Document:

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                                                                    Exhibit 10.1

                                  [LOGO] SPRINT

                  PURCHASE OF EQUIPMENT AND SERVICES AGREEMENT

                                     BETWEEN

                        SPRINT/UNITED MANAGEMENT COMPANY

                                       AND

                          HYBRID NETWORKS, INCORPORATED

                                DATED MAY 1, 2000

                           CONTRACT NUMBER CM000490SBS

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                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                              <C>
1.0    HEADINGS AND DEFINITIONS ..................................................................................1

2.0    ORDER .....................................................................................................4
   2.1   ORDER TERMS .............................................................................................4
   2.2   ORDER REQUIREMENTS ......................................................................................4
   2.3   BRANDING AND LABELING ...................................................................................4
   2.4   PURCHASE REQUIREMENTS ...................................................................................5
   2.5   ADDITIONAL OR INCONSISTENT TERMS ........................................................................5
   2.6   FORECAST ................................................................................................5
   2.7   CPE EQUIPMENT LEAD TIME REDUCTION .......................................................................5

3.0    ACCEPTANCE OF ORDER .......................................................................................5
   3.1   ACCEPTANCE ..............................................................................................5
   3.2   SHIPMENT DATE ...........................................................................................5
   3.3   DAMAGES FOR DELAY .......................................................................................5
   3.4   SHIPPING PROCEDURES .....................................................................................6

3.5SHIPPING PRIORITY .............................................................................................6

4.0    MODIFICATION OF ORDERS ....................................................................................6
   4.1   CANCELLATION ............................................................................................6
   4.2   POSTPONEMENT ............................................................................................6

5.0    DISCONTINUATION ...........................................................................................6

6.0    PREPARATION AND APPROVAL OF THE SPECIFICATIONS FOR THE ENHANCED EQUIPMENT..................................7
   6.1   HIGH LEVEL REQUIREMENTS .................................................................................7
   6.2   DETAILED REQUIREMENTS DEVELOPMENT .......................................................................7
   6.3   ENHANCED EQUIPMENT DEVELOPMENT ..........................................................................7

7.0    TESTING AND ACCEPTANCE ....................................................................................7
   7.1   TESTING REQUIREMENTS ....................................................................................7
   7.2   ACCEPTANCE PLAN DEVELOPMENT .............................................................................7
   7.3   ENGINEERING PRODUCT DEVELOPMENT TEST ....................................................................7
   7.4   USER ACCEPTANCE TEST ....................................................................................8
   7.5   SPRINT DELAYS ...........................................................................................8
   7.6   MILESTONE ACCEPTANCE CERTIFICATES .......................................................................8

8.0    FUTURE ENHANCEMENTS TO THE EQUIPMENT ......................................................................8
   8.1   DEVELOPMENT .............................................................................................8
   8.2   PRIORITY ................................................................................................9
   8.3   EXCLUSIVITY .............................................................................................9

9.0 OWNERSHIP OF INTELLECTUAL PROPERTY ...........................................................................9
   9.1   WORK PRODUCT.............................................................................................9
   9.2   LICENSE .................................................................................................9

10.0   SCOPE CHANGE ..............................................................................................9

11.0   SYSTEM INTEROPERABILITY; SYSTEM ACCEPTANCE ...............................................................10
  11.1   SYSTEM ACCEPTANCE ......................................................................................10
  11.2   SUPPLIER ASSISTANCE ....................................................................................10

12.0   TEST-BED LABORATORY ......................................................................................10

13.0   SPARING ..................................................................................................10

14.0   OPERATING AND MAINTENANCE MANUALS ........................................................................10
  14.1   CPE EQUIPMENT MANUALS ..................................................................................10
  14.2   BASE STATION EQUIPMENT MANUALS .........................................................................10
  14.3   STANDARDS FOR MANUALS ..................................................................................11

15.0   THIRD PARTY SUPPLIERS ....................................................................................11
  15.1   ALTERNATIVE COMPONENTS .................................................................................11
  15.2   THIRD PARTY CONSENTS ...................................................................................11

16.0   SPRINT TRADEMARK, LICENSE AND BRANDING ...................................................................11
  16.1   LICENSE GRANT ..........................................................................................11
  16.2   NOTICES ................................................................................................11
</TABLE>

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<TABLE>
<S>                                                                                                              <C>
  16.3   USES ...................................................................................................12
  16.4   SUPPLIER ASSISTANCE ....................................................................................12
  16.5   UNAUTHORIZED USES ......................................................................................12

17.0   TERM AND TERMINATION .....................................................................................12
  17.1   TERM ...................................................................................................12
  17.2   TERMINATION ............................................................................................12
  17.3   TERMINATION BY SUPPLIER ................................................................................12
  17.4   CONSEQUENCES OF TERMINATION ............................................................................13

18.0   AFFILIATE TRANSACTIONS ...................................................................................13
  18.1   AFFILIATE ORDERS .......................................................................................13
  18.2   AFFILIATES .............................................................................................13
  18.3   AFFILIATE RIGHTS .......................................................................................13

19.0   ASSIGNMENT ...............................................................................................14

20.0   TECHNOLOGY ESCROW AND AVAILABILITY .......................................................................14
  20.1   FUTURE ASSURANCES ......................................................................................14
  20.2   DEPOSIT OF ESCROW TECHNOLOGY ...........................................................................14
  20.3   RELEASE OF ESCROW TECHNOLOGY ...........................................................................14
  20.4   NON-ESCROW TECHNOLOGY ..................................................................................14
  20.5   MAINTENANCE RELEASE OF TECHNOLOGY ......................................................................15
  20.6   INSOLVENCY RELEASE OF TECHNOLOGY .......................................................................15
  20.7   BANKRUPTCY OF SUPPLIER .................................................................................15
  20.8   NO WARRANTY ............................................................................................15

21.0   PRICE AND PRICE WARRANTY .................................................................................15
  21.1   PRICING ................................................................................................15
  21.2   MOST FAVORED CUSTOMER STATUS ...........................................................................16

22.0   SOFTWARE LICENSE .........................................................................................17

23.0   INVOICING AND PAYMENT ....................................................................................16
  23.1   INVOICE REQUIREMENTS ...................................................................................16
  23.2   INVOICE ................................................................................................17

24.0   SHIPMENT, TITLE & RISK OF LOSS ...........................................................................17
  24.1   SHIPMENT ...............................................................................................17
  24.2   EARLY SHIPMENT .........................................................................................17
  24.3   FACTORY TESTING ........................................................................................17

25.0   INSPECTION AND REJECTION .................................................................................17
  25.1   INSPECTION OF DELIVERABLES .............................................................................17
  25.2   DEFECTIVE DELIVERABLES .................................................................................18
  25.3   RIGHT TO INSPECT AND TEST ..............................................................................18

26.0   WARRANTIES ...............................................................................................18
  26.1   EQUIPMENT WARRANTY .....................................................................................18
  26.2   EQUIPMENT WARRANTY TERM ................................................................................18
  26.3   PATTERN DEFECTS ........................................................................................18
  26.4   BACKWARDS COMPATIBILITY ................................................................................19
  26.5   DISCLAIMER .............................................................................................19

27.0   LIABILITY AND INDEMNIFICATION ............................................................................19
  27.1   THIRD PARTY CLAIMS .....................................................................................19
  27.2   PRODUCT LIABILITY CLAIMS ...............................................................................19
  27.3   TAXES AND BENEFITS .....................................................................................20
  27.4   INFRINGEMENT ...........................................................................................19
  27.5   INDEMNIFICATION PROCEDURES .............................................................................20

28.0   LIMITATION ON LIABILITY ..................................................................................20
  28.1   EXCLUSION OF DAMAGES ...................................................................................20
  28.2   TOTAL LIABILITY ........................................................................................21
  28.3   EXCLUSION OF CLAIMS ....................................................................................21

29.0   INSURANCE ................................................................................................21
  29.1   INSURANCE OBLIGATIONS ..................................................................................21
  29.2   CERTIFICATE OF INSURANCE ...............................................................................21
  29.3   No INSURANCE LIMITATION ................................................................................22
</TABLE>

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<TABLE>
<S>                                                                                                              <C>
30.0   DISPUTE RESOLUTION .......................................................................................22
    30.1   NEGOTIATION...........................................................................................22
     302   WAIVER OF JURY .......................................................................................22
    30.3   VENUE ................................................................................................22

31.0   FEDERAL REQUIREMENTS .....................................................................................22
    31.1   FEDERAL ACQUISITION REQUIREMENTS .....................................................................22
    31.2   GOVERNMENT END USERS .................................................................................22
    31.3   SUBCONTRACTING OPPORTUNITIES .........................................................................22

32.0   PRODUCT SAFETY NOTIFICATIONS .............................................................................22

33.0   INTELLECTUAL PROPERTY ....................................................................................22

34.0   PROPRIETARY INFORMATION ..................................................................................23
    34.1   SPRINT PROPRIETARY INFORMATION .......................................................................24
    34.2   SUPPLIER PROPRIETARY INFORMATION .....................................................................24
    34.3   CONFIDENTIALITY OF PROPRIETARY INFORMATION ...........................................................23
    34.4   EXCEPTIONS FOR CONFIDENTIALITY .......................................................................23
    34.5   INJUNCTIVE RELIEF FOR PROPRIETARY INFORMATION ........................................................24

35.0   INDEPENDENT CONTRACTOR ...................................................................................24
    35.1   INDEPENDENT CONTRACTORS ..............................................................................24
    35.2   SPRINT'S RESPONSIBILITIES ............................................................................24
    35.3   RESPONSIBILITY FOR WAGES AND TAXES ...................................................................24
    35.4   REMOVAL OF SUPPLIER PERSONNEL ........................................................................24
    35.5   CONTRACTORS' COMPLIANCE ..............................................................................24

36.0   WORK ON SPRINT AND SUPPLIER PREMISES .....................................................................24

37.0   SECURITY .................................................................................................25
    37.1   COMPLIANCE WITH SPRINT POLICIES ......................................................................25
    37.2   SECURITY FOR SOFTWARE ................................................................................25

38.0   TECHNICAL SUPPORT SERVICE AND FEES .......................................................................25
    38.1   SYSTEM SUPPORT SERVICE ...............................................................................25
    38.2   INSTALLATION SERVICES ................................................................................25
    38.3   ADDITIONAL SERVICE FEES ..............................................................................25
    38.4   FEE INCREASES ........................................................................................25
    38.5   TECHNICAL SUPPORT PERSON .............................................................................26

39.0   TRAINING SERVICES AND FEES ...............................................................................25

40.0   NOTICES ..................................................................................................26

41.0   GENERAL ..................................................................................................26
    41.1   MATERIAL/MECHANIC'S LIEN .............................................................................26
    41.2   GOVERNING LAW ........................................................................................26
    41.3   WAIVER ...............................................................................................26
    41.4   SEVERABILITY .........................................................................................26
    41.5   SURVIVAL .............................................................................................26
    41.6   THIRD PARTY BENEFICIARIES ............................................................................26
    41.7   PUBLICITY ............................................................................................27

41.8   REMEDIES .................................................................................................27

41.9   ETHICS CODE ..............................................................................................27
   41.10   LAWS AND REGULATIONS .................................................................................27
   41.11   PERMITS AND LICENSES .................................................................................27
   41.12    SCHEDULES ...........................................................................................27
   41.13   FORCE MAJEURE.........................................................................................28

42.0   ENTIRE AGREEMENT .........................................................................................28
</TABLE>

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6

SPRINT PROPRIETARY INFORMATION - RESTRICTED

                  PURCHASE OF EQUIPMENT AND SERVICES AGREEMENT

                                     BETWEEN

                        SPRINT/UNITED MANAGEMENT COMPANY

                                       AND

                          HYBRID NETWORKS, INCORPORATED

         This Purchase of Equipment and Services Agreement ("Agreement") is
effective May 1, 2000 ("Effective Date") between Sprint/United Management
Company, a Kansas corporation, with offices at 2330 Shawnee Mission Parkway,
Westwood, Kansas 66205 ("Sprint"), and Hybrid Networks, Inc., a Delaware
corporation, having its principal place of business at 6409 Guadalupe Mines
Road, San Jose, CA 95120 ("Supplier").

                                   BACKGROUND

         A. Supplier designs, develops, manufacturers, distributes, sells, and
licenses equipment and all related documents, reports, and information and
provides installation, training, technical, and maintenance services for the
equipment.

         B. Sprint desires the right to purchase the equipment from Supplier
which Sprint will use itself, sell, or lease, to its customers in association
with products and services of Sprint, subject to the terms and conditions of
this Agreement. The parties agree as follows:

1.0      HEADINGS AND DEFINITIONS

         All headings used in this Agreement are inserted for convenience only
and are not intended to affect the meaning or interpretation of this Agreement
or any section or clause of this Agreement. References to "third party" or
"third parties" will not mean either party. The meanings given to terms defined
in this Agreement are equally applicable to both the singular and the plural
forms of such terms. Terms used and/or defined in the Schedules attached to this
Agreement that are not otherwise defined in this Agreement, will have the
meanings as set forth in those Schedules for the purposes of those Schedules
only. For purposes of this Agreement, the following definitions apply:

         1.1 "Acceptance Date" means the date of issue by Sprint of the
Milestone Acceptance Certificate confirming that the Enhanced Equipment or
Future Enhanced Equipment has passed the User Acceptance Test.

         1.2 "Acceptance Test Plan" means a document that sets forth the
detailed roles, responsibilities, procedures, test equipment, test locations,
test cases and criteria to be used during the Engineering Product Development
Test and User Acceptance Test to determine whether or not the Enhanced Equipment
or Future Enhanced Equipment conforms to the applicable Specifications. The
Acceptance Test Plans for the Enhanced Equipment and Future Enhanced Equipment
will be developed by the parties using the procedures set forth in Section 7.0.
The Acceptance Test Plan will consist of both an Engineering Product Development
Test and User Acceptance Test.

         1.3 "Additional Affiliates" means those persons designated by Sprint as
Additional Affiliates pursuant to the terms of Section 18.2.

         1.4 "Additional Affiliate Agreement" means an agreement between Sprint
and/or any Initial Affiliate and a Person to be designated an Additional
Affiliate under the terms of this Agreement, which agreement will include an
agreement to market communications services under any Sprint Mark.

         1.5 "Affiliates" means the collective reference to Initial Affiliates
and Additional Affiliates.

         1.6 "Agreement" means this document and all attachments, exhibits,
schedules and supplements hereto (each of which is incorporated by reference) as
these currently exist and as they may be amended from time to time by agreement
of the parties.

SPRINT PROPRIETARY INFORMATION - RESTRICTED

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         1.7 "Applicable Laws" means, as to any entity, the certificate of
incorporation and by-laws or other organizational or governing documents of such
entity, and all laws, treaties, ordinances, statutes, rules, regulations, orders
and interpretations of any Governmental Entity, applicable to or binding upon
such entity or any of its property or to which such entity or any of its
property is subject.

         1.8 "Base Station" is a cable head end as described in the
Specification Letter.

         1.9 "Claim" is defined in Section 27.5(a).

         1.10 "Commitment" is defined in Section 2.4.

         1.11 "CPE" is a modem as described in the Specification Letter.

         1.12 "Defect" means a failure to conform to the warranties contained in
Section 26.1.

         1.13 "Deliverable(s)" means any Service or Equipment.

         1.14 "Effective Date" is defined in the opening paragraph of this
Agreement.

         1.15 "Engineering Product Development Test" means the test to be
carried out by Supplier to demonstrate that, following the development of any
modification to the Equipment required to be tested pursuant to Section 7.0, the
Equipment complies with the Specifications.

         1.16 "Enhanced Equipment" means Equipment containing the standards,
features, functionality or service capabilities described in the High Level
Requirements Letter.

         1.17 "Equipment" means any items or product listed in Schedule 1.16,
whether or not manufactured by Supplier. Equipment includes the Existing
Equipment, Enhanced Equipment and Future Enhanced Equipment.

         1.18 "Escrow Technology" means technical information, (including
Supplier's source code, chip designs, schematics, supplier lists, supplier part
numbers, maintenance and support documentation, and to the extent available to
Supplier, specifications and drawings of test fixtures, jigs, test systems and
development systems) necessary or useful to manufacture, improve, maintain and
support the Equipment without the assistance of any other person or reference to
any other material.

         1.19 "Existing Equipment" means the Equipment containing only the
standards, features, functionalities and service capabilities set forth in
Specification Letter as it exists on the Effective Date.

         1.20 "FAR" is defined in Section 31.1.

         1.21 "Final Acceptance" means, as to any System, the successful
completion of the final acceptance test procedures. Sprint will prepare, in
consultation with Supplier, the detailed final acceptance testing procedures.
Sprint will consider all reasonable requests for modifications of the final
acceptance testing procedures, but is required to make modifications only if the
failure to make the modification would result in the tests that do not test
Specifications or that are inconsistent with the outline of the test procedures
contained in Schedule 1.21. If the Acceptance Date for Enhanced Equipment does
not occur by the date set forth in the Milestone Schedule, then no Final
Acceptance of any System will occur until the Acceptance Date for such Enhanced
Equipment; provided, however, the failure to meet an Acceptance Date will have
no impact on any payment milestones for any System for which Final Acceptance
has already occurred.

         1.22 "Future Enhanced Equipment" means Equipment containing standards,
features, functionalities or service capabilities in addition to those contained
in Existing Equipment and described in the High Level Requirements Letter.

         1.23 "Governmental Entity" means any nation or government, any state,
province or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of, or
pertaining to, government.

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         1.24 "High Level Requirements" means a summary of standards, features,
functionalities service capabilities established by the parties for the Enhanced
Equipment as described in the High Level Requirements disclosure letter from
Supplier to Sprint dated May 1, 2000 (the "High Level Requirements Letter").

         1.25 "Indemnitees" means, with respect to a party, that party and its
affiliates and their respective directors and employees. As used in this
definition, the term affiliate means, in the case of Sprint, the Affiliates, and
in the case of Supplier, its subsidiaries.

         1.26 "Initial Affiliates" means those Persons listed on Schedule 1.25.

         1.27 "Interest" means a rate per year equal to that announced from time
to time by The Wall Street Journal as the "prime rate" in its "Money Rates"
table.

         1.28 "Milestone Acceptance Certificate" means a written communication
signed by Sprint confirming that Supplier has satisfied its obligations under
the Engineering Product Development Test or User Acceptance Test.

         1.29 "Milestone Schedule" means the timing and sequence of events
agreed between Sprint and Supplier for the development of Enhanced Equipment and
Future Enhanced Equipment. Each Milestone Schedule will be mutually agreed to by
the parties, except that the parties agree the Acceptance Dates for Enhanced
Equipment are contained in the High Level Requirements Letter.

         1.30 "MMDS Services" means fixed wireless communication services.

         1.31 "Net Price" means the final price paid by any customer after all
discounts, reductions, rebates, or adjustments of any kind are applied.

         1.32 "Non-Escrow Technology" means the systems, elements or physical
components, (including Supplier's masks, jigs, test fixtures, test systems,
development systems and similar material), and other physical materials
necessary or useful to allow a reasonably skilled third-party to manufacture,
improve, maintain and support Equipment without the assistance of any other
person or the reference to any other material except Escrow Technology.

         1.33 "Order" means any purchase order that Sprint may place with
Supplier for Deliverables under this Agreement.

         1.34 "Person" means an individual, partnership, limited partnership,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Entity or other entity of whatever
nature.

         1.35 "Services" means any service provided by Supplier to Sprint under
this Agreement.

         1.36 "Software" means the computer software products licensed by Hybrid
that is contained in or operating on the Equipment.

         1.37 "Specifications" means the detailed standards, features,
functionalities and service capabilities established by the parties for the
Equipment and Services. The Specifications for the Existing Equipment are set
forth in the specification letter from Supplier to Sprint dated May 1, 2000
("Specification Letter"). The Specifications for the Enhanced Equipment and
Future Enhanced Equipment will be developed by the parties using the procedures
Set forth in Section 6.0.

         1.38 "Sprint Marks" means the trademarks or trade names owned or
licensed by Sprint.

         1.39 "Substantial Completion" means, as to any System, the successful
completion of the substantial completion testing procedures. Sprint will
prepare, in consultation with Supplier, the detailed substantial completion
testing procedures. Sprint will consider all reasonable requests for
modifications of the substantial completion testing procedures, but is required
to make modifications only if the failure to make the modification would result
in the tests that do not test Specifications or that are inconsistent with the
outline of the test procedures contained in Schedule 1.21.

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         1.40 "System" means all Equipment, Services, and other equipment,
services, tools and software and any other property necessary or desirable to
provide MMDS Services in an area supported by a single Base Station. A graphical
illustration of a System is set forth as Schedule 1.40.

         1.41 "Systems Integrator" means any Person other than Sprint or
Supplier retained by Sprint for the purposes of installing, testing, operating
or maintaining a System, or a Person who resells Equipment to Sprint.

         1.42 "System Support Services" is defined in Section 38.1. Supplier
will only provide System Support Services on the portions of the System
contained in the marked areas on Schedule 1.40.

         1.43 "User Acceptance Test" means the test to be carried out by Sprint
to demonstrate that, following any modification to the Equipment required to be
tested pursuant to Section 7.0, the Equipment complies with the Specifications.

         1.44 "Warranty Period" means the period beginning upon the shipment by
Supplier of the Equipment to Sprint and expiring 18 months thereafter. In the
case of Software, the Warranty Period is 90 days from the date of shipment by
Supplier to Sprint of the Software. In no event will the Warranty Period for
Equipment or Software begin before Substantial Completion of the System in which
it is incorporated.

         1.45 "Supplier Insolvency" means (i) the failure of Supplier to pay its
debts to creditors when and as due (ii) under circumstances in which one or more
of such creditors have refused to modify, amend, waive or delay the exercise of
their rights to obtain strict compliance with such obligations and (iii) such
failure and refusal could reasonably be expected to have a material adverse
effect on the ability of Supplier to continue to operate its business without
the protection of federal or state laws governing the rights of creditors.
Supplier Insolvency is not a breach of this Agreement and shall not be a cause
for termination thereof.

2.0  ORDER

         2.1      ORDER TERMS.

         This Agreement sets forth the terms that apply to any Order that Sprint
or any Affiliate may place with Supplier during the term of this Agreement.

         2.2      ORDER REQUIREMENTS.

         Sprint will specify the quantity of Deliverables needed, the shipment
date, shipping method, the location to which Deliverables should be shipped, and
any other information reasonably required by Supplier and identified in advance
upon receipt of an Order. Supplier may not ship unauthorized substitute
equipment to Sprint without Sprint's prior written approval. Unless otherwise
specified herein (or accepted by Supplier), all Orders must be placed by Sprint
at least 90 days prior to the proposed shipment date and, upon acceptance of any
such Order by Supplier, will be deemed firm and non-cancelable and
non-changeable, except as specified in Section 4.0. An Order may specify only a
single address for delivery.

         2.3      BRANDING AND LABELING.

         Supplier will comply with the brand labeling and electronic
asset-tracking requirements and procedures designated by Sprint from
time-to-time. Such asset-tracking requirements and procedures will include, at a
minimum, the labeling of Equipment components with bar-coded serial numbers. Bar
coding shall consist of laser-printed labels to be affixed to the Equipment. Any
special or unique asset tracking equipment required by Sprint shall be provided
by Sprint to the extent the cost of such special or unique asset tracking
equipment that exceeds $5,000.00. Sprint will pay to Supplier $1.00 per brand
label for each label affixed by Supplier to Equipment at Sprint's request.

         Supplier may continue to include the brand and proprietary rights
notices (including without limitation copyright, patent or trademark notices) of
Supplier and its suppliers on the Equipment, Supplier may from time to time
modify or change its brand proprietary rights notices provided such notices
appear in substantially the same manner (e.g., size, color) as they are included
on the Effective Date. Sprint will not delete, alter or obscure such brand or
proprietary rights notices. Sprint will evaluate requests by Supplier to be
included in its advertising literature, subject to agreement on the nature,
scope and funding of such marketing efforts.

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         2.4      PURCHASE REQUIREMENTS.

         Provided that the Equipment shipped by Supplier meets all criteria
required for Substantial Completion, prior to December 31, 2000 Sprint will pay
to Supplier an aggregate minimum amount of $10,000,000 ("Commitment") for the
Equipment achieving the Substantial Completion milestones and any other
Deliverables. Any purchase of Deliverables by Sprint or any Initial Affiliate
after September 30, 1999 will be credited toward fulfilling the Commitment,
including purchases from a Systems Integrator.

         2.5      ADDITIONAL OR INCONSISTENT TERMS.

         This Agreement shall take precedence over any inconsistent or
additional terms contained in any Order or other form used by Sprint to order
under this Agreement and any acknowledgment or other form used by Supplier. Any
such inconsistent or additional terms shall be deemed stricken, null and void.
This Agreement shall take precedence over any terms in any Schedule attached to
this Agreement that are inconsistent with this Agreement, and such inconsistent
terms will be deemed stricken, null and void, unless the parties mutually agree
in a signed writing to such additional provisions.

         2.6      FORECAST.

         During the term of this Agreement, Sprint will furnish Supplier, on a
monthly basis, with a non-binding 180-day rolling forecast of its Orders for
Deliverables.

         2.7      CPE EQUIPMENT LEAD TIME REDUCTION

         In the event Sprint makes a binding commitment to purchase a fixed
amount of CPE Equipment, then commencing 60 days from the date of Sprint's
commitment Supplier will make such CPE Equipment available for shipment to
Sprint within 8 weeks from the date of any Sprint Order for CPE Equipment placed
on or after the 60 days. Supplier will use commercially reasonable efforts to
reduce all CPE Equipment lead times.

3.0      ACCEPTANCE OF ORDER

         3.1      ACCEPTANCE.

         Supplier must accept any Order issued by Sprint that does not
         materially exceed the forecast provided to Supplier pursuant to Section
         2.6 or the manufacturing capacity or lead times of Supplier set forth
         on Schedule 3.1.

         3.2      SHIPMENT DATE.

         Supplier will ship the Equipment ordered on the shipment date contained
in any Order accepted by Supplier.

         3.3      DAMAGES FOR DELAY.

                  (A) If shipment from Supplier to Sprint's designated location
         is delayed more than 5 consecutive calendar days beyond the designated
         shipment date, Supplier agrees to pay liquidated damages calculated as
         1/2% of the price of the Order, for each business day of delay after
         the initial 5 days, up to a maximum of 15% of the total amount of such
         Order to the extent such Order is comprised of CPE Equipment and up to
         a maximum of 10% of such Order to the extent such Order is comprised of
         Base Station Equipment. Liquidated damages will be calculated only on
         the portion of the Order delayed and the portion of the Order Sprint is
         unable to use because a portion of the Order is delayed.

                  (B) Supplier will ship at least 80% of all Orders scheduled
         for shipment in a consecutive 3-month period in accordance with the
         terms of this Section 3.0 prior to or within 5 business days of the
         scheduled shipment date for such Orders (the "Fulfillment Standard").
         Supplier's compliance with the Fulfillment Standard will be measured in
         each rolling 3-month period. In the event Supplier fails to meet the
         Fulfillment Standard, then in the subsequent month Supplier must ship
         at least 80% of all Orders scheduled for shipment during that month in
         accordance with the terms of this Section 3.0 on or prior to the
         scheduled shipment date for such Orders. If Supplier fails to comply
         with the foregoing sentence, then in the subsequent month any Order
         that is shipped after its scheduled shipment date will be shipped for
         next day delivery at Supplier's costs. Supplier's failure to achieve
         the Fulfillment Standard during any 4 consecutive measurements will
         constitute a material breach of this Agreement, which Supplier has no
         further right to cure under Section 17.2, and giving Sprint the
         immediate right to terminate.

                  (C) Supplier will not be responsible for delays caused by the
         failure of a carrier designated by Sprint to meet its shipment
         schedule.

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         3.4      SHIPPING PROCEDURES.

Unless otherwise instructed by Sprint, Supplier must:

                  (A)      Ship all Orders complete;

                  (B)      Ship all Orders via Sprint's designated common
                           carriers as designated in Schedule 3.4;

                  (C)      Verify that all subordinate documents bear the
                           correct Order number;

                  (D)      Enclose a packing memorandum with each shipment and,
                           when more than one package is shipped, identify the
                           one which contains the memorandum;

                  (E)      Mark the correct Order number on all packages and
                           shipping papers;

                  (F)      Submit invoices in duplicate or as otherwise
                           specified by Sprint, showing the correct Order
                           number;

                  (G)      Render separate invoices for each shipment, whether
                           or not a complete Order;

                  (H)      Verify that bills of lading match corresponding
                           shipping invoices; and

                  (I)      Forward applicable bills of lading and shipping
                           notices with items shipped.

         3.5      SHIPPING PRIORITY.

         Supplier will provide Sprint with priority over other Supplier
customers, in terms of the availability and shipment of the Deliverables. If
Orders for Deliverables exceed Supplier's capacity for such Deliverables, then
Supplier will completely fill Sprint's Orders for such Deliverables before
filling the order of any other customers for such Deliverables.

4.0      MODIFICATION OF ORDERS

         4.1      CANCELLATION.

         Sprint may, by written notice, cancel or reduce the quantity of
Deliverables specified in any Order. If the cancellation or reduction occurs
after the lead times required by Supplier (as set forth on Schedule 4.1) to
obtain the Equipment components in order to meet the delivery schedule, then
Sprint will pay to Supplier direct costs specified on Schedule 4.1 reasonably
incurred prior to receipt of such notice to obtain and assemble such components,
with appropriate allowance for salvage value and possible mitigation of damages
by completion and sale to others. Supplier's Equipment component lead times are
contained in Schedule 4.1. Sprint will also pay to Supplier, in addition to such
direct costs, an amount equal to 5% of the purchase price for any portion of an
Order that Sprint cancels within 90 days of the shipment date. Any amount paid
by Sprint under this Section 4.0 does not count toward fulfillment of the
Commitment. The provisions of this Section 4.1 are Supplier's sole and exclusive
remedy for Sprint's cancellation of Orders.

         4.2      POSTPONEMENT.

         Sprint may, by written notice, postpone one time without penalty the
shipment date for any Order prior to the shipment date established for such
Order for a period not to exceed 45 days from the initial shipment date. In the
event Sprint postpones the shipment date of any Order more than once, then
Sprint will pay Supplier Interest on one-half of the purchase price of such
Order during the period of postponement,

5.0      DISCONTINUATION

         Supplier will continue to (i) manufacture the Equipment throughout the
term of this Agreement (ii) support the Base Station Equipment (including,
without limitation, repair, maintenance and support services) for 8 years after
the time such Base Station Equipment was last provided by Supplier to Sprint and
(iii) repair the CPE Equipment for a period of 2 years after the expiration of
the Warranty Period for such CPE Equipment. Supplier agrees to provide Sprint
not less than 180 business days' prior written notice of its intent to
discontinue the manufacture or support of any such Equipment after the
termination of this Agreement. The replacement of Equipment with new Equipment
that is interoperable and equivalent in terms of standards, features,
functionality, service capability and price does not constitute discontinuation.

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6.0      PREPARATION AND APPROVAL OF THE SPECIFICATIONS FOR THE ENHANCED
         EQUIPMENT

         6.1      HIGH LEVEL REQUIREMENTS.

         The High Level Requirements for the Enhanced Equipment are set forth in
the High Level Requirements Letter.

         6.2      DETAILED REQUIREMENTS DEVELOPMENT.

         A) Supplier will commence preparation of the Specifications for the
Enhanced Equipment in accordance with the Milestone Schedule and consistent with
the High Level Requirements.

         B) Upon completion of the Specifications, Supplier will submit the
Specifications to Sprint. Sprint will either approve the Specifications or
propose amendments as it will reasonably judge appropriate. If Sprint fails to
approve the Specifications or propose amendments within the time period set
forth in the Milestone Schedule, Sprint will be notified by Supplier that a
response is due. Sprint will be in breach of this Agreement if it does not
respond within 10 calendar days after being notified that a response is due.

         C) Supplier will include all reasonable requests for amendment of the
Specifications received from Sprint and will prepare revised Specifications.
Each party will then signify its approval of the Specifications by signing the
Specifications within the timeframe set forth in the Milestone Schedule. Any
modification to the Specifications following each party's approval will be
governed by the Scope Change procedures set forth in Section 10.0.

         6.3      ENHANCED EQUIPMENT DEVELOPMENT.

         Supplier will develop, at its cost, the Enhanced Equipment necessary to
ensure that the Equipment conforms to the applicable Specifications and is ready
for approval under the Engineering Product Development Test and User Acceptance
Test in accordance with the time schedule set out in the Milestone Schedule.

7.0      TESTING AND ACCEPTANCE

         7.1      TESTING REQUIREMENTS.

         Prior to Sprint's acceptance of any Enhanced Equipment or Future
Enhanced Equipment that contains a standard, feature, functionality or service
capability (other than minor maintenance releases) not previously contained in
any Equipment tested pursuant to the terms of this Section 7.0, the parties will
follow the procedures set forth below.

         7.2      ACCEPTANCE PLAN DEVELOPMENT.

                  (A) Supplier will commence, in collaboration with Sprint,
         preparation of the Acceptance Test Plan for the Enhanced Equipment and
         Future Enhanced Equipment in accordance with a Milestone Schedule
         agreed to by both parties. Sprint will provide Supplier all information
         and other documents reasonably requested by Supplier for the
         preparation of the Acceptance Test Plan.

                  (B) Upon completion of the Acceptance Test Plan, Supplier will
         submit the Acceptance Test Plan to Sprint. Sprint will either approve
         the Acceptance Test Plan or propose amendments as it will reasonably
         judge appropriate. If Sprint fails to approve the Acceptance Test Plan
         or propose amendments within the time period set forth in the Milestone
         Schedule, Sprint will be notified by Supplier that a response is due.
         Sprint will be in breach of this Agreement if it does not respond
         within l0 calendar days after being notified that a response is due.

                  (C) Supplier will include all reasonable requests for
         amendment of the Acceptance Test Plan received from Sprint and will
         prepare a revised Acceptance Test Plan. Each party will then signify
         its approval of the Acceptance Test Plan by signing the Acceptance Test
         Plan within the timeframe set forth in the Milestone Schedule. Any
         modification to the Acceptance Test Plan following its approval will be
         governed by the Scope Change procedures set forth in Section 10.0.

         7.3      ENGINEERING PRODUCT DEVELOPMENT TEST.

                  (a) Upon approval of the Acceptance Test Plan and in
         accordance with the Milestone Schedule, Supplier will proceed with the
         Engineering Product Development Test. Sprint has the right to attend
         the Engineering

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                  Product Development Test and Supplier will promptly forward to
Sprint copies of the test readings.

                  (b) When the Enhanced and Future Enhanced Equipment has passed
         the Engineering Product Development Test, Sprint will promptly issue a
         Milestone Acceptance Certificate to Supplier.

                  (c) If the Enhanced and Future Enhanced Equipment fails the
         Engineering Product Development Test then Sprint may at its option:

                           (i) require Supplier to promptly make such further
                  alterations or modifications to the Enhanced and Future
                  Enhanced Equipment as reasonably necessary to enable the
                  Equipment to pass the Engineering Product Development Test; or

                           (ii) accept the Enhanced and Future Enhanced
                  Equipment as passing the Engineering Product Development Test,
                  subject to a list of Defects to be corrected by Supplier
                  promptly or within a mutually agreeable time period.

         7.4      USER ACCEPTANCE TEST.

                  (A) Sprint will issue details of the proposed test data and
         tests for the User Acceptance Test for the Enhanced and Future Enhanced
         Equipment to Supplier in accordance with the time schedule set out in
         the Milestone Schedule. The User Acceptance Test will test conformance
         of such Equipment with the Specifications. The User Acceptance Test
         plan will be mutually agreed to by the parties. After the Engineering
         Product Development Test is passed in accordance with the provisions of
         Section 7.3, Supplier will deliver the Equipment to Sprint for
         performance of the User Acceptance Test in accordance with the time
         schedule set out in the Milestone Schedule. The location of the test
         facilities shall be in a Sprint lab to be designated by Sprint.
         Supplier has the right to attend the User Acceptance Test and Sprint
         will promptly forward to Supplier copies of the test readings.

                  (B) When the Equipment has passed the User Acceptance Test,
         Sprint will promptly issue a Milestone Acceptance Certificate to
         Supplier.

                  (C) If the Equipment fails to pass the User Acceptance Test,
then Sprint may, at its option:

                           (i) require Supplier to promptly make such further
                  alterations or modifications to the Equipment as reasonably
                  necessary to enable the Equipment to pass the User Acceptance
                  Test; or

                           (ii) accept the Equipment subject to a list of
                  Defects to be corrected by Supplier promptly or within a time
                  period that Sprint and Supplier will mutually agree to.

         7.5      SPRINT DELAYS.

         The date set forth in the Milestone Schedule as the Acceptance Date
will be extended one day for each day that Sprint fails to perform any
obligations identified as a Sprint responsibility in the Milestone Schedule that
causes Supplier not to be able to meet the Acceptance Date set forth in the
Milestone Schedule. Prior to incurring any delay caused by Sprint, Supplier will
notify Sprint of Sprint's failure to perform any Sprint obligation within the
time period established in the Milestone Schedule.

         7.6      MILESTONE ACCEPTANCE CERTIFICATES.

         As soon as the Equipment has passed the Engineering Product Development
Test or User Acceptance Test, Sprint will issue a Milestone Acceptance
Certificate which will state the date of passing the test. Sprint will sign and
issue the certificate within 3 business days of Supplier demonstrating that the
requirements which constitute meeting the Engineering Product Development Test
or User Acceptance Test, as the case may be, have been met. If Sprint accepts
the Equipment subject to a list of faults to be corrected promptly or on a
schedule mutually agreed to by Supplier and Sprint, then such items, together
with the time period for correction will be set out on the Milestone Acceptance
Certificate. Acceptance of the Equipment will occur only in accordance with the
terms of this Agreement.

8.0      FUTURE ENHANCEMENTS TO THE EQUIPMENT

         8.1      DEVELOPMENT.

         In addition to the enhancements to be contained in the Enhanced
Equipment, Sprint may from time to time request and

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Supplier will provide (to the extent technically possible) Furore Enhanced
Equipment in the form of the removal, modification or addition of standards,
features, functionality, or service capabilities. Sprint and Supplier will
negotiate in good faith a reasonable development budget and time schedule for
the shipment of such enhancements. Supplier will notify Sprint within 30 days of
the date of any Sprint request for an enhancement whether Supplier is willing to
develop the enhancement at its cost, in which case the enhancement will be the
exclusive property of Supplier, or whether Supplier intends to charge Sprint in
accordance with Section 38.2 for the development of the enhancement, in which
case the development of the enhancement will be subject to the provisions of
Section 9.1. Enhancements that would not increase Supplier's cost of performance
will be provided at no charge, the parties will follow the procedures
established in Sections 6.0 and 7.0 for the development and acceptance of
enhancements.

         8.2      PRIORITY.

         As long as the dollar amount of purchases made by Sprint under this
Agreement exceed the dollar amount of purchases made by each other customer of
Supplier during the prior 6-month period, Supplier will provide Sprint with
development priority over any other Supplier customer. If Sprint believes that
Supplier is not providing Sprint enhancements priority, Sprint will notify
Supplier in writing that Sprint is dissatisfied with Supplier's scheduling
priority. Supplier will respond within l0 days to Sprint's concerns and if
Sprint remains dissatisfied, Supplier will provide Sprint and its auditors the
access to verify that the work of Sprint is being scheduled and performed with
priority over any other Supplier customer. If Sprint is not receiving priority,
then Supplier will modify its development schedule so that Sprint enhancements
are performed first and pay for the cost of the audit.

         If Supplier notifies Sprint of any third party request to undertake a
material development effort and Sprint cannot, within 5 business days of
Supplier's notice, identify a development need that would interfere with the
third party's request, then Sprint may not subsequently require development
priority that would interfere with Supplier's contractual obligation to perform
development for such third party. Supplier's notice is required to disclose only
the existence of the request for the development effort, the associated time
schedule, estimated man hours for the development effort, and a statement
notifying Sprint of the consequences for failing to respond within 5 business
days. In no event will Supplier allow a development effort for a third party to
interfere with a development effort for Sprint that was scheduled prior to the
third party's request for development.

         8.3      EXCLUSIVITY.

         Sprint will have exclusive use of the features ("Feature(s)") set
forth on Schedule 8.3 for a period of 3 months following Sprint's initial
acceptance of the Equipment incorporating such Features in accordance with
Section 7.0. In addition, during each calendar year Sprint may designate up
to 2 Features to be developed during such calendar year as exclusive to
Sprint. Sprint will have exclusive use of such Features for a period of 3
months following Sprint's initial acceptance of such features.  Supplier will
not grant to any other Person the exclusive right to use any feature.

9.0      OWNERSHIP OF INTELLECTUAL PROPERTY

         9.1      WORK PRODUCT.

         Supplier hereby assigns and agrees to assign to Sprint all right,
title, and interest, including without limitation, copyrights, patents, trade
secrets and proprietary rights, in and to those writings, documents, software,
techniques, know-how, patentable ideas, and other materials made by Supplier and
its representatives under this Agreement in connection with the development of
Future Enhanced Equipment that is paid for by Sprint pursuant to Section 38.2
("Work Product"), and such Work Product will be deemed "Work Made for Hire" to
the extent allowed under U.S. Copyright Laws. Supplier will take such further
actions as Sprint reasonably deems appropriate to give full and proper effect to
this assignment at Sprint's expense, including providing reasonable assistance
to secure intellectual property protection, including, but not limited to,
assistance in the preparation and filing of any patent applications, copyright
registrations, and the execution of all applications, assignments or other
instruments for perfection or protection of title in the Work Product. Supplier
represents that it has agreements in place with its employees and
representatives sufficient to convey to Sprint the rights described in this
Section.

         9.2      LICENSE.

         Sprint hereby grants and agrees to grant to Supplier a non-exclusive,
perpetual, worldwide, fully paid up, royalty-free license to make, use, sell,
offer to sell, import, duplicate, create derivative works based upon and
distribute the Work Product solely for the purpose of providing Equipment to
Sprint.

10.0 SCOPE CHANGE

         At any time during the modification of the Equipment or development of
any enhancement, if either party identifies

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the need for a change in the Milestone Schedule or Specifications ("Scope
Change"), the parties will follow the procedures set forth in this Section 10.0.
If a request for a Scope Change is received from Sprint, Supplier will provide a
Scope Change form to Sprint in the form attached as Schedule 11.0. A request for
a Scope Change by Supplier will be submitted to Sprint as a Scope Change form at
the time of such request. Sprint and Supplier will discuss all proposed Scope
Changes; however, the obligations of the parties will not be changed until a
Scope Change form has been executed by both parties. Neither Supplier nor Sprint
will unreasonably withhold its consent to any Scope Change.

11.0     SYSTEM INTEROPERABILITY; SYSTEM ACCEPTANCE

                  11.1     SYSTEM ACCEPTANCE.

         Sprint will conduct a test of each System to confirm that such System
is operating in accordance with the Specifications. Supplier will assist Sprint,
in accordance with Sections 1.39 and 1.21 respectively, in the development and
implementation of the Substantial Completion and Final Acceptance criteria for
each System. Substantial Completion and Final Acceptance will not be withheld if
it is determined that the sole reason Substantial Completion or Final Acceptance
has not occurred is because (i) third party equipment fails to meet its
specifications, (ii) third party equipment fails to intemperate with third party
equipment, or (iii) third party equipment fails to interoperate with Equipment
because the third party equipment failed to comply with the interface protocols
established by Supplier and provided to the third party. In the event
Substantial Completion or Final Acceptance would not occur but for the preceding
sentence, then prior to declaring Substantial Completion or Final Acceptance,
Sprint will have the opportunity to promptly replace the defective equipment and
reinitiate the applicable test, which replacement and testing procedure may not
take more than 15 business days.

         11.2     SUPPLIER ASSISTANCE.

         Supplier will work with Sprint and its third party suppliers and use
its best efforts to ensure that (i) the Equipment operates and interoperates
with the equipment provided by third parties and the System as a whole and (ii)
the System operates in a manner that it will achieve Substantial Completion and
Final Acceptance.

12.0     TEST-BED LABORATORY

         Supplier will supply the Equipment and Services necessary for the
establishment of one System in a test-bed laboratory at a location to be
designated by Sprint (the "Test-Bed Laboratory"). Such Equipment will be subject
to the applicable warranty terms of this Agreement. Supplier will provide all
upgrades and enhancements applicable to the Equipment located in the Test-Bed
Laboratory. Sprint will not use the Equipment located in the Test-Bed Laboratory
for any purpose other than testing without the prior written consent of
Supplier, which consent Supplier will not unreasonably withhold or delay.

13.0     SPARING

         Supplier will provide and Sprint will pay for spare parts at each Base
Station System location. Any spare parts used will promptly be replaced by
Supplier. Supplier will invoice Sprint for all spare parts provided to Sprint;
however, Supplier will provide replacement spare parts for any spare parts
returned by Sprint during the Warranty Period at no cost, and will provide a
credit memorandum accompanying such replacement spare parts.

14.0     OPERATING AND MAINTENANCE MANUALS.

         14.1     CPE EQUIPMENT MANUALS.

         Supplier will provide Sprint one operating manual with each unit of CPE
Equipment shipped to Sprint. Supplier will provide Sprint with CPE Equipment
installation manuals as reasonably requested by Sprint from time to time. The
operating manuals will describe in sufficient detail the procedures for
operating the CPE Equipment. The installation manuals will describe in
sufficient detail the procedures for installing the CPE Equipment. Supplier will
provide Sprint with one copy of each of the operating and installation manuals
in CD-ROM format. Sprint has the right and license to print, copy and distribute
the manuals or portions of the manuals.

         14.2     BASE STATION EQUIPMENT MANUALS.

         Supplier must provide Sprint one operating manual, one maintenance
manual and one installation manual for each Base Station upon shipment of the
Equipment comprising the Base Station, except that Supplier has until June 30,
2000 to deliver maintenance manuals for any Base Station shipped prior to June
30, 2000, The operating, maintenance and installation manuals will be prepared
in accordance with the relevant Specifications and in sufficient detail to
accurately represent the

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Equipment and all of its material components and will set forth procedures for
operating, maintenance and installing the Base Station Equipment. From time to
time, but in any event at least once a year, Supplier will provide Sprint
reasonable updates to such manuals. Supplier will provide Sprint with one copy
of each of the operating, maintenance and installation manuals in CD-ROM format.
Sprint has the right and license to print, copy and distribute the manuals or
portions of the manuals. The Base Station Equipment manuals are Supplier's
Proprietary Information.

         14.3     STANDARDS FOR MANUALS.

         All manuals must be:

         (A) detailed, comprehensive and prepared in conformance with generally
accepted standards of professional care, skill, diligence and competence
applicable to communications and operation practices for facilities similar to
the System;

         (B) consistent with good quality industry operating practices for
operating personal communications service systems of similar size, type and
design; and

         (C) sufficient to enable Sprint to operate and maintain the Equipment
and end users to operate the Equipment that is located on their premises.

15.0     THIRD PARTY SUPPLIERS

         15.1     ALTERNATIVE COMPONENTS.

         Upon Sprint's request, Supplier will promptly identify the manufacturer
of each Equipment component manufactured by a third party. In the event Sprint
requests Supplier to consider using an alternative third party supplier's
component ("Alternative Component"), Supplier will promptly prepare a written
analysis of the differences between the components (including cost and
performance). Following such analysis, Supplier will, at Sprint's request, use
the Alternative Component in the Equipment. To the extent use of an Alternative
Component would cause an increase or decrease in Supplier's cost to provide such
Equipment to Sprint, the price of the Equipment to Sprint will be increased or
decreased by a corresponding amount.

         Supplier will provide Sprint with 100 hours of engineering time per
calendar year for the purpose of analyzing Sprint's change requests or for such
other purposes as Sprint may reasonably require. Sprint will bear the cost of
analysis in excess of the engineering time allotted to Sprint. Supplier will
provide Sprint with an estimate of such costs before preparing the analysis,
together with a report indicating the number of engineering hours available to
Sprint at no charge.

         15.2     THIRD PARTY CONSENTS.

         Supplier warrants that Schedule 15.2.1 contains a complete list of each
Person that is Supplier's sole source of a service or component necessary or
convenient for the manufacturing of Existing Equipment. Supplier will use
commercially reasonable efforts to obtain within 90 days of the Effective Date
the written agreement of each supplier on Schedule 15.2.1, stating that in the
event of an Escrow Termination Event, such supplier will provide to Sprint the
services or equipment it presently provides to Supplier on substantially the
same terms as provided to Supplier on the Effective Date. Each consent will be
substantially in the form as that set forth as Schedule 15.2.2. Supplier will
obtain the foregoing consent from any other supplier that first provides such
services or equipment as a sole source after the Effective Date.

16.0     SPRINT TRADEMARK, LICENSE AND BRANDING

         16.1     LICENSE GRANT.

         Sprint grants to Supplier a non-exclusive, non-transferable, revocable,
worldwide license, without the right to sublicense, to use the Sprint Marks
solely as designated by Sprint in writing and only as set forth in the Sprint
trademark usage guidelines as provided by Sprint from time to time. Supplier
will not use Sprint Marks without the prior written consent of Sprint.

         16.2 NOTICES.

         Supplier agrees to include on all materials bearing any of the Sprint
Marks any notice required by Sprint related to Sprint Marks.

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                  16.3     USES.

                  All uses of the Sprint Marks by Supplier inure to the benefit
         of Sprint. Supplier acquires no rights, title, or interest in the
         Sprint Marks or the goodwill associated with them, other than the right
         to use the Sprint Marks in accordance with this Agreement. In accepting
         this Agreement, Supplier acknowledges Sprint's ownership of the Sprint
         Marks, their validity, and the goodwill connected with them. Supplier
         will not attack the Sprint Marks, nor assist anyone in attacking them.
         Supplier further agrees not to make any application to register the
         Sprint Marks, or to knowingly and willfully use any confusing similar
         trademark, service mark, trade name, or derivation, during the term or
         thereafter.

         16.4     SUPPLIER ASSISTANCE.

                  At Sprint's request, Supplier will execute any papers or
         documents reasonably necessary to protect the rights of Sprint in the
         Sprint Marks and execute and deliver such other documents as may be
         reasonably requested by Sprint.

         16.5     UNAUTHORIZED USES.

                  Supplier will promptly notify Sprint of any unauthorized use
         of the Sprint Marks that comes to Supplier's management attention.
         Sprint in its sole discretion may take such action as may be required
         to prosecute the infringement. In the event that Sprint decides that
         action should be taken against such third parties, Sprint may take such
         action either in its own name or, alternatively, Sprint may authorize
         Supplier to initiate such action in Supplier's name. In either event,
         Supplier agrees to cooperate fully with Sprint to whatever extent
         necessary to prosecute such action, all expenses being borne by Sprint
         and all damages that may be recovered being solely for the account of
         Sprint.

17.0     TERM AND TERMINATION

         17.1     TERM.

         This Agreement is effective as of the Effective Date and will continue
thereafter for a period of 5 years, unless earlier terminated as provided in the
Agreement. Upon expiration of the initial term, this Agreement will
automatically be renewed for successive one-year periods, unless either party
gives the other notice 180 days prior to the expiration of the then current term
of its intent not to renew this Agreement. The terms of this Agreement will
continue to apply to any Order that is outstanding at the time of termination or
expiration of this Agreement. Unless the term of this Agreement will be
extended, Sprint may not provide Supplier with Orders during the final 90 days
of the term of this Agreement.

         17.2     TERMINATION.

                  17.2.1   MATERIAL BREACH

                  If Sprint believes Supplier is in material breach of this
         Agreement, then Sprint may provide a notice to Supplier identifying the
         action or inaction that is the basis of the claim of material breach
         and stating its intention to terminate this Agreement if the material
         breach is not cured. Supplier will act promptly and continuously to
         effect a cure as soon as reasonably possible after receiving the
         notice. Supplier will have 135 days from the date of Sprint's notice in
         which to cure the breach; provided that if the breach cannot by cured
         during the 135-day period, but Supplier has taken actions reasonably
         likely to effect a cure in the 30 days following the 135-day period,
         Supplier will have an additional 30 days in which to cure the breach.
         If the breach is not cured during the 135-day period, or if Supplier is
         entitled to an additional 30 days period, the breach is not cured
         following the expiration of such additional 30-day period, then Sprint
         may immediately deliver a termination notice to Supplier. This
         Agreement will be terminated on the date specified in the termination
         notice, which date will be at least 5 but not more than 30 days from
         the date the termination notice is given. Examples of a material breach
         include:

         (A)      Supplier's material failure to correct Defects in the
                  Equipment,

         (B)      Supplier's material failure to provide (i) material
                  enhancements required under the Agreement or (ii) the upgrades
                  or the other maintenance services required under the
                  Agreement.

         (C)      Supplier's repeated and material failure to satisfy
                  availability, quantity, shipping and pricing, as required
                  under the Agreement.

                  17.2.2   [RESERVED]

         17.3     TERMINATION BY SUPPLIER.

         If Supplier believes Sprint is in material breach of this Agreement,
then Supplier may provide a notice to Sprint

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identifying the action or inaction that is the basis of the claim of material
breach and stating its intention to terminate this Agreement if the material
breach is not cured. Sprint will have 135 days from the date of Supplier's
notice in which to cure the breach; provided that if the breach cannot by cured
during the 135-day period, but Sprint has taken actions reasonably likely to
effect a cure in the 30 days following the-135 day period, Sprint will have an
additional 30 days in which to cure the breach. If the breach is not cured
during the 135-day period, or if Sprint is entitled to an additional 30 days
period, the breach is not cured following the expiration of such additional
30-day period, then Supplier may immediately deliver to Sprint a termination
notice. This Agreement will be terminated on the date specified in the
termination notice, which date will be at least 5 but not more than 30 days from
the date the termination notice is given. Supplier may refuse to ship
Deliverables without penalty if Sprint fails to pay any amount owed Supplier
within 10 days of receipt of notice from Supplier that such payment is past due.

         17.4     CONSEQUENCES OF TERMINATION.

(A) If this Agreement is terminated by Sprint pursuant to Section 17.2 then (i)
Sprint will retain possession of and title to all Equipment delivered to Sprint,
in accordance with an Order, as of the termination date and (ii) Supplier will
not be entitled to invoice Sprint any further amounts for such Equipment
(including amounts associated with the subsequent achievement of milestones for
any System that has not achieved Final Acceptance as of the termination date)
other than amounts earned under this Agreement prior to the termination date.

(B) If this Agreement is terminated by Supplier pursuant to Section 17.3 then
(i) Sprint will retain possession of and title to all Equipment delivered to
Sprint, in accordance with an Order, as of the termination date and (ii)
Supplier will be entitled to immediately invoice Sprint for the full purchase
price of such Equipment, regardless of whether or not the payment milestones
associated with achieving Substantial Completion or Final Acceptance have
occurred prior to the termination date.

(C) Upon expiration of the term of this Agreement, for a period of 1 year
thereafter ("Transition Period") Supplier will continue to provide Services and
Equipment of the type previously provided to Sprint in connection with Systems
for which Supplier has previously provided Equipment and Services, but for which
Final Acceptance has not occurred. Supplier will be entitled to invoice Sprint
in accordance with the terms of the Agreement for the delivery of Equipment and
Services and achievement of Substantial Completion or Final Acceptance of any
System during the Transition Period. After the Transition Period, Sprint will
retain possession of and title to all Equipment delivered to Sprint and Supplier
will not be entitled to receive any further amounts for such Equipment
(including amounts associated with the subsequent achievement of milestones for
any System that has not achieved Final Acceptance prior to the expiration of the
Transition Period).

18.0     AFFILIATE TRANSACTIONS

         18.1     AFFILIATE ORDERS.

         Sprint has the right, but not the obligation, to require Supplier to
fulfill (and Supplier will so fulfill) Orders for Equipment and Services
received from any Affiliate designated by Sprint pursuant to, and in accordance
with, the same prices and the same terms and conditions as set forth in this
Agreement. Each such Order will be governed by, and such Affiliate will be bound
by, the terms and conditions of this Agreement as if such Affiliate were Sprint,
and Supplier will have the right and ability to enforce any rights hereunder
against any such Affiliate.

         18.2     AFFILIATES.

         On a quarterly basis commencing on the Effective Date, Sprint may, by
written notice to Supplier, designate any Person that is not an Initial
Affiliate as an "Additional Affiliate"; provided, that Supplier will have a 15
business-day period to consent or withhold consent to such designation (such
consent not to be unreasonably withheld) based upon (a) Supplier's reasonable
credit criteria, (b) whether or not such proposed Additional Affiliate has in
the past materially breached prior material agreements with Supplier or its
affiliates or(c) whether or not the proposed Additional Affiliate is, at the
time of such determination, a direct competitor of Supplier or its affiliates;
provided further, that (i) Sprint or any Initial Affiliate has at least a 10%
equity ownership in such Person, (ii) such Person is controlled by, or under the
common control with, Sprint or any Initial Affiliate or (iii) there exists
between Sprint or any Initial Affiliate and such Person an Additional Affiliate
Agreement. A Person that is an Additional Affiliate only because there is an
Additional Affiliate Agreement between such Person and Sprint is entitled to
order Equipment and Services under this Agreement only to the extent such Person
is using this Agreement for purposes related to the marketing of communication
services under any Sprint Mark.

         18.3     AFFILIATE RIGHTS.

         Only Sprint may designate a Person as an Affiliate in accordance with
the terms of this Section 18.0 and (except for

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Affiliates that have issued Orders pursuant to this Section 18.0) only Sprint
has the right and/or the ability to enforce any rights hereunder against
Supplier. in no event will Sprint have any liability whatsoever for or in
connection with any Affiliate Order.

19.0     ASSIGNMENT

         Sprint may transfer or assign this Agreement and any Order(s) hereunder
to any Affiliate, upon written notice to Supplier. Except as expressly set forth
in the preceding sentence, Sprint may not assign this Agreement, in whole or in
part, without the prior written consent of Supplier, and such written consent
will not be unreasonably withheld. Supplier may not assign this Agreement or any
of its rights nor delegate its obligations hereunder without the prior written
consent of Sprint, and such written consent will not be unreasonably withheld.
This Agreement will be binding upon the parties' successors and permitted
assigns. Notwithstanding anything herein to the contrary, this Agreement is
assignable by the Supplier, without Sprint's consent, in connection with any
merger, acquisition, consolidation, change of control, or sale of all or
substantially all of Supplier's assets. The assignor will be released of any
obligations that arise under this Agreement after the date this Agreement is
assigned.

20.0     TECHNOLOGY ESCROW AND AVAILABILITY

         20.1     FUTURE ASSURANCES.

         Supplier hereby grants to Sprint the perpetual, non-exclusive,
non-assignable, right and license to use, modify and enhance the Escrow
Technology and the Non-Escrow Technology under the restrictions set forth in
this Section 20.0, in connection with the development, enhancement, maintenance,
manufacturing, use, sale and lease of Equipment for the provision of wireless
broadband services to Sprint's and its Affiliates' customers, other than
broadband access providers owning wireless frequencies. Supplier agrees that the
rights and licenses granted to Sprint herein are licenses to rights to
intellectual property within the meaning and for purposes of Title 11, Section
365(n) of the United States code, or any replacement provision thereof. Sprint's
non-exclusive license to the Escrow Technology and the Non-Escrow Technology is
personal. Sprint may sublicense the Technology only as necessary to enable
suppliers to develop, enhance, maintain and manufacture Equipment for the
provision of wireless broadband services to Sprint's and its Affiliates'
customers (other than broadband access providers owning wireless facilities).
Sprint will not exercise its license rights except in the event it obtains
access to the Escrow Technology and Non-Escrow Technology through the procedures
outlined in this Section 20.0.

         20.2     DEPOSIT OF ESCROW TECHNOLOGY.

         Supplier will, at Supplier's sole expense, deposit the Escrow
Technology that is utilized in each piece of Equipment sold or licensed,
respectively, to Sprint under this Agreement with a mutually acceptable
independent escrow agent pursuant to a written escrow agreement signed by Sprint
and Supplier and consistent with the terms of this Agreement. Additionally,
Supplier will automatically deposit any updates, upgrades, or other revisions of
the Escrow Technology with such escrow agent pursuant to the escrow agreement
between the parties. Supplier will provide updated information to the escrow
agent no later than 30 days after Supplier first sells the Equipment that
incorporates the updated information. The escrow agent will give Sprint written
notice of any deposit by Supplier. Sprint will be entitled to inspect the
deposit or have a third party inspect the deposit on Sprint's behalf. The source
code delivered to the escrow agent will be in a form suitable for reproduction
by Sprint.

         20.3     RELEASE OF ESCROW TECHNOLOGY.

     The escrow agreement described in this Section 20.0 will provide that upon
the happening of any of the events listed in Sections 3.3(b), or 17.2.1 (a), (b)
or (c) giving rise to Sprint's right to terminate this Agreement, and upon the
effective date of the termination of this Agreement (an "Escrow Termination
Event"), Sprint will give written notice to the escrow agent and Supplier,
specifying the event, and the escrow agent will thereupon deliver to Sprint all
deposited escrowed materials within 10 days not having received an objection
from the Supplier. Any such notice must prominently reference this Agreement and
be entitled: "IMPORTANT COMMUNICATION RE: ESCROW TERMINATION EVENT." Any dispute
regarding the Escrow Termination Event shall be resolved by arbitration in
accordance with Schedule 20.3. In the event that arbitration results in finding
that an Escrow Termination Event has occurred, Supplier will withdraw its
objection to the release of the Escrow Technology.

         20.4     NON-ESCROW TECHNOLOGY

         Supplier shall grant Sprint access to the Non-Escrow Technology if an
arbitrator finds that an Escrow Termination Event has occurred, but such access
to the Non-Escrow Technology ("Non-Escrow Technology Access") shall not
interfere with Supplier's use of the Non-Escrow Technology necessary to support
contractual relationships.

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         20.5     MAINTENANCE RELEASE OF TECHNOLOGY

         Notwithstanding Sections 20.3 and 20.4, the escrow agent will
immediately release the Escrow Technology to Sprint and Supplier will
immediately provide Non-Escrow Technology Access to Sprint upon receipt of
notice from Sprint specifying the termination of this Agreement arising out of
an Escrow Termination Event set forth in Sections 17.2.1 (a) or (b)(ii) and in
spite of any objection from Supplier. If the arbitrator subsequently determines
that Sprint was not entitled to the Escrow Technology and Non-Escrow Technology
Access, then Sprint will promptly (i) return such materials to Supplier, (ii)
certify to Supplier the destruction of any copies, (iii) pay Supplier's out of
pocket costs incurred in connection with the removal and replacement of the
Escrow Technology, and (iv) reimburse Supplier for any maintenance fee revenue
avoided by Sprint as a result of the release, subject to Sprint's right to
damages for any Supplier breach of its obligations under this Agreement. Sprint
agrees that, in the event it obtains access to the Technology pursuant to this
Section 20.5, Sprint will use the Technology solely for the purpose of
maintaining the Equipment.

         20.6     INSOLVENCY RELEASE OF TECHNOLOGY

         Immediately upon the occurrence of a Supplier Insolvency, Supplier
shall promptly give notice to Sprint that the Supplier Insolvency exists. Any
such notice must prominently reference this Agreement and be entitled:
"IMPORTANT COMMUNICATION RE: SUPPLIER INSOLVENCY." If, upon or following such
notice, and while the Supplier Insolvency persists, (i) Supplier commits an act
constituting breach under Section 17.2.1 (a), (b) or (c), and (ii) Sprint gives
notice to Supplier and the escrow agent that such a breach occurred during a
Supplier Insolvency, then, and in spite of any objection from Supplier, (A) the
escrow agent will immediately release the Escrow Technology to Sprint and
Supplier will immediately provide Non-Escrow Technology access to Sprint (the
"Insolvency Release") and (B) Sprint may then exercise its rights under the
license of Section 20.1, but such exercise may continue only for so long as the
Supplier Insolvency persists. However, if the Supplier Insolvency persists for
more than 90 days following the Insolvency Release, then Sprint's right to use
the Escrow Technology and Non-Escrow Technology under the license of Section
20.1 shall become perpetual.

         Any dispute regarding the occurrence of the Supplier Insolvency, an
Insolvency Release and/or Splint's right to gain access to the Technology
pursuant to this Section 20.6 shall be resolved by arbitration in accordance
with Schedule 20.3.

         20.7     BANKRUPTCY OF SUPPLIER

         If Supplier or its successors or representatives, including any
bankruptcy trustee, rejects or terminates this Agreement under Title 11, Section
365 of the United States Code, or any replacement provision therefor, Sprint
shall have the right to retain all or any portion of its rights under this
Agreement and any agreement supplementary hereto including, but not limited to,
the escrow agreement. Sprint's rights include, but are not limited to, all
rights to continue to use and have access to the Escrow Technology and the
Non-Escrow Technology including, upon written request by Sprint, the right to
obtain the Escrow Technology from Supplier (or its trustee in bankruptcy) and
have Supplier (or its trustee in bankruptcy) provide Non-Escrow Technology
Access from Supplier, and the right to obtain the Escrow Technology from the
escrow agent immediately upon such rejection or termination.

         If Supplier or its successors files a, or becomes the subject of an
involuntary, petition in bankruptcy, then unless and until Supplier (or its
trustee in bankruptcy, if one has been appointed) rejects this Agreement,
Supplier (or its trustee in bankruptcy) shall (i) perform all obligations of
Supplier under this Agreement and the escrow agreement and (ii) not interfere
with the proper release of the Escrow Technology by the escrow agent to Sprint
in accordance with the terms of the Agreement.

         20.8     NO WARRANTY

         THE ESCROW TECHNOLOGY AND NON-ESCROW TECHNOLOGY, IF AND WHEN PROVIDED
TO SPRINT, ARE PROVIDED TO SPRINT "AS IS." OTHER THAN A WARRANTY OF
COMPLETENESS, SUPPLIER MAKES NO OTHER WARRANTIES ON THE ESCROW TECHNOLOGY AND
NON-ESCROW TECHNOLOGY.

         21.0     PRICE AND PRICE WARRANTY

         21.1     PRICING.

         Pricing will be in accordance with the pricing disclosure letter from
Supplier to Sprint dated May 1, 2000 (the "Pricing Letter"). Any customs duties,
freight, sales, use, excise or similar taxes with respect to the Deliverables
will be detailed as a separate line item on each applicable invoice. The prices
in the Pricing Letter do not include applicable customs duties, taxes, shipping,
and special packaging and labeling.

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         21.2     MOST FAVORED CUSTOMER STATUS.

     Sprint will be Supplier's most favored customer. Accordingly, Supplier's
pricing to Sprint will be equal to or better than that charged to each other
customer of Supplier for the same or comparable Equipment or Services after all
reductions, rebates, volume discounts or adjustments are applied.

         (A) In the event that the Net Price charged to any of Supplier's other
customers for any Deliverables is lower than the Net Price previously charged to
Sprint for such Deliverables, Sprint is entitled to receive the benefit of such
lower Net Price with respect to any Deliverables invoiced to Sprint from the
date of which such lower Net Price was invoiced to such Supplier's other
customers. In addition, such lower Net Price will be applied to all subsequent
Orders of such Deliverables by Sprint during the remainder of the term of this
Agreement, subject to future reductions under this Agreement.

         (B) All invoices to Sprint for Deliverables to which a lower Net Price
is applicable under this Section 21.0, will be reissued by Supplier within 30
days after it is determined that Sprint is entitled to receive the benefit of a
lower Net Price. The reissued invoice must indicate the difference between the
Net Price originally invoiced to Sprint and the reduced Net Price, together with
all applicable sales or other tax reductions attributable to the price
reduction. The reduction in Net Price made in accordance with this Section 21.0
will be reflected on all future invoices issued by Supplier to Sprint (subject
to future reductions under this Section 21.0).

         (C) On an annual basis throughout the term of this Agreement commencing
on January 1, 2001, Supplier will be required to audit its pricing of all
Deliverables provided to all of its customers in the preceding calendar year and
deliver to Sprint a certification (the "MFC Certificate") signed by an
authorized officer of Supplier, certifying that this Section 21.0 has been
adhered to and identifying what, if any, Net Prices charged to Sprint have been
decreased as a result of compliance with this Section 21.0. The MFC Certificate
will be provided to Sprint within 60 days after the close of each calendar year.
Sprint has the right to have Supplier's compliance with this Section 21.0
verified annually. Such verification shall be performed by an independent,
reputable and nationwide public accounting firm chosen by Sprint and reasonably
acceptable to Supplier. Since the conduct of the audit may expose the accounting
firm to Supplier's Proprietary Information, such accounting firm, prior to
conducting the audit, will enter into a non-disclosure agreement reasonable
acceptable to Supplier. In addition to any other terms reasonably required by
Supplier, such non-disclosure agreement shall provide that the accounting firm
will provide to Sprint only the minimum amount of information necessary for
Sprint to verify Supplier's compliance with this Section 21.0.

22.0     SOFTWARE LICENSE

         Upon payment of the applicable license fee, Supplier hereby grants to
Sprint a perpetual, fully paid up, worldwide, non-exclusive right to install and
have others install, sell, and use the Software on the following terms:

         (a)      The Software is licensed in object code format only;

         (b)      The license to the Software may be transferred only in
                  connection with a transfer of the Equipment on which the
                  Software is contained or operating;

         (c)      Sprint and its transferees will not decompile or reverse
                  engineer the Software and Sprint will obtain agreements
                  binding the transferees of such Software to the terms of this
                  Section 22.0.

23.0     INVOICING AND PAYMENT

         23.1     INVOICE REQUIREMENTS.

         Invoices must be sent to the following address and include:

         Sprint
         Supplier Disbursements
         6860 West 115th Street
         Overland Park, KS 66211
         MailStop: KSOPKD0101

         (a)          the Agreement number and Order number; and

         (b)          the date shipment was made and the shipping point;

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         The line item on the Order must match the line item on the invoice,
including the price and description. Sprint may specify additional reasonable
invoicing instructions on the Order.

         23.2     INVOICE.

         (A)      All payments required under this Agreement are due 30 days
                  from the date of shipment of the invoice.

         (B)      Prior to Final Acceptance of a System, Supplier will invoice
                  Sprint for Base Station Equipment incorporated into such
                  System as follows:

                  (i)      40% of the purchase price upon the date the Equipment
                           is shipped,

                  (ii)     45% of the purchase price upon Substantial Completion
                           of the System. Sprint shall cause the Equipment,
                           together with all third-party equipment to be
                           installed and configured and shall perform
                           Substantial Completion testing (including retesting)
                           of the System within 60 days after the date Equipment
                           is shipped to Sprint in accordance with the
                           applicable Order, and

                  (iii)    15% of the purchase price upon Final Acceptance of
                           the System.

         (C) Following Final Acceptance of a System, Supplier may invoice Sprint
for 100% of the purchase price of additional Base Station Equipment incorporated
into such System upon the date the Base Station Equipment is shipped.

         (D) Supplier may invoice Sprint for 100% of the purchase price of CPE
Equipment upon the date the CPE Equipment is shipped.

         (E) Supplier may invoice Sprint for System Support Services on the
first day of the month in which the System Support Services will be provided.
Supplier's invoices for System Support Services will be for all System Support
Services that will be provided during the following three months.

         (F) Supplier may invoice Sprint for Installation Services upon
completion of the Installation Services.

         (G) Supplier may invoice Sprint for Consulting Services, including
training, performed during the month preceding the month in which the invoice is
shipped.

         24.0     SHIPMENT, TITLE & RISK OF LOSS

         24.1     SHIPMENT.

         Shipment of the Deliverables will be F.O.B. origin. Title and risk of
loss will pass to Sprint upon delivery to Sprint's designated carrier.

         24.2     EARLY SHIPMENT.

         Supplier may not ship Deliverables prior to the shipment date specified
in an Order without Splint's consent. Sprint may place any Deliverables shipped
early in storage at Supplier's expense until the specified shipment date.

         24.3     FACTORY TESTING.

         Prior to the shipment of any Order, Supplier will test the Equipment
contained in such Order for conformance to the Specifications. Supplier will not
ship any Equipment that does not conform to the Specifications. Sprint may
attend Supplier's factory tests.

25.0     INSPECTION AND REJECTION

         25.1     INSPECTION OF DELIVERABLES.

Deliverables may be inspected and tested by Sprint prior to shipment by
Supplier. At Sprint's request and expense, and subject to Supplier's reasonable
resource limitations, Supplier may provide reasonable assistance for inspections
and tests.

         25.2     DEFECTIVE DELIVERABLES.

         If any Deliverables are found to be defective upon inspection or not in
conformity to the Order, Sprint may:

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                                       17
<PAGE>

         (a)      cancel the Order as to those Deliverables and accept a
                  corresponding reduction in the Commitment;

         (b)      accept the Deliverables, at an equitable reduction in price;

         (c)      reject the Deliverables and return to Supplier at Supplier's
                  expense and require shipment of replacements which meets the
                  specifications set forth in this Agreement.

         25.3     RIGHT TO INSPECT AND TEST.

         Splint's right to inspect and test does not relieve Supplier from its
testing, inspection and quality control obligations.

26.0     WARRANTIES

         26.1     EQUIPMENT WARRANTY.

         Supplier warrants that the Equipment will be new and throughout the
Warranty Period:

         (a)      will conform to the Specifications;

         (b)      will be free from defects in materials and workmanship;

         (c)      will be free from liens and encumbrances.

         26.2     EQUIPMENT WARRANTY TERM.

         Supplier will promptly repair or replace the non-conforming Equipment,
at Supplier's discretion and expense. Sprint will return any such non-conforming
Equipment to Supplier in accordance with the procedures set forth on Schedule
26.2. Equipment corrected or replaced is warranted under this Section for the
remaining portion of the original Warranty Period.

         26.3     PATTERN DEFECTS.

         (A) In the event that more than 12% of any lot, batch or other
separately distinguishable manufacturing run of Base Station Equipment (or 10%
of any lot, batch or other separately distinguishable manufacturing run of
receiver cards forming a part of Base Station Equipment) or 6% of any lot, batch
or other separately distinguishable manufacturing run of CPE Equipment (each a
"Batch") shipped to Sprint is found to be defective with the same or similar
Defects occurring during the first 5 years after shipment of any part of such
Batch (whether or not occurring all at the same time) (a "Pattern Defect"),
Sprint may notify Supplier of the Pattern Defect. Upon receipt of such
notification, Supplier will have 30 days in which to determine the cause of such
Pattern Defect and 90 days to remedy such Pattern Defect (the "Pattern Defect
Cure Period"). Pursuant to such remediation, Supplier will promptly repair or
replace any and all Equipment that was part of the Batch subject to the Pattern
Defect, whether in Sprint's or any Affiliate's inventory or in Sprint's or any
Affiliate's distribution channels, including Equipment held by end-users.
Supplier will reimburse Sprint for any removal and reinstallation costs
associated with the repair or replacement of the Batch. For purposes of this
Section 26.3, a Defect will be considered the same or similar to another Defect
if (i) both Defects involve the failure of the Equipment to achieve the same or
similar Equipment specification (ii) both Defects arise out of the manner in
which the Equipment is assembled or (iii) both Defects arise out of the manner
in which the Equipment is designed.

         (B) In the event that a Pattern Defect is not remedied within the
Pattern Defect Cure Period, Sprint will have the right to terminate this
Agreement and/or any then outstanding Order(s) and/or to resell to Supplier for
cash payment (at Sprint's original cost) any and all Equipment in Sprint's and
any Affiliate's inventory or distribution channel(s) and that are subject to any
such Pattern Defect(s), provided that if Supplier is diligently pursuing a cure,
Sprint will allow Supplier an additional 30 days to remedy such Pattern Defect
prior to taking such actions. In the event that such Pattern Defect is not
remedied, Supplier agrees to remove, at its cost, and repurchase (at Splint's
and any Affiliate's original cost therefor) from Sprint any Equipment
repurchased or otherwise recalled by Sprint due to Supplier's failure to remedy
any such Pattern Defect. Sprint will not recall any Equipment without reasonable
prior written notification to (but not the consent of) Supplier.

         (C) Notwithstanding anything contained in this Agreement to the
contrary, in the event that, with respect to any Equipment, a recall or similar
demand, request or suggestions is issued by the Consumer Product Safety
Commission or other Governmental Authority, Supplier will immediately remove,
repurchase and recall (at its own cost and expense) any such Equipment whether
then held by Sprint, any Affiliate, or end-user.

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         26.4     BACKWARDS COMPATIBILITY.

         Enhanced Equipment will be backwards compatible with Existing
Equipment. Future Enhanced Equipment will be backwards compatible with two prior
generations of Equipment. Backwards compatible means the previous version of the
Equipment will remain fully functional up to the performance levels to which it
was performing immediately prior to the introduction of an Equipment
enhancement.

         26.5     DISCLAIMER.

ALL OF THE WARRANTIES SET FORTH IN THIS SECTION 26.0 ARE IN LIEU OF, AND
SUPPLIER DISCLAIMS, ALL OTHER WARRANTIES OR REPRESENTATIONS, EXPRESS AND
IMPLIED, ORAL OR WRITTEN, INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OF NONINFRINGEMENT. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, SUPPLIER MAKES NO WARRANTY THAT THE
OPERATION OR PERFORMANCE OF ANY DELIVERABLE WILL BE UNINTERUPTED OR ERROR-FREE
OR WILL MEET SPRINT'S REQUIREMENTS.

27.0     LIABILITY AND INDEMNIFICATION

         27.1     THIRD PARTY CLAIMS.

         Each party agrees to defend, pay all third party judgments,
settlements, expenses, and costs (including reasonable attorney fees) and
indemnify, and hold the other party and its Indemnitees harmless from any suit,
claim or proceeding brought against the other party and its Indemnitees by any
third party (excluding affiliates of the indemnified party, but including any
personnel of Sprint or Supplier) for personal injury (including death), or
damage to property, to the extent the loss, destruction, injury or death is
caused by a negligent act or omission or willful misconduct by the indemnifying
party or its Indemnitees, subcontractors or agents. Any infringement of an
intellectual property right shall not be covered under this subsection, but is
covered in subsection 27.4.

         27.2     PRODUCT LIABILITY CLAIMS.

         Supplier will defend, pay all third party judgments, settlements,
expenses and costs (including reasonable attorney fees) and indemnify and hold
the Sprint Indemnitees harmless against any claim brought against the Sprint
Indemnitees for personal injury (including death) to the extent the claim is
based upon an allegation that any Deliverable is defective or dangerous or any
warning associated with such Deliverable is lacking or inadequate.

         27.3     TAXES AND BENEFITS.

         Supplier will indemnify, hold harmless and defend the Sprint
Indemnitees from all claims by any employees, subcontractors, or agents utilized
by Supplier for the performance of this Agreement, or any government or
governmental agency, relating to payment of employment taxes and employee
benefits, including without limitation, any penalties and interest which may be
assessed against the Sprint Indemnitees with respect to such taxes and benefits.
Supplier will similarly indemnify and defend the Sprint Indemnitees from all
claims by any person or governmental agency which arise directly or indirectly
from any failure by Supplier to comply with applicable workers' compensation
coverage on Supplier's employees, subcontractors and agents.

         27.4     INFRINGEMENT.

         (A) Supplier Indemnity. Supplier agrees to defend, indemnify the Sprint
Indemnitees for any damages incurred by the Sprint Indemnitees and hold the
Sprint Indemnitees harmless from all third party claims brought against the
Sprint Indemnitees based on any third party claim that the Deliverables as
shipped by Supplier to Sprint pursuant to this Agreement, or any use or sale or
offer to sell or importation of the Deliverables in a manner intended by
Supplier or permitted sale by the Sprint Indemnitees of such Deliverables,
constitutes an infringement of a U.S. patent, a copyright infringement, or
misappropriates a trade secret.

         Supplier will have no liability, however, for any claim of infringement
to the extent caused by: (i) modification of any Deliverable other than
modifications made by or with the approval of Supplier; (ii) the use or sale or
offer to sell or importation of a Deliverable in connection with another product
(including software) or service (the combination of which causes the
infringement) not provided by Supplier unless the use was intended by Supplier;
or (iii) Supplier's compliance with Sprint's specific instructions.

         If, as a result of a claim of infringement for which Supplier has an
indemnity obligation, the sale or use of Deliverables is enjoined, or the Sprint
Indemnitees must cease use based on a claim of infringement, Supplier will, at

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<PAGE>

Supplier's option and expense, either (i) procure for the Sprint Indemnitees the
right to use the applicable Deliverables, (ii) modify the Deliverables so they
become non-infringing within a time frame reasonably acceptable to Sprint, or
(iii) replace the Deliverables with substantially equivalent non-infringing
Deliverables. In the event Supplier, using commercially reasonable efforts, is
unable to do either (i), (ii) or (iii), the Sprint Indemnitees will cease using
the Deliverables and return the same to Supplier. Supplier will then refund to
the Sprint Indemnitees the amount paid by Sprint for such infringing
Deliverables.

         (B) Sprint Indemnity. Sprint agrees to indemnify and hold the Supplier
Indemnitees harmless from all third party claims brought against the Supplier
Indemnitees or its permitted assigns based upon any claim that any Deliverable
or Supplier's manufacture, use, sale or offer for sale thereof infringes any
U.S. patent, constitutes a copyright infringement, or misappropriates a trade
secret, if such infringement or alleged infringement would not have occurred or
be alleged to have occurred but for Supplier's compliance with Sprint's
specifications or instructions.

         (C) SOLE REMEDY. THE PROVISIONS OF THIS SECTION 27.4 SET FORTH EACH
PARTY'S SOLE AND EXCLUSIVE OBLIGATIONS, AND THE OTHER PARTY'S SOLE AND EXCLUSIVE
REMEDIES, WITH RESPECT TO INFRINGEMENT OR MISAPPROPRIATION OF INTELLECTUAL
PROPERTY RIGHTS OF ANY KIND.

         27.5     INDEMNIFICATION PROCEDURES.

         (A) Notice of Claims. Promptly upon becoming aware of any matter which
is subject to the provisions of Sections 27.1, 27.2, 27.3 or 27.4 (a "Claim"),
the party seeking indemnification (the "Indemnified Party") must give written
notice of such Claim to the other party (the "Indemnifying Party"), accompanied
by copies of any written documentation regarding the Claim received by the
Indemnified Party.

         (B) Defense of Claims. The Indemnifying Party will retain the right at
its option, to compromise or defend at its own expense and with its own counsel,
any such Claim. The Indemnified Party will have the right, at its option, to
participate in the settlement or defense of any such Claim, with its own counsel
and at its own expense; but the Indemnifying Party will have the right to
control such settlement or defense; provided, however, that the Indemnifying
Party will not enter into any settlement that imposes any liability or
obligation on the Indemnified Party without the Indemnified Party's prior
written consent. The parties agree to cooperate in any such settlement or
defense and to give each other full access to all relevant information, subject
to the execution of appropriate and reasonable confidentiality agreements. In
the event that the Indemnifying Party fails to notify the Indemnified Party of
the Indemnifying Party's intent to take any action within 15 days after receipt
of notice of a Claim or fails to proceed thereafter in good faith with the
prompt resolution of the Claim, the Indemnified Party (without waiving any
rights to indemnification hereunder) may defend such Claim and may enter into
any good faith settlement without the prior written consent of the Indemnifying
Party, and the Indemnifying Party will reimburse the Indemnified Party on demand
for all reasonable costs and expenses incurred by the Indemnified Party in
defending and settling such Claim. The Indemnified Party will notify the
Indemnifying Party prior to taking any such action.

         (C) Conditions. Neither party will have an obligation to indemnify the
other if the Indemnified Party fails to notify the Indemnifying Party of a Claim
promptly and to provide reasonable cooperation, information, assistance, and
sole control for the handling and defense of the Claim, and such failure
materially prejudices the Indemnifying Party.

         28.0     LIMITATION ON LIABILITY

         28.1 EXCLUSION OF DAMAGES.

         IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT,
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES OR LOSSES, INCLUDING LOST PROFITS,
REVENUE, OR SAVINGS, OR LOSS OF USE ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR THE USE OR PERFORMANCE OR OPERATION OF ANY DELIVERABLE, WHETHER
SUCH LIABILITY ARISES FROM ANY CLAIM BASED ON CONTRACT, WARRANTY, TORT
(INCLUDING NEGLIGENCE), PRODUCT LIABILITY OR OTHERWISE, AND WHETHER OR NOT
SUPPLIER HAS BEEN ADVISED IN ADVANCE OF THE POSSIBILITY OF SUCH DAMAGES OR LOSS.

         28.2     TOTAL LIABILITY.

         IN NO EVENT WILL EITHER PARTY'S TOTAL LIABILITY TO THE OTHER UNDER THIS
AGREEMENT, REGARDLESS OF THE FORM OF CLAIM OR ACTION, EXCEED THE GREATER OF $10
MILLION OR 3 TIMES THE FEES PAID BY SPRINT TO SUPPLIER DURING THE 12-MONTH
PERIOD PRECEDING THE EVENT THAT GAVE RISE TO THE CLAIM.

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         28.3 EXCLUSION OF CLAIMS.

         THE PROVISIONS OF SECTION 28.2 DO NOT APPLY TO ANY CLAIMS FOR WHICH A
PARTY HAS AN OBLIGATION OF INDEMNITY UNDER SECTION 27.0 OF THIS AGREEMENT. THE
PROVISIONS OF THE SECTION 28.l DO NOT APPLY TO ANY CLAIMS FOR WHICH A PARTY HAS
AN OBLIGATION OF INDEMNITY UNDER SECTIONS 27.1, 27.2 OR 27.3 OF THIS AGREEMENT.

29.0     INSURANCE

         29.1     INSURANCE OBLIGATIONS.

         During the term of this Agreement, Supplier must obtain and maintain at
Supplier's expense, with financially reputable insurers licensed to conduct
business in all jurisdictions where work is performed and that are reasonably
acceptable to Sprint, not less than the following insurance:

              (a) Workers' Compensation as required under any Workers'
     Compensation or similar law in the jurisdiction where work is performed,
     with an Employer's Liability limit of not less than $500,000 per accident;

              (b) Commercial General Liability, including coverage for
     Contractual Liability and Products/Completed Operations Liability, with a
     primary limit of not less than $1,000,000 combined single limit per
     occurrence for bodily injury, personal injury and property damage
     liability, together with umbrella or excess coverage not less than
     $10,000,000 naming Sprint as an additional insured.

              (c) Business Auto insurance covering Supplier's maintenance or use
     of any owned, non-owned or hired automobile with a limit of not less than
     $1,000,000 combined single limit per accident for bodily injury, including
     death and property damage liability, naming Sprint as an additional
     insured;

              (d) "All Risk" Property insurance covering not less than the full
     replacement cost of Supplier's, if any, personal property while on Sprint
     premises. Supplier will ensure that subcontractors, if any, also have
     adequate "All Risk" property insurance.

         29.2     CERTIFICATE OF INSURANCE.

         Supplier must, as a material condition of this Agreement, prior to
commencement of any work and prior to any renewal of insurance, deliver to
Sprint a certificate of insurance, satisfactory in form and content to Sprint,
evidencing that the above insurance is in force and will not be canceled or
materially altered without first giving Sprint 30 days' prior written notice.

         29.3     NO INSURANCE LIMITATION.

         Nothing contained in this Section 29.0 limits Supplier's liability to
         Sprint to the limits of insurance certified or carried.

30.0     DISPUTE RESOLUTION

         30.1     NEGOTIATION.

         The parties may, but are not obligated to, attempt in good faith to
resolve any issue, dispute, or controversy arising out of or relating to this
Agreement, including but not limited to any Section of this Agreement that
requires mutual agreement of the parties, promptly by negotiation between the
parties' representatives who have authority to settle any issue, dispute, or
controversy. In the event the parties agree to comply with this Section 30.1,
any party may give the other party written notice of any dispute not resolved in
the normal course of business. Within 10 days after delivery of such notice,
representatives of both parties will meet at a mutually acceptable time and
place, according to the following schedule, to exchange relevant information and
to attempt to resolve the dispute:

         (A)               Within l0 days following notice, managers from Sprint
                           and Supplier will meet for a period not to exceed 2
                           business days, unless otherwise agreed.

         (B)               Within 20 days following notice, directors from
                           Sprint and Supplier will meet for a period not to
                           exceed 2 business days, unless otherwise agreed.

         (C)               Within 30 days following notice, Assistant Vice
                           Presidents or Vice Presidents from Sprint and
                           Supplier will meet for a period not to exceed 1
                           business day, unless otherwise agreed.

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         If a negotiator intends to be accompanied at a meeting by an attorney,
the other negotiator will be given at least 2 business days' notice of such
intention and may also be accompanied by an attorney. All negotiations pursuant
to this provision are confidential and will be treated as compromise and
settlement negotiations for purposes of the Federal Rules of Evidence and State
Rules of Evidence.

         30.2     WAIVER OF JURY.

         EACH PARTY AGREES TO WAIVE, AND HEREBY DOES WAIVE, ITS RIGHTS TO A JURY
WITH RESPECT TO ANY LITIGATION BETWEEN THE PARTIES ARISING OUT OF THIS
AGREEMENT.

         30.3     VENUE.

         Any court proceeding brought by Supplier must be brought, as
appropriate, in Kansas District Court located in Johnson County, Kansas, or in
the United States District Court for the District of Kansas in Kansas City,
Kansas. Any court proceeding brought by Sprint must be brought in a California
State Court located in Santa Clara County, CA or in the United States Federal
District Court in Santa Clara County, CA.

31.0     FEDERAL REQUIREMENTS

         31.1     FEDERAL ACQUISITION REQUIREMENTS.

         If Sprint or the federal government determines that this Agreement
supports specific requirements included in a Sprint contract or subcontract with
the federal government, Supplier will be subject to certain federal acquisitions
regulations ("FARs") contained in Sprint's contract or subcontract. Supplier
will be subject only to FARs that must be included in all subcontracts as a
matter of law. The applicable FAR will be attached to the affected Order.

         31.2     GOVERNMENT END USERS.

         If Sprint is acquiring the Equipment on behalf of any unit or agency of
the United States Government, the following provisions apply. The Hybridware
Software constitute a "commercial item", as that term is defined at Federal
Acquisition Regulation (FAR) 2.101 (Oct. 1995), consisting of "commercial
computer software" and "commercial computer software documentation", as such
terms are used in FAR 12.212 (Sept. 1995), and is provided to the U.S.
Government only as commercial software (with "Restricted Rights," if
applicable). Use, duplication, or disclosure by the U.S. Government is subject
to restrictions set forth in this license agreement and as provided in DFARS
227.7202-l(a) and 227.7202-3(a) (1995), DFARS 252.227-7013-C-(1)(iI) (OCT 1988),
FAR 12.212(a) (1995), FAR 52.227-19, or FAR 52.227-14 (ALT III), as applicable.

         31.3     SUBCONTRACTING OPPORTUNITIES.

         Should Sprint become subject to federal government reporting
requirements as a prime contractor or subcontractor, Supplier agrees to make an
accounting, upon request, of dollars that are subcontracted to firms that are
Small Businesses, Small Disadvantaged Businesses, or Women-Owned Businesses
under Small Business Administration regulations. These dollars will be reported
in writing to the following address:

         Sprint
         Attention: Director, Supplier Diversity
         903 E. 104th Street
         Kansas City, MO 64131

32.0     PRODUCT SAFETY NOTIFICATIONS

         Supplier will promptly notify Sprint by telephone (followed by written
confirmation within 24 hours) if the Equipment purchased or materials used fail
to comply with applicable safety rules or standards of the United States
Consumer Product Safety Commission or the Environmental Protection Agency or
contain a Defect that presents a substantial risk to the public health or injury
to the public or the environment, whether by itself or when used by Sprint for
its intended purpose.

33.0     INTELLECTUAL PROPERTY

         As soon as possible, but in no event later than June 30, 2001, Supplier
will complete an application programming interface and a reference design,
including without limitation, the schematic, bill of material, source code and
object code for the CPE operating system (collectively, the "Interface").
Supplier will license the Interface to third parties designated by Sprint to
allow such third parties to develop, make, have made, use, sell and import an
alternative to the CPE solely to interface with

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<PAGE>

Hybrid Base Station Equipment and no other third party base station equipment.
Supplier shall license the Interface to such third parties on commercially
reasonable terms acceptable to Supplier. The terms of such license shall be
consistent with the practice in the telecommunications services industry for the
license of comparable technology, equipment and the intellectual property
actually licensed by Supplier (such terms shall not be deemed to be commercially
reasonable if they prohibit such third party from developing, manufacturing and
selling an alternative to the CPE on market competitive terms and conditions).
Any dispute regarding the terms of such license shall be resolved by arbitration
in accordance with Schedule 20.3. The Interface shall include all
specifications, schematics, bill of material, source and object code or other
technical information and rights, necessary or useful to allow a third party to
manufacture an alternative to the CPE which interfaces with the Hybrid Base
Station Equipment consistent with the Specifications. Supplier is not required
to license third parties to make, use, or sell Base Station equipment of any
type. Supplier retains the right to refuse to license a third party against whom
it has given notice that such third party is infringing upon its intellectual
property rights, is actively in discussions or negotiations with such third
party concerning the infringement, or is otherwise actively enforcing its
intellectual property rights against such third party.

34.0     PROPRIETARY INFORMATION

         34.1     SPRINT PROPRIETARY INFORMATION.

         Supplier acknowledges that while performing this Agreement it may have
access to Sprint-owned trade secrets, including, but not limited to, products or
planned products, service or planned service, vendors, customers, prospective
customers, data, financial information, computer software, processes, methods,
knowledge, inventions, ideas, marketing promotions, discoveries, current or
planned activities, research, development or other information relating to
Sprint's business activities or operations or those of its customers or vendors
("Sprint Proprietary Information").

         34.2     SUPPLIER PROPRIETARY INFORMATION.

         Sprint acknowledges that while performing this Agreement it may have
access to Supplier-owned trade secrets, including, but not limited to, products
or planned products, service or planned service, vendors, customers, prospective
customers, data, financial information, Software, processes, methods, knowledge,
inventions, ideas, marketing promotions, discoveries, current or planned
activities, research, development or other information relating to Supplier's
business activities or operations or those of its customers or vendors, and
Supplier's source code and Escrow Technology and Non-Escrow Technology
("Supplier Proprietary Information").

         34.3     CONFIDENTIALITY OF PROPRIETARY INFORMATION.

         This Agreement creates a confidential relationship between Sprint and
Supplier. The parties will keep each other's Proprietary Information
confidential, and except as authorized by the owner of the Proprietary
Information in writing, the non-owner of Proprietary Information may not
disclose, and may only use, the Proprietary Information to perform this
Agreement, and may only make copies necessary for performing this Agreement. The
parties will make a good faith effort to label all Proprietary Information as
proprietary to the owner of Proprietary Information. Upon cessation of work, or
upon the owner of Proprietary Information's request, the non-owner of
Proprietary Information will immediately return to the owner of Proprietary
Information all documents and other materials in the non-owner of Proprietary
Information's control that contain or relate to Proprietary Information. The
parties may disclose Proprietary Information of the other to their affiliates,
subcontractors and representatives (collectively, "Representatives") who have a
need to know the information for purposes of carrying out the transactions
contemplated by this Agreement and, in the case of Sprint, for installing or
maintaining the Equipment; provided such Representatives are bound by the terms
of a confidentiality agreement. In any event, each party will be responsible for
the disclosures of their Representatives. Any customers of Sprint receiving any
Proprietary Information shall also be bound by the terms of this section 34.3.

         34.4     EXCEPTIONS FOR CONFIDENTIALITY.

         The confidentiality obligations for the Proprietary Information does
not include information that the non-owner of Proprietary Information can
demonstrate:

              (A) is rightfully known to the non-owner of Proprietary
     Information prior to first receiving such information from the owner of the
     Proprietary Information; or

              (B) is independently developed by the non-owner of Proprietary
     Information without any reliance on any of the owner's Proprietary
     Information; or

              (C) is or later becomes part of the public domain through no
fault of the non-owner of the Proprietary

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                                       23
<PAGE>

              Information; or

              (D) is lawfully obtained by the non-owner of Proprietary
     Information from a third party, and such third party is not under any
     confidentiality obligation to the owner of Proprietary Information.

         34.5     INJUNCTIVE RELIEF FOR PROPRIETARY INFORMATION.

         The non-owner of Proprietary Information acknowledges that its wrongful
use or disclosure of any of the owner's Proprietary Information will cause
irreparable injury to the owner of the Proprietary Information, that is
inadequately compensable in monetary damages. Accordingly, the owner of
Proprietary Information may seek injunctive relief in any court of competent
jurisdiction for the breach or threatened breach of this Section, in addition to
any other remedies in law or equity.

35.0     INDEPENDENT CONTRACTOR

         35.1     INDEPENDENT CONTRACTORS.

         Supplier, its subcontractors, employees or agents are independent
contractors for all purposes and at all times. Supplier has the responsibility
for, and control over, the means and details of providing the Deliverables and
performing the Services, subject to Sprint's inspection. Supplier will provide
all training, hiring, supervising, hours of work, work policies and procedures,
work rules, compensation, payment for expenses and discipline and termination of
its employees.

         35.2     SPRINT'S RESPONSIBILITIES.

         Sprint will incur no responsibility or obligation to employees, agents,
subcontractors or other parties utilized by Supplier to perform this Agreement.
Such person or parties will, at all times, remain employees, agents or
subcontractors (whichever is applicable) of Supplier.

         35.3     RESPONSIBILITY FOR WAGES AND TAXES.

         Supplier is solely responsible for payment of wages, salaries, fringe
benefits and other compensation of, or claimed by, Supplier's employees
including, without limitation, contributions to any employee benefit, medical or
savings plan and is responsible for all payroll taxes including, without
limitation, the withholding and payment of all federal, state and local income
taxes, FICA, unemployment taxes and all other payroll taxes.

         35.4     REMOVAL OF SUPPLIER PERSONNEL.

         If Sprint determines that a Supplier-provided employee, agent or
subcontractor is not providing satisfactory service, Sprint will advise Supplier
and may require Supplier to remove that individual or subcontractor. Sprint will
only pay for work actually performed by the removed individual or subcontractor
prior to Sprint's notice for removal and not for transportation or per diem
costs associated with replacing the individual.

         35.5     CONTRACTORS' COMPLIANCE.

         Supplier and Sprint will require their respective employees, agents and
subcontractors to comply with the terms and conditions of this Agreement.

36.0     WORK ON SPRINT AND SUPPLIER PREMISES

         If Supplier's or Sprint's performance of this Agreement involves
performance on Sprint's or Supplier's premises, respectively, Supplier and
Sprint will take necessary precautions to prevent injury to persons or property
during the work and adhere to the security procedures of the other party.
Supplier's and Sprint's employees, agents and contractors are prohibited from
carrying weapons or ammunition onto the other parties' premises or using or
carrying weapons while performing work on Sprint's behalf or attending
Sprint-sponsored or Supplier-sponsored activities. Supplier and Sprint further
agrees to comply with any postings or notices located on each other's premises
regarding safety, security or weapons.

37.0     SECURITY

         37.1     COMPLIANCE WITH SPRINT POLICIES.

         Security access rights to each party's premises will be designated by
that party. Each party will abide by the other's procedures and policies
applicable to that party's premises access rights and ensure compliance by its
employees, agents and subcontractors.

SPRINT PROPRIETARY INFORMATION - RESTRICTED

                                       24
<PAGE>

         37.2     SECURITY FOR SOFTWARE.

         Software security will be followed by Supplier and Sprint for any
application used by the other party. Sprint will designate the required Sprint
software access to Supplier's employees and will make the request to Supplier
for Supplier software access for Sprint employees.

38.0     TECHNICAL SUPPORT SERVICE AND FEES

         38.1     SYSTEM SUPPORT SERVICES.

         Upon Sprint's request, Supplier will perform the System support
services ("System Support Services") in accordance with the requirements set
forth in Schedule 38.1. Sprint or its System Integrator will obtain either Tier
II or Tier III System Support Services from Supplier for each System for a
period of at least one year from Substantial Completion of such System. Sprint
will provide Supplier written notice of Sprint's intent to continue or
discontinue System Support Services. Such notice shall be provided 30 days in
advance of the requested date of termination of the System Support Services.
Sprint will designate in its request whether Sprint is requesting Tier II or
Tier III System Support Services. If Sprint is requesting Tier II System Support
Services, Supplier will follow the procedures in Schedule 38.1. If Sprint is
requesting Tier III System Support Services, Supplier will follow the procedures
in Schedule 38.1 only after Sprint's System Integrator has used reasonable
efforts to identify the nature of the problem, and using commercially reasonable
efforts, has or will be unable to provide a resolution.

         Supplier will provide for each System, at no additional cost to Sprint,
System Support Services for a period of 90 days following Substantial Completion
of such System.

         38.2     INSTALLATION SERVICES.

         Upon Sprint's request, Supplier will provide one support engineer that
will provide technical assistance to Sprint during the installation by Sprint of
Base Station Equipment. Such support engineer will be provided to Sprint at the
rates set forth in the Pricing Letter, except that the support engineer will be
provided for one day at no charge. Sprint will pay the reasonable out of pocket
travel expenses of Supplier's personnel incurred in connection with performing
installation services for Sprint. When traveling at Splint's expense, Supplier
will adhere to Splint's travel policy.

         38.3     ADDITIONAL SERVICE FEES.

         Supplier will provide other System related services (not included
within the Services performed by Supplier pursuant to Section 38.1 or 38.2) to
Sprint upon reasonable notice ("Consulting Services").

         38.4     FEE INCREASES.

         Supplier may increase its fees for Services on January 1 of each year
by an amount not to exceed the change in the cost of living index for San Jose,
CA as published by the U.S. Bureau of Labor Statistics between January 1 of the
prior year and the January 1 of the change.

         38.5     ON SITE TECHNICAL SUPPORT PERSON.

         Supplier will provide potential candidates to Sprint for mutually
agreed upon selection of a candidate to be an on-site technical support person
("Technical Support Person"). The Technical Support Person will work at a site
designated by Sprint three weeks per month, and at Supplier's location one week
per month for one year after Supplier receives payment from Sprint (the "Support
Term"). Sprint will pay to Supplier the rate for the Technical Support Person as
designated in the Pricing Letter. Sprint will also pay for all travel and living
expenses for the Technical Support Person for the Support Term. If Sprint wants
to retain the services of the Technical Support Person after the expiration of
the Support Term, Sprint must request such retention thirty days prior to the
expiration of the Support Term. The actual Supplier employee fulfilling the role
of the Technical Support Person may change during the Support Term; however, any
replacement employee shall be selected in accordance with the terms of this
Section 38.5.

39.0     TRAINING SERVICES AND FEES

         Supplier will provide a trainer at a site designated by Sprint three
weeks per month, and at Supplier's location one week per month for preparing and
upgrading documentation. Sprint will provide all training hardware and Supplier
will provide one copy of the training documentation. Supplier will use Sprint's
travel policy when traveling at Sprint's expense.

SPRINT PROPRIETARY INFORMATION - RESTRICTED

                                       25
<PAGE>

40.0     NOTICES

         Communications relating to this Agreement must be identified to this
Agreement and the applicable Order number and sent by certified mail, return
receipt requested, telex, facsimile or overnight mail to the following addresses
or as may be later designated by written notice of the other party'

         Sprint:             Sprint Corporation
                             Senior Director, Business Development
                             Broadband Wireless Group
                             6450 Sprint Parkway
                             Overland Park, Kansas 66251
                             Fax: (913) 315-9264

                             Sprint Corporation
                             Assistant Vice President, Supply Chain Management
                             903 E. 104th  Street
                             Kansas City, MO 64131
                             Fax: (815) 854-2280

         Supplier:           Ms. Thara Edson
                             Vice President and Chief Financial Officer
                             Hybrid Networks, Inc.
                             6409 Guadalupe Mines Road,
                             San Jose, CA 95120
                             Fax: 408-323-6470

41.0     GENERAL

         41.1     MATERIAL/MECHANIC'S LIEN.

         Supplier will promptly pay for all services, materials, equipment,
and/or labor used under this Agreement, and will hold Sprint harmless from all
losses, expenses, and liabilities connected with Supplier's failure to promptly
pay for services, materials equipment and/or labor and will keep Sprint premises
free of claims or liens. Supplier will furnish Sprint with a list of all its
subcontractors before Services are performed on premises by subcontractors.
Supplier will furnish Sprint with lien waivers from all subcontractors.

         41.2     GOVERNING LAW.

         This Agreement and any claims arising out of this Agreement are
governed by and construed in accordance with the laws of the State of Kansas
without regard to any conflict of laws provision.

         41.3     WAIVER.

         The waiver of a breach of any term of this Agreement will not
constitute the waiver of any other breach of the same or any other term.

         41.4     SEVERABILITY.

         If certain provisions of this Agreement are held to be unenforceable,
the remaining provisions will remain in effect, to be construed as if the
unenforceable provisions were originally deleted.

         41.5     SURVIVAL.

         Numbered provisions 5.0, 9.0, 16.0, 17.4, 20.0 (excluding 20.2), 26.0,
27.0, 28.0, 30.0, 34.0, 41.2 and 41.7 will survive the termination or expiration
of this Agreement, in addition to any other provisions that by their content are
intended to survive the termination or expiration of this Agreement.

         41.6     THIRD PARTY BENEFICIARIES.

         Supplier will make available to Sprint's third party System Integrators
comparable terms that are at least as favorable to such third party System
Integrators as provisions 3.3, 3.5, (Section 3.5 is subject to Sprint priority)
21.0, 23.2, 26.1, 26.2,

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                                       26
<PAGE>

26.3, 38.1 and 38.2 of this Agreement, but only to the extent the third party
System Integrators are relying on such terms for the purposes of supplying goods
and services to Sprint.

         Supplier's failure to comply with its obligations under such provisions
to Sprint's System integrators will be deemed to be a breach of the
corresponding provision of this Agreement by Supplier and entitle Sprint to the
remedies available to Sprint under this Agreement. For example, if Supplier
fails to meet the Fulfillment Standard described in Section 3.3 on Orders
submitted by Sprint's System integrators in connection with the supply of goods
and services to Sprint, then Sprint will have the rights described in Section
3.3 of this Agreement.

         41.7     PUBLICITY.

         Neither Sprint nor Supplier will, without the other's prior written
consent:

               (A)      make any news release, public announcement, denial or
                        confirmation of this Agreement or its subject matter;
                        or

               (B)      in any manner advertise or publish the fact of this
                        Agreement.

         41.8     REMEDIES.

         All remedies available to either party under this Agreement are
cumulative and may be exercised concurrently or separately. The exercise of one
remedy will not be an election of that remedy to the exclusion of other
remedies.

         41.9     ETHICS CODE.

         Both parties agree to comply with Sprint's Principles of Business
Conduct, where applicable, a copy of which has been provided to Supplier.

         41.10    LAWS AND REGULATIONS.

         Each party must comply with all Applicable Law in the performance of
this Agreement.

         41.11    PERMITS AND LICENSES.

         Supplier must obtain and keep current at Supplier's expense all
governmental permits, certificates and licenses necessary for Supplier to
perform under this Agreement.

         41.12    SCHEDULES.

         The following exhibits are attached to and incorporated by this
Agreement:

         Schedule 1.16                   List of Equipment

         Schedule 1.21                   Master Test Plans

         Schedule 1.25                   Initial Affiliates

         Schedule 1.40                   System Illustration

         Schedule 3.1                    Manufacturing Capacity and Lead Times

         Schedule 3.4                    Shipping Procedures

         Schedule 4.1                    Raw Material Lead Times

         Schedule 8.3                    Exclusivity Features

         Schedule 11.0                   Scope Change Form

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<PAGE>

         Schedule 15.2.1                 Sole Source Suppliers

         Schedule 15.2.2                 Form of Supplier's Consent

         Schedule 20.3                   Arbitration Procedures

         Schedule 26.2                   Return Procedures

         Schedule 38.1                   Maintenance and Support Terms

         41.13    FORCE MAJEURE.

     If either party's ability to perform its obligations under this Agreement
is interfered with by reason of any strikes, riots, insurrection, fires, flood,
storm, explosions, acts of God, war, governmental action, labor conditions,
earthquakes, or similar causes beyond the reasonable control of such party, then
such party will be excused from such performance on a day-for-day basis to the
extent of such interference (and the other party will likewise be excused from
performance on a day-for-day basis to the extent such party's obligations relate
to the performance so interfered with); provided, that the party so affected
will use its best efforts under the circumstances to remove such causes of
nonperformance. In the event that a force majeure claimed by either party lasts
in excess of 90 days from the commencement of any such claim, the party not so
claiming force majeure hereunder will have the right, but not the obligation, to
terminate this Agreement.

42.0     ENTIRE AGREEMENT

     This Agreement together with its exhibits, constitutes the entire agreement
between the parties with respect to the subject matter contained and supersedes
all prior or contemporaneous agreements, understandings or communications,
written or oral, concerning such subject matter. This Agreement may not be
amended or modified without specific written amendment, signed by duly
authorized representatives of both parties.

SPRINT/UNITED MANAGEMENT COMPANY         HYBRID NETWORKS, INCORPORATED

Signed: /S/ DAVID XXX                    Signed:
       ------------------------                 -------------------------------
By:                                      By:
   ----------------------------             -----------------------------------
Title:                                   Title:
      -------------------------                --------------------------------
Date: May 1, 2000                        Date:
     --------------------------               ---------------------------------

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<PAGE>

         Schedule 20.3                      Arbitration Procedures

         Schedule 26.2                      Return Procedures

         Schedule 38.1                      Maintenance and Support Terms

         41.13    FORCE MAJEURE.

     If either party's ability to perform its obligations under this Agreement
is interfered with by reason of any strikes, riots, insurrection, fires, flood,
storm, explosions, acts of God, war, governmental action, labor conditions,
earthquakes, or similar causes beyond the reasonable control of such party, then
such party will be excused from such performance on a day-for-day basis to the
extent of such interference (and the other party will likewise be excused from
performance on a day-for-day basis to the extent such party's obligations relate
to the performance so interfered with); provided, that the party so affected
will use its best efforts under the circumstances to remove such causes of
nonperformance. In the event that a force majeure claimed by either party lasts
in excess of 90 days from the commencement of any such claim, the party not so
claiming force majeure hereunder will have the right, but not the obligation, to
terminate this Agreement.

42.0     ENTIRE AGREEMENT

     This Agreement together with its exhibits, constitutes the entire agreement
between the parties with respect to the subject matter contained and supersedes
all prior or contemporaneous agreements, understandings or communications,
written or oral, concerning such subject matter. This Agreement may not be
amended or modified without specific written amendment, signed by duly
authorized representatives of both parties.

SPRINT/UNITED MANAGEMENT COMPANY                HYBRID NETWORKS, INCORPORATED

Signed:                                         Signed:  /S/ THARA M. EDSON
       ---------------------------                     -------------------------
By:                                             By:      THARA M. EDSON
   -------------------------------                 -----------------------------
Title:                                          Title:   VP OF FINANCE & CFO
      ----------------------------                    --------------------------
Date:                                           Date:    5/1/2000
     -----------------------------                   ---------------------------

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<PAGE>

         Schedule 15.2.1                    Sole Source Suppliers

         Schedule 15.2.2                    Form of Supplier's Consent

         Schedule 20.3                      Arbitration Procedures

         Schedule 26.2                      Return Procedures

         Schedule 38.1                      Maintenance and Support Terms

         41.13    FORCE MAJEURE.

     If either party's ability to perform its obligations under this Agreement
is interfered with by reason of any strikes, riots, insurrection, fires, flood,
storm, explosions, acts of God, war, governmental action, labor conditions,
earthquakes, or similar causes beyond the reasonable control of such party, then
such party will be excused from such performance on a day-for-day basis to the
extent of such interference (and the other party will likewise be excused from
performance on a day-for-day basis to the extent such party's obligations relate
to the performance so interfered with); provided, that the party so affected
will use its best efforts under the circumstances to remove such causes of
nonperformance. In the event that a force majeure claimed by either party lasts
in excess of 90 days from the commencement of any such claim, the party not so
claiming force majeure hereunder will have the right, but not the obligation, to
terminate this Agreement.

42.0     ENTIRE AGREEMENT

     This Agreement together with its exhibits, constitutes the entire agreement
between the parties with respect to the subject matter contained and supersedes
all prior or contemporaneous agreements, understandings or communications,
written or oral, concerning such subject matter. This Agreement may not be
amended or modified without specific written amendment, signed by duly
authorized representatives of both parties.

SPRINT/UNITED MANAGEMENT COMPANY                 HYBRID NETWORKS, INCORPORATED

Signed: /S/ DAVID XXX                            Signed:  MICHAEL D. GREENBAUM
       ---------------------------                      ------------------------
By:                                              By:
   -------------------------------                   ---------------------------
Title:                                           Title:   PRESIDENT & CEO
      ----------------------------                     -------------------------
Date: May 1, 2000                                Date:    May 6, 2000
      ----------------------------                     -------------------------

                                       29
<PAGE>

                                  SCHEDULE L.16
                                 EQUIPMENT LIST

SECTION 1: PoP Equipment

<TABLE>
<CAPTION>
     Part number      Description                                                          List Price
------------------------------------------------------------------------------------------------------
     <S>              <C>                                                                   <C>
     CMG.2000-SP      CYBERMNGR 2000+ SW FOR 20,000 SUBS. NEW SPARC 5                        $109,091
------------------------------------------------------------------------------------------------------
     CMG-2000-SPB     CYBERMNGR 2000+SW FOR 20,000 SUBS. REFURBISHED SPARC 5                 $109,091
------------------------------------------------------------------------------------------------------
      CMD-2000B       CM DOWNSTREAM ROUTER + SW, PLUG-IN REDUNDANT P/S                        $22,000
------------------------------------------------------------------------------------------------------
      SQC-200-3       SIF (QAM) CARD, 3-CHANNEL (EACH 10 MBPS)                                 $6,423
------------------------------------------------------------------------------------------------------
     QMC-200-3FC      64 QAM MODULATOR CARD W/COMBINER AND FILTER, 3 CHANNEL                   $7,185
------------------------------------------------------------------------------------------------------
      QMC-200-3       64 QAM MODULATOR CARD W/COMBINER, 3 CHANNEL                              $6,825
------------------------------------------------------------------------------------------------------
      HEM-2204-B      ENCODER BASEBAND (64 QAM)                                                $3,685
------------------------------------------------------------------------------------------------------
      HEM-2204-1      MODULATOR-IF (64 QAM)                                                    $4,820
------------------------------------------------------------------------------------------------------
    CMU-2000-14CB     CM UPSTREAM ROUTER + SW, PLUG-IN REDUNDANT P/S                          $29,000
------------------------------------------------------------------------------------------------------
      QDC-030-2       QPSK DEMODULATOR RECEIVER CARD, 2 PORTS PER CARD                         $4,500
------------------------------------------------------------------------------------------------------
</TABLE>

SECTION 2: Commercial PoP Equipment.

<TABLE>
<CAPTION>
     Part number      Description                                                          List Price

------------------------------------------------------------------------------------------------------
       <S>            <C>                                                                  <C>
       DKT-030        MONITOR AND KEYBOARD (BOTH RACKMOUNT FOR CMD AND CMU)                      $925
------------------------------------------------------------------------------------------------------
</TABLE>

SECTION 3: Spare Part

<TABLE>
<CAPTION>
     Part number      Description                                                          List Price

       <S>            <C>                                                                  <C>
------------------------------------------------------------------------------------------------------
       LAC-010        10/100 BASE T LAN INTERFACE CARD                                           $170
------------------------------------------------------------------------------------------------------
      QDM-030-2       MASTER QPSK DEMODULATOR RECEIVER CARD)                                   $5,500
------------------------------------------------------------------------------------------------------
       SUG-2000       CYBERMANAGER HARD DRIVE WITH FACTORY SOFTWARE LOADED                     $2,200
------------------------------------------------------------------------------------------------------
     087-00022-XX     CMD HARD DRIVE WITH FACTORY SOFTWARE LOADED                                $450
------------------------------------------------------------------------------------------------------
     087-00023-XX     CMU HARD DRIVE WITH FACTORY SOFTWARE LOADED                                $450
------------------------------------------------------------------------------------------------------
</TABLE>

* See attached for Spare Part assumptions

SECTION 4: Hybrid     Modem Pricing

<TABLE>
<CAPTION>
Part number           Description
       <S>            <C>
------------------------------------------------------------------------------------------------------
      WBR-60-231      ROUTER, (60 USER), QPSK RETURN RS232 - PRIOR TO 12/1/00
------------------------------------------------------------------------------------------------------
     WBR-60-231B      ROUTER, (60 USER), QPSK RETURN RS232 - PRIOR TO 12/1/00
------------------------------------------------------------------------------------------------------
      WBR-60-231      ROUTER, (60 USER), QPSK RETURN RS232 - AFTER 12/1/00
------------------------------------------------------------------------------------------------------
     WBR-60-231B      ROUTER, (60 USER), QPSK RETURN RS232 - AFTER 12/1/00
------------------------------------------------------------------------------------------------------
</TABLE>

SECTION 5: Consulting

<TABLE>
<CAPTION>
     Part number      Description

       <S>            <C>
------------------------------------------------------------------------------------------------------
      CON-SP-100      ARCHITECTURAL CONSULTING
------------------------------------------------------------------------------------------------------
      CON-SP-200      SOFTWARE CONSULTING
------------------------------------------------------------------------------------------------------
      CON-SP-300      HARDWARE CONSULTING
------------------------------------------------------------------------------------------------------
      CON-SP-400      SUPPORT ENGINEERING
------------------------------------------------------------------------------------------------------
</TABLE>

SECTION 6: Support Contract

<TABLE>
<CAPTION>
     Part number      Description
------------------------------------------------------------------------------------------------------
     <S>              <C>
       SSP-SP2        LEVEL II (PER YEAR)
------------------------------------------------------------------------------------------------------
       SSP-SP3        LEVEL ILL(PER YEAR)
------------------------------------------------------------------------------------------------------
      SSP-SP-OS       FULL-TIME ON SITE TECHNICAL SUPPORT AT SPRINT-DESIGNATED LOCATION
------------------------------------------------------------------------------------------------------
</TABLE>

SPRINT PROPRIETARY INFORMATION - RESTRICTED

<PAGE>

SECTION 7: Training   On Site

<TABLE>
<CAPTION>
Part number           Description
       <S>            <C>
---------------------------------------------------------------------------------------
      TRN-250-OS      FULL TIME ON-SITE TRAINING AT SPRINT LOCATION.
---------------------------------------------------------------------------------------
      TRN-SP-100      ON SITE TRAINING AT SPRINT LOCATION
---------------------------------------------------------------------------------------
</TABLE>

SECTION 8: New Software Releases

<TABLE>
       <S>            <C>
---------------------------------------------------------------------------------------
      SWM-SP-100      SOFTWARE ENHANCEMENTS
---------------------------------------------------------------------------------------

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

SPRINT PROPRIETARY INFORMATION - RESTRICTED

                                       2
<PAGE>

                                  SCHEDULE 1.21
                                MASTER TEST PLANS

1.0      INITIAL SYSTEM VERIFICATION

Sprint and the Supplier will perform end-to-end System verification prior to
deployment of any System hereunder on Supplier's System deployed and operating
in Phoenix. Sprint will provide access to its System in Phoenix and each party
will provide resources required to satisfy the initial System verification as
promptly as possible. Initial System verification will test all functional and
performance capabilities of the System against the Specifications and will
include those tests contemplated for Substantial Completion. In the event the
parties are unable to demonstrate that the System in Phoenix is operating in
accordance with its Specifications and has satisfied the Substantial Completion
testing procedures within 45 days from the Effective Date, the Commitment will
be terminated.

2.0      SUBSTANTIAL COMPLETION TESTING

The purpose of Substantial Completion Testing is to confirm the operational
capability in accordance with the Specifications of the System in a "real world"
environment. The test plan will clearly identify tests to be run, procedures to
monitor and measure system performance, equipment necessary to undertake tests,
and expected results and roles and responsibilities.

The test will simulate real world environmental conditions to the extent
possible, including, performance under load, reasonable interference, and other
environmental conditions. To accomplish this, Sprint will provision at least
eight customers (or test sites) per sector in each System. All users in MDS-1
sectors shall broadcast on a common RF channel and all users in MDS-2 sectors
shall broadcast on a common RF channel. Test will be performed for various
upstream channel widths. The tests must test for all minimums, maximums and
operational. All test results must be valid and based on objective criteria.

These tests will include, but will not be limited to, the following types of
tests:

A. FIELD INSTALLATION AND INTEGRATION ACCEPTANCE TESTS

-        Power Up Procedures

-        Transmit tests (Repeated for each CMD and CMD channel)

-        Diagnostic Testing

-        Alarm Testing (monitor system shall be tested to ensure that cyber
         manager alarm message logs are created and passed to network)

-        Software Installation (including, but not limited to functionality,
         interoperability and performance testing of the software.)

-        Initialization

-        Call Processing Testing

-        Remote Unit Installation and Test

-        Routing Tests

-        Equipment, including third party equipment and all functional elements
         thereof, shall be tested (including RF, Hybrid (and IP infrastructure
         elements)

-        Interoperability Testing, (including, but not limited to
         interoperability to various vendor platforms, routers, etc.)

-        Provisioning interface test (ensure correct operation of customer and
         network provisioning capabilities)

-        Network management interface test (ensure correct operation of the
         network management capabilities).

-        Cold-start. (To ensure the system is recoverable, in the event of loss
         of system power or system maintenance, a cold-start of all components
         will be performed. After reactivation, basic regression testing of the
         above tests will be performed to ensure continued proper operation.)

B. SYSTEM PERFORMANCE TESTS

-        Super - Cell Capacity. For a representative sample of downstream
         channels and a representative sample of upstream channels, throughput
         testing will be performed to ensure deployed capacity is within design
         margins.

SPRINT PROPRIETARY INFORMATION - RESTRICTED

                                       3
<PAGE>

-        Delay. For a representative sample of downstream channels and a
         representative sample of upstream channels, latency testing will
         be performed to ensure the System is within design margins.

-        R.F Coverage. Each downstream RF channel and each upstream RF channel,
         testing will be performed to ensure the link budget (including fade
         margin) is within design margins, assuming the input/output
         specifications of 3rd party RF components are met.

-        Bit Error Rate. Each downstream channel and each upstream channel,
         testing will be performed to ensure system BER (with FEC) is within
         design margins.

3.0      FINAL ACCEPTANCE TEST CRITERIA

For each market, Final Acceptance will occur if, all (but not less than all) of
the following are true:

-        Operational requirements set forth in Section 1.0, subsection A above
         shall be retested and complied with as part of Final Acceptance
         testing.

-        In total, in each market, there are no more than "X" Performance Events
         during the relevant "Burn-In Period". For the purposes hereof "X
         Performance Events" means (i) 10 E l events in the first 2 markets to
         achieve Substantial Completion; (ii) 8 El events in the next 2 markets
         to achieve Substantial Completion; iii) 4 E 1 events in any additional
         such Systems thereafter to achieve Substantial Completion and (iv) 4 E
         1 events in any System for which the applicable Burn In Period has been
         reinstated.

For the purposes hereof "Burn-In Period" means: (i) in the first 2 markets to
reach Substantial Completion, 140 days; (ii) in the next 2 markets, the later
of(x) 120 days or (y) Final Acceptance of the first 2 markets to achieve
Substantial Completion, and (iii) in any additional Systems thereafter to reach
Substantial Completion, the later of (x) 60 days or (y) Final Acceptance of the
first 2 markets to achieve Substantial Completion.

-        No continuing El event.
-        No more than 2 E1 event in the last 60 days

If one of the above conditions is not met, then the Burn In Period shall be
reinstated for the greater of (i) the time remaining in the original Burn In
Period or (ii) sixty (60) days.

Outages caused by power failures that are in excess of the duration of the
backup power supply or outages caused by personnel of Sprint not following
maintenance procedures or outages caused by 3 party equipment or outages caused
by acts of nature (i.e., sector antenna struck by lightning or falling off
tower) or outages caused by personnel of Sprint using incorrect installation
practices or personnel of Sprint not following specifications of any Equipment
are not counted as E 1 events for the purpose of Final Acceptance.

SPRINT PROPRIETARY INFORMATION - RESTRICTED

                                       4
<PAGE>

                                  SCHEDULE 1.25
                               INITIAL AFFILIATES

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------

               NAME                                                     ADDRESS                                          TELEPHONE

------------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>                                                             <C>
SPRINT CORPORATION                                    2330 Shawnee Mission Parkway, Westwood, Kansas 66205            (913) 624-3000
------------------------------------------------------------------------------------------------------------------------------------
SPRINT/UNITED MANAGEMENT COMPANY                      2330 Shawnee Mission Parkway, Westwood, Kansas 66205            (913) 624-3000
------------------------------------------------------------------------------------------------------------------------------------
SPRINT COMMUNICATIONS COMPANY L.P.                    8140 Ward Parkway, Kansas City, Missouri 64114'-8417            (816) 276-6000
------------------------------------------------------------------------------------------------------------------------------------
United Telephone Company of Kansas                    2330 Shawnee Mission Parkway, Westwood, Kansas 66205            (913) 624-3000
------------------------------------------------------------------------------------------------------------------------------------
SPRINT GLOBAL VENTURE, INC.                           12490 Sunrise Valley Drive, Reston, Virginia 22096              (703) 689-6000
------------------------------------------------------------------------------------------------------------------------------------
Sprint International of Canada, Inc.                  12490 Sunrise Valley Drive, Reston, Virginia 22096              (703) 689-6000
------------------------------------------------------------------------------------------------------------------------------------
Sprint International Mexico S.A. de C.V.              12490 Sunrise Valley Drive, Reston, Virginia 22096              (703) 689-6000
------------------------------------------------------------------------------------------------------------------------------------
SPRINT MID-ATLANTIC TELECOM, INC.                     14111 Capital Blvd., Wake Forest, North Carolina 27587-5900     (919) 554-7900
------------------------------------------------------------------------------------------------------------------------------------
Sprint/Carolina Telephone                             720 Western Blvd., Tarboro, North Carolina 27886                (919) 641-3768
------------------------------------------------------------------------------------------------------------------------------------
Sprint/Centel -North Carolina                         320 First Avenue N.W., Hickory, North Carolina 28601-6123       (704) 328-0222
------------------------------------------------------------------------------------------------------------------------------------
Sprint/Centel - Virginia                              2211 Hydraulic Rd., P.O. Box 6788, Charlottesville, VA 22906    (804) 971-2144
------------------------------------------------------------------------------------------------------------------------------------
Sprint/United Telephone - Southeast                   112 Sixth Street, Bristol, Tennessee 37620                      (615) 968-812
------------------------------------------------------------------------------------------------------------------------------------
SPRINT NORTH SUPPLY                                   600 New Century Parkway, New Century, Kansas 66031               (913) 791-700
------------------------------------------------------------------------------------------------------------------------------------
SPRINT PARANET, INC.                                  2330 Shawnee Mission Parkway, Westwood, KS 66205                (816) 624-6000
------------------------------------------------------------------------------------------------------------------------------------
SPRINT PUBLISHING & ADVERTISING                       6666 West 110th, Overland Park, Kansas 66211                    (913) 491-7000
------------------------------------------------------------------------------------------------------------------------------------
SPRINT SPECTRUM HOLDING COMPANY L.P.                  4717 Grand Avenue, Kansas city, MO 64112                        (816) 559-1000
------------------------------------------------------------------------------------------------------------------------------------
American PCS, L.P.                                    4717 Grand Avenue, Kansas City, MO 64112                        (816) 559-1000
------------------------------------------------------------------------------------------------------------------------------------
Sprint Spectrum L.P.                                  4717 Grand Avenue, Kansas City, MO 64112                        (816) 559-1000
------------------------------------------------------------------------------------------------------------------------------------
Sprint Spectrum Equipment Company, L.P.               4717 Grand Avenue, Kansas City, MO 64112                         (816) 559-100
------------------------------------------------------------------------------------------------------------------------------------
Phillie Co., L.P.                                     4717 Grand Avenue, Kansas City, MO 64112                        (816) 559-1000
------------------------------------------------------------------------------------------------------------------------------------
SPRINTCOM, INC.                                       2330 Shawnee Mission Parkway, Westwood, KS 66205                (816) 624-6000
------------------------------------------------------------------------------------------------------------------------------------
SPRINTCOM EQUIPMENT COMPANY LP.                       2330 Shawnee Mission Parkway, Westwood, KS 66205                (816) 624-6000
------------------------------------------------------------------------------------------------------------------------------------
SPRINT eBUSINESS, INC.                                2330 Shawnee Mission Parkway, Westwood, KS 66205                (816) 624-6000
------------------------------------------------------------------------------------------------------------------------------------
AMERICAN TELECASTING INC.                             2330 Shawnee Mission Parkway, Westwood, KS 66205                (816) 624-6000
------------------------------------------------------------------------------------------------------------------------------------
CALL-NET ENTERPRISES, INC.                            2550 Victoria Park Avenue, North York, Ontario M2JSA9
------------------------------------------------------------------------------------------------------------------------------------
Sprint Canada Inc.                                    2550 Victoria Park Avenue, North York, Ontario M2JSA9
------------------------------------------------------------------------------------------------------------------------------------
CENTRAL TELEPHONE COMPANY                             2330 Shawnee Mission Parkway, Westwood, KS 66205                (816) 624-6000
------------------------------------------------------------------------------------------------------------------------------------
Central Telephone - Illinois                          8725 Higgins Road, Chicago, Illinois 60631                      (312) 399-2500
------------------------------------------------------------------------------------------------------------------------------------
Central Telephone - Nevada                            330 S. Valley View, Las Vegas, Nevada 89152                     (800) 877-7077
------------------------------------------------------------------------------------------------------------------------------------
Sprint Florida, Incorporated                          555 Lake Border Drive, Apopka, Florida 32703                    (407) 889-6000
------------------------------------------------------------------------------------------------------------------------------------
United Telephone Communications Systems,              555 Lake Border Drive, Apopka, Florida 32703                    (407) 889-6000
------------------------------------------------------------------------------------------------------------------------------------
Incorporated
------------------------------------------------------------------------------------------------------------------------------------
United Telephone Long Distance, Inc.                  555 Lake Border Drive, Apopka, Florida 32703                    (407) 889-6000
------------------------------------------------------------------------------------------------------------------------------------
The Winter Park Telephone Company                     555 Lake Border Drive, Apopka, Florida 32703                    (407) 889-6000
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

SPRINT PROPRIETARY INFORMATION - RESTRICTED

<PAGE>

<TABLE>
<S>                                                   <C>                                                             <C>
------------------------------------------------------------------------------------------------------------------------------------
EARTHLINK NETWORK, INC.                               2330 Shawnee Mission, Westwood, Kansas 66205                    (913) 624-3000
------------------------------------------------------------------------------------------------------------------------------------
HYBRID NETWORKS, INC.                                 2330 Shawnee Mission Parkway, Westwood, KS 66205                (816) 624-6000
------------------------------------------------------------------------------------------------------------------------------------
PEOPLE'S CHOICE TV CORPORATION                        2330 Shawnee Mission Parkway, Westwood, KS 66205                (816) 624-6000
------------------------------------------------------------------------------------------------------------------------------------
TELMEX/SPRINT COMMUNICATIONS, L.L.C.                  2330 Shawnee Mission Parkway, Westwood, KS 66205                (816) 624-6000
------------------------------------------------------------------------------------------------------------------------------------
TDI ACQUISITION CORPORATION                           2330 Shawnee Mission Parkway, Westwood, KS 66205                (816) 624-6000
------------------------------------------------------------------------------------------------------------------------------------
UNITED TELEPHONE COMPANY OF KANSAS                    2330 Shawnee Mission Parkway, Westwood, KS 66205                (816) 624-6000
------------------------------------------------------------------------------------------------------------------------------------
Sprint/United Midwest Management Services Company     2330 Shawnee Mission Parkway, Westwood, KS 66205                (816) 624-6000
------------------------------------------------------------------------------------------------------------------------------------
UNITED TELEPHONE COMPANY OF EASTERN KANSAS            2330 Shawnee Mission Parkway, Westwood, KS 66205                (816) 624-6000
------------------------------------------------------------------------------------------------------------------------------------
UNITED TELEPHONE COMPANY OF FLORIDA                   555 Lake Border Drive, Apopka, Florida 32703                    (407) 889-6090
------------------------------------------------------------------------------------------------------------------------------------
Vista-United Telecommunications                       555 Lake Border Drive, Apopka, Florida 32703                    (407) 889-6000
------------------------------------------------------------------------------------------------------------------------------------
UNITED TELEPHONE - MID ATLANTIC                       1201 Walnut Bottom Road, Carlisle, Pennsylvania 17013-0905      (7i7) 245-6312
------------------------------------------------------------------------------------------------------------------------------------
United Telephone - New Jersey                         1201 Walnut Bottom Road, Carlisle, Pennsylvania 17013-0905      (7i7) 245-6312
------------------------------------------------------------------------------------------------------------------------------------
United Telephone - Pennsylvania                       1201 Walnut Bottom Road, Carlisle, Pennsylvania 17013-0905      (717) 245-6312
------------------------------------------------------------------------------------------------------------------------------------
UNITED TELEPHONE WESTERN                              5454 West 110th, Overland Park, Kansas 6621 i                   (913) 345-7600
------------------------------------------------------------------------------------------------------------------------------------
United Telephone - Kansas                             123 North Eisenhower, Junction City, Kansas 66441               (913) 762-3232
------------------------------------------------------------------------------------------------------------------------------------
United Telephone - So. Central Kansas                 5454 West 100n Street, Overland Park, Kansas 66211              (913) 345-6000
------------------------------------------------------------------------------------------------------------------------------------
United Telephone - Minnesota                          105 Peavey Road, Chaska, Minnesota 55318                        (612) 448-8200
------------------------------------------------------------------------------------------------------------------------------------
United Telephone - Missouri (East)                    319 Madison Street, P.O. Box 689, Jefferson City, Missouri 65102(314) 634-0555
------------------------------------------------------------------------------------------------------------------------------------
United Telephone - Missouri (West)                    210 East Market, P.O. Box 87, Warrensburg, Missouri 64093       (816) 429-7119
------------------------------------------------------------------------------------------------------------------------------------
United Telephone - Nebraska                           2806 Avenue D, Scottsbluff, Nebraska 69361                      (308) 635-8201
------------------------------------------------------------------------------------------------------------------------------------
United Telephone - Oregon                             902 Wasco Street, Hood River, Oregon 97031
------------------------------------------------------------------------------------------------------------------------------------
United Telephone - Texas                              1005 Congress Avenue, Suite 400, Austin, Texas 78701            (512) 472-1597
------------------------------------------------------------------------------------------------------------------------------------
UNITED TELEPHONE - NORTH CENTRAL                      665 Lexington Avenue, Mansfield, Ohio 44907                     (419) 755-8011
------------------------------------------------------------------------------------------------------------------------------------
United Telephone - Indiana                            P.O. Box 391 2000 W. William Avenue, Warsaw, Indiana 46580      (219) 267-6161
------------------------------------------------------------------------------------------------------------------------------------
United Telephone - Ohio                               P.O. Box 3555, 839 W. Lonsview Road, Mansfield, Ohio 44907      (419) 755-8011
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

SPRINT PROPRIETARY INFORMATION - RESTRICTED

                                       2
<PAGE>

                                  SCHEDULE 3.1

                      MANUFACTURING CAPACITY AND LEAD-TIME

SYSTEM COMPONENTS

<TABLE>
<CAPTION>
------------------------ --------------------------------------------------------- ----------------------------
Part Number              Description                                                         Maximum
                                                                                         Production per
                                                                                              Month

<S>                      <C>                                                             <C>
------------------------ --------------------------------------------------------- ----------------------------
CMG-2000-SP              CyberMngr 2000 w\HybridWare                                           20
                         + SW License for 20,000. Subs.
------------------------ --------------------------------------------------------- ----------------------------
CMG-2000-SPB             CyberMngr 2000 w\HybridWare                                           20
                         + SW License for 20,000 Subs.
------------------------ --------------------------------------------------------- ----------------------------
CMD-2000B                CM Downstream Router + SW for 20,000                                  20
------------------------ --------------------------------------------------------- ----------------------------
SQC-200-3                SIF (QAM) Card, 3-channel (each 10 Mbps)                              20
------------------------ --------------------------------------------------------- ----------------------------
QMC-200-3                64 QAM Modulator Card                                                 20
                         w/Combiner, 3 channel
------------------------ --------------------------------------------------------- ----------------------------
QMC-200-3FC              64 QAM Modulator Card                                                 20
                         w/Combiner and filter, 3 channel
------------------------ --------------------------------------------------------- ----------------------------
HEM-2204-B               Encoder Baseband (64 QAM)                                             20
------------------------ --------------------------------------------------------- ----------------------------
HEM-2204-I               Modulator-IF (64 QAM)                                                 20
------------------------ --------------------------------------------------------- ----------------------------
CMU-2000-14CB            CM Upstream Router with HybridWare 20 w/two QPSK
                         Demodulator Receiver Cards.
------------------------ --------------------------------------------------------- ----------------------------
QDC-030-2                QDC-030-2 QPSK Demodulator Cards.                                     250
                         2 ports per card
---------------------------------------------------------------------------------------------------------------
</TABLE>

COMMERCIAL PoP EQUIPMENT

<TABLE>
<S>                      <C>                                                             <C>
---------------------------------------------------------------------------------------------------------------
DKT-30                   Monitor and Keyboard                                                  50
                         (both rackmount for CMD and CMU)
------------------------ --------------------------------------------------------- ----------------------------

------------------------ --------------------------------------------------------- ----------------------------
SPARE PARTS
------------------------ --------------------------------------------------------- ----------------------------
LAC-010                  10/100 Baser LAN Interface Card                                       50
------------------------ --------------------------------------------------------- ----------------------------
QDM-030-2                Master QPSK Demoulator Receiver Card.                                 20
------------------------ --------------------------------------------------------- ----------------------------
SUG-2000                 Cybermanager Hard Drive with factory S/W                              80
------------------------ --------------------------------------------------------- ----------------------------
HDD-XX                   CMD Hard Drive with factory software                                  80
------------------------ --------------------------------------------------------- ----------------------------
HDU-XX                   CMU Hard Drive with factory software                                  80
------------------------ --------------------------------------------------------- ----------------------------
CMP--400                 CMD or CMU Power Supply                                               50

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

     *MAXIMUM PRODUCTION RATE REQUIRES A 180 DAY ROLLING FORECAST.

WIRELESS BROADBAND ROUTERS

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
Part Number              Description                                                         Maximum
                                                                                         Production per
                                                                                             Month*
<S>                      <C>                                                             <C>
------------------------ --------------------------------------------------------- ----------------------------
WBR-60-231               Wireless Broadband Router 60 User.                                  10,000
------------------------ --------------------------------------------------------- ----------------------------
WBR-60-231B              Wireless Broadband Router 60 User                                   50,000
---------------------------------------------------------------------------------------------------------------
</TABLE>

                        *MAXIMUM PRODUCTION RATE REQUIRES A 180-DAY ROLLING
                         FORECAST.

                         MANUFACTURING LEAD TIMES

HEADEND
     SYSTEM COMPONENTS

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
Part Number              Description                                                      Standard Lead
                                                                                              Times
                                                                                        (calendar days)*

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

SPRINT PROPRIETARY INFORMATION - RESTRICTED

<PAGE>

<S>                      <C>                                                             <C>
---------------------------------------------------------------------------------------------------------
CMG-2000-SP               CyberMngr 2000 w\HybridWare                                       60
---------------------------------------------------------------------------------------------------------
CMG-2000-SPB              + SW License for 20,000 Subs.                                     60
                          CyberMngr 2000 w\HybridWare
---------------------------------------------------------------------------------------------------------
CMD-2000B                 + SW License for 20,000 Subs.                                     60
                          CM Downstream Router + SW for 20,000
---------------------------------------------------------------------------------------------------------
SQC-200-3                 SIF (QAM) Card, 3-channel (each l0 Mbps)                          90
---------------------------------------------------------------------------------------------------------
QMC-200-3                 64 QAM Modulator Card w/Combiner,3 channel                       120
---------------------------------------------------------------------------------------------------------
QMC-200-3FC               64 QAM Modulator Card                                            120
                          w/Combiner and filter, 3 channel
---------------------------------------------------------------------------------------------------------
HEM-2204-B                Encoder Baseband (64 QAM)                                         90
---------------------------------------------------------------------------------------------------------
HEM-2204-I                Modulator-IF (64 QAM)                                             90
---------------------------------------------------------------------------------------------------------
CMU-2000-14CB             CMU-2000-14CB                                                    120
                          w/two QPSK Demodulator Receiver Cards.
---------------------------------------------------------------------------------------------------------
QDC-030-2                 QDC-030-2 QPSK Demodulator Cards.                                120
                          2 ports per card
---------------------------------------------------------------------------------------------------------
</TABLE>

COMMERCIAL PoP EQUIPMENT

<TABLE>
<S>                      <C>                                                             <C>
---------------------------------------------------------------------------------------------------------
DKT-30                    Monitor and Keyboard                                              45
                          (both rackmount for CMD and CMU
---------------------------------------------------------------------------------------------------------
</TABLE>

SPARE PARTS

<TABLE>
<S>                      <C>                                                             <C>
---------------------------------------------------------------------------------------------------------
LAC-0 l0                  10/100 BaseT LAN Interface Card                                   45
---------------------------------------------------------------------------------------------------------
QDM-030-2                 Master, QPSK Demoulator Receiver Card.                           120
SUG-2000                  Cybermanager Hard Drive with factory S/W
---------------------------------------------------------------------------------------------------------
HDD-XX                    CMD Hard Drive with factory software                              30
---------------------------------------------------------------------------------------------------------
HDU-XX                    CMU Hard Drive with factory software                              30
---------------------------------------------------------------------------------------------------------
CMP-400                   CMD or CMU Power Supply                                           45
---------------------------------------------------------------------------------------------------------
</TABLE>

*THE LEAD-TIME FOR THIS EQUIPMENT IS AS SHOWN PROVIDED HYBRID IS SUPPLIED WITH A
ROLLING 80 DAY FORECAST.

WIRELESS BROADBAND ROUTERS

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
Part Number               Description                                                 Standard Lead
                                                                                          Times
                                                                                     (calendar days)*
<S>                      <C>                                                             <C>
---------------------------------------------------------------------------------------------------------
WBR-60-231                Wireless Broadband Router 60 User                                 90
---------------------------------------------------------------------------------------------------------
WBR-60-23 IB              Wireless Broadband Router 60 User                                 90
---------------------------------------------------------------------------------------------------------
</TABLE>

*THE LEAD-TIME FOR THIS EQUIPMENT IS AS SHOWN PROVIDED HYBRID IS SUPPLIED WITH A
ROLLING 180 DAY FORECAST.

SPRINT PROPRIETARY INFORMATION - RESTRICTED

                                       3
<PAGE>

                                  SCHEDULE 3.4

                               SHIPPING PROCEDURES

                          TRANSPORTATION ROUTING GUIDE

ROUTING: The carriers listed below shall be used for the inbound and outbound
movement of materials to, from, and between Sprint locations and suppliers.

BILLING: All freight charges which are directly, or indirectly, the
responsibility of Sprint should be billed third party to Sprint Accounts
Payable, P.O. Box 5409, Kansas City, MO 64131. Purchase of insurance coverage
from transportation carriers is NOT authorized.

DOCUMENTATION: All shipping documents should reference Purchase Order, Work
Order, or Cost Center number. International paperwork should be verified by
Sprint's Transportation Department prior to shipment.

COMPLIANCE: Failure to comply with Sprint's Transportation Routing Guide
instructions will result in excess freight chargebacks to your company.
Shipments routed by means other than the guidelines within will be charged back
to the supplier unless previously agreed to by both Parties.

SPRINT TRANSPORTATION: Please refer any questions to Sprint's Transportation
Department to the following Transportation Specialist:

Tom Conrow, Domestic Ground & Air Shipments            913/791-7394
Zoe Morgan, International Shipments                    913/791-7395
Ginger Farrell, International Shipments                703/904-2784

Small package surface shipments should be routed via United Parcel Service or
Roadway Package System. These would be shipments weighing under 150 pounds in
total weight and meeting carrier size and weight restrictions as follows:

-        150 pounds maximum weight per package
-        130 inches combined length and girth
-        108 inches maximum length

The freight charges should be billed to Sprint using our UPS third party
account/shipper number - 35E 2E4. Contact Sprint Transportation Services for
more information regarding third party billing.

Surface shipments weighing over 150 pounds should be routed with the appropriate
LTL carrier as shown on page 2 of the Routing Guide.

SPRINT PROPRIETARY INFORMATION - RESTRICTED

<PAGE>

                          TRANSPORTATION ROUTING GUIDE

                     LTL SURFACE ROUTING OVER 150 LBS. TOTAL
                (INCLUDING TO AND FROM CANADA - REGION MAP BELOW)

         Shipments above 10,000 lbs. require authorization by Sprint's
Transportation Department prior to shipment

NATIONWIDE LONG HAUL LTL CARRIERS:     Consolidated Freightways, Yellow Freight
                                       System

REGIONAL SHORT HAUL LTL CARRIERS:

<TABLE>
<CAPTION>
         NORTHWEST                          MIDWEST                                NORTHEAST

      <S>                            <C>                                        <C>
      Con-way Western                American Freightways                       Howard Express
                                        Con-Way Central                          USF Red Star

           WEST                            SOUTHWEST                               SOUTHEAST

                                     American Freightways                         AAA Cooper
      Con-Way Western              Con-Way Southern Express                Southeastern Freightways
                                                                           Con-Way Southern Express
</TABLE>

Regional LTL (Less-than-truckload) shipments are defined as short haul
interstate LTL movements, normally under 500 miles which occur either within a
region, or between a region and the bordering states of a neighboring region or
bordering Canadian Provinces.

                         DEFINED REGIONS FOR LTL FREIGHT

                                      [MAP]

                        ELECTRONIC (PADDED) VAN SHIPMENTS

BEKINS VAN LINES (ALL POINTS)                     816/763-6300     800/767- 1120
NORTH AMERICAN VAN LINES (BELTMANN)               913/888-9105      800/869-6114
UNITED VAN LINES (FRY-WAGNER)                     913/541-0020      800/829-0049

                  DOMESTIC AIR EXPRESS AND AIR FREIGHT ROUTING
(SEE GEOGRAPHIC ROUTING EXCEPTION FOR CANADA, ALASKA, HAWAII, PUERTO RICO AND
                            INTERNATIONAL SHIPMENTS)

Shipments above 1,000 lbs. require authorization by Sprint Transportation prior
                                  to shipment

SPRINT PROPRIETARY INFORMATION - RESTRICTED

                                       2
<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
     WEIGHT           SAME DAY          NEXT DAY          2ND DAY           3-5 DAYS            INTERNATIONAL
---------------------------------------------------------------------------------------------------------------------
<S>                   <C>               <C>               <C>               <C>                 <C>
                        QUICK
                       COURIER

                          |                 AIRBORNE EXPRESS*
    LTR - 50              |                  FEDERAL EXPRESS               UPS GROUND
                          |                                                RPS GROUND          AIRBORNE EXPRESS
                                                                                              ----------------------
                          V
------------------                     ---------------------------------
                                          EMERY            EMERY                                DHL WORLDWIDE*
     51 - 70                            WORLDWIDE        WORLDWIDE
------------------                     --------------                     ------------------------------------------
                                                                                             CALL TRANSPORTATION
                                                                  BAX GLOBAL                  FOR INTERNATIONAL
      71 +                             BAX GLOBAL              PILOT AIR FREIGHT                ROUTING GUIDE
                                                                                               AND INSTRUCTIONS
---------------------------------------------------------------------------------------------------------------------
</TABLE>

Air routing is only authorized when expedited service is requested by Corporate
Procurement to meet specific delivery requirements. Packages shipped via air,
without authorization from Corporate Procurement, by the supplier will result in
a 50% chargeback, to that supplier, of the total transportation cost.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                       GEOGRAPHIC EXCEPTIONS (AIR & SURFACE)
                                               (INBOUND AND OUTBOUND)

---------------------------------------------------------------------------------------------------------------------
     WEIGHT            CANADA                   CANADA                    ALASKA &                  PUERTO
                        (Air)                  (Surface)                   HAWAII                    RICO
---------------------------------------------------------------------------------------------------------------------
<S>                   <C>                    <C>                           <C>                       <C>

     LETTER           AIRBORNE
                    DHL WORLDWIDE                                                  AIRBORNE EXPRESS*
        -              FEDERAL                UPS GROUND                            FEDERAL EXPRESS
       70              EXPRESS

---------------------------------------------------------------------------------------------------------------------
                        EMERY                CONSOLIDATED
       71+            WORLDWIDE               FREIGHTWAYS                BAX GLOBAL               BAX GLOBAL
                     BAX GLOBAL          YELLOW FREIGHT SYSTEM

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

-------------------------------------------------------------------------------
                               CONTACT INFORMATION

<TABLE>
<CAPTION>
CARRIER                                CUSTOMER SERVICE CONTACT
<S>                                    <C>
Airborne Express*                      800/24%2676

Bekins Van Lines                       800/767-1120 or 816/763-6300, Customer Service
BAX Global (formerly Burlington)       Contact local station
DHL Worldwide Express*                 800/345-3601 -Natalie Lechuga

Emery Worldwide                        800/443-6379
Federal Express                        800/238-5355

LTL Carriers                           Contact local terminal - customer service/dispatch
North American Van Lines               800/869-6114 or 913/888-9105, Deanna Cox
Pilot Air Freight                      800/447-.4568 or local station
Quick International Courier            800/4884400, extension 475
Sprint Transportation Dept.            913/791-7394 - Tom Conrow (Domestic Air & Ground)

                                       913/791-7395 - Zoe Morgan (International)
                                       913/791-2182 - Department Fax Number for Tom and Zoe

United Van Lines                       800/829-0049 - Fry-Wagner - Mike Wagner
---------------------------------------------------------------------------------------------
</TABLE>

*PREFERRED CARRIER FOR SPECIFIC SERVICE REQUIREMENT

SPRINT PROPRIETARY INFORMATION - RESTRICTED

                                       3
<PAGE>

                                  SCHEDULE 4.1

                             RAW MATERIAL LEAD TIMES

                MODEM (WBR-60-23 1B)

                TUNER                       18 WEEKS         $12
                LIBIT                       20 WEEKS         $23
                SAW FILTER                  12 WEEKS          $3
                TANTALUM CAPS               26 WEEKS          $5
                RF INDUCTORS                12 WEEKS          $1
                LEDS                        12 WEEKS          $1
                TRANSISTERS                 12 WEEKS          $1
                TRANSFORMERS                14 WEEKS          $3
                MAXIM TRANSMITTER           12 WEEKS          $6
                MAXIM RS232                 16 WEEKS          $2
                DRAM                        12 WEEKS          $8
                HITACHI PROCESSOR           12 WEEKS         $12
                TRANSCEIVER                 12 WEEKS          $6
                VIDEO AMP                   12 WEEKS          $1
                SONIC T                     16 WEEKS         $29
                ENCLOSURE                   16 WEEKS          $6
                POWER SUPPLY                12 WEEKS          $5
                                                            $124

                CMU (CMU-2000-14CB)

                CABLES                      12 WEEKS          $80
                STEL CARDS                  16 WEEKS        $1990
                ALTERA FPGA                 16 WEEKS         $600
                CPU CARD                    26 WEEKS         $900
                                                            $3570

                  QPSK DEMODULATOR CARDS (QDC-030-2)

                  CABLES                    12 WEEKS          $40
                  STEL CARDS                16 WEEKS         $995
                  ALTERA FPGA               16 WEEKS         $600
                                                            $1635

                  CMD (CMD-2000B)

                  CPU CARD                  26 WEEKS          $900
                                                              $900

                  64 QAM MODULATOR (QMC-200-3)

                  CABLES                      12 WEEKS         $120
                  CRYSTALS                    26 WEEKS          $50
                  BROADCOM                    12 WEEKS         $220
                  ALTERA FPGA                 12 WEEKS          $30
                  XILINX FPGA                 12 WEEKS         $327
                  DIGITAL CONVERTER           26 WEEKS         $210
                                                               $957

SPRINT PROPRIETARY INFORMATION - RESTRICTED

<PAGE>

                                  SCHEDULE 8.3

                              EXCLUSIVITY FEATURES

                                    - NONE -

SPRINT PROPRIETARY INFORMATION - RESTRICTED

<PAGE>

                                  SCHEDULE 11.0
                                SCOPE CHANGE FORM

                                                               Date:
                                                                    ------------

REFERENCE:

1.   Title of Scope Change

2.    Date of Scope Change

3.   Originator of Scope Change

4.   Reason for the Scope Change

5.   Details of the Scope Change

6.    Type of Scope Change [CHECK ONE]

      [] Clarify Specifications                 [] Misinterpreted Specifications
      [] Add Specifications                          [] Remove Specifications
      [] Change Approach                             [] Process Changes
      [] Architecture Changes                   [] Other

7. The impact, if any, of the Scope Change on other aspects of the project such
as:

     a)   Specifications
     b)  Budget
     c) Milestone Schedule

8.   Other Comments

Purchase of Equipment and Services Agreement between Sprint/United Management
Company and Hybrid Networks, Inc.

This Scope Change Form is hereby approved, and incorporated into the Purchase of
Equipment and Services Agreement between Sprint/United Management Company and
Hybid Networks, Inc.

HYBRID NETWORKS, INC.                    SPRINT/UNITED MANAGEMENTCOMPANY

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

SPRINT PROPRIETARY INFORMATION - RESTRICTED

<PAGE>

                                 SCHEDULE 15.2.1

                              SOLE SOURCE SUPPLIERS

<TABLE>
<CAPTION>
VENDOR         HYBRID PART NO.       HYBRID PART DESCRIPTION                   WHERE USED

<S>           <C>             <C>                                           <C>
INTEL         003-000023-01    S/ASY QPSK STEL CARD W/RF CONNECTOR               QDC-030-2

ICS            095-00062-01   S/ASY ICS 6PC1/111SA 400W RNDNT P/S CMD            CMD-2000B

ICS            095-00063-01   S/ASY ICS 2PCI/151SA 400W RNDNT P/S            CMU-2000-14CB

BROADCOM       110-O3023-01   IC BCM3023 QFP-52 QAM MOD                          QMC-030-2

XILINX         110-04013-01   IC XC4013E-4 PQFP-240                              QMC-030-3

TI             110-04030-01   IC LBT4030 64/256-QAM DEMOD&QPSK/16 QAM          WBR-60-231B

SUN            095-00001-03   CYBERMANAGER 2000 + SW FOR 20,000 SUBS           CMG-2000-SP

NATIONAL       110-83936-01   IC DP83936 PQFPI60 33MHZ SONIC W/TP              WBR-60-231B

SIEMANS        337-00017-01   FILTER SAW X6940 2MHZ/BW SMD/SIP5K PKG           WBR-60-231B

ALTERA         110-01030-01   EPFIOF30EQC208-3 RQFP-208                          WBR-60-231B

HITACHI        110-O7708-01   IC HD7708 PQFPI44 60MHZ 3V CPU                     WBR-60-231B
</TABLE>

SPRINT PROPRIETARY INFORMATION - RESTRICTED

                                       2
<PAGE>

                                 SCHEDULE 15.2.1
                           FORM OF SUPPLIER'S CONSENT

                             [SUPPLIER'S LETTERHEAD]

Sprint/United Management Company
[ADDRESS TO COME]

                                                     [Date]

Ladies and Gentlemen:

We understand that Sprint/United Management Company (together with its
affiliates, "Sprint") is a party to an equipment purchase agreement (the
"Purchase Agreement") with Hybrid Networks, Inc. ("Hybrid"). The Purchase
Agreement provides that in the event Hybrid is unable to satisfy its material
obligations to Sprint, Sprint is entitled to obtain the technology and
manufacturing capabilities of Hybrid for purposes of continuing to manufacture,
maintain and sell equipment previously manufactured and maintained by Hybrid.

As a key supplier of Hybrid, Sprint has our assurances that in the event Sprint
exercises its manufacturing and maintenance rights under the Purchase Agreement,
we will continue to act as a supplier to Sprint in substantially the same manner
as we have previously served Hybrid.

                                                     Very Truly Yours

                                                      [Supplier Name]

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

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

SPRINT PROPRIETARY INFORMATION - RESTRICTED

<PAGE>

                                 SCHEDULE 20.3

                             ARBITRATION PROCEDURES

(i)      All arbitration proceedings will be held in Denver, Colorado.

(ii)     The choice of law provisions of this Agreement apply.

(iii)    The arbitration will be governed by JAMS/Endispute comprehensive
         Arbitration Rules in existence on the commencement date of the
         arbitration ("Rules"), except that in the event of an inconsistency
         between the Rules and this Schedule 20.3 the terms of this Schedule
         20.3 will control.

(iv)     The parties will select one arbitrator that will be either a retired
         judge or a lawyer with at least 5 years experience as an arbitrator.

(v)      In the event the parties are unable to agree upon an arbitrator within
         10 days of the date of the notice delivered under Section 20.3 then
         each party will have 5 additional days to select their own arbitrator
         meeting the qualifications of paragraph (iv) above. Such arbitrators
         will then within 5 days of their appointment select a sole arbitrator
         to govern the arbitration proceedings.

(vi)     All discovery will be completed within 75 days after the appointment of
         the arbitrator. Each party may submit no more than 10 interrogatories,
         20 requests for production of documents and take no more than 4
         depositions lasting not more than 4 hours each.

(vii)    All responses to discovery requests are due within 20 days of the
         request.

(viii)   All discovery disputes will be resolved by the arbitrator within 10
         days of notice of the discovery dispute. (ix) There will be a hearing
         on the issue being arbitrated within 14 days of the completion of
         discovery. (x) Each side will have one 8-hour day to present its case.
         Each side will be allotted one-half day of summary arguments following
         the presentation of each side's case. (xi) The arbitrator will make its
         decision in writing within 3 days of the conclusion of the case. (xii)
         Each party will bear its own costs and expenses and an equal share of
         the arbitrators' and administrative fees of the arbitration.

(xiii)   The arbitrator has the power to award sanctions for delay in or
         obstruction of the arbitration proceeding or for raising of frivolous
         claims or defenses.

(xiv)    All notices must be hand delivered or delivered by overnight mail.

(xv)     The arbitrator shall have the power, upon good cause shown and with due
         regard for the parties' expressed desire to expedite the proceedings,
         to extend or continue the deadlines set forth in paragraphs (vi)
         through (xi) above.

(xvi)    The failure of the either of the parties or of the arbitrator to meet
         the deadlines set forth in paragraphs (vi) through (xi) shall not
         divest the arbitrator of the jurisdiction to act further in respect of
         the arbitration.

SPRINT PROPRIETARY INFORMATION - RESTRICTED

<PAGE>

                                  SCHEDULE 26.2
                       RETURN/REPAIR WARRANTY, PROCEDURES

I.       EQUIPMENT RETURNS OR RMA (RETURNED MATERIAL AUTHORIZATION)

A.       General Guidelines for RMA

Sprint will contact Supplier for a Return Material Authorization (RMA) number
prior to returning Equipment for any reason. The telephone number to obtain an
RMA number and the address to ship defective Equipment is as follows:

                  Hybrid Networks, Inc.
                  6409 Guadalupe Mines Road San Jose, CA 95120-5000
                  (Tel.) 800-516-9316
                  (Tel.) 408-323-6299

If Sprint returns Equipment without identifying the RMA number on the outside of
the shipping container, Supplier may refuse the shipment and return the
Equipment to Sprint. Except as described in Section IV below, Sprint is
responsible for removal and reinstallation of Equipment, as well as shipping
charges to return Equipment to Supplier at the address designated above.

Supplier will return, at its cost, Equipment to Sprint via UPS ground or an
equivalent method. Additional costs associated with requests by Sprint for
expedited delivery will be charged to Sprint. Out of Box Failures will be return
shipped by overnight mail at no cost to Sprint.

B.    Out of Box Failures

      Equipment which fails within the first 90 days of installation ("Out of
      Box Failures"), will be replaced as follows: If Supplier receives notice
      of an Equipment failure prior to 12:00 p.m. P.S.T., Supplier will ship
      replacement Equipment on the same business day by the fastest suitable
      method for shipping the Equipment. If Supplier receives notice of an
      Equipment failure after 12:00 P.S.T., Supplier will ship replacement
      Equipment within the following business day by the fastest suitable method
      for shipping the Equipment. Notice of Equipment failure shall be provided
      by telephone to the number set forth in Section I.A and via a confirmatory
      fax transmitted to (408)3236470. The advance replacement procedures
      described in Section III below will be followed.

C.   In-Warranty Repair

     Supplier will use its best efforts to repair or replace defective Equipment
     other than Out of the Box Failures within 15 business days. The 15-day
     Equipment repair turnaround commitment is measured from the date the
     defective Equipment arrives at Supplier's repair facility to the date the
     repaired Equipment is reshipped to Sprint.

II.      OUT OF WARRANTY REPAIR

A.   Headend

Out of warranty repairs for headend equipment will be provided on a time and
material basis at the rates in the Pricing Letter. Sprint will obtain an RMA to
return the Equipment to Supplier. Supplier will diagnose the returned Equipment
and provide a quotation for repair. Supplier will repair Equipment after
receiving a purchase order from Sprint. Supplier will use its best efforts to
repair Equipment within 15 business days from the date the defective Equipment
arrives at Supplier's repair facility to the date the repaired Equipment is
reshipped to Sprint. Equipment will be labeled after repair to indicate a new
warranty period of one year from the reshipment date.

B.   Wireless Broadband Routers

Out of warranty repairs for wireless broadband routers are done on a flat fee
basis. Sprint will obtain an RMA to return such Equipment to Supplier. Supplier
will repair the Equipment after receiving a purchase order from

SPRINT PROPRIETARY INFORMATION - RESTRICTED

<PAGE>

Sprint and reship the Equipment to Sprint. Equipment will be labeled after
repair to indicate a new warranty period of one year from the reshipment date.

Ordering Information: Equipment Repair is ordered on a per unit basis.

<TABLE>
<CAPTION>
--------------------------- --------------------------------------- ----------------------- -----------------
Product Code                Description                             Requirements            Price
<S>                         <C>                                     <C>                     <C>
--------------------------- --------------------------------------- ----------------------- -----------------
EWR-365-01                  Repair and one year warranty            Each Unit               $75
--------------------------- --------------------------------------- ----------------------- -----------------
</TABLE>

III.     ADVANCE REPLACEMENT

Supplier will ship replacement Equipment to Sprint immediately upon Sprint's
request if Sprint has issued a purchase order to cover Equipment being replaced.
After replacement, the failed Equipment is to be shipped back to Supplier. An
invoice will be generated at the time of shipment of the replacement Equipment.
The invoice will be credited when the failed Equipment is received complete by
Supplier. The invoice will be sent to Sprint if the defective Equipment is not
returned complete within 60 days of invoice generation.

IV.      ANNUALIZED FIELD FAILURE RATES

Sprint will be responsible for the cost of removing/reinstalling Equipment,
except to the extent the Annualized Field Failure Rate ("AFFR") exceeds the
thresholds set forth in the table below. Supplier will reimburse Sprint for
Equipment removal/reinstallation costs associated with Defects to the extent the
AFFR exceeds the thresholds set forth in the table below. In no event will
Supplier be charged more than $60 for any removal/reinstallation cycle. The AFFR
will be calculated separately for each category of Equipment.

         (i) The AFFR threshold for Base Station Equipment where the cumulative
shipments for that Equipment type exceed 500 is:

<TABLE>
<CAPTION>
3-MONTH PERIOD(S) FOLLOWING EFFECTIVE DATE          ANNUALIZED FIELD FAILURE RATE THRESHOLD

<S>                                                 <C>
1st                                                 Less than and equal to 3%
2nd                                                 Less than and equal to 2%
3rd and each one-month period thereafter            Less than and equal to 1%
</TABLE>

         (ii) The AFFR threshold for Base Station Equipment where cumulative
shipments are less than 500 is:

UNITS SHIPPED                                                 AFFR THRESHOLD
I to 100 units                                                2 units
100 to 300 units                                              4 units
300 to 500 units                                              6 units

         (iii) The AFFR threshold for CPE Equipment is as follows:

UNITS SHIPPED                                                 AFFR THRESHOLD
I to 500 units                                                20 units
501 to 1000 units                                             40 units
1001 units                                                    5%

The Annualized Field Failure Rate will be first calculated at the end of the
first full month following the Effective Date and each month thereafter
throughout the term of the Agreement.

The Annualized Field Failure Rate is the number, expressed as a percentage,
obtained by multiplying:

         (a)       the quotient of:

DEFECTIVE EQUIPMENT UNDER WARRANTY RETURNED BY SPRINT DURING THE MONTH BEING
MEASURED
--------------------------------------------------------------------------------
                        Average Equipment under Warranty

         (b)       by the number 12.

SPRINT PROPRIETARY INFORMATION - RESTRICTED

                                       2
<PAGE>

"Average Equipment Under Warranty" means (i) the sum of the number of units of
Equipment in service and under warranty on the first and last days of the month
being measured divided by (ii) the number 2.

V.       TESTING

Supplier will provide Sprint with software for use by each CPE Equipment
installation/repair technician that will enable such technician to test each
unit of CPE Equipment to see that it is operating properly. Sprint will test
each unit using such software and any reasonable testing procedures provided by
Supplier prior to returning it to Supplier for repair or replacement. At
Supplier's request, Sprint will certify compliance with this paragraph. In the
event Sprint fails to comply with this paragraph and the unit is returned and
confirmed not to be defective, Sprint will pay Supplier $60 for the cost of
testing such unit.

VI.      REPORTING

Supplier will provide monthly, quarterly and annual reports identifying the
number, type and cause of Defects occurring during the period covered by the
report. Supplier will provide to Sprint by the end of each month a report
calculating the Annualized Field Failure Rate for the prior month.

VII.     DOA

DOA GOALS

1 to 100 units                  less than 2 failures
100 to 300 units                less than 3 failures
301 to 500 units                less than 5 failures

For Equipment where the shipment is greater than 500 units the DOA shall be less
than 1%.

SPRINT PROPRIETARY INFORMATION - RESTRICTED

                                       3
<PAGE>

                                  SCHEDULE 38.1
                             SYSTEM SUPPORT SERVICES

1.       SUPPLIER ASSISTANCE.

              (a) Upon receipt of a request for technical assistance from
Sprint, the nature of the problem will be identified by Sprint, and a priority
assigned by Sprint (upon discussion with Supplier which in no event will require
the agreement and/or consent of Supplier).

              (b) Following attempted corrective actions by Sprint in accordance
with applicable operating and maintenance manuals provided by Supplier, when
Supplier is notified by Sprint that the System or any part thereof fails to
operate in accordance with the Specifications, Supplier will promptly commence
and diligently pursue all reasonable efforts to correct the Defect.

              (c) Supplier's correction of Defects in the System may take the
form of new software codes, new or supplementary operating instructions or
procedures, modifications of the software codes in Sprint's possession, or any
other commonly used method for correcting software Defects, as Sprint and
Supplier deem appropriate.

              (d) When appropriate, Supplier will provide non-emergency
technical support to Sprint via telephone, facsimile transmission, modem, or
other acceptable means during Sprint's normal business hours.

              (e) Supplier will provide emergency technical assistance to Sprint
via a telephone number designated to Sprint in advance by Supplier, 24 hours per
day, 365 days per year.

              (f) Supplier will provide remote intervention and assistance
capability to Sprint for remotely accessing operating Systems. Upon mutual
agreement between the Parties, Supplier may remotely access operating Systems
for the purpose of technical assistance.

2.       TROUBLE REPORTS.

         From time to time, failures in or degradation of Equipment may cause
services provided by the System to be adversely affected. It is necessary that
immediate assistance be provided by Supplier to allow Sprint to restore the
affected service. Critical service outages which cannot be resolved by Sprint's
field technicians or technical support engineers using procedures described in
Supplier's operating maintenance manuals will be transmitted to Supplier as a
trouble report ("TR"). Supplier will assign an identifying number to each TR to
aid in tracking its disposition. TRs will be immediately addressed by Supplier
through emergency technical assistance. TRs may not be considered concluded
until the solution is concurred upon by a Sprint employee within Sprint's
network operations center ("NOC"). Supplier is authorized by Sprint to install
and integrate, at Supplier's expense, any software upgrade or software
enhancement pursuant to mutual agreements reached between the parties.

3.       EMERGENCY TECHNICAL ASSISTANCE.

              (a) When a problem is encountered that adversely affects service
and/or performance with respect to a System, a Sprint maintenance technician
will attempt to repair or replace any malfunctioning Equipment adversely
affecting such service and/or performance using the procedures recommended in
the operating and maintenance manuals. If unsuccessful, a Sprint technical
representative will consult Supplier's designated ETA group at the telephone
number provided by Supplier in subsection 4(c) below. Following receipt of
notification by the ETA group, the ETA group will utilize all available
technical resources and will ensure that a qualified technical engineer is
communicating with Sprint's personnel regarding the problem within t 5 minutes
of any such notification.

              (b) A problem adversely affecting service that has a severity
level defined below either as an "El Emergency Condition" or an "E2 Emergency
Condition" is to be addressed under the ETA procedures set forth below in this
subsection 4 and in subsection 5.

SPRINT PROPRIETARY INFORMATION - RESTRICTED

<PAGE>

                  (i)      An E 1 Emergency Condition means a problem resulting
                           from any one or more of the following events:

                  -        An event including loss of origination and
                           termination capability in all terminations in a
                           sector for a period longer than 30 seconds.

                  -        Any System-initiated or unplanned manual restart
                           (warm, cold, reload, or image) which causes a System
                           loss of data forwarding capacity of a sector for more
                           than 30 seconds. Manual restarts with 24-hour notice
                           would be planned.

                  -        Usable subscriber and network performance statistics
                           not being collected.

                  -        Ten percent (10%) or more of the total data
                           forwarding capacity of a sector are out-of-service,
                           where the disrupted traffic demand exceeds the
                           alternate routing capability.

                  -        Total loss of access to a specific service, total
                           loss of access to one or more specific services
                           because of a fault condition in the System and
                           related Equipment (not to include
                           non-System-impacting failure of individual CPE).

                  -        Any single unit of Equipment having a hard failure in
                           excess of 30 minutes, whether or not it recovers from
                           such failure (not to include non-System-impacting
                           failure of individual CPE).

                  -        Any memory leakage, buffer utilization congestion or
                           configuration parameter loss (not to include
                           non-System-impacting failure of individual CPE).

                  -        (i) the loss of 10% or more of the capacity of any
                           sector for a period in excess of 10 seconds, (ii)
                           more than 10% of the users experience a BER of less
                           than 10-6 for more than 10 seconds, (iii) more than
                           10% of users experience latency in excess of design
                           parameters for a period of more than I0 seconds, or
                           (iv) the ratio of signal to interference + noise
                           falls below design parameters for a period of more
                           than 10 seconds affecting more than 10% of users in a
                           sector.

                  -        Any outage, other than non-System-impacting failure
                           of individual CPE.

              Supplier must allocate sufficient ETA that could reasonably be
              expected to clear all E1 Emergency Conditions within 12 hours of
              notification of their occurrence. Work must continue without any
              cessation until the defect causing the E 1 Emergency Condition is
              solved or the severity thereof is reduced to a "PI Major
              Condition", as defined below, or less.

                  (ii)     An E2 Emergency Condition means a problem resulting
                           from any one or more of the following events:

                  -        Loss of the redundant functionality for any Equipment
                           that is duplicated.

                  -        Loss of the master clock.

                  -        50% or more of the equipped tape or disk drive units
                           out-of-service.

SPRINT PROPRIETARY INFORMATION - RESTRICTED

                                       2
<PAGE>

                  -        Inability to dump or initialize an element image.

                  -        Inability to perform critical maintenance procedures.

              Supplier must allocate sufficient ETA that could reasonably be
              expected to clear all E2 Emergency Conditions within 24 hours of
              notification of such E2 Emergency Conditions. Work must continue
              without any cessation until the Defect causing the E2 Emergency
              Condition is solved or the severity is reduced to a P 1 Major
              Condition or less.

              (c) In the event that an E 1 Emergency Condition or an E2
Emergency Condition should remain unresolved following referral to Supplier by
Sprint, the problem causing such condition must be reported to the levels of
management set forth below (with comparable titles, if different) to ensure all
available resources necessary to address the problem will be committed in
accordance with the following:

         The following are the reporting levels if an E 1 Emergency Condition or
an E2 Emergency Condition is not resolved within the time periods set forth
below as amended from time to time following referral thereof to Supplier by
Sprint:

<TABLE>
<CAPTION>
  SUPPLIER CONTACT                           SUPPLIER CONTACT NAME        TELEPHONE NUMBER

<S>                                          <C>                        <C>
  One hour Operations Engineering Mgr.       [to be designated]         [to be designated]

  Two hours-- BWG NOC                        Ron Fordon                     (214) 684-2999

  Three hours -- BWG AVP                     John Montross                  (913) 315-9340

  Four hours -- Vice President               Jim Harman                     (913) 315-9423
</TABLE>

              (d) If Sprint reasonably determines that Supplier has not provided
sufficient ETA to resolve any E1 Emergency Condition or E2 Emergency Condition
on a timely basis, Sprint will be entitled to withhold all payments with respect
to the affected System then due or outstanding prior to the date of such
determination until such time as adequate ETA is provided to Sprint to resolve
such Emergency Condition.

              (e) If an E 1 Emergency Condition or an E2 Emergency Condition
exists in a System prior to Final Acceptance of such System, Supplier must
deliver to Sprint each Software upgrade and each Equipment upgrade developed by
or on behalf of Supplier to resolve any E 1 Emergency Condition or E2 Emergency
Condition promptly following completion of development of such Software upgrades
or promptly following availability of such Equipment upgrades.

              (f) The term Non-Emergency Services includes providing to Sprint
any requested technical assistance and support for the purpose of resolving
non-emergency problems as defined below, remote monitoring and outage review
consultation and the handling of CSRs.

              (g) Technical assistance and support must be provided for the
purpose of resolving non-emergency problems defined below as "P 1 Major
Condition", "P2 Significant Problem" and "P3 Minor Problem" which are reported
to Supplier.

                      (i) P1 Major Condition means any non-emergency failure of
         specific features or functions of any Equipment that restricts its
         operations, but does not render the Equipment inoperable, impact
         traffic capacity or coverage or require significant manual intervention
         for the Equipment to operate properly and in accordance with its
         Specifications. These events will include loss of diagnostic
         capabilities and/or loss of reporting functions. Work must continue
         without cessation during Supplier's normal business hours until the
         Defect causing the P 1 Major Condition is corrected.

SPRINT PROPRIETARY INFORMATION - RESTRICTED

                                       3
<PAGE>

                      (ii) P2 Significant Problem means any non-emergency
         intermittently occurring problem related to specific primary functions
         or features and/or any inoperable secondary functions, which does not
         have a significant adverse effect on the overall performance of any
         Equipment. By-pass or work around procedures must be used to alleviate
         such P2 Significant Problem until it is corrected.

                      (iii) P3 Minor Problem means any non-emergency problem
         that does not affect the performance or functions of any Equipment,
         and, despite such problem, the Equipment is fully operable without
         restrictions. Such P3 Minor Problems may include documentation
         inaccuracies, cosmetics, minor requests for changes or maintenance
         requests. Supplier will resolve such P3 Minor Problems during the next
         available scheduled Software Upgrade or Equipment Upgrade.

              (h) Should a non-emergency problem remain unresolved for the
period or periods of time set forth below following referral to Supplier by
Sprint, such problem must be reported to the levels of management set forth
below to ensure all available resources necessary to correct such problem will
be committed to address such problem pursuant to the following:

<TABLE>
<CAPTION>
                           -------------------------------------------------------------------
                                           REPORTING LEVELS IF NON-EMERGENCY
                                                 IS NOT RESOLVED WITHIN

----------------------------------------------------------------------------------------------
  CONDITION                   1 DAY         2 DAYS           7 DAYS          30 DAYS
----------------------------------------------------------------------------------------------
<S>                           <C>           <C>             <C>              <C>

                              Technical     Technical
  P1                          Assistance    Assistance       BWG             BWG AVP
    Major Condition           Manager       Senior Manager   Director
----------------------------------------------------------------------------------------------
  P2                                        Technical        Technical
  Significant                               Assistance       Assistance      BWG Director
  Condition                                 Manager          Senior Manager
----------------------------------------------------------------------------------------------
                                                             Technical
  P3                                                         Assistance      BWG Director
  Minor Condition                                            Manager
----------------------------------------------------------------------------------------------
</TABLE>

         Non-emergency problems referred to Supplier as a CSR will be resolved
based upon the priority assigned to them as determined by Sprint, and to the
extent possible will be incorporated into the next scheduled Software Upgrade or
Equipment Upgrade.

4. ETA AND CSR.

         In the event that emergency or non-emergency technical support provided
from Supplier's technical support center is not sufficient to resolve an El
Emergency Condition or an E2 Emergency Condition, a P 1 Major Condition or a P2
Significant Problem, Supplier must send a technically qualified person or
persons to the site of such emergency condition or problem to assist Sprint's
employees in solving such condition or problem. Supplier's technically qualified
person or persons must be on-site as soon as practicable after the mutual
determination that the support provided by Supplier's technical assistance
center is not sufficient to resolve the condition, but in no event more than 24
hours after such determination, or at such later time as may be determined by
Sprint. A CSR will be submitted by Sprint to request a repair of the emergency
condition or the non-emergency problem, or to request the addition of a Software
or Equipment Upgrade or other Software or Equipment Enhancement. Sprint's CSRs
will define the condition or problem and state whether Sprint considers the CSR
to be for a Software/Equipment Upgrade or Software/Equipment Enhancement.
Changes to the System resulting from CSRs must be fully tested and accepted in
accordance with the Specifications. Supplier must respond to the submission of a
CSR by Sprint within five (5) business days, acknowledging receipt of the CSR,
confirming or denying agreement with Sprint's assessment of whether the CSR may
be considered a Software or Equipment Upgrade or a Software or Equipment
Enhancement and summarizing Supplier's intended actions to handle the CSR. A CSR
may result in System fixes, or enhancements, resulting in Equipment
modifications reasonably acceptable to Sprint.

SPRINT PROPRIETARY INFORMATION - RESTRICTED

                                       4
<PAGE>

5.       UPGRADES AND ENHANCEMENTS.

         Supplier will provide and install Software Upgrades, and Equipment
Upgrades at no additional charge.

         Upon payment of the applicable license fee described in the Pricing
Letter, Supplier will provide and install Software Enhancements in Systems
designated by Sprint. Supplier will provide Sprint a rolling six-month forecast
of its planned release dates of Software Enhancements. Supplier represents that
the functionality and features described in the High Level Requirements will be
incorporated into one of Supplier's next two Software Enhancements.

6.    DEFINITIONS.

         For purposes of this Schedule, the following definitions apply:

l)       "Equipment Upgrade" means a change or modification in any Equipment
     which fixes or otherwise corrects faults, design shortcomings or
     shortcomings in meeting the Specifications, or failure rates, or in any
     such case, that is necessary to enable performance in accordance with the
     Specifications for the most current version of the Equipment.

2)       "Software Enhancements" means major modifications or improvements made
     to the Software which improve performance or capacity of the Software or
     which provide additional functions to the Software and which will be
     identified by a change to the first digit to the right of the decimal point
     of the number identifying the version of the Software.

3)       "Software Upgrades" means periodic updates to the Software issued by
     Supplier under Warranty and Software maintenance obligations to: (i)
     correct Defects in the Software and (ii) provide minor enhancements.
     Upgrades may be designated by a change to the second digit to the right of
     the decimal point of the number identifying the version of the Software.

                                       5<PAGE>

                                                                     Exhibit 4.1
================================================================================

                          ALEXION PHARMACEUTICALS, INC.

                                       and

                            THE CHASE MANHATTAN BANK
                                       as
                                     Trustee

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

                                    INDENTURE

                            Dated as of March 8, 2000

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

                         $ 120,000,000 Principal Amount*

                 5 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2007

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

----------------
*     Plus an additional $30,000,000 issuable at the option of the Initial
      Purchasers as described herein.
<PAGE>

                              CROSS-REFERENCE TABLE

    TIA                                                      Indenture
  Section                                                     Section
  -------                                                     -------

   310(a)(1) ..............................................   7.10
      (a)(2) ..............................................   7.10
      (a)(3) ..............................................   N.A.
      (a)(4) ..............................................   N.A.
      (a)(5) ..............................................   N.A.
      (b) .................................................   7.08; 7.10; 13.02
      (c) .................................................   N.A.
   311(a) .................................................   7.11
      (b) .................................................   7.11
      (c) .................................................   N.A.
   312(a) .................................................   2.05
      (b) .................................................   13.03
      (c) .................................................   13.03
   313(a) .................................................   7.06
      (b)(1) ..............................................   N.A.
      (b)(2) ..............................................   7.06
      (c) .................................................   7.06; 13.02
      (d) .................................................   7.06
   314(a) .................................................   4.02
      (b) .................................................   N.A.
      (c)(1) ..............................................   13.04
      (c)(2) ..............................................   13.04
      (c)(3) ..............................................   N.A.
      (d) .................................................   N.A.
      (e) .................................................   13.05
      (f) .................................................   N.A.
   315(a) .................................................   7.01(b)
      (b) .................................................   7.05; 13.02
      (c) .................................................   7.01(a)
      (d) .................................................   7.01(c)
      (e) .................................................   6.11
   316(a)(last sentence) ..................................   2.09
      (a)(1)(A) ...........................................   6.05
      (a)(1)(B) ...........................................   6.04
      (a)(2) ..............................................   N.A.
      (b) .................................................   6.07
   317(a)(1) ..............................................   6.08
      (a)(2) ..............................................   6.09
      (b) .................................................   2.04
   318(a) .................................................   13.01
<PAGE>

                                TABLE OF CONTENTS
                                                                         Page
                                                                         ----

                                       ARTICLE ONE

                        DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01.   Definitions .............................................  1
SECTION 1.02.   Other Definitions .......................................  5
SECTION 1.03.   Incorporation by Reference of Trust Indenture Act .......  6
SECTION 1.04.   Rules of Construction ...................................  6

                                   ARTICLE TWO

                                 THE SECURITIES

SECTION 2.01.   Form and Dating .........................................  7
SECTION 2.02.   Execution and Authentication ............................  7
SECTION 2.03.   Registrar, Paying Agent and Conversion Agent ............  8
SECTION 2.04.   Paying Agent to Hold Money in Trust .....................  8
SECTION 2.05.   Securityholder Lists ....................................  9
SECTION 2.06.   Transfer and Exchange ...................................  9
SECTION 2.07.   Replacement Securities ..................................  9
SECTION 2.08.   Outstanding Securities .................................. 10
SECTION 2.09.   Securities Held by the Company or an Affiliate .......... 10
SECTION 2.10.   Temporary Securities .................................... 10
SECTION 2.11.   Cancellation ............................................ 10
SECTION 2.12.   Defaulted Interest ...................................... 11
SECTION 2.13.   CUSIP Numbers ........................................... 11
SECTION 2.14.   Deposit of Moneys ....................................... 11
SECTION 2.15.   Book-Entry Provisions for Global Securities ............. 11
SECTION 2.16.   Special Transfer Provisions ............................. 12
SECTION 2.17.   Restrictive Legends ..................................... 15

                                  ARTICLE THREE

                             REDEMPTION; REPURCHASE

SECTION 3.01.   Notices to Trustee ...................................... 15
SECTION 3.02.   Selection of Securities to Be Redeemed .................. 16
SECTION 3.03.   Notice of Redemption .................................... 16
SECTION 3.04.   Effect of Notice of Redemption .......................... 17
SECTION 3.05.   Deposit of Redemption Price ............................. 17
SECTION 3.06.   Securities Redeemed in Part ............................. 17
SECTION 3.07.   Repurchase at Option of Holder upon a Repurchase Event .. 18

                                       -i-
<PAGE>

                                                                         Page
                                                                         ----

                                       ARTICLE FOUR

                                        COVENANTS

SECTION 4.01.   Payment of Securities ................................... 23
SECTION 4.02.   Maintenance of Office or Agency ......................... 23
SECTION 4.03.   Reports to Holders ...................................... 24
SECTION 4.04.   Compliance Certificate .................................. 24
SECTION 4.05.   Stay, Extension and Usury Laws .......................... 24
SECTION 4.06.   Corporate Existence ..................................... 24
SECTION 4.07.   Notice of Default ....................................... 25

                                  ARTICLE FIVE

                    CONSOLIDATION, MERGER AND SALE OF ASSETS

SECTION 5.01.   When Company May Merge, etc. ............................ 25
SECTION 5.02.   Successor Substituted ................................... 25

                                   ARTICLE SIX

                              DEFAULTS AND REMEDIES

SECTION 6.01.   Events of Default ....................................... 26
SECTION 6.02.   Acceleration ............................................ 27
SECTION 6.03.   Other Remedies .......................................... 27
SECTION 6.04.   Waiver of Past Defaults ................................. 28
SECTION 6.05.   Control by Majority ..................................... 28
SECTION 6.06.   Limitation on Suits ..................................... 28
SECTION 6.07.   Rights of Holders to Receive Payment or Convert ......... 28
SECTION 6.08.   Collection Suit by Trustee .............................. 29
SECTION 6.09.   Trustee May File Proofs of Claim ........................ 29
SECTION 6.10.   Priorities .............................................. 29
SECTION 6.11.   Undertaking for Costs ................................... 29

                                  ARTICLE SEVEN

                                     TRUSTEE

SECTION 7.01.   Duties of Trustee ....................................... 30
SECTION 7.02.   Rights of Trustee ....................................... 31
SECTION 7.03.   Individual Rights of Trustee ............................ 32
SECTION 7.04.   Trustee's Disclaimer .................................... 32
SECTION 7.05.   Notice of Defaults ...................................... 32
SECTION 7.06.   Reports by Trustee to Holders ........................... 32
SECTION 7.07.   Compensation and Indemnity .............................. 32

                                      -ii-
<PAGE>

                                                                         Page
                                                                         ----

SECTION 7.08.   Replacement of Trustee .................................. 33
SECTION 7.09.   Successor Trustee by Merger etc. ........................ 34
SECTION 7.10.   Eligibility; Disqualification ........................... 34
SECTION 7.11.   Preferential Collection of Claims Against Company ....... 34

                                  ARTICLE EIGHT

                     SATISFACTION AND DISCHARGE; DEFEASANCE

SECTION 8.01.   Termination of Company's Obligations .................... 35
SECTION 8.02.   Application of Trust Money .............................. 36
SECTION 8.03.   Repayment to Company .................................... 36
SECTION 8.04.   Reinstatement ........................................... 36

                                  ARTICLE NINE

                                   AMENDMENTS

SECTION 9.01.   Without Consent of Holders .............................. 37
SECTION 9.02.   With Consent of Holders ................................. 37
SECTION 9.03.   Compliance with Trust Indenture Act ..................... 38
SECTION 9.04.   Revocation and Effect of Consents ....................... 38
SECTION 9.05.   Notation on or Exchange of Securities ................... 38
SECTION 9.06.   Trustee Protected ....................................... 39

                                   ARTICLE TEN

                                   CONVERSION

SECTION 10.01.  Conversion Privilege; Restrictive Legends ............... 39
SECTION 10.02.  Conversion Procedure .................................... 39
SECTION 10.03.  Fractional Shares ....................................... 40
SECTION 10.04.  Taxes on Conversion ..................................... 40
SECTION 10.05.  Company to Provide Stock ................................ 40
SECTION 10.06.  Adjustment of Conversion Price .......................... 41
SECTION 10.07.  Effect of Reclassification, Consolidation,
                Merger or Sale .......................................... 50
SECTION 10.08.  Notice of Certain Transactions .......................... 51
SECTION 10.09.  Company Determination Final ............................. 51
SECTION 10.10.  Trustee's Disclaimer .................................... 51

                                      -iii-
<PAGE>

                                                                         Page
                                                                         ----

                                 ARTICLE ELEVEN

                                   [RESERVED]

                                 ARTICLE TWELVE

                                  SUBORDINATION

SECTION 12.01.  Securities Subordinated to Senior Indebtedness .......... 52
SECTION 12.02.  Subrogation ............................................. 54
SECTION 12.03.  Obligation of Company Unconditional ..................... 54
SECTION 12.04.  Modification of Terms of Senior Indebtedness ............ 54
SECTION 12.05.  [Reserved] .............................................. 55
SECTION 12.06.  Effectuation of Subordination by Trustee ................ 55
SECTION 12.07.  Knowledge of Trustee .................................... 55
SECTION 12.08.  Trustee's Relation to Senior Indebtedness ............... 56
SECTION 12.09.  Rights of Holders of Senior Indebtedness Not Impaired ... 56
SECTION 12.10.  Certain Conversions Not Deemed Payment .................. 56

                                ARTICLE THIRTEEN

                                  MISCELLANEOUS

SECTION 13.01.  Trust Indenture Act Controls ............................ 57
SECTION 13.02.  Notices ................................................. 57
SECTION 13.03.  Communication by Holders with Other Holders ............. 58
SECTION 13.04.  Certificate and Opinion as to Conditions Precedent ...... 58
SECTION 13.05.  Statements Required in Certificate or Opinion ........... 58
SECTION 13.06.  Rules by Trustee and Agents ............................. 59
SECTION 13.07.  Legal Holidays .......................................... 59
SECTION 13.08.  No Recourse Against Others .............................. 59
SECTION 13.09.  Duplicate Originals ..................................... 59
SECTION 13.10.  Governing Law ........................................... 59
SECTION 13.11.  No Adverse Interpretation of Other Agreements ........... 59
SECTION 13.12.  Successors .............................................. 59
SECTION 13.13.  Separability ............................................ 60
SECTION 13.14.  Table of Contents, Headings, etc. ....................... 60

SIGNATURES ..............................................................S-1

                                      -iv-
<PAGE>

EXHIBITS

Exhibit A - Form of Security
Exhibit B - Form of Legends
Exhibit C - Form of Certificate to Be Delivered in Connection with Transfers to
              Non-QIB Accredited Investors
Exhibit D - Form of Certificate to Be Delivered in Connection with Transfers
              Pursuant to Regulation S
Exhibit E - Form of Notice of Transfer Pursuant to Registration Statement
Exhibit F - Form of Opinion of Counsel in Connection with Registration of
              Securities

                                       -v-
<PAGE>

            INDENTURE dated as of March 8, 2000 between ALEXION PHARMACEUTICALS,
INC., a Delaware corporation (the "Company"), and THE CHASE MANHATTAN BANK, as
trustee (the "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 5 3/4%
Convertible Subordinated Notes Due 2007:

                                   ARTICLE ONE

                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01. Definitions.

            "Affiliate" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
this purpose, "control" shall mean the power to direct the management and
policies of a Person through the ownership of securities, by contract or
otherwise.

            "Agent" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.

            "Board of Directors" means the Board of Directors of the Company or
any committee of the Board authorized to act for it hereunder.

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

            "Capital Stock" means any and all shares, interests, participations
or other equivalents (however designated) of capital stock of the Company and
all warrants or options to acquire such capital stock.

            "Common Stock" means the common stock, par value $.0001 per share,
of the Company.

            "Company" means the party named as such above until a successor
replaces it pursuant to the applicable provision hereof and thereafter means the
successor.

            "Company Request" or "Company Order" means a written request or
order signed on behalf of the Company by its Chairman of the Board, its
President or any Vice President and by its Treasurer or an Assistant Treasurer,
its Secretary or an Assistant Secretary, and delivered to the Trustee.

<PAGE>
                                      -2-

            "Conversion Price" means $106.425 per share of Common Stock, as
adjusted pursuant to Article Ten.

            "Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 13.02 or such other address as the Trustee may
give notice of to the Company.

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

            "Depository" means The Depository Trust Company, its nominees and
successors.

            "Designated Senior Indebtedness" means any Senior Indebtedness in
which the instrument creating or evidencing the same or the assumption or
guarantee thereof (or related agreements or documents to which the Company is a
party) expressly provides that such Senior Indebtedness shall be "Designated
Senior Indebtedness" for purposes of this Indenture.

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

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

            "IAI Global Security" means a permanent Global Security in
registered form representing the aggregate principal amount of Securities
transferred to Institutional Accredited Investors.

            "Indebtedness" means, with respect to any Person, (i) all
obligations, contingent or otherwise, of such Person (a) for borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof), (b) evidenced by a note, debenture, bond
or written instrument (including a purchase money obligation), (c) in respect of
leases of such Person required, in conformity with generally accepted accounting
principles, to be accounted for as capitalized lease obligations on the balance
sheet of such Person and all obligations and other liabilities (contingent or
otherwise) under any lease or related document (including a purchase agreement)
in connection with the lease of real property which provides that such Person is
contractually obligated to purchase or cause a third party to purchase the
leased property and thereby guarantee a minimum residual value of the leased
property to the lessor and the obligations of such Person under such lease or
related document to purchase or to cause a third party to purchase such leased
property or (d) in respect of letters of credit (including reimbursement
obligations with respect thereto) or bankers' acceptances; (ii) all obligations
of others of the type described in clause (i) above or in clause (iii), (iv) or
(v) below assumed by or guaranteed in any manner by such Person or in effect
guaranteed by such Person through an agreement to purchase, contingent or
otherwise (and the obligations of such Person under any such assumptions,
guarantees or other such arrangements); (iii) all obligations secured by a
mortgage, pledge, lien, encumbrance, charge or adverse claim affecting title or
resulting in an encumbrance to which the property or assets of such Person are
subject, whether or not the obligation secured thereby shall have been assumed
by or shall otherwise be such Person's legal liability; (iv) to the extent not
otherwise included, all obligations of such Person under interest rate and
currency swap agreements, cap, floor and collar agreements, spot and forward
contracts and

<PAGE>
                                      -3-

similar agreements and arrangements; and (v) all obligations, contingent or
otherwise, of such Person under or in respect of any and all deferrals,
renewals, extensions and refundings of, or amendments, modifications or
supplements to, any liability of the kind described in any of the preceding
clauses (i), (ii), (iii) or (iv).

            "Indenture" means this Indenture as amended or supplemented from
time to time.

            "Institutional Accredited Investor" means an "accredited investor"
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act
that is an institutional investor.

            "interest" means, with respect to any Security, interest on the
Security plus liquidated damages, if any.

            "Issue Date" means (i) March 8, 2000 with respect to the
$120,000,000 aggregate principal amount of Securities issued on such date, and
(ii) with respect to any of up to $30,000,000 aggregate principal amount of
Securities that may be issued after March 8, 2000 pursuant to the option
described in Section 2.01, the respective issue date of such Securities.

            "liquidated damages" has the meaning provided in the Registration
Rights Agreement.

            "Maturity Date" means March 15, 2007.

            "Non-U.S. Person" means a Person who is not a U.S. Person, as
defined in Regulation S under the Securities Act.

            "Officer" means the Chairman of the Board, the President, any Vice
President, the Chief Financial Officer, the Treasurer or the Secretary of the
Company.

            "Officers' Certificate" means a certificate signed by two Officers
or by an Officer and an Assistant Treasurer or an Assistant Secretary of the
Company.

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

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

            "principal" of a debt security means the principal of the security
plus the premium, if any, on the security.

            "QIB" means a "qualified institutional buyer" within the meaning of
Rule 144A under the Securities Act.

<PAGE>
                                      -4-

            "Registration Rights Agreement" means the Registration Rights
Agreement dated as of March 8, 2000 between the Company and the Initial
Purchasers.

            "Regulation S" means Regulation S under the Securities Act.

            "Regulation S Global Security" means a permanent Global Security in
registered form representing the aggregate principal amount of Securities sold
in reliance on Regulation S.

            "Restricted Security" means a Security that constitutes a
"Restricted Security" within the meaning of Rule 144(a)(3) under the Securities
Act; provided, however, that the Trustee shall be entitled to request and
conclusively rely on an Opinion of Counsel with respect to whether any Security
constitutes a Restricted Security.

            "Rule 144A Global Security" means a permanent Global Security in
registered form representing the aggregate principal amount of Securities sold
in reliance on Rule 144A.

            "SEC" means the Securities and Exchange Commission.

            "Securities" means the 5 3/4% Convertible Subordinated Notes Due
2007 issued by the Company pursuant to this Indenture.

            "Securities Act" means the Securities Act of 1933, as amended.

            "Senior Indebtedness" means the principal of, premium, if any, and
interest on, rent payable under, and any other amounts due on or in connection
with any and all Indebtedness of the Company (including, without limitation,
fees, costs, expenses and any interest accruing after the filing of a petition
initiating any proceeding pursuant to any bankruptcy law, but only to the extent
allowed or permitted to the holder of such Indebtedness against the bankruptcy
or other insolvency estate of the Company in such proceeding), whether
outstanding on the date of this Indenture or thereafter created, incurred,
assumed, guaranteed or in effect guaranteed by the Company (including all
deferrals, renewals, extensions or refundings of, or amendments, modifications
or supplements to the foregoing); provided, however, that Senior Indebtedness
does not include (i) Indebtedness evidenced by the Securities, (ii) Indebtedness
of the Company to any subsidiary of the Company except to the extent such
Indebtedness is pledged by such subsidiary as security for any Senior
Indebtedness, (iii) accounts payable of the Company to trade creditors arising
in the ordinary course of business, and (iv) any particular Indebtedness in
which the instrument creating or evidencing the same or the assumption or
guarantee thereof expressly provides that such Indebtedness shall not be senior
in right of payment to, or is pari passu with, or is subordinated or junior to,
the Securities.

            "subsidiary" means (i) a corporation a majority of whose capital
stock with voting power, under ordinary circumstances, to elect directors is at
the time, directly or indirectly, owned by the Company, by one or more
subsidiaries of the Company or by the Company and one or more subsidiaries
thereof or (ii) any other Person (other than a corporation) in which the
Company, one or more subsidiaries thereof or the Company and one or more
subsidiaries thereof, directly or indirectly, at the date of determination
thereof, have at least majority ownership interest.

<PAGE>
                                      -5-

            "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb) as in effect on the date of this Indenture, except as provided in
Section 9.03.

            "Trust Officer" means any officer of the Trustee assigned by the
Trustee to administer this Indenture.

            "Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions hereof and thereafter
means the successor.

SECTION 1.02. Other Definitions.

              Term                                    Defined in Section
              ----                                    ------------------

        "Bankruptcy Law" ..........................       6.01
        "Business Day" ............................      13.07
        "Change in Control" .......................       3.07(1)
        "Closing Price" ...........................      10.06(h)
        "Common Dividend Amount" ..................      10.06(e)
        "Company Notice" ..........................       3.07(b)
        "Continuing Director" .....................       3.07(1)
        "Conversion Agent" ........................       2.03
        "Current Market Price" ....................      10.06(h)
        "Custodian" ...............................       6.01
        "Event of Default" ........................       6.01
        "fair market value" .......................      10.06(h)
        "Global Security" .........................       2.01
        "Initial Purchasers" ......................       2.02
        "Legal Holiday" ...........................      13.07
        "Market Capitalization" ...................      10.06(e)
        "Participants" ............................       2.15
        "Paying Agent" ............................       2.03
        "Payment Blockage Notice" .................      12.01(b)
        "Payment Blockage Period" .................      12.01(b)
        "Payment Default" .........................      12.01(b)
        "Physical Securities" .....................       2.15(b)
        "Private Placement Legend" ................       2.17
        "Record Date" .............................      10.06(h)
        "Registrar" ...............................       2.03
        "Repurchase Date" .........................       3.07(a)
        "Repurchase Event" ........................       3.07(1)
        "Repurchase Price .........................       3.07
        "Subject Securities" ......................      10.06(d)
        "Termination of Trading" ..................       3.07(1)
        "Trading Day" .............................      10.06(h)

<PAGE>
                                      -6-

        "Trigger Event" ...........................      10.06(d)
        "U.S. Government Obligations" .............       8.01

SECTION 1.03. Incorporation by Reference of Trust Indenture Act.

            Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.

            The following TIA terms used in this Indenture have the following
meanings:

            "Commission" means the SEC;

            "indenture securities" means the Securities;

            "indenture security holder" means a Holder;

            "indenture to be qualified" means this Indenture;

            "indenture trustee" or "institutional trustee" means the Trustee;
and

            "obligor" on the indenture securities means the Company.

            All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
and not otherwise defined herein have the meanings so assigned to them.

SECTION 1.04. Rules of Construction.

            Unless the context otherwise requires:

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

            (2) an accounting term not otherwise defined has the meaning
      assigned to it in accordance with generally accepted accounting principles
      in effect on the date hereof;

            (3) "or" is not exclusive;

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

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

            (6) "herein", "hereof" and other words of similar import refer to
      this Indenture as a whole and not to any particular Article, Section or
      other subdivision.

<PAGE>
                                      -7-

                                   ARTICLE TWO

                                 THE SECURITIES

SECTION 2.01. Form and Dating.

            The Securities and the Trustee's certificate of authentication shall
be substantially in the form set forth in Exhibit A, which is incorporated in
and forms a part of this Indenture. The Securities may have notations, legends
or endorsements required by law, stock exchange rule or usage. Each Security
shall be dated the date of its authentication.

            Securities offered and sold in reliance on Rule 144A, Securities
offered and sold in reliance on Regulation S and Securities subsequently
transferred to Institutional Accredited Investors shall be issued initially in
the form of one or more Global Securities, substantially in the form set forth
in Exhibit A (the "Global Security"). The aggregate principal amount of the
Global Security may from time to time be increased or decreased by adjustments
made on the records of the Trustee, as custodian for the Depository, as
hereinafter provided.

SECTION 2.02. Execution and Authentication.

            Two Officers shall sign the Securities for the Company by manual or
facsimile signature.

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

            A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Security has been authenticated under this Indenture.

            Upon a written order of the Company signed by two Officers or by an
Officer and an Assistant Treasurer of the Company, the Trustee shall
authenticate Securities for original issue in the principal amount of
$120,000,000 and such additional principal amounts, if any, as shall be
determined pursuant to the next sentence of this Section 2.02. Upon receipt by
the Trustee of an Officers' Certificate stating that the Initial Purchasers have
elected to purchase from the Company a specified principal amount of additional
Securities, not to exceed $30,000,000, pursuant to Section 1 of the Purchase
Agreement dated as of March 3, 2000 between the Company, as issuer, and J.P.
Morgan Securities Inc., U.S. Bancorp Piper Jaffray Inc., Chase Securities Inc.
and Warburg Dillon Read LLC, as initial purchasers (the "Initial Purchasers"),
the Trustee shall authenticate and deliver such specified principal amount of
additional Securities to or upon the written order of the Company signed as
provided in the immediately preceding sentence. Such Officers' Certificate must
be received by the Trustee at least two full Business Days prior to the proposed
date for delivery of such additional Securities, but, in any case, not later
than April 5, 2000. The aggregate principal amount of Securities outstanding at
any time may not exceed $150,000,000 except as provided in Section 2.07.

<PAGE>
                                      -8-

            Upon a written order of the Company signed by two Officers or by an
Officer and an Assistant Treasurer of the Company, the Trustee shall
authenticate Securities not bearing the Private Placement Legend to be issued to
the transferee when sold pursuant to an effective registration statement under
the Securities Act.

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

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

SECTION 2.03. 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 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 appoint or change one or more
co-registrars, one or more additional paying agents and one or more additional
conversion agents without notice and may act in any such capacity on its own
behalf. The term "Registrar" includes any co-registrar; the term "Paying Agent"
includes any additional paying agent; the term "Conversion Agent" includes any
additional conversion agent.

            The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall notify
the Trustee of the name and address of any Agent not a party to this Indenture.
If the Company fails to maintain a Registrar, Paying Agent or Conversion Agent,
the Trustee shall act as such.

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

SECTION 2.04. Paying Agent to Hold Money in Trust.

            Each Paying Agent shall hold in trust for the benefit of the Holders
or the Trustee all moneys held by the Paying Agent for the payment of principal
of or interest on the Securities, and shall notify the Trustee of any default by
the Company in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee.
The Company at any time may require a Paying Agent to pay all money held by it
to the Trustee. Upon payment over to the Trustee, the Paying Agent shall have no
further liability for the money. If the Company acts as Paying Agent, it shall
segregate and hold as a separate trust fund all money held by it as Paying
Agent.

<PAGE>
                                      -9-

SECTION 2.05. 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
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before each interest payment date and at such other times as the
Trustee may request in writing a list, in such form and as of such date as the
Trustee may reasonably require, of the names and addresses of Holders.

SECTION 2.06. Transfer and Exchange.

            Where Securities are presented to the Registrar with a request to
register their transfer or to exchange them for an equal principal amount of
Securities of other authorized denominations, the Registrar shall register the
transfer or make the exchange if its requirements for such transaction are met.
To permit registrations of transfer and exchanges, the Company shall execute and
the Trustee shall authenticate Securities at the Registrar's request. The
Company or the Trustee, as the case may be, shall not be required (a) to issue
or authenticate, register the transfer of or exchange any Security during a
period beginning at the opening of business 15 days before the mailing of a
notice of redemption of the Securities selected for redemption under Section
3.03 and ending at the close of business on the day of such mailing, or (b) to
register the transfer of or exchange any Security so selected for redemption in
whole or in part, except the unredeemed portion of Securities being redeemed in
part.

            No service charge shall be made for any registration of transfer,
exchange or conversion of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer, registration of transfer or exchange of
Securities, other than exchanges pursuant to Sections 2.10, 3.06, 9.05 or 10.02
not involving any transfer.

SECTION 2.07. Replacement Securities.

            If the Holder of a Security claims that the Security has been
mutilated, lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Security if the Trustee's requirements
are met and, in the case of a mutilated Security, such mutilated Security is
surrendered to the Trustee. In the case of lost, destroyed or wrongfully taken
Securities, if required by the Trustee or the Company, an indemnity bond must be
provided by the Holder that is sufficient in the judgment of both to protect the
Company, the Trustee or any Agent from any loss which any of them may suffer if
a Security is replaced. The Company or the Trustee may charge for its expenses
in replacing a Security.

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

            Every replacement Security is an additional obligation of the
Company.

<PAGE>
                                      -10-

SECTION 2.08. Outstanding Securities.

            Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those converted, those cancelled by it,
those delivered to it for cancellation and those described in this Section as
not outstanding. A Security does not cease to be outstanding because the Company
or one of its subsidiaries or Affiliates holds the Security.

            If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it, or a court
holds, that the replaced Security is held by a protected purchaser.

            If the Paying Agent (other than the Company) holds on a redemption
date or maturity date money sufficient to pay Securities payable on that date,
then on and after that date, such Securities shall be deemed to be no longer
outstanding and interest on them shall cease to accrue.

SECTION 2.09. Securities Held by the Company or an Affiliate.

            In determining whether the Holders of the required aggregate
principal amount of Securities have concurred in any direction, waiver or
consent, Securities owned by the Company or a subsidiary or an Affiliate shall
be disregarded, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which a Trust Officer knows are so owned shall be so disregarded.

SECTION 2.10. Temporary Securities.

            Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities in exchange for temporary Securities.

SECTION 2.11. Cancellation.

            The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar, Paying Agent and Conversion Agent shall forward to
the Trustee any Securities surrendered to them for registration of transfer,
exchange, payment or conversion. The Trustee shall cancel all Securities
surrendered for registration of transfer, exchange, payment, conversion or
cancellation and the Trustee may, but shall not be required to, destroy
cancelled Securities and deliver a certificate of any such destruction to the
Company or return such cancelled Securities to the Company. The Company may not
issue new Securities to replace Securities that it has paid or delivered to the
Trustee for cancellation or that any Holder has converted pursuant to Article
Ten.

<PAGE>
                                      -11-

SECTION 2.12. Defaulted Interest.

            If and to the extent the Company defaults in a payment of interest
on the Securities, it shall pay the defaulted interest in any lawful manner
plus, to the extent not prohibited by applicable statute or case law, interest
payable on the defaulted interest. It may pay the defaulted interest to the
Persons who are Holders on a subsequent special record date. The Company shall
fix such record date and payment date. At least 15 days before the record date,
the Company shall mail to Holders a notice that states the record date, payment
date and amount of interest to be paid.

SECTION 2.13. CUSIP Numbers.

            The Company in issuing the Securities may use one or more "CUSIP"
numbers, and if so, the Trustee shall use the CUSIP numbers in notices of
redemption or exchange as a convenience to Holders; provided, however, that no
representation is hereby deemed to be made by the Trustee as to the correctness
or accuracy of the CUSIP numbers printed in the notice or on the Securities, and
that reliance may be placed only on the other identification numbers printed on
the Securities. The Company shall promptly notify the Trustee of any change in
the CUSIP number.

SECTION 2.14. Deposit of Moneys.

            Prior to 11:00 a.m., New York City time, on each interest payment
date, maturity date, redemption date and Repurchase Date, the Company shall have
deposited with the Paying Agent in immediately available funds money sufficient
to make cash payments, if any, due on such interest payment date, maturity date,
redemption date and Repurchase Date, as the case may be, in a timely manner
which permits the Paying Agent to remit payment to the Holders on such interest
payment date, maturity date, redemption date and Repurchase Date, as the case
may be.

SECTION 2.15. Book-Entry Provisions for Global Securities.

            (a) The Global Securities initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear the legend for
Global Securities as set forth in Exhibit B(II).

            Members of, or participants in, the Depository ("Participants")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depository, or the Trustee as its custodian, or
under the Global Security, and the Depository may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of the
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 Depository or impair, as between the
Depository and Participants, the operation of customary practices governing the
exercise of the rights of a Holder of any Security.

            (b) Transfers of Global Securities shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. In addition, permanent certifi-

<PAGE>
                                      -12-

cated Securities in registered form, in the form set forth in Exhibit A (the
"Physical Securities"), shall be transferred to all beneficial owners in
exchange for their beneficial interests in Global Securities if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for any Global Security and a successor Depository is not appointed
by the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a written request from
the Depository to issue Physical Securities.

            (c) In connection with any transfer or exchange of a portion of the
beneficial interest in a Global Security to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Securities are to be
issued) reflect on its books and records the date and a decrease in the
aggregate principal amount of such Global Security in an amount equal to the
aggregate initial aggregate principal amount of the beneficial interest in the
Global Security to be transferred, and the Company shall execute and the Trustee
shall authenticate and deliver one or more Physical Securities of authorized
denominations in an aggregate principal amount equal to the aggregate principal
amount of the beneficial interest in the Global Security so transferred.

            (d) In connection with the transfer of a Global Security in its
entirety to beneficial owners pursuant to paragraph (b) of this Section 2.15,
such Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall upon written
instructions from the Company authenticate and deliver, to each beneficial owner
identified by the Depository in exchange for its beneficial interest in such
Global Security, an equal aggregate principal amount of Physical Securities of
authorized denominations.

            (e) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to paragraph
(b) or (c) of this Section 2.15 shall, except as otherwise provided by Section
2.16, bear the Private Placement Legend.

            (f) The Holder of any Global Security may grant proxies and
otherwise authorize any Person, including Participants and Persons that may hold
interests through Participants, to take any action which a Holder is entitled to
take under this Indenture or the Securities.

SECTION 2.16. Special Transfer Provisions.

            (a)Transfers to Non-QIB Institutional Accredited Investors and
Non-U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Restricted Security to any
Institutional Accredited Investor which is not a QIB or to any Non-U.S. Person:

            (i) the Registrar shall register the transfer of any Restricted
      Security, whether or not such Security bears the Private Placement Legend,
      if (x) the requested transfer is after the second anniversary of the Issue
      Date for such Security; provided, however, that the transferor shall
      represent to the Registrar that, to the transferor's knowledge, neither
      the Company nor any Affiliate of the Company has held any beneficial
      interest in such Security, or portion thereof, at any time on or prior to
      the second anniversary of the Issue Date for such Security or (y)(1) in
      the case of a transfer to an Institutional Accredited Investor which is
      not a QIB

<PAGE>
                                      -13-

      (excluding Non-U.S. Persons), the proposed transferee has delivered to the
      Registrar a certificate substantially in the form of Exhibit C hereto and
      any legal opinions and certifications required thereby and (2) in the case
      of a transfer to a Non-U.S. Person, the proposed transferee has delivered
      to the Registrar a certificate substantially in the form of Exhibit D
      hereto;

            (ii) if the proposed transferee is a Participant and the Securities
      to be transferred consist of Physical Securities which after transfer are
      to be evidenced by an interest in the Global Security, upon receipt by the
      Registrar of (x) written instructions given in accordance with the
      Depository's and the Registrar's procedures and (y) the appropriate
      certificate, if any, required by clause (y) of paragraph (i) above, the
      Registrar shall register the transfer and reflect on its books and records
      the date and an increase in the aggregate principal amount of the Global
      Security in an amount equal to the aggregate principal amount of Physical
      Securities to be transferred, and the Trustee shall cancel the Physical
      Securities so transferred; and

            (iii) if the proposed transferor is a Participant seeking to
      transfer an interest in the Rule 144A Global Security, upon receipt by the
      Registrar of (x) written instructions given in accordance with the
      Depository's and the Registrar's procedures and (y) the appropriate
      certificate, if any, required by clause (y) of paragraph (i) above, the
      Registrar shall register the transfer and reflect on its books and records
      the date and (A) a decrease in the aggregate principal amount of the Rule
      144A Global Security in an amount equal to the aggregate principal amount
      of the Securities to be transferred and (B) an increase in the aggregate
      principal amount of the Regulation S Global Security or the IAI Global
      Security, as the case may be, in an amount equal to the aggregate
      principal amount of the Securities to be transferred.

            (b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Restricted Security to
a QIB:

            (i) the Registrar shall register the transfer of any Restricted
      Security, whether or not such Security bears the Private Placement Legend,
      if (x) the requested transfer is after the second anniversary of the Issue
      Date for such Security; provided, however, that the transferor shall
      represent to the Registrar that, to the transferor's knowledge, neither
      the Company nor any Affiliate of the Company has held any beneficial
      interest in such Security, or portion thereof, at any time on or prior to
      the second anniversary of the Issue Date for such Security or (y) such
      transfer is being made by a proposed transferor who has checked the box
      provided for on the form of Security stating, or has otherwise advised the
      Company and the Registrar in writing, that the sale has been made in
      compliance with the provisions of Rule 144A to a transferee who has signed
      the certification provided for on the form of Security stating, or has
      otherwise advised the Company and the Registrar in writing, that it is
      purchasing the Security for its own account or an account with respect to
      which it exercises sole investment discretion and that it and any such
      account is a QIB within the meaning of Rule 144A, and is aware that the
      sale to it is being made in reliance on Rule 144A and acknowledges that it
      has received such information regarding the Company as it has requested
      pursuant to Rule 144A or has determined not to request such information
      and that it is aware that the transferor is relying

<PAGE>
                                      -14-

      upon its foregoing representations in order to claim the exemption from
      registration provided by Rule 144A;

            (ii) if the proposed transferee is a Participant and the Securities
      to be transferred consist of Physical Securities which after transfer are
      to be evidenced by an interest in the Global Security, upon receipt by the
      Registrar of written instructions given in accordance with the
      Depository's and Registrar's procedures, the Registrar shall register the
      transfer and reflect on its books and records the date and an increase in
      the principal amount of the Global Security in an amount equal to the
      principal amount of Physical Securities to be transferred, and the Trustee
      shall cancel the Physical Security so transferred; and

            (iii) if the proposed transferor is a Participant seeking to
      transfer an interest in the Regulation S Global Security or the IAI Global
      Security, upon receipt by the Registrar of written instructions given in
      accordance with the Depository's and the Registrar's procedures, the
      Registrar shall register the transfer and reflect on its books and records
      the date and (A) a decrease in the aggregate principal amount of the
      Regulation S Global Security or the IAI Global Security, as the case may
      be, in an amount equal to the aggregate principal amount of the Securities
      to be transferred and (B) an increase in the aggregate principal amount of
      the Rule 144A Global Security in an amount equal to the aggregate
      principal amount of the Securities to be transferred.

            (c) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture, a Global Security may
not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.

            (d) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Securities not bearing the Private Placement Legend,
the Registrar or co-Registrar shall deliver Securities that do not bear the
Private Placement Legend. Upon the registration of transfer, exchange or
replacement of Securities bearing the Private Placement Legend, the Registrar or
co-Registrar shall deliver only Securities that bear the Private Placement
Legend unless (i) the requested transfer is after the second anniversary of the
Issue Date for such Security (provided, however, that neither the Company nor
any Affiliate of the Company has held any beneficial interest in such Security,
or portion thereof, at any time prior to or on the second anniversary of the
Issue Date for such Security), (ii) there is delivered to the Trustee an Opinion
of Counsel reasonably satisfactory to the Company to the effect that neither
such legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act or (iii) such
Security has been sold pursuant to an effective registration statement under the
Securities Act and the Holder selling such Securities has delivered to the
Registrar or co-Registrar a notice in the form of Exhibit E hereto. Upon the
effectiveness of the Shelf Registration Statement (as defined in the
Registration Rights Agreement) the Company shall deliver to the Trustee a notice
of effectiveness, a Security or Securities, an authentication order in
accordance with Section 2.02 and an Opinion of Counsel in the form

<PAGE>
                                      -15-

of Exhibit F hereto and, if required by the Depository, the Company shall
deliver to the Depository a letter of representations in a form reasonably
acceptable to the Depository.

            (e) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.

            The Registrar shall retain, in accordance with its customary
procedures, copies of all letters, notices and other written communications
received pursuant to Section 2.15 or this Section 2.16. The Company shall have
the right to inspect and make copies of all such letters, notices or other
written communications at any reasonable time upon the giving of reasonable
notice to the Registrar.

            (f) Transfers of Securities Held by Affiliates. Any certificate (i)
evidencing a Security that has been transferred to an Affiliate of the Company
within two years after the Issue Date for such Security, as evidenced by a
notation on the Assignment Form for such transfer or in the representation
letter delivered in respect thereof or (ii) evidencing a Security that has been
acquired from an Affiliate (other than by an Affiliate) in a transaction or a
chain of transactions not involving any public offering, shall, until two years
after the last date on which either the Company or any Affiliate of the Company
was an owner of such Security, in each case, bear the Private Placement Legend,
unless otherwise agreed by the Company (with written notice thereof to the
Trustee).

SECTION 2.17. Restrictive Legends.

            Each Global Security and Physical Security that constitutes a
Restricted Security shall bear the private placement legend (the "Private
Placement Legend") as set forth in Exhibit B(I) on the face thereof until after
the second anniversary of the later of the Issue Date for such Securities and
the last date on which the Company or any Affiliate of the Company was the owner
of such Security (or any predecessor security) (or such shorter period of time
as permitted by Rule 144(k) under the Securities Act or any successor provision
thereunder) (or such longer period of time as may be required under the
Securities Act or applicable state securities laws in the opinion of counsel for
the Company, unless otherwise agreed by the Company and the Holder thereof).

                                  ARTICLE THREE

                             REDEMPTION; REPURCHASE

SECTION 3.01. Notices to Trustee.

            If the Company wants to redeem Securities pursuant to paragraph 6 of
the Securities, it shall notify the Trustee at least 45 days prior to the
redemption date (unless a shorter notice period shall be satisfactory to the
Trustee) of the redemption date and the aggregate principal amount of Securities
to be redeemed. If the Company wants to credit against any such redemption
Securities it has

<PAGE>
                                      -16-

not previously delivered to the Trustee for cancellation (other than Securities
repurchased pursuant to Section 3.07), it shall deliver the Securities with the
notice.

SECTION 3.02. Selection of Securities to Be Redeemed.

            If less than all the Securities are to be redeemed, the Trustee
shall select the Securities to be redeemed on either a pro rata basis or by lot
or such other method as the Trustee shall deem fair and equitable. The Trustee
shall make the selection from Securities outstanding not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations larger than $1,000 principal amount.
Securities and portions of them it selects shall be in amounts of $1,000
principal amount or whole multiples of $1,000 principal amount. Provisions of
this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption.

            The Registrar need not register the transfer of or exchange any
Securities selected for redemption. Also, the Registrar need not transfer or
exchange any Securities for a period of 15 days before selecting Securities to
be redeemed.

SECTION 3.03. Notice of Redemption.

            At least 30 days but not more than 60 days before a redemption date,
the Company shall mail by first-class mail or cause to be mailed a notice of
redemption to each Holder whose Securities are to be redeemed.

            The notice shall identify the Securities and the aggregate principal
amount thereof to be redeemed and shall state:

            (1) the redemption date;

            (2) the redemption price, plus the amount of accrued and unpaid
      interest to be paid on the Securities called for redemption;

            (3) the then current conversion rate;

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

            (5) the date on which the right to convert the principal of the
      Securities called for redemption will terminate and the place or places
      where such Securities may be surrendered for conversion;

            (6) that Holders who want to convert Securities must satisfy the
      requirements in Article Ten;

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

<PAGE>
                                      -17-

            (8) that interest on Securities called for redemption ceases to
      accrue on and after the redemption date; and

            (9) the CUSIP number of the Securities.

            The date on which the right to convert the principal of the
Securities called for redemption will terminate shall be at the close of
business on the date prior to the redemption date, or, if the day before the
redemption date is a Legal Holiday, the close of business on the next preceding
day which is not a Legal Holiday.

            At the Company's request (which request shall be furnished to the
Trustee at least 40 days prior to the redemption date (unless a shorter period
shall be acceptable to the Trustee)), the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense; provided that the
form and content of such notice shall be prepared by the Company.

SECTION 3.04. Effect of Notice of Redemption.

            Once notice of redemption is mailed, Securities called for
redemption become due and payable on the redemption date at the redemption price
plus accrued and unpaid interest to the date of redemption, and, on and after
such date (unless the Company shall default in the payment of the redemption
price), such Securities shall cease to bear interest. Upon surrender to the
Paying Agent, such Securities shall be paid at the redemption price plus accrued
interest to the redemption date, unless the redemption date is an interest
payment date, in which case the accrued interest will be paid in the ordinary
course.

SECTION 3.05. Deposit of Redemption Price.

            On or before the redemption date, the Company shall deposit with the
Paying Agent pursuant to Section 2.14 money in funds immediately available on
the redemption date sufficient to pay the redemption price of and accrued
interest on all Securities to be redeemed on that date. The Paying Agent shall
return to the Company, as soon as practicable, any money not required for that
purpose because of conversion of Securities.

SECTION 3.06. Securities Redeemed in Part.

            Upon surrender of a Security that is redeemed in part, the Company
shall execute and the Trustee shall authenticate for the Holder a new Security
equal in principal amount to the unredeemed portion of the Security surrendered.

            If a portion of a Holder's Securities is selected for partial
redemption and that Holder converts a portion of that Holder's Securities, the
converted portion shall be deemed (as far as may be) to be the portion selected
for redemption.

<PAGE>
                                      -18-

SECTION 3.07. Repurchase at Option of Holder upon a Repurchase Event.

            (a) If there shall occur a Repurchase Event, then each Holder shall
have the right, at such Holder's option, to require the Company to repurchase
all of such Holder's Securities, or any portion thereof (in principal amounts of
$1,000 or integral multiples thereof), on the date (the "Repurchase Date") that
is forty (40) calendar days after the date of the Company Notice (as defined
below) of such Repurchase Event (or, if such 40th day is not a Business Day, the
next succeeding Business Day). Such repurchase shall be made in cash at a price
equal to 105% of the principal amount of Securities such Holder elects to
require the Company to repurchase, together with accrued interest, if any, to
but excluding the Repurchase Date (the "Repurchase Price") (or, at the option of
the Company, by delivery of Common Stock in accordance with the provisions of
Section 3.07(k)); provided, however, that if such Repurchase Date is March 15 or
September 15, then the interest payable on such date shall be paid to the holder
of record of the Security on the next preceding March 1 or September 1,
respectively. No Securities may be repurchased at the option of Holders upon a
Repurchase Event if there has occurred and is continuing an Event of Default,
other than a default in the payment of the Repurchase Price with respect to such
Securities on the Repurchase Date.

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

            (1) the Repurchase Date;

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

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

            (4) the Repurchase Price and whether the Repurchase Price shall be
      payable in cash or Common Stock and, if payable in Common Stock, the
      method of calculating the amount of the Common Stock to be delivered upon
      the repurchase as provided in Section 3.07(k);

            (5) a description of the procedure which a Holder must follow to
      exercise a repurchase right;
<PAGE>
                                      -19-

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

            (7) the CUSIP numbers of the Securities.

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

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

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

            (d) If the Company fails to repurchase on the Repurchase Date any
Securities (or portions thereof) as to which the repurchase right has been
properly exercised, then the principal of such Securities shall, until paid,
bear interest to the extent permitted by applicable law from the Repurchase Date
at the rate borne by the Securities and each such Security shall be convertible
into Common Stock in accordance with this Indenture until the principal of such
Security shall have been paid or duly provided for.

            (e) Any Security which is to be repurchased only in part shall be
surrendered to the Trustee duly endorsed for transfer to the Company and
accompanied by appropriate evidence of genuineness and authority satisfactory to
the Company and the Trustee duly executed by the Holder thereof (or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities, containing identical terms and conditions,
of any authorized denomination as requested by such Holder in aggregate
principal amount equal to and in exchange for the unrepurchased portion of the
principal of the Security so surrendered.

            (f) On or prior to the Repurchase Date, the Company shall deposit
with the Trustee or with a Paying Agent, pursuant to Section 2.14, the
Repurchase Price in cash for payment to the Holder on the Repurchase Date;
provided that if payment is to be made in cash and such cash payment is made on
the Repurchase Date it must be received by the Trustee or paying agent, as the
case
<PAGE>
                                      -20-

may be, by 10:00 a.m., New York City time, on such date; provided, further, that
if the Repurchase Price is to be paid in shares of Common Stock, such shares of
Common Stock are to be paid as promptly after the Repurchase Date as
practicable.

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

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

            (i) Any issuance and delivery of certificates for shares of Common
Stock on repurchase of Securities shall be made without charge to the Holder of
Securities being repurchased for such certificates or for any tax or duty in
respect of the issuance or delivery of such certificates or the securities
represented thereby; provided, however, that the Company shall not be required
to pay any tax or duty which may be payable in respect of (i) income of the
Holder or (ii) any transfer involved in the issuance or delivery of certificates
for shares of Common Stock in a name other than that of the Holder of the
Securities being repurchased, and no such issuance or delivery shall be made
unless and until the Person requesting such issuance or delivery has paid to the
Company the amount of any such tax or duty or has established, to the
satisfaction of the Company, that such tax or duty has been paid.

            (j) All Securities delivered for repurchase shall be delivered to
the Trustee to be canceled in accordance with the provisions of Section 2.11.

            (k) The Company may elect to pay the Repurchase Price by delivery of
shares of Common Stock if and only if the following conditions shall have been
satisfied:
<PAGE>
                                      -21-

            (i) the shares of Common Stock deliverable in payment of the
      Repurchase Price shall have a fair market value as of the Repurchase Date
      of not less than the Repurchase Price. For purposes of this Section 3.07,
      the fair market value of shares of Common Stock shall be determined by the
      Company and shall be equal to 95% of the average of the Closing Prices of
      the Common Stock for the five consecutive Trading Days immediately
      preceding and including the third Trading Day prior to the Repurchase
      Date;

            (ii) such shares have been registered under the Securities Act or
      are freely transferable without such registration;

            (iii) the issuance of such Common Stock does not require
      registration with or approval of any governmental authority under any
      state law or any other federal law, which registration or approval has not
      been made or obtained;

            (iv) such shares have been approved for quotation on the Nasdaq
      National Market or listing on a national securities exchange; and

            (v) such shares will be issued out of the Company's authorized but
      unissued stock and, upon issuance, will be duly and validly and fully paid
      and non-assessable and free of any preemptive rights.

            (l) For purposes of this Section 3.07:

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

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

            (iii) the term "Continuing Director" means at any date a member of
      the Company's Board of Directors (i) who was a member of such board on
      March 3, 2000 or (ii) who was nominated or elected by at least a majority
      of the directors who were Continuing Directors at the time of such
      nomination or election or whose election to the Company's Board of
      Directors was recommended or endorsed by at least a majority of the
      directors who were Continuing Directors at the time of such nomination or
      election or such lesser number comprising a majority of a nominating
      committee if authority for such nominations or elections has been
      delegated to a nominating committee whose authority and composition have
      been approved by at least a majority of the Continuing Directors; and

            (iv) the term "Repurchase Event" means a Change in Control or a
      Termination of Trading, in each case defined as follows:
<PAGE>
                                      -22-

                  A "Change in Control" shall be deemed to have occurred when
            (i) any "person" or "group" (as such terms are used in Sections
            13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
            owner" (as defined in Rules 13-d3 and 13-d5 under the Exchange Act)
            of shares representing more than 50% of the combined voting power of
            the then outstanding securities entitled to vote generally in
            elections of directors of the Company (the "Voting Stock"); (ii) the
            stockholders of the Company approve any plan or proposal for the
            liquidation, dissolution or winding up of the Company; (iii) the
            Company (A) consolidates with or merges into any other Person or any
            other Person merges into the Company, and in the case of any such
            transaction, the outstanding Common Stock of the Company is changed
            or exchanged into other assets or securities as a result, unless the
            stockholders of the Company immediately before such transaction own,
            directly or indirectly immediately following such transaction, more
            than 50% of the combined voting power of the outstanding voting
            securities of the Person resulting from such transaction in
            substantially the same proportion as their ownership of the Voting
            Stock immediately before such transaction, or (B) conveys, transfers
            or leases all or substantially all of its assets to any Person other
            than a subsidiary or subsidiaries; or (iv) Continuing Directors do
            not at any time constitute a majority of the Board of Directors of
            the Company; provided that a Change in Control shall not be deemed
            to have occurred if either (x) the Closing Price of the Common Stock
            for any five (5) Trading Days during the ten (10) Trading Days
            immediately preceding the Change in Control is at least equal to
            105% of the Conversion Price in effect on the date on which the
            Change in Control occurs or (y) in the case of a merger or
            consolidation otherwise constituting a Change in Control, all of the
            consideration (excluding cash payments for fractional shares) in
            such merger or consolidation constituting the Change in Control
            consists of common stock traded on a United States national
            securities exchange or quoted on the Nasdaq National Market (or
            which will be so traded or quoted when issued or exchanged in
            connection with such Change in Control) and as a result of such
            transaction or transactions the Securities become convertible solely
            into such Common Stock.

                  A "Termination of Trading" shall have occurred if the Common
            Stock (or other common stock into which the Securities are then
            convertible) is neither listed for trading on a United States
            national securities exchange nor approved for trading on an
            established automated over-the-counter trading market in the United
            States.
<PAGE>
                                      -23-

                                  ARTICLE FOUR

                                    COVENANTS

SECTION 4.01. Payment of Securities.

            The Company shall pay the principal amount, premium, if any, of and
any accrued and unpaid interest on the Securities on the dates and in the manner
provided in the Securities. The principal, premium, if any, and any accrued and
unpaid interest thereon shall be considered paid on the date due if the Paying
Agent holds (or, if the Company is acting as Paying Agent, if the Company has
segregated and holds in trust in accordance with Section 2.04) on that date
money sufficient to pay the principal, premium, if any, and any accrued and
unpaid interest thereon.

            The Company shall pay interest on any overdue principal at the rate
borne by the Securities. The Company shall pay interest on overdue installments
of interest at the same rate to the extent not prohibited by applicable law.

SECTION 4.02. Maintenance of Office or Agency.

            The Company will maintain in the Borough of Manhattan, The City of
New York, an office or agency where Securities may be surrendered for
registration of transfer or exchange or conversion and where notices and demands
to or upon the Company in respect of the Securities and this Indenture may be
served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.

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

            The Company hereby designates the Corporate Trust Office of the
Trustee as an agency of the Company in accordance with Section 2.03.

            The Company also shall comply with the provisions of TIA ss. 314(a).
<PAGE>
                                      -24-

SECTION 4.03. Reports to Holders.

            (a) The Company (at its own expense) will deliver to the Trustee
within 15 days after the filing of the same with the SEC, copies of the
quarterly and annual reports and of the information, documents and other
reports, if any, the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act.

            (b) Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will promptly provide the information required by Rule 144A(d)(4) to any Holder
that so requests.

            (c) In addition, if and when this Indenture becomes subject to the
TIA, the Company will file a copy of all such information with the SEC for
public availability (unless the Commission will not accept such a filing) and
make such information available to investors who request it in writing. The
Company will also comply with the other provisions of TIA ss. 314(a).

SECTION 4.04. Compliance Certificate.

            The Company shall deliver to the Trustee within 120 days after the
end of each fiscal year of the Company an Officers' Certificate stating whether
or not the signers know of any Default or Event of Default by the Company in
performing any of its obligations under this Indenture or the Securities. If
they do know of any such Default or Event of Default, the certificate shall
describe the Default or Event of Default and its status.

SECTION 4.05. Stay, Extension and Usury Laws.

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

SECTION 4.06. Corporate Existence.

            Subject to Article Five, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate existence of each subsidiary in accordance with the
respective organizational documents of each subsidiary and the rights (charter
and statutory), licenses and franchises of the Company and its subsidiaries;
provided, however, that the Company shall not be required to preserve any such
right, license or franchise, or the corporate existence of any subsidiary, if in
the judgment of the Company, (i) such preservation or existence is not material
to the conduct of business of the Company and (ii) the loss of
<PAGE>
                                      -25-

such right, license or franchise or the dissolution of such subsidiary does not
have a material adverse impact on the Holders.

SECTION 4.07. Notice of Default.

            In the event that any Default under Section 6.01 hereof shall occur
the Company will give prompt written notice of such Default to the Trustee.

                                  ARTICLE FIVE

                    CONSOLIDATION, MERGER AND SALE OF ASSETS

SECTION 5.01. When Company May Merge, etc.

            The Company shall not consolidate with or merge into, or transfer or
lease all or substantially all of its assets to, another Person unless such
other Person is a corporation, limited liability company, partnership, trust or
other business entity organized under the laws of the United States, any State
thereof or the District of Columbia and such Person assumes by supplemental
indenture all the obligations of the Company under the Securities, this
Indenture and the Registration Rights Agreement, and immediately after giving
effect to the transaction, no Default or Event of Default has occurred and is
continuing.

            The Company shall deliver to the Trustee prior to the consummation
of the proposed transaction an Officers' Certificate to the foregoing effect and
an Opinion of Counsel stating that the proposed transaction and such
supplemental indenture will, upon consummation of the proposed transaction,
comply with this Indenture.

            Notwithstanding the foregoing, any subsidiary may consolidate with,
merge into or transfer all or part of its properties and assets to the Company
or any other subsidiary or subsidiaries.

SECTION 5.02. Successor Substituted.

            Upon any consolidation or merger or transfer or lease of all or
substantially all of the assets of the Company in accordance with Section 5.01,
the successor Person formed by such consolidation or into which the Company is
merged or to which such transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, and shall assume
every duty and obligation of, the Company under this Indenture with the same
effect as if such successor corporation had been named as the Company herein.
When the successor corporation assumes all obligations of the Company hereunder,
all obligations of the predecessor corporation shall terminate.
<PAGE>
                                      -26-

                                   ARTICLE SIX

                              DEFAULTS AND REMEDIES

SECTION 6.01. Events of Default.

            An "Event of Default" occurs if:

            (1) the Company fails to pay the principal of or any premium on the
      Securities when due (whether or not prohibited by the provisions set forth
      in Article Twelve hereof);

            (2) the Company fails to pay any interest on the Securities for 30
      days when due (whether or not prohibited by the provisions set forth in
      Article Twelve hereof);

            (3) the Company fails to perform any other covenant in this
      Indenture for the period and after the notice specified in the last
      paragraph of this Section 6.01;

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

                  (A) commences a voluntary case,

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

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

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

            (5) a court of competent jurisdiction enters an order or decree
      under any Bankruptcy Law that:

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

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

                  (C) orders the liquidation of the Company,

            and the order or decree remains unstayed and in effect for 90
            consecutive days.

            The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or State law for the relief of debtors. The term "Custodian" means any
receiver trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
<PAGE>
                                      -27-

            A default under clause (3) is not an Event of Default until the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Securities then outstanding notify the Company and the Trustee of the default
and the Company does not cure the default within 90 days after receipt of the
notice of such default. The notice must specify the default, demand that it be
remedied and state that the notice is a "Notice of Default". If the Holders of
25% in aggregate principal amount of the outstanding Securities request the
Trustee to give such notice on their behalf, the Trustee shall do so. When a
default is cured, it ceases.

SECTION 6.02. Acceleration.

            If an Event of Default (other than an Event of Default specified in
Section 6.01(4) or (5)) occurs and is continuing, the Trustee by notice to the
Company, or the Holders of at least 25% in principal amount of the Securities
then outstanding by notice to the Company and the Trustee, may declare the
principal of, premium, if any, and any accrued and unpaid interest on all the
Securities to be due and payable. Upon such declaration such principal and
interest shall be due and payable immediately. If an Event of Default specified
in Section 6.01(4) or (5) occurs, the entire principal amount of the Securities
shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.

            The Company shall promptly notify holders of Designated Senior
Indebtedness if payment of the Securities is accelerated because of an Event of
Default.

            After a declaration of acceleration, but before a judgment or decree
of the money due in respect of the Securities has been obtained, the Holders of
not less than a majority in aggregate principal amount of the Securities then
outstanding by written notice to the Trustee may rescind an acceleration and its
consequences if (i) all existing Events of Default (other than the nonpayment of
principal of and interest on the Securities which has become due solely by
virtue of such acceleration) have been cured or waived, (ii) the rescission
would not conflict with any judgment or decree and (iii) the Company shall have
paid all amounts due pursuant to Section 7.07.

SECTION 6.03. Other Remedies.

            Notwithstanding any other provision of this Indenture, if an Event
of Default occurs and is continuing, the Trustee may pursue any available remedy
by proceeding at law or in equity to collect the payment of the principal of,
premium, if any, and 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 it does not possess
any of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative.
<PAGE>
                                      -28-

SECTION 6.04. Waiver of Past Defaults.

            Subject to Sections 6.02, 6.07 and 9.02, the Holders of a majority
in aggregate principal amount of the Securities then outstanding by notice to
the Trustee may waive any past Default or Event of Default and its consequences.
When a Default or an Event of Default is waived, it is cured and ceases.

SECTION 6.05. Control by Majority.

            The Holders of a majority in aggregate principal amount of the
Securities then outstanding may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture, is unduly prejudicial to
the rights of other Holders or would involve the Trustee in personal liability;
provided that the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.

SECTION 6.06. Limitation on Suits.

            Except as provided in Section 6.07, a Holder may pursue a remedy
with respect to this Indenture or the Securities only if:

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

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

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

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

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

SECTION 6.07. Rights of Holders to Receive Payment or Convert.

            Notwithstanding any other provision of this Indenture, (i) the right
of any Holder to receive payment of the principal of and interest on the
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such
<PAGE>
                                      -29-

respective dates, shall not be impaired or affected without the consent of the
Holder and (ii) the right of any Holder to bring suit for the enforcement of the
right to convert the Security shall not be impaired or affected without the
consent of the Holder.

SECTION 6.08. Collection Suit by Trustee.

            If an Event of Default specified in Section 6.01(1) or (2) 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 of
principal and interest remaining unpaid and amounts due to the Trustee under
Section 7.07.

SECTION 6.09. Trustee May File Proofs of Claim.

            The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee, any predecessor Trustee and the Holders allowed in any judicial
proceedings relative to the Company, its creditors or its property.

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

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

            Second: to holders of Senior Indebtedness to the extent required by
      Article Twelve;

            Third: to Holders for amounts due and unpaid on the Securities for
      principal, premium, if any, and interest, ratably, without preference or
      priority of any kind, according to the amounts due and payable on the
      Securities for principal, premium, if any, and interest, respectively, and

            Fourth: to the Company.

            The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment by it to Holders pursuant to this
Section 6.10.

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 in its discretion may
<PAGE>
                                      -30-

require the filing by any party litigant in the suit other than the Trustee of
an undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 6.11 shall not apply
to a suit by the Trustee, a suit by a Holder or group of Holders of more than
10% in aggregate principal amount of the outstanding Securities, or to any suit
instituted by any Holder for the enforcement or the payment of the principal or
interest on any Securities on or after the respective due dates for such
Securities.

                                  ARTICLE SEVEN

                                     TRUSTEE

SECTION 7.01. Duties of Trustee.

            (a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her 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.

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

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

            (3) the Trustee shall not be liable with respect to any action it
      takes or omits to take in good faith in accordance with a direction
      received by it pursuant to Section 6.05.
<PAGE>
                                      -31-

            (d) The Trustee may refuse to perform any duty or exercise any right
or power unless it receives indemnity satisfactory to it against any loss,
liability or expense.

            (e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.

SECTION 7.02. Rights of Trustee.

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

            (b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate and/or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel.

            (c) Any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors shall be sufficiently evidenced by a Board
Resolution.

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

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

            (f) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its
discretion, rights or powers hereunder.

            (g) 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 may, in absence of bad
faith on its part, rely upon an Officers' Certificate.

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

            (i) The Trustee shall not be charged with knowledge of any Default
or Event of Default with respect to the Securities unless either (1) a Trust
Officer shall have actual knowledge of
<PAGE>
                                      -32-

such Default or Event of Default or (2) written notice of such Default or Event
of Default shall have been given to the Trustee by the Company or by any Holder.

SECTION 7.03. 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 an
Affiliate thereof with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. The Trustee, however, must comply with
Sections 7.10 and 7.11.

SECTION 7.04. Trustee's Disclaimer.

            The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Securities; it shall not be accountable for the
Company's use of the proceeds from the Securities; and it shall not be
responsible for any statement in the Securities other than its certificate of
authentication.

SECTION 7.05. Notice of Defaults.

            If a Default or Event of Default occurs and is continuing and if it
is actually known to the Trustee, the Trustee shall mail to each Holder a notice
of the Default or Event of Default within 30 days after it occurs unless such
Default or Event of Default has been cured or waived. Except in the case of a
Default or Event of Default in payment of the principal of, premium, if any, and
interest on any Security, the Trustee may withhold the notice if and so long as
it in good faith determines that withholding the notice is in the interests of
Holders.

SECTION 7.06. Reports by Trustee to Holders.

            Within 60 days after each May 15 beginning with May 15, 2001, the
Trustee shall mail to each Holder, to the extent required by TIA ss. 313(c), a
brief report dated as of such March 1 that complies with TIA ss. 313(a). In such
event, the Trustee also shall comply with TIA ss. 313(b).

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

SECTION 7.07. Compensation and Indemnity.

            The Company shall pay to the Trustee from time to time such
compensation for its services as shall be agreed upon in writing. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon request for all
reasonable out-of-pocket expenses incurred by it. Such expenses shall include
the reasonable compensation and out-of-pocket expenses of the Trustee's agents
and counsel.
<PAGE>
                                      -33-

            The Company shall indemnify the Trustee against any loss or
liability or expense (including the reasonable fees and expenses of counsel)
incurred by it in connection with the acceptance or administration of this trust
and the performance of its duties hereunder, including the reasonable costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers and duties hereunder. The
Company need not pay for any settlement made without its consent. The Trustee
shall notify the Company promptly of any claim for which it may seek
indemnification. The Company need not reimburse any expense or indemnify against
any loss or liability incurred by the Trustee through the Trustee's negligence
or bad faith.

            To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee, except that held in trust to pay the principal
of, premium, if any, and interest on particular Securities.

            The indemnity obligations of the Company with respect to the Trustee
provided for in this Section 7.07 shall survive any resignation or removal of
the Trustee and the termination of this Indenture.

            When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(4) or (5) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.

SECTION 7.08. Replacement of Trustee.

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

            The Trustee may resign by so notifying the Company in writing 30
days prior to such resignation. The Holders of a majority in aggregate principal
amount of the Securities then outstanding may remove the Trustee by so notifying
the Trustee and the Company in writing and may appoint a successor Trustee with
the Company's consent. The Company may remove the Trustee if:

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

            (2) the Trustee is adjudged a bankrupt or an insolvent;

            (3) a receiver or other public officer takes charge of the Trustee
      or its property; or

            (4) the Trustee 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 a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in aggregate principal amount of the Securities
<PAGE>
                                      -34-

then outstanding may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.

            If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in aggregate principal amount of the outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.

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

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

SECTION 7.09. Successor Trustee by Merger, etc.

            If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee, if such successor corporation is otherwise eligible
hereunder.

SECTION 7.10. Eligibility; Disqualification.

            This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1). The Trustee shall always have a combined
capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA ss.
310(b).

SECTION 7.11. Preferential Collection of Claims Against Company.

             The Trustee shall comply with TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated.
<PAGE>
                                      -35-

                                  ARTICLE EIGHT

                     SATISFACTION AND DISCHARGE; DEFEASANCE

SECTION 8.01. Termination of Company's Obligations.

            The Company may terminate its substantive obligations in respect of
the Securities if the Securities mature within six months, or all of them are to
be called for redemption within one year under arrangements satisfactory to the
Trustee for giving notice of redemption, by delivering all outstanding
Securities to the Trustee for cancellation and paying all sums payable by it on
account of principal of, premium, if any, and interest on all Securities or
otherwise. In addition to the foregoing, the Company may terminate its
obligations under Sections 3.07, 4.03 and 4.06 (other than with respect to the
corporate existence of the Company), and no Default or Event of Default under
Section 6.01(3) shall thereafter apply, by (i) depositing with the Trustee,
under the terms of an irrevocable trust agreement, money or direct non-callable
obligations of the United States of America for the payment of which the full
faith and credit of the United States is pledged ("U.S. Government
Obligations") sufficient (without reinvestment) to pay the principal of,
premium, if any, and interest on the Securities at maturity or an earlier
redemption, (ii) delivering to the Trustee either an Opinion of Counsel or a
ruling directed to the Trustee from the Internal Revenue Service to the effect
that the Holders of the Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and termination of
obligations and (iii) delivering to the Trustee an Officers' Certificate and an
Opinion of Counsel each stating compliance with all conditions precedent
provided for herein. In addition, the Company may, provided that no Default or
Event of Default has occurred and is continuing or would arise therefrom (or,
with respect to a Default or Event of Default specified in Section 6.01(4),
occurs at any time on or prior to the 91st calendar day after the date of such
deposit (it being understood that this condition shall not be deemed satisfied
until after such 91st day)), terminate all of its substantive obligations in
respect of the Securities (including its obligations to pay the principal of,
premium, if any, and interest on the Securities) by (i) depositing with the
Trustee, under the terms of an irrevocable trust agreement, money or United
States Government Obligations sufficient (without reinvestment) to pay the
principal of, premium, if any, and interest on the Securities at maturity or on
earlier redemption, (ii) delivering to the Trustee either a ruling directed to
the Trustee from the Internal Revenue Service to the effect that the Holders of
the Securities will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and termination of obligations or an
Opinion of Counsel addressed to the Trustee based upon such a ruling or based on
a change in the applicable Federal tax law since the date of this Indenture to
such effect and (iii) delivering to the Trustee an Officers' Certificate and an
Opinion of Counsel each stating compliance with all conditions precedent
provided for herein.

            Notwithstanding the foregoing paragraph, the Company's obligations
in Article Ten and Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.10, 2.12, 2.13
and 4.01 (but not with respect to termination of substantive obligations
pursuant to the third sentence of the foregoing paragraph), 4.02, 7.07, 7.08,
8.03 and 8.04 shall survive until the Securities are no longer outstanding.
Thereafter the Company's obligations in Sections 7.07, 8.03 and 8.04 shall
survive.
<PAGE>
                                      -36-

            After such delivery or irrevocable deposit and delivery of an
Officers' Certificate and Opinion of Counsel, the Trustee upon request shall
acknowledge in writing the discharge of the Company's obligations under the
Securities and this Indenture except for those surviving obligations specified
above.

            The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the United States Government
Obligations deposited pursuant to this Section 8.01 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of outstanding Securities.

SECTION 8.02. Application of Trust Money.

            Subject to the provisions of Section 8.03, the Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to Section
8.01. It shall apply the deposited money and the money from U.S. Government
obligations through the Paying Agent and in accordance with this Indenture to
the payment of the principal of, premium, if any, and interest on the
Securities. Money and securities so held in trust are not subject to the
subordination provisions of Article Twelve.

SECTION 8.03. Repayment to Company.

            The Trustee and the Paying Agent shall promptly pay to the Company
upon request any excess money or securities held by them at any time. The
Trustee and the Paying Agent shall pay to the Company upon request any money
held by them for the payment of the principal of, premium, if any, and interest
that remains unclaimed for two years; 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 of general
circulation in The City of New York or cause to be mailed to each Holder, notice
stating that such money remains and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication or mailing, any
unclaimed balance of such money then remaining will be repaid to the Company.
After payment to the Company, Holders entitled to the money must look to the
Company for payment as general creditors unless an applicable abandoned property
law designates another Person.

SECTION 8.04. Reinstatement.

            If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 8.01 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.01 until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with Section 8.01; provided, however,
that to the extent the Company makes any payment of the principal of, premium,
if any, and interest on any Securities because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
<PAGE>
                                      -37-

                                  ARTICLE NINE

                                   AMENDMENTS

SECTION 9.01. Without Consent of Holders.

            The Company, when authorized by a Board Resolution, may modify,
amend or supplement this Indenture or the Securities without notice to or the
consent of any Holder:

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

            (2) to comply with Sections 5.01 and 10.07;

            (3) to provide for uncertificated Securities in addition to
      certificated Securities; or

            (4) to make any change that does not adversely affect the rights of
      any Holder.

SECTION 9.02. With Consent of Holders.

            The Company, when authorized by a Board Resolution, may modify,
amend or supplement this Indenture or the Securities without notice to any
Holder but with the written consent of the Holders of at least a majority in
aggregate principal amount of the outstanding Securities. Subject to Section
6.07, the Holders of a majority in aggregate principal amount of the outstanding
Securities may waive compliance by the Company with any provision of this
Indenture or the Securities without notice to any other Holder. However, without
the consent of each Holder affected, an amendment, supplement or waiver,
including a waiver pursuant to Section 6.04, may not:

            (1) change the stated maturity of the Securities:

            (2) reduce the principal, premium, if any. or interest on the
      Securities:

            (3) change the place of payment from New York, New York or change
      the currency in which the Securities are payable;

            (4) waive a default in the payment of the principal of, premium, if
      any, or interest on any Security;

            (5) make any change in Section 6.04, Section 6.07 or this Section
      9.02;

            (6) modify the provisions of Article Twelve in a materially adverse
      manner to the Holders; or

            (7) make any change that adversely affects the right to convert any
      Security.
<PAGE>
                                      -38-

            Furthermore, an amendment under this Article Nine may not make any
change that adversely affects the rights of any holder of Senior Indebtedness
under Article Twelve unless the holders of such Senior Indebtedness consent to
such change pursuant to the terms governing such Senior Indebtedness. It shall
not be necessary for the consent of the Holders under this Section 9.02 to
approve the particular form of any proposed amendment or supplement, but it
shall be sufficient if such consent approves the substance thereof.

            Promptly after an amendment under this Section 9.02 becomes
effective, the Company shall mail to Holders a notice briefly describing the
amendment.

SECTION 9.03. Compliance with Trust Indenture Act.

            Every amendment, waiver or supplement to this Indenture or the
Securities shall comply with the TIA as then in effect.

SECTION 9.04. Revocation and Effect of Consents.

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

            After an amendment, supplement or waiver becomes effective with
respect to the Securities, it shall bind every Holder unless it makes a change
described in any of clauses (1) through (7) of Section 9.02. In that case the
amendment, supplement or waiver shall bind each Holder of a Security who has
consented to it and, provided that notice of such amendment, supplement or
waiver is reflected on a Security that evidences the same debt as the consenting
Holder's Security, every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's Security.

SECTION 9.05. Notation on or Exchange of Securities.

            If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee. The Trustee may place an appropriate notation on the Security as
directed and prepared by the Company about the changed terms and return it to
the Holder. Alternatively, if the Company so determines, the Company in exchange
for the Security shall issue and the Trustee shall authenticate a new Security
that reflects the changed terms.
<PAGE>
                                      -39-

SECTION 9.06. Trustee Protected.

            The Trustee need not sign any amendment, supplement or waiver
authorized pursuant to this Article that adversely affects the Trustee's rights.
The Trustee shall be entitled to receive and rely upon, in addition to the
documents required by Section 13.04, an Opinion of Counsel and an Officers'
Certificate that any supplemental indenture, modification, amendment or waiver
complies with the Indenture.

                                   ARTICLE TEN

                                   CONVERSION

SECTION 10.01. Conversion Privilege; Restrictive Legends.

            A Holder of a Security may convert the principal of such Security
into Common Stock at any time during the period stated in paragraph 9 of the
Securities. The number of shares issuable upon conversion of a Security is
determined as follows: divide each $1,000 of the principal amount to be
converted by the Conversion Price in effect on the conversion date and round the
result to the nearest 1/100th of a share. The Conversion Price is subject to
adjustment in accordance with Section 10.06.

            A Holder may convert a portion of the principal of such Security if
the portion is at least $1,000 principal amount or a whole multiple of $1,000
principal amount. Provisions of this Indenture that apply to conversion of all
of a Security also apply to conversion of a portion of it.

            Any shares issued upon conversion of a Security shall bear the
Private Placement Legend set forth in Exhibit B(I) until after the second
anniversary of the later of the Issue Date for such Security and the last date
on which the Company or any Affiliate of the Company was the owner of such
shares or the Security (or any predecessor security) from which such shares were
converted (or such shorter period of time as permitted by Rule 144(k) under the
Securities Act or any successor provision thereunder or such longer period of
time as may be required under the Securities Act or applicable state securities
laws unless otherwise agreed by the Company and the Holder thereof).

SECTION 10.02. Conversion Procedure.

            To convert a Security a Holder must satisfy the requirements in
paragraph 9 of the Securities. The date on which the Holder satisfies all those
requirements is the conversion date. As soon as practicable, the Company shall
deliver to the Holder through the Conversion Agent a certificate for the number
of full shares of Common Stock issuable upon the conversion and a check in lieu
of any fractional share. The Person in whose name the certificate is registered
shall be treated as a stockholder of record on and after the conversion date.
<PAGE>
                                      -40-

            Except as described below, no payment or adjustment will be made for
accrued interest on, or liquidated damages with respect to, a converted Security
or for dividends on any Common Stock issued on conversion. If any Security is
converted between a record date for the payment of interest and the next
succeeding interest payment date, unless such Security has been called for
redemption on a redemption date between such dates, such Security must be
accompanied by funds equal to the interest payable to the registered Holder on
such interest payment date on the principal amount so converted. A Security
converted on an interest payment date need not be accompanied by any payment,
and the interest on the principal amount of the Security being converted will be
paid on such interest payment date to the registered Holder of such Security on
the applicable record date.

            If a Holder converts more than one Security at the same time, the
number of full shares issuable upon the conversion shall be based on the total
principal amount of the Securities converted.

            Upon surrender of a Security that is converted in part the Trustee
shall authenticate for the Holder a new Security equal in principal amount to
the unconverted portion of the Security surrendered.

            If the last day on which a Security may be converted is a Legal
Holiday in a place where a Conversion Agent is located, the Security may be
surrendered to that Conversion Agent on the next succeeding day that is not a
Legal Holiday.

SECTION 10.03. Fractional Shares.

            The Company will not issue fractional shares of Common Stock upon
conversion of Securities and instead will deliver a check in lieu of the
fractional share based upon the current market value of the Common Stock. The
current market value of a fraction of a share is determined by multiplying the
current market price of a full share by the fraction, and rounding the result to
the nearest cent. For purposes of this Section, the current market price of a
share of Common Stock is the Closing Price of the Common Stock on the Trading
Day immediately preceding the conversion date.

SECTION 10.04. Taxes on Conversion.

            If a Holder converts its Security, the Company shall pay any
documentary, stamp or similar issue or transfer tax due on the issue of shares
of Common Stock upon the conversion. However, the Holder shall pay any such tax
which is due because the shares are issued in a name other than the Holder's
name.

SECTION 10.05. Company to Provide Stock.

            The Company shall reserve out of its authorized but unissued Common
Stock or its Common Stock held in treasury enough shares of Common Stock to
permit the conversion of all of the Securities, including such greater number of
shares of Common Stock into which such Securities shall be convertible into as a
result of a Conversion Price adjustment contemplated by Section 10.06 hereof.
<PAGE>
                                      -41-

            All shares of Common Stock which may be issued upon conversion of
the Securities shall be validly issued, fully paid and non-assessable.

            The Company will endeavor to comply with all securities laws
regulating the offer and delivery of shares of Common Stock upon conversion of
Securities and will endeavor to list such shares on each national securities
exchange on which the Common Stock is listed.

SECTION 10.06. Adjustment of Conversion Price.

            The Conversion Price shall be adjusted from time to time by the
Company as follows:

            (a) In case the Company shall hereafter pay a dividend or make a
      distribution to all holders of the outstanding Common Stock in shares of
      Common Stock, the Conversion Price in effect at the opening of business on
      the date following the Record Date with respect to stockholders entitled
      to receive such dividend or other distribution shall be reduced by
      multiplying such Conversion Price by a fraction of which the numerator
      shall be the number of shares of Common Stock outstanding at the close of
      business on the Record Date fixed for such determination and the
      denominator shall be the sum of such number of shares and the total number
      of shares constituting such dividend or other distribution, such reduction
      to become effective immediately after the opening of business on the day
      following the Record Date. If any dividend or distribution of the type
      described in this Section 10.06(a) is declared but not so paid or made,
      the Conversion Price shall again be adjusted to the Conversion Price which
      would then be in effect if such dividend or distribution had not been
      declared.

            (b) In case the Company shall issue rights or warrants to all
      holders of its outstanding shares of Common Stock entitling them to
      subscribe for or purchase shares of Common Stock at a price per share less
      than the Current Market Price on the Record Date fixed for the
      determination of stockholders entitled to receive such rights or warrants,
      the Conversion Price shall be adjusted so that the same shall equal the
      price determined by multiplying the Conversion Price in effect at the
      opening of business on the date after such Record Date by a fraction of
      which the numerator shall be the number of shares of Common Stock
      outstanding at the close of business on the Record Date plus the number of
      shares which the aggregate offering price of the total number of shares so
      offered for subscription or purchase would purchase at such Current Market
      Price, and of which the denominator shall be the number of shares of
      Common Stock outstanding on the close of business on the Record Date plus
      the total number of additional shares of Common Stock so offered for
      subscription or purchase. Such adjustment shall become effective
      immediately after the opening of business on the day following the Record
      Date fixed for determination of stockholders entitled to receive such
      rights or warrants. To the extent that shares of Common Stock are not
      delivered pursuant to such rights or warrants, upon the expiration or
      termination of such rights or warrants the Conversion Price shall be
      readjusted to the Conversion Price which would then be in effect had the
      adjustments made upon the issuance of such rights or warrants been made on
      the basis of delivery of only the number of shares of Common Stock
      actually delivered. In the event that such rights or warrants are not so
      issued, the Conversion Price shall again be adjusted to be the Conversion
<PAGE>
                                      -42-

      Price which would then be in effect if such date fixed for the
      determination of stockholders entitled to receive such rights or warrants
      had not been fixed. In determining whether any rights or warrants entitle
      the holders to subscribe for or purchase shares of Common Stock at less
      than such Current Market Price, and in determining the aggregate offering
      price of such shares of Common Stock, there shall be taken into account
      any consideration received for such rights or warrants, the value of such
      consideration, if other than cash, to be determined in good faith by the
      Board of Directors.

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

            (d) In case the Company shall, by dividend or otherwise, distribute
      to all holders of its Common Stock shares of any class of capital stock of
      the Company (other than any dividends or distributions to which Section
      10.06(a) applies) or evidences of its indebtedness, cash or other assets
      (including securities, but excluding (1) any rights or warrants referred
      to in Section 10.06(b), (2) dividends and distributions (A) in connection
      with the liquidation, dissolution or winding up of the Company or (B) paid
      exclusively in cash and (3) any capital stock, evidences of indebtedness,
      cash or assets distributed upon a merger or consolidation to which Section
      10.07 applies) (the foregoing hereinafter in this Section 10.06(d) called
      the "Subject Securities"), unless the Company elects to reserve such
      Subject Securities for distribution to the Holders upon conversion of the
      Securities so that any such Holder converting Securities will receive upon
      such conversion, in addition to the shares of Common Stock to which such
      Holder is entitled, the amount and kind of such Subject Securities which
      such Holder would have received if such Holder had converted its
      Securities into Common Stock immediately prior to the Record Date for such
      distribution of the Subject Securities, then, in each such case, 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 with respect to such
      distribution by a fraction of which the numerator shall be the Current
      Market Price on such date less the fair market value on such date of the
      portion of the Subject Securities so distributed applicable to one share
      of Common Stock and the denominator shall be such Current Market Price,
      such reduction to become effective immediately prior to the opening of
      business on the day following the Record Date; provided, however, that in
      the event the then fair market value of the portion of the Subject
      Securities so distributed applicable to one share of Common Stock is equal
      to or greater than the Current Market Price on the Record Date, then in
      lieu of the foregoing adjustment, adequate provision shall be made so that
      each Holder shall have the right to receive upon conversion of a Security
      (or any portion thereof) the amount of Subject Securities such Holder
<PAGE>
                                      -43-

      would have received had such Holder converted such Security (or portion
      thereof) immediately prior to such Record Date. In the event that such
      dividend or distribution is not so paid or made, the Conversion Price
      shall again be adjusted to be the Conversion Price which would then be in
      effect if such dividend or distribution had not been declared.

            For purposes of this Section 10.06(d), rights or warrants
      distributed by the Company to all holders of Common Stock entitling the
      holders thereof to subscribe for or purchase shares of the Company's
      capital stock (either initially or under certain circumstances) that are
      (i) deemed to be transferred with such shares of Common Stock; (ii) not
      exercisable; and (iii) issued in respect of future issuances of Common
      Stock, until the occurrence of a specified event or events ("Trigger
      Event") shall be deemed not to have been distributed and no adjustment to
      the Conversion Price with respect thereto shall be made until the
      occurrence of the earliest Trigger Event. If any such right or warrant is
      subject to subsequent events, upon the occurrence of which such right or
      warrant shall become exercisable to purchase different securities,
      evidences of indebtedness or other assets or entitle the holder to
      purchase a different number or amount of the foregoing or to purchase any
      of the foregoing at a different purchase price, then the occurrence of
      each such event shall be deemed to be the date of issuance and record date
      with respect to a new right or warrant (and a termination or expiration of
      the existing right or warrant without exercise by the holder thereof). In
      addition, in the event of any distribution (or deemed distribution) of
      rights or warrants, or any Trigger Event or other event (of the type
      described in the preceding sentence) with respect thereto, that resulted
      in an adjustment to the Conversion Price under this Section 10.06(d), (1)
      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 final redemption or
      repurchase to give effect to such distribution or Trigger Event, as the
      case may be, as though it were a cash distribution, equal to the per share
      redemption or repurchase price received by a holder of Common Stock with
      respect to such rights or warrants (assuming such holder had retained such
      rights or warrants), made to all holders of Common Stock as of the date of
      such redemption or repurchase, and (2) in the case of such rights or
      warrants all of which shall have expired or been terminated without
      exercise, the Conversion Price shall be readjusted as if such rights and
      warrants had never been issued.

            For purposes of this Section 10.06(d) and Sections 10.06(a) and (b),
      any dividend or distribution to which this Section 10.06(d) is otherwise
      applicable that also includes shares of Common Stock, or rights or
      warrants to subscribe for or purchase shares of Common Stock applies (or
      both), shall be deemed instead to be (1) a dividend or distribution of the
      evidences of indebtedness, assets, shares of capital stock, rights or
      warrants (other than such shares of Common Stock or rights or warrants)
      (and any Conversion Price reduction required by this Section 10.06(d) with
      respect to such dividend or distribution shall then be made) immediately
      followed by (2) a dividend or distribution of such shares of Common Stock
      or such rights or warrants (and any further Conversion Price reduction
      required by Sections 10.06(a) and (b) with respect to such dividend or
      distribution shall then be made), except (A) the Record Date of such
      dividend or distribution shall be substituted as "the date fixed for the
      determination of stockholders entitled to receive such dividend or other
      distribution", "Record
<PAGE>
                                      -44-

Date fixed for such determination" and "Record Date" within the meaning of
Section 10.06(a) and as "the date fixed for the determination of stockholders
entitled to receive such rights or warrants", "the Record Date fixed for the
determination of the stockholders entitled to receive such rights or warrants"
and "such Record Date" within the meaning of Section 10.06(b) and (B) any shares
of Common Stock included in such dividend or distribution shall not be deemed
"outstanding at the close of business on the Record Date fixed for such
determination" within the meaning of Section 10.06(a).

      With respect to any stockholder rights plan existing on the date hereof or
in the event that the Company implements any other stockholder rights plan, upon
conversion of the Securities the Holders will receive, in addition to the Common
Stock issuable upon such conversion, the rights issued under such rights plan
(notwithstanding the occurrence of an event causing such rights to separate from
the Common Stock at or prior to the time of conversion); provided, a Holder who
is a holder of Common Stock (or direct or indirect interests therein) at the
time of conversion, but who is not entitled as such a holder to such rights
pursuant to the terms of any such plan, shall not be eligible to receive any
such rights hereunder. Any distribution of rights or warrants pursuant to a
stockholder rights plan complying with the requirements set forth in the
immediately preceding sentence of this paragraph shall not constitute a
distribution of rights or warrants for the purposes of the other provisions of
this Section 10.06(d).

      (e) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock cash (excluding any cash that is distributed upon a
merger or consolidation to which Section 10.07 applies or as part of a
distribution referred to in Section 10.06(d)), in an aggregate amount that,
combined together with (1) the aggregate amount of all other such all-cash
distributions to all holders of its Common Stock within the twelve (12) months
preceding the date of payment of such distribution, and in respect of which no
adjustment pursuant to this Section 10.06(e) has been made, and (2) the
aggregate of any cash plus the fair market value of consideration payable in
respect of any tender offer by the Company or any subsidiary for all or any
portion of the Common Stock concluded within the twelve (12) months preceding
the date of payment of such distribution, and in respect of which no adjustment
pursuant to Section 10.06(f) has been made (such aggregate amount, the "Common
Dividend Amount"), exceeds 10% of the product of the Current Market Price on the
Record Date with respect to such distribution times the number of shares of
Common Stock outstanding on such date (the "Market Capitalization"), then, and
in each such case, immediately after the close of business on such date, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the close of business on such Record Date by a fraction (i) the numerator of
which shall be equal to the Current Market Price on the Record Date less an
amount equal to the quotient of (x) the amount by which the Common Dividend
Amount exceeds 10% of the Market Capitalization and (y) the number of shares of
Common Stock outstanding on the Record Date and (ii) the denominator of which
shall be equal to the Current Market Price on such date; provided, however, that
in the event the portion of the cash so distributed applicable to one share of
Common Stock is equal to or greater than the Current Market Price of the
<PAGE>
                                      -45-

Common Stock on the Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Holder shall have the right to receive upon
conversion of a Security (or any portion thereof) the amount of cash such Holder
would have received had such bolder convened such Security (or portion thereof)
immediately prior to such Record Date. In the event that such dividend or
distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such
dividend or distribution had not been declared.

      (f) In case a tender offer made by the Company or any subsidiary for all
or any portion of the Common Stock shall expire and such tender offer shall
require the payment to holders of Common Stock of an aggregate consideration
that together with

            (1) the aggregate of the cash plus the fair market value of
      consideration payable in respect of any other tender offers by the Company
      or any of its subsidiaries for all or any portion of the Common Stock
      expiring within the twelve (12) months preceding the expiration of such
      tender offer and in respect of which no adjustment pursuant to this
      Section 10.06(f) has been made, and

            (2) the aggregate amount of any all-cash distributions to all
      holders of the Company's Common Stock made within twelve (12) months
      preceding the expiration of such tender offer and in respect of which no
      adjustment pursuant to Section 10.06(e) has been made,

exceeds 10% of the product of the Current Market Price as of the time of
expiration of such tender offer times the number of shares of Common Stock
outstanding at such time, then, and in each such case, immediately prior to the
opening of business on the day after the expiration of such tender offer, the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the close of business on the date of the expiration of such tender offer by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding on the date of expiration of the tender offer multiplied by the
Current Market Price of the Common Stock on the Trading Day next succeeding the
date of expiration of the tender offer and the denominator shall be the sum
of (x) the fair market value of the aggregate consideration payable for all
shares of Common Stock validly tendered and not withdrawn as of the date of
expiration of the tender offer and (y) the product of the number of shares of
Common Stock outstanding less all shares validly tendered and not withdrawn as
of the date of expiration of the tender offer and the Current Market Price of
the Common Stock on the Trading Day next succeeding the date of expiration of
the tender offer, such reduction (if any) to become effective immediately prior
to the opening of business on the day following the date of expiration of the
tender offer. In the event the Company is permanently prevented by applicable
law from effecting any such purchases or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such tender offer had not been made. If the application of
this Section 10.06(f) to any tender offer would result in an

<PAGE>
                                      -46-

increase in the Conversion Price, no adjustment shall be made for such tender
offer under this Section 10.06(f).

      (g) In case of a tender or exchange offer made by a Person other than the
Company or any subsidiary for an amount which increases such Person's ownership
of Common Stock to more than 25% of the Common Stock outstanding and involves
the payment by such Person of consideration per share of Common Stock having a
fair market value that exceeds the Current Market Price of the Common Stock on
the Trading Day next succeeding the closing date of such offer, and, as of the
closing date of such offer, the Board of Directors does not recommend rejection
of such offer, then the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Conversion Price in effect on the
closing date of such offer by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding on the closing date of such offer
multiplied by the Current Market Price of the Common Stock on the Trading Day
next succeeding the closing date of such offer and the denominator shall be the
sum of (x) the fair market value of the aggregate consideration payable for all
shares validly tendered or exchanged and not withdrawn as of the closing date of
such offer and (y) the product of the number of shares of Common Stock
outstanding less all shares validly tendered and not withdrawn as of the closing
date of such offer and the Current Market Price of the Common Stock on the
Trading Day next succeeding the closing date of such offer, such reduction to
become effective immediately prior to the opening of business on the day
following the closing date of such offer. In the event such Person is
permanently prevented by applicable law from effecting any such purchases or all
such purchases are rescinded, the Conversion Price shall again be adjusted to be
the Conversion Price which would then be in effect if such tender or exchange
offer had not been made. Notwithstanding the foregoing, the adjustment described
in this Section 10.06(g) shall not be made if, as of the closing date of such
offer, the offering documents with respect to such offer disclose a plan or
intention to cause the Company to engage in any transaction described in Article
Five.

      (h) For purposes of this Section 10.06, the following terms have the
meanings indicated:

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

<PAGE>
                                      -47-

      firm selected from time to time by the Board of Directors for that
      purpose, or a price determined in good faith by the Board of Directors,
      whose determination shall be conclusive and described in a Board
      Resolution.

            (2) "Current Market Price" shall mean the average of the Closing
      Prices per share of Common Stock for the ten (10) consecutive Trading Days
      immediately prior to the date for which a Current Market Price is
      required; provided, however, that:

                  (1) if the "ex" date (as hereinafter defined) for any event
            (other than the issuance or distribution requiring such computation)
            that requires an adjustment to the Conversion Price pursuant to
            Section 10.06(a), (b), (c), (d), (e), (f) or (g) occurs during such
            ten consecutive Trading Days then the Closing Price for each
            Trading Day prior to the "ex" date for such other event shall be
            adjusted by multiplying such Closing Price by the same fraction by
            which the Conversion Price is so required to be adjusted as a result
            of such other event,

                  (2) if the "ex" date for any event (other than the issuance or
            distribution requiring such computation) that requires an adjustment
            to the Conversion Price pursuant to Section 10.06(a), (b), (c), (d),
            (e), (f) or (g) occurs on or after the "ex" date for the issuance or
            distribution requiring such computation and prior to the day in
            question, then the Closing Price for each Trading Day on and after
            the "ex" date for such other event shall be adjusted by multiplying
            such Closing Price by the reciprocal of the fraction by which the
            Conversion Price is so required to be adjusted as a result of such
            other event, and

                  (3) if the "ex" date for the issuance or distribution
            requiring such computation is prior to the day in question, after
            taking into account any adjustment required pursuant to clause (1)
            or (2) of this proviso, the Closing Price for each Trading Day on or
            after such "ex" date shall be adjusted by adding thereto the amount
            of any cash and the fair market value of the evidences of
            indebtedness, shares of capital stock or assets being distributed
            applicable to one share of Common Stock as of the close of business
            on the day before such "ex" date.

            For purposes of any computation under Sections 10.06(f) or (g), the
      Current Market Price of the Common Stock on any date shall be deemed to be
      the average of the daily Closing Prices per share of Common Stock for such
      day and the next two succeeding Trading Days; provided, however, that if
      the "ex" date for any event (other than the tender offer requiring such
      computation) that requires an adjustment to the Conversion Price pursuant
      to Section 10.06(a), (b), (c), (d), (e), (f) and (g) occurs on or after
      the date of expiration of the tender or exchange offer requiring such

<PAGE>
                                      -48-

      computation and prior to the day in question, the Closing Price for each
      Trading Day on and after the "ex" date for such other event shall be
      adjusted by multiplying such Closing Price by the reciprocal of the
      fraction by which the Conversion Price is so required to be adjusted as a
      result of such other event.

            For purposes of this definition, the term "ex" date, (1) when used
      with respect to any issuance or distribution, means the first date on
      which the Common Stock trades regular way on the relevant exchange or in
      the relevant market from which the Closing Price was obtained without the
      right to receive such issuance or distribution, (2) when used with respect
      to any subdivision or combination of shares of Common Stock, means the
      first date on which the Common Stock trades regular way on such exchange
      or in such market after the time at which such subdivision or combination
      becomes effective, and (3) when used with respect to any tender or
      exchange offer means the first date on which the Common Stock trades
      regular way on such exchange or in such market after the Expiration Time
      of such offer.

            (3) "fair market value" shall mean the amount which a willing buyer
      would pay a willing seller in an arm's length transaction determined in
      good faith by the Board of Directors, whose determination shall be
      conclusive and described in a Board Resolution.

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

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

      (i) The Company may make such reductions in the Conversion Price, in
addition to those required by Sections 10.06(a), (b), (c), (d), (e), (f) and
(g), as the Board of Directors considers to be advisable to avoid or diminish
any income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.

<PAGE>
                                      -49-

      To the extent permitted by applicable law, the Company from time to time
may reduce the Conversion Price by any amount for any period of time if the
period is at least twenty (20) days 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 Holder of each Security at his last
address appearing on the register maintained by the Registrar a notice of the
reduction at least fifteen (15) days prior to the date the reduced Conversion
Price takes effect, and such notice shall state the reduced Conversion Price and
the period during which it will be in effect.

      (j) No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in such price;
however, any adjustment that would otherwise be required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Article Ten shall be made by the Company and shall be
made to the nearest cent or to the nearest one hundredth of a share, as the case
may be. No adjustment need be made for a change in the par value or no par value
of the Common Stock.

      (k) Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly file with the Trustee, and any Conversion Agent other
than the Trustee, an Officers' Certificate setting forth the Conversion Price
after such adjustment and setting forth a brief statement of the facts requiring
such adjustment. Unless and until a Trust Officer of the Trustee shall have
received such Officers' Certificate, the Trustee shall not be deemed to have
knowledge of any adjustment of the Conversion Price and may assume without
inquiry that the last Conversion Price of which it has knowledge remains in
effect. Promptly after delivery of such certificate, the Company shall prepare a
notice of such adjustment of the Conversion Price setting forth the adjusted
Conversion Price and the date on which each adjustment becomes effective and
shall mail such notice of such adjustment of the Conversion Price to the Holder
of each Security at his last address appearing on the register maintained by the
Registrar, within twenty (20) days of the effective date of such adjustment.
Failure to deliver such notice shall not affect the legality or validity of any
such adjustment.

      (l) In any case in which this Section 10.06 provides that an adjustment
shall become effective immediately after a Record Date for an event, the Company
may defer until the occurrence of such event (i) issuing to the Holder of any
Security converted after such Record Date and before the occurrence of such
event the additional shares of Common Stock issuable upon such conversion by
reason of the adjustment required by such event over and above the Common Stock
issuable upon such conversion before giving effect to such adjustment and (ii)
paying to such Holder any amount in cash in lieu of any fraction pursuant to
Section 10.03.

      (m) For purposes of this Section 10.06, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of

<PAGE>
                                      -50-

Common Stock. The Company will not pay any dividend or make any distribution on
shares of Common Stock held in the treasury of the Company.

SECTION 10.07.  Effect of Reclassification, Consolidation, Merger or Sale.

            In the case of (i) any reclassification or change of the outstanding
shares of Common Stock (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), (ii) any consolidation, merger or combination of the Company
with another corporation as a result of which holders of Common Stock shall be
entitled to receive stock, securities or other property or assets (including
cash) with respect to or in exchange for such Common Stock, or (iii) any sale or
conveyance of the properties and assets of the Company as, or substantially as,
an entirety to any other corporation as a result of which holders of Common
Stock shall be entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock, then,
unless an adjustment with respect thereto shall be made pursuant to Section
10.06, the Company or the successor or purchasing corporation, as the case may
be, shall execute with the Trustee a supplemental indenture providing that the
Securities shall be convertible into the kind and amount of shares of stock and
other securities or property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
by a holder of a number of shares of Common Stock issuable upon conversion of
such Securities immediately prior to such reclassification, change,
consolidation, merger, combination, sale or conveyance assuming such holder of
Common Stock did not exercise rights of election, if any, as to the kind or
amount of securities, cash or other property receivable upon such consolidation,
merger, statutory exchange, sale or conveyance. 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. If, in the case
of any such reclassification, change, consolidation, merger, combination, sale
or conveyance, the stock or other securities and assets receivable thereupon by
a holder of shares of Common Stock include shares of stock or other securities
and assets of a Person other than the successor or purchasing corporation, as
the case may be, in such reclassification, change, consolidation, merger,
combination, sale or conveyance, then such supplemental indenture shall also be
executed by such other Person and shall contain such additional provisions to
protect the interests of the Holders as the Board of Directors shall reasonably
consider necessary by reason of the foregoing.

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

<PAGE>
                                      -51-

SECTION 10.08. Notice of Certain Transactions.

            If:

            (1) the Company proposes to take any action that would require an
      adjustment in the conversion rate;

            (2) the Company proposes to take any action that would require a
      supplemental indenture pursuant to Section 10.07; or

            (3) there is a proposed liquidation, winding up or dissolution of
      the Company,

the Company shall mail to Holders a notice stating the proposed record date for
a dividend or distribution or the proposed effective date of a subdivision,
combination, reclassification, consolidation, merger, transfer, lease,
liquidation or dissolution. The Company shall mail the notice at least 10 days
before such date. Failure to mail the notice or any defect in it shall not
affect the validity of the transaction.

SECTION 10.09.  Company Determination Final.

            Any determination that the Board of Directors makes pursuant to this
Article is conclusive, absent manifest error.

SECTION 10.10.  Trustee's Disclaimer.

            The Trustee has no duty to determine when an adjustment under this
Article or under the terms of the Securities should be made, how it should be
made or what it should be. Such information shall be timely provided to the
Trustee in an Officers' Certificate. The Trustee has no duty to determine
whether any provisions of a supplemental indenture under Section 10.07 are
correct. 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 the Company's failure to comply with this Article. Each
Conversion Agent other than the Company shall have the same protection under
this Section 10.10 as the Trustee.

                                 ARTICLE ELEVEN

                                   [RESERVED]

<PAGE>
                                      -52-

                                 ARTICLE TWELVE

                                  SUBORDINATION

SECTION 12.01.  Securities Subordinated to Senior Indebtedness.

            The Company covenants and agrees, and each Holder of a Security, by
his acceptance thereof, likewise covenants and agrees, that the indebtedness
represented by the Securities and the payment of the principal of (and premium,
if any) and interest on each and all of the Securities is hereby expressly
subordinate and junior, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full of all Senior Indebtedness.

            (a) Upon any distribution of assets of the Company, upon any
dissolution, winding up, liquidation or reorganization of the Company, whether
in bankruptcy, insolvency, reorganization or receivership proceedings or upon an
assignment for the benefit of creditors or any other marshaling of the assets
and liabilities of the Company or otherwise, then the holders of all Senior
Indebtedness shall first be entitled to receive payment of the full amount due
thereon in cash or other consideration satisfactory to the holders of Senior
Indebtedness in respect of principal (and premium, if any) and interest, or
provision shall be made for such amount in cash or other consideration
satisfactory to the holders of Senior Indebtedness, before the Holders of any of
the Securities are entitled to receive any payment or distribution of any
character, whether in cash, securities or other property, on account of the
principal of (or premium, if any) or interest on the indebtedness evidenced by
the Securities.

            For purposes of this Article Twelve, the words, "cash, securities or
other property" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article Twelve with
respect to the Securities to the payment of all Senior Indebtedness which may at
the time be outstanding; provided that (i) the Senior Indebtedness is assumed by
the new corporation, if any, resulting from any reorganization or readjustment,
and (ii) the rights of the holders of Senior Indebtedness (other than leases
which are not assumed by the Company or the new corporation, as the case may be)
are not, without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another Person or the liquidation or dissolution of the Company
following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another Person upon the terms and conditions
provided for in Article Five shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section 12.01(a) if such
other Person shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Article Five.

            (b) No payment shall be made by the Company with respect to the
principal of, premium, if any, or interest on the Securities or to acquire any
of the Securities, if (i) any default in payment of the principal of or premium,
if any, or interest on, rent under, or any other payment obligation under any
Senior Indebtedness occurs and is continuing (a "Payment Default") beyond any
applicable

<PAGE>
                                      -53-

grace period with respect thereto, unless and until all such payments due in
respect of such Senior Indebtedness have been paid in full in cash or other
consideration satisfactory to holders of Senior Indebtedness or such default
shall have been cured or waived or shall have ceased to exist, (ii) any event of
default, other than a Payment Default, with respect to any Designated Senior
Indebtedness occurs and is continuing permitting the holders of such Designated
Senior Indebtedness (or a trustee or other representative on behalf of the
holders thereof) to declare such Designated Senior Indebtedness due and payable
prior to the date on which it would otherwise have become due and payable, and
the Trustee receives notice thereof from the Company or by any holders of such
Designated Senior Indebtedness (or a trustee or other representative on behalf
of the holders thereof) (the "Payment Blockage Notice"), for a period (the
"Payment Blockage Period") ending on the earlier of the date on which such event
of default shall have been cured or waived or shall have ceased to exist or 179
days after receipt of the Payment Blockage Notice, or (iii) any judicial
proceeding shall be pending with respect to any such default in payment or event
of default; provided, further, any number of additional Payment Blockage Periods
may be commenced during an existing Payment Blockage Period; provided, however,
that no such additional Payment Blockage Period shall extend beyond the initial
Payment Blockage Period. Notwithstanding anything in the subordination
provisions of this Indenture or the Securities to the contrary, (x) in no event
will a Payment Blockage Period extend beyond 179 days from the date of the
Payment Blockage Notice in respect thereof was given and (y) there shall be a
period of at least 181 consecutive days in each 360-day period when no Payment
Blockage Period is in effect. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the Trustee
shall be the basis for a subsequent payment blockage notice.

            (c) If the maturity of the Securities is accelerated, no payment may
be made on the Securities until all amounts due or to become due on Senior
Indebtedness have been paid in full in cash or other consideration satisfactory
to holders of Senior Indebtedness or until such acceleration has been cured or
waived.

            (d) In the event that, notwithstanding the foregoing provisions of
Sections 12.01(a), (b) and (c), any payment on account of principal of or
interest on the Securities shall be made by or on behalf of the Company and
received by the Trustee, by any Holder or by any Paying Agent (or, if the
Company is acting as its own Paying Agent, money for any such payment shall be
segregated and held in trust), at a time when such payment is not permitted by
any of such provisions, then, unless and until all Senior Indebtedness (or
Designated Senior Indebtedness, in the case of Section 12.01(b)) is paid in full
in cash or other consideration satisfactory to the holders thereof, or such
payment is otherwise permitted to be made by the provisions of each of Sections
12.01(a), 12.01(b) and 12.01(c) (subject, in each case, to the provisions of
Section 12.07), such payment on account of principal of or interest on the
Securities shall be held in trust for the benefit of, and shall be immediately
paid over to, the holders of Senior Indebtedness (or Designated Senior
Indebtedness, in the case of Section 12.01(b)) or their representative or
representatives or the trustee or trustees under any indenture under which any
instruments evidencing any of the Senior Indebtedness (or Designated Senior
Indebtedness, in the case of Section 12.01(b)) may have been issued, as their
interests may appear.

<PAGE>
                                      -54-

            Regardless of anything to the contrary herein, nothing shall prevent
(A) any payment by the Company or the Trustee to Holders of amounts in
connection with a redemption of Securities if (i) notice of such redemption has
been given pursuant to Section 3.01 prior to the receipt by the Trustee of a
Payment Blockage Notice, and (ii) such notice of redemption is given not earlier
than 75 days before the Redemption Date, or (B) any payment by the Trustee to
the Holders of amounts deposited with it pursuant to Section 8.01.

SECTION 12.02.  Subrogation.

            Subject to the payment in full of all Senior Indebtedness to which
the indebtedness evidenced by the Securities is in the circumstances
subordinated as provided in Section 12.01, the Holders of the Securities
(together with the holders of any other indebtedness of the Company which is
subordinate in right of payment to the payment in full of all Senior
Indebtedness, which is not subordinate in right of payment to the Securities and
which by its terms grants such right of subrogation to the holders thereof)
shall be subrogated to the rights of the holders of such Senior Indebtedness to
receive payments or distributions of cash, property or securities of the Company
applicable to such Senior Indebtedness until all amounts owing on the Securities
shall be paid in full, and, as between the Company, its creditors other than
holders of such Senior Indebtedness, and the Holders of the Securities, no such
payment or distribution made to the holders of Senior Indebtedness by virtue of
this Article which otherwise would have been made to the Holders of the
Securities shall be deemed to be a payment by the Company on account of such
Senior Indebtedness, it being understood that the provisions of this Article are
and are intended solely for the purpose of defining the relative rights of the
Holders of the Securities, on the one hand, and the holders of Senior
Indebtedness, on the other hand.

SECTION 12.03.  Obligation of Company Unconditional.

            Nothing contained in this Article or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Securities the principal of (and premium, if any)
and interest on the Securities as and when the same shall become due and payable
in accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of the Company other than
the holders of Senior Indebtedness, nor shall anything herein or therein prevent
the Trustee or the Holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article of the holders of Senior Indebtedness in
respect of cash, property or securities of the Company received upon the
exercise of any such remedy.

SECTION 12.04.  Modification of Terms of Senior Indebtedness.

            Any renewal or extension of the time of payment of any Senior
Indebtedness or the exercise by the holders of Senior Indebtedness of any of
their rights under any instrument creating or evidencing Senior Indebtedness,
including without limitation the waiver of default thereunder, may be made or
done all without notice to or assent from the Holders of the Securities or the
Trustee.

<PAGE>
                                      -55-

            No compromise, alteration, amendment, modification, extension,
renewal or other change of, or waiver, consent or other action in respect of,
any liability or obligation under or in respect of, or of any of the terms,
covenants or conditions of any indenture or other instrument under which any
Senior Indebtedness is outstanding or of such Senior Indebtedness, whether or
not such release is in accordance with the provisions of any applicable
document, shall in any way alter or affect any of the provisions of this Article
or of the Securities relating to the subordination thereof.

SECTION 12.05.  [Reserved]

SECTION 12.06.  Effectuation of Subordination by Trustee.

            Each Holder of Securities, by his acceptance thereof, authorizes and
directs the Trustee in his or her behalf to take such action as may be necessary
or appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his or attorney-in-fact for any and all such purposes.

            Upon any payment or distribution of assets of the Company referred
to in this Article, the Trustee and the Holders of the Securities shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which any such dissolution, winding up, liquidation or
reorganization proceeding affecting the affairs of the Company is pending or
upon a certificate of the trustee in bankruptcy, receiver, assignee for the
benefit of creditors, liquidating trustee or agent or other Person making any
payment or distribution, delivered to the Trustee or to the Holders of the
Securities, for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, and as to other facts pertinent to the right of
such Persons under this Article, and if such evidence is not furnished, the
Trustee may defer any payment to such Persons pending judicial determination as
to the right of such Persons to receive such payment.

SECTION 12.07.  Knowledge of Trustee.

            Notwithstanding the provisions of this Article or any other
provisions of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any Senior Indebtedness, of any default in payment of
principal, premium (if any) or interest on any Senior Indebtedness, or of any
facts which would prohibit the making of any payment of moneys to or by the
Trustee, or the taking of any other action by the Trustee, unless and until a
Trust Officer of the Trustee having responsibility for the administration of the
trust established by this Indenture shall have received written notice thereof
from the Company, any Holder of Securities, any Paying or Conversion Agent of
the Company or the holder or representative of any class of Senior Indebtedness,
and, prior to the receipt of any such written notice, the Trustee shall be
entitled in all respects to assume that no such default or facts exist;
provided, however, that unless on the third Business Day prior to the date upon
which by the terms hereof any such moneys may become payable for any purpose the
Trustee shall have received the notice provided for in this Section 12.07, then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such moneys and apply the same to the
purpose for which they were received, and shall not be affected by any notice to
the contrary which may be received by it on or after such date.

<PAGE>
                                      -56-

SECTION 12.08.  Trustee's Relation to Senior Indebtedness.

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

            Nothing in this Article shall apply to claims of or payments to the
Trustee under or pursuant to Section 7.07.

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

SECTION 12.09.  Rights of Holders of Senior Indebtedness Not
                Impaired.

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

SECTION 12.10.  Certain Conversions Not Deemed Payment.

            For the purposes of Article Ten only, (1) the issuance and delivery
of junior securities upon conversion of Securities in accordance with Article
Ten shall not be deemed to constitute a payment or distribution on account of
the principal of, premium, if any, or interest on Securities or on account of
the purchase or other acquisition of Securities, and (2) the payment, issuance
or delivery of cash (except in satisfaction of fractional shares pursuant to
Section 10.03), property or securities (other than junior securities) upon
conversion of a Security shall be deemed to constitute payment on account of the
principal of, premium, if any, or interest on such Security. For the purposes of
this Section 12.10, the term "junior securities" means (a) shares of any stock
of any class of the Company or (b) securities of the Company that are
subordinated in right of payment to all Senior Indebtedness to substantially the
same extent as, or to a greater extent than, the Securities are so subordinated
as provided in this Article. Nothing contained in this Article Twelve or
elsewhere in this Indenture or in the Securities is intended to or shall impair,
as among the Company, its creditors (other than holders of Senior Indebtedness)
and the Holders, the right, which is absolute and unconditional, of the Holder
of any Security to convert such note in accordance with Article Ten.

<PAGE>
                                      -57-

                                ARTICLE THIRTEEN

                                  MISCELLANEOUS

SECTION 13.01.  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 13.02.  Notices.

            Any notice or communication by the Company or the Trustee to the
other is duly given if in writing and delivered in person, mailed by first-class
mail or by express delivery to the other's address stated in this Section 13.02.
The Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.

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

            If a notice or communication is mailed in the manner provided above,
it is duly given, whether or not the addressee receives it.

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

            All notices or communications shall be in writing.

            The Company's address is:

                   Alexion Pharmaceuticals, Inc.
                   25 Science Park
                   New Haven, Connecticut 06511
                   Attention: President

            The Trustee's address is:

                   The Chase Manhattan Bank
                   450 West 33rd Street, 15th Floor
                   New York, NY 10001
                   Attention: Capital Markets Fiduciary Services

<PAGE>
                                      -58-

SECTION 13.03.  Communication by Holders with Other Holders.

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

SECTION 13.04.  Certificate and Opinion as to Conditions Precedent.

            Upon any request or application by the Company to the Trustee to
take any action under this Indenture the Company shall 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.

            Each signer of an Officers' Certificate or an Opinion of Counsel may
(if so stated) rely, effectively, upon an Opinion of Counsel as to legal matters
and an Officers' Certificate as to factual matters if such signer reasonably and
in good faith believes in the accuracy of the document relied upon.

SECTION 13.05.  Statements Required in Certificate or Opinion.

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

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

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

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

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

<PAGE>
                                      -59-

SECTION 13.06.  Rules by Trustee and Agents.

            The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar, Paying Agent or Conversion Agent may make reasonable
rules and set reasonable requirements for their respective functions.

SECTION 13.07.  Legal Holidays.

            A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions are not required to be open in The City of New York, in the State
of New York or in the city in which the Trustee administers its corporate trust
business. If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue on that payment for the intervening
period.

            A "Business Day" is a day other than a Legal Holiday.

SECTION 13.08.  No Recourse Against Others.

            All liability described in the Securities of any director, officer,
employee or stockholder, as such, of the Company is waived and released.

SECTION 13.09.  Duplicate Originals.

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

SECTION 13.10.  Governing Law.

            The laws of the State of New York, without regard to principles of
conflicts of law, shall govern this Indenture and the Securities.

SECTION 13.11.  No Adverse Interpretation of Other Agreements.

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

SECTION 13.12.  Successors.

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

<PAGE>
                                      -60-

SECTION 13.13.  Separability.

            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
and a Holder shall have no claim therefor against any party hereto.

SECTION 13.14.  Table of Contents, Headings, etc.

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

<PAGE>
                                       S-1

                                   SIGNATURES

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

                                        ALEXION PHARMACEUTICALS, INC.

                                        By: /s/ David Keiser
                                            -----------------------------------
                                            Name:
                                            Title:

                                        THE CHASE MANHATTAN BANK, as
                                          Trustee

                                        By: /s/ Kathleen Perry
                                            -----------------------------------
                                            Name: Kathleen Perry
                                            Title: Vice President

<PAGE>

                                                                       EXHIBIT A
REGISTERED                     [Face of Security]
NUMBER                                                                   DOLLARS

                          ALEXION PHARMACEUTICALS, INC.

                  5 3/4% CONVERTIBLE SUBORDINATED NOTE DUE 2007

            ALEXION PHARMACEUTICALS, INC., a Delaware corporation (herein called
the "Company"), for value received, hereby promises to pay to
or registered assigns, the principal sum of           Dollars on March 15, 2007,
and to pay interest thereon as provided on the reverse hereof on the principal
sum, until the principal hereof and any unpaid and accrued interest is paid or
duly provided for. The right to payment of principal, premium, if any, and
interest is subordinated to the rights of Senior Indebtedness as set forth in
the Indenture referred to on the reverse side hereof.

            Interest Payment Dates: March 15 and September 15, with the first
payment to be made on September 15, 2000.

            Record Dates: March 1 and September 1.

<PAGE>

            IN WITNESS WHEREOF, ALEXION PHARMACEUTICALS, INC. has caused this
instrument to be duly signed.

                                        ALEXION PHARMACEUTICALS, INC.

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

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

Dated:

TRUSTEE'S CERTIFICATE OF
   AUTHENTICATION

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

THE CHASE MANHATTAN BANK, as Trustee

By:
    ---------------------------------
            Authorized Officer

                                      A-2
<PAGE>

                              [REVERSE OF SECURITY]

                          ALEXION PHARMACEUTICALS, INC.

                  5 3/4% CONVERTIBLE SUBORDINATED NOTE DUE 2007

            1. Interest. Alexion Pharmaceuticals, Inc., a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company will pay interest
semi-annually in arrears on March 15 and September 15 of each year, with the
first payment to be made on September 15, 2000. Interest on the Securities will
accrue on the principal amount from the most recent date to which interest has
been paid or duly provided for or, if no interest has been paid, from March 8,
2000. Interest will be computed on the basis of a 360-day year of twelve 30-day
months.

            2. Maturity. The Securities will mature on March 15, 2007 unless
earlier converted, redeemed or repurchased pursuant to the terms hereof and the
Indenture.

            3. Method of Payment. The Company will pay interest on the
Securities (except defaulted interest) to the Persons who are registered Holders
of Securities at the close of business on the record date set forth on the face
of this Security next preceding the applicable interest payment date except that
(i) interest payable upon redemption or repurchase, unless the date of
redemption or repurchase is an interest payment date, will be payable to the
Person to whom the principal is payable and (ii) in the case of any Security or
portion of any Security that is converted into Common Stock during the period
from, but excluding, a record date for any interest payment date to, but
excluding, that interest payment date either (A) if the Security, or portion of
the Security, has been called for redemption on a redemption date that occurs
during that period, or is to be repurchased on a Repurchase Date that occurs
during that period, the Company will not be required to pay interest on that
interest payment date in respect of any Security, or portion of any Security,
that is so redeemed or repurchased; or (B) if otherwise, any Security or portion
of any Security that is not called for redemption but is submitted for
conversion during that period must be accompanied by funds equal to the interest
payable on that interest payment date on the principal amount so converted.
Holders must surrender Securities to a Paying Agent to collect the principal
payments. The Company will pay the principal, premium, if any, and interest in
money of the United States that at the time of payment is legal tender.
Principal and interest may, at the Company's option, be paid either (i) by check
mailed to the address of the Person entitled to the interest as it appears in
the register kept by the Registrar (provided (a) payments to the Depository will
be made by wire transfer of immediately available funds to the account of the
Depository or its nominee and (b) a Holder with an aggregate principal amount of
Securities in excess of $10 million will, at the written election of the Holder,
filed on or before the relevant record date with the Trustee, be paid by wire
transfer in immediately available funds); or (ii) by transfer to an account
maintained by that Person located in the U.S.

            4. Paying Agent, Registrar, Conversion Agent. Initially, The Chase
Manhattan Bank (the "Trustee") will act as Paying Agent, Registrar and
Conversion Agent. The Company may change any Paying Agent, Registrar or
Conversion Agent without notice. The Company may act in any such capacity.

                                      A-3
<PAGE>

            5. Indenture. The Company issued the Securities under an Indenture
dated as of March 8, 2000 (the "Indenture") between the Company and the Trustee.
The terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.
Code ss.ss. 77aaa-77bbbb) (the "Act") as in effect on the date of the Indenture.
The Securities are subject to all such terms, and Holders are referred to the
Indenture and the Act for a statement of such terms. The Securities are general
unsecured subordinated obligations of the Company limited to a maximum of
$120,000,000 aggregate principal amount (plus such additional amount (up to an
aggregate of $130,000,000) purchased by the Initial Purchasers pursuant to the
option described in Section 2.02), except as otherwise provided in the Indenture
(except for Securities issued in substitution for destroyed, mutilated, lost or
stolen Securities). Terms used herein which are defined in the Indenture have
the meanings assigned to them in the Indenture.

            6. Optional Redemption by the Company. At any time on or after March
20, 2003, the Company may redeem the Securities on at least 30 days' notice as a
whole or, from time to time, in part at the following prices, expressed as a
percentage of the principal amount, together with accrued interest to, but
excluding, the date fixed for redemption:

                                                                    Redemption
Period                                                                 Price
------                                                              ----------

Beginning March 20, 2003 and ending on March 14, 2004 ...........    103.286%
Beginning March 15, 2004 and ending on March 14, 2005 ...........    102.464%
Beginning March 15. 2005 and ending on March 14. 2006 ...........    101.643%
Beginning March 15. 2006 and ending on March 14, 2007 ...........    100.822%

and 100% on March 15, 2007. My accrued interest becoming due on the date fixed
for redemption will be payable to the holders of record on the relevant record
date of the Securities being redeemed.

            7. Notice of Redemption. Notice of redemption pursuant to paragraph
6 will be mailed at least 30 days before the redemption date to each Holder of
Securities to be redeemed at its registered address. Securities in denominations
larger than $1,000 principal amount may be redeemed in part but only in whole
multiples of $1,000 principal amount. On and after the redemption date interest
ceases to accrue on Securities or portions of them called for redemption.

            8. Repurchase at Option of Holder. Pursuant to Section 3.07 of the
Indenture within 15 days after a Repurchase Event occurs, the Company is
required to give notice of the Repurchase Event to the Holders. Each Holder has
the right, at its option, to require the Company to repurchase all or any
portion of the Securities 40 days after the notice of repurchase event is
mailed. The Repurchase Price will be 105% of the principal amount of the
Securities submitted for repurchase, plus accrued and unpaid interest to, but
excluding, the Repurchase Date. If a Repurchase Date is an interest payment
date, then the interest payable on that date will be paid to the holder of
record on the relevant record date. Subject to the conditions of Section 3.07 of
the Indenture, the Company, at its option, instead of paying the Repurchase
Price in cash, may pay the Repurchase Price in Common Stock, valued at 95% of
the average of the Closing Prices for the five Trading Days immediately before
and including the third Trading Day preceding the Repurchase Date.

            9. Conversion. A Holder of a Security may convert the principal of
such Security into Common Stock at any time after the date of original issuance
of the Security to the close of

                                      A-4
<PAGE>

business on the business day prior to March 15, 2007, or (x) if the Security
is called for redemption by the Company, the Holder may convert it at any
time before the close of business on the date that is one business day before
the date fixed for such redemption, or (y) if the Security is to be
repurchased by the Company pursuant to paragraph 8 hereof, the Holder may
convert it at any time before the close of business on the date that is one
business day before the date fixed for such repurchase. The initial
Conversion Price is $106.425 per share of Common Stock, subject to adjustment
in certain circumstances as set forth in Section 10.06 of the Indenture. To
determine the number of shares issuable upon conversion of a Security, divide
the principal amount to be converted by the Conversion Price in effect on the
conversion date and round the result to the nearest 1/100th share. The
Company is not required to issue fractional shares of Common Stock upon
conversion and, instead, will pay a cash amount as provided in Section 10.03
of the Indenture. Except as provided in Article Ten of the Indenture, no
payment or adjustment for the principal of, premium, if any, interest on or
liquidated damages with respect to, the Securities or for dividends on any
Common Stock will be made. If a Holder surrenders a Security for conversion
between the record date for the payment of interest and the next interest
payment date, such Security, when surrendered for conversion, must be
accompanied by payment of an amount equal to the interest thereon which the
registered Holder on such record date is to receive. A Security which the
Holder has elected to be repurchased may be converted only if the Holder
withdraws its election to have such Security repurchased in accordance with
the terms of the Indenture before the close of business on the business day
prior to the Repurchase Date.

            To convert a Security a Holder must (1) complete and sign the
Conversion Notice, with appropriate signature guarantee, on the back of the
Security, (2) surrender the Security to a Conversion Agent, (3) furnish
appropriate endorsements and transfer documents if required by the Registrar or
Conversion Agent, (4) pay the amount of interest, if any, the Holder may be paid
as provided in the last sentence of the above paragraph and (5) pay any transfer
or similar tax if required. A Holder may convert a portion of a Security if the
portion is $1,000 principal amount or a whole multiple of $ 1,000 principal
amount.

            Any shares issued upon conversion of a Security shall bear the
Private Placement Legend until after the second anniversary of the later of the
issue date for the Securities and the last date on which the Company or any
Affiliate of the Company was the owner of such shares or the Security (or any
predecessor security) from which such shares were converted (or such shorter
period of time as permitted by Rule 144(k) under the Securities Act or any
successor provision thereunder) (or such longer period of time as may be
required under the Securities Act or applicable state securities laws as set
forth in the Opinion of Counsel delivered to the Conversion Agent, unless
otherwise agreed by the Company and the Holder thereof).

            10. Subordination. The Securities are subordinated in right of
payment, in the manner and to the extent set forth in the Indenture, to the
prior payment in full of all Senior Indebtedness. Each Holder by accepting a
Security agrees to such subordination and authorizes the Trustee to give it
effect.

            11. Denominations, Transfer, Exchange. The Securities are in
registered form without coupons in denominations of $1,000 principal amount and
whole multiples of $1,000 principal amount. The transfer of Securities may be
registered and Securities may be exchanged as provided in the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents. No service charge shall be made for any
such registration

                                      A-5
<PAGE>

of transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Registrar need not exchange or register the transfer of any Security
selected for redemption in whole or in part. Also, it need not exchange or
register the transfer of any Securities for a period of 15 days before the
mailing of a notice of redemption of the Securities selected to be redeemed.

            12. Persons Deemed Owners. The registered Holder of a Security may
be treated as the owner of such Security for all purposes.

            13. Merger or Consolidation. The Company shall not consolidate with,
or merge into, or transfer or lease all or substantially all of its assets to,
any Person unless, among other things, the Person is organized under the laws of
the United States, any State thereof or the District of Columbia and such Person
assumes by supplemental indenture all the obligations of the Company under the
Securities, the Indenture and the Registration Rights Agreement and after giving
effect to the transaction no Default or Event of Default exists.

            Notwithstanding the foregoing, any subsidiary of the Company may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company or any other subsidiary or subsidiaries of the Company.

            14. Amendments, Supplements and Waivers. Subject to certain
exceptions, the Indenture or the Securities may be amended or supplemented with
the consent of the Holders of at least a majority in aggregate principal amount
of the Securities then outstanding, and any existing Default or Event of Default
may be waived with the consent of the Holders of a majority in aggregate
principal amount of the Securities then outstanding. Without notice to or the
consent of any Holder, the Indenture or the Securities may be amended or
supplemented to cure any ambiguity, omission, defect or inconsistency, to
provide for uncertificated Securities in addition to certificated Securities, to
comply with Sections 5.01 and 10.07 of the Indenture or to make any change that
does not adversely affect the rights of any Holder.

            15. Defaults and Remedies. An Event of Default includes the
occurrence of any or the following: default in payment of the principal of or
any premium on the Securities; default for 30 days in payment of interest;
failure by the Company for 90 days after notice to it to comply with any of its
other agreements in the Indenture or the Securities; and certain events of
bankruptcy or insolvency. If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Securities then outstanding may declare all the Securities to be due and
payable. Holders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Securities. Subject to certain
limitations, Holders of a majority in principal amount of the Securities then
outstanding may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders notice of any continuing Default or Event of
Default (except a Default or Event of Default in payment of principal or
interest) if it determines that withholding notice is in their interests. The
Company must furnish an annual compliance certificate to the Trustee.

            16. Registration Rights. The Holders are entitled to shelf
registration rights as set forth in the Registration Rights Agreement. The
Holders shall be entitled to receive liquidated damages in certain
circumstances, all as set forth in the Registration Rights Agreement.

                                      A-6
<PAGE>

            17. Trustee Dealings with Company. The Trustee under the Indenture,
or any banking institution serving as successor Trustee thereunder, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not Trustee.

            18. No Recourse Against Others. No past, present or future director,
officer, employee or stockholder, as such, of the Company shall 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. Each Holder by accepting a Security waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.

            19. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.

            20. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM ( tenants in common), TEN ENT (=
tenants by the entirety), JT TEN (= joint tenants with right of survivorship and
not as tenants in common), CUST (= Custodian), and U/G/M/A (Uniform Gifts to
Minors Act).

            THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST
AND WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO:

            ALEXION PHARMACEUTICALS, INC.
            25 SCIENCE PARK
            NEW HAVEN, CONNECTICUT 06511
            ATTENTION: PRESIDENT

                                       A-7
<PAGE>

                              [FORM OF ASSIGNMENT]

I or we assign to

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER

___________________________________________

________________________________________________________________________________
(please print or type name and address)

________________________________________________________________________________

________________________________________________________________________________
the within Security and all rights thereunder, and hereby irrevocably
constitutes and appoints

________________________________________________________________________________
attorney to transfer the Security on the books of the Company with full power of
substitution in the premises.

Dated:_______________________________   ________________________________________
                                        NOTICE: The signature on this assignment
                                        must correspond with the name as it
                                        appears upon the face of the within
                                        Security in every particular without
                                        alteration or enlargement or any change
                                        whatsoever and be guaranteed by the
                                        endorser's bank or broker.

Signature Guarantee: ___________________________________________________________

            (Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended.)

            In connection with any transfer of this Security occurring prior to
the date which is the earlier of (i) the date of the declaration by the
Commission of the effectiveness of a registration statement under the Securities
Act of 1933, as amended (the "Securities Act") covering resales of this Security
(which effectiveness shall have been suspended or terminated at the date of the
transfer) and (ii) March 7, 2002 the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with
transfer:

                                      A-8
<PAGE>

                                  [Check One]

(1) ___     to the Company or a subsidiary thereof; or

(2) ___     pursuant to and in compliance with Rule 144A under the Securities
            Act of 1933, as amended; or

(3) ___     to an institutional "accredited investor" (as defined in Rule
            50l(a)(1), (2), (3) or (7) under the Securities Act of 1933, as
            amended) that has furnished to the Trustee a signed letter
            containing certain representations and agreements (the form of which
            letter can be obtained from the Trustee); or

(4) ___     outside the United States to a "foreign purchaser" in compliance
            with Rule 904 of Regulation S under the Securities Act of 1933, as
            amended; or

(5) ___     pursuant to the exemption from registration provided by Rule 144
            under the Securities Act of 1933, as amended; or

(6) ___     pursuant to an effective registration statement under the Securities
            Act of 1933, as amended; or

(7) ___     pursuant to another available exemption from the registration
            statement requirements of the Securities Act of 1933, as amended.

and unless the box below is checked, the undersigned confirms that such Security
is not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):

            |_| The transferee is an Affiliate of the Company.

(If the Security is transferred to an Affiliate, the restrictive legend must
remain on the Security for two years following the date of the transfer).

            Unless one of the items is checked, the Trustee will refuse to
register any of the Securities evidenced by this certificate in the name of any
Person other than the registered Holder thereof; provided, however, that if item
(3),(4),(5) or (7) is checked, the Company or the Trustee may require, prior to
registering any such transfer of the Securities, in their sole discretion, such
written legal opinions, certifications (including an investment letter in the
case of box (3) or (4)) and other information as the Trustee or the Company have
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.

            If none of the foregoing items are checked, the Trustee or Registrar
shall not be obligated to register this Security in the name of any Person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.16 of the Indenture shall have
been satisfied.

                                      A-9
<PAGE>

Dated: _____________________________    Signed: ________________________________
                                                 (Sign exactly as name appears
                                                 on the other side of this
                                                 Security)

Signature Guarantee: ___________________________________________________________

TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED

            The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.

Dated: ______________________________   ________________________________________
                                        NOTICE: To be executed by an
                                                executive officer

                                   A-10
<PAGE>

                               CONVERSION NOTICE

To convert this Security into Common Stock of the Company, check the box:

|_|

To convert only part of this Security, state the principal amount to be
converted (must be in multiples of $1,000):

$_______________________________________________________________________________

If you want the stock certificate made out in another person's name, fill in the
form below:

________________________________________________________________________________
(Insert other person's soc. sec. or tax I.D. no.)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
(Print or type other person's name, address and zip code)

Date: ___________   Signature(s): ______________________________________________

                                  ______________________________________________
                                  (Signatures must be guaranteed by an "eligible
                                  guarantor institution" meeting the
                                  requirements of the Registrar, which
                                  requirements include membership or
                                  participation in the Security Transfer Agent
                                  Medallion Program ("STAMP") or such other
                                  "signature guarantee program" as may be
                                  determined by the Registrar in addition to, or
                                  in substitution for, STAMP, all in accordance
                                  with the Securities Exchange Act of 1934, as
                                  amended.)

                                      A-11
<PAGE>

Signature(s) guaranteed by: ____________________________________________________
                            (Signatures must be guaranteed by an "eligible
                            guarantor institution" meeting the requirements of
                            the Registrar, which requirements include membership
                            or participation in the Security Transfer Agent
                            Medallion Program ("STAMP") or such other "signature
                            guarantee program" as may be determined by the
                            Registrar in addition to, or in substitution for,
                            STAMP, all in accordance with the Securities
                            Exchange Act of 1934, as amended.)

                                      A-12
<PAGE>

                   OPTION OF HOLDER TO ELECT PURCHASE NOTICE

            If you want to elect to have this Security purchased by the Company
pursuant to Section 3.07 of the Indenture, check the box: |_|

            If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 3.07 of the Indenture, state the principal
amount:

                    $ _____________________________________
                      (in an integral multiple of S 1,000)

Date: ________________                  Signature(s): __________________________

                                        ________________________________________
                                        (Sign exactly as your name(s) appear(s)
                                        on the other side of this Security)

Signature(s) guaranteed by:             ________________________________________
                                        (Signatures must be guaranteed by an
                                        "eligible guarantor institution" meeting
                                        the requirements of the Registrar, which
                                        requirements include membership or
                                        participation in the Security Transfer
                                        Agent Medallion Program ("STAMP") or
                                        such other "signature guarantee program"
                                        as may be determined by the Registrar in
                                        addition to, or in substitution for,
                                        STAMP, all in accordance with the
                                        Securities Exchange Act of 1934, as
                                        amended.)

                                      A-13
<PAGE>

                                                                       EXHIBIT B

                                FORM OF LEGENDS

                          I. PRIVATE PLACEMENT LEGEND

            Each Security issued under the Indenture shall bear a legend (and
any common stock issued upon conversion of such Security shall bear a comparable
legend) substantially in the following form:

            THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
      TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES
      ACT OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY AND THE SHARES OF
      COMMON STOCK ISSUABLE UPON CONVERSION HEREOF MAY NOT BE OFFERED, SOLD OR
      OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
      EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED
      THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE
      PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
      THEREUNDER.

            THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUER
      HEREOF THAT (A) THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON
      CONVERSION HEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
      TRANSFERRED, ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER
      REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE
      144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS
      OF RULE 144A, (II) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
      SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (III)
      PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
      IN EACH OF CASES (I) THROUGH (III) IN ACCORDANCE WITH ANY APPLICABLE
      SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER
      WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF
      THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

                                      B-1
<PAGE>

                           II. GLOBAL SECURITY LEGEND

            Any Global Security authenticated and delivered hereunder shall bear
a legend (which would be in addition to any other legends required in the case
of a Restricted Security) in substantially the following form:

            THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
      INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
      DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS
      SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
      PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
      CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY
      (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A
      NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE
      DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT
      IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

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

            TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
      WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. 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 SECTION 2.16 OF THE INDENTURE.
<PAGE>

                                                                       EXHIBIT C

                           Form of Certificate To Be
                          Delivered in Connection with
                   Transfers to Non-QIB Accredited Investors

                                                                          [Date]

The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001
Attention: Capital Markets Fiduciary Services

Ladies and Gentlemen:

            In connection with our proposed purchase of 5 3/4% Convertible
Subordinated Notes Due 2007 (the "Securities") of Alexion Pharmaceuticals, Inc.
(the "Company"), we confirm that:

            1. We have received a copy of the Offering Memorandum (the "Offering
      Memorandum"), dated March 3, 2000, relating to the Securities and such
      other information as we deem necessary in order to make our investment
      decision. We acknowledge that we have read and agreed to the matters
      stated on page 1 of the Offering Memorandum and in the section entitled
      "Notice to Investors" of the Offering Memorandum, including the
      restrictions on duplication and circulation of the Offering Memorandum.

            2. We understand that any subsequent transfer of the Securities is
      subject to certain restrictions and conditions set forth in this Indenture
      relating to the Securities (as described in the Offering Memorandum) and
      the undersigned agrees to be bound by, and not to resell, pledge or
      otherwise transfer the Securities except in compliance with, such
      restrictions and conditions and the Securities Act of 1933, as amended
      (the "Securities Act") and all applicable state securities laws.

            3. We understand that the offer and sale of the Securities have not
      been registered under the Securities Act, and that the Securities may not
      be offered or sold except as permitted in the following sentence. We
      agree, on our own behalf and on behalf of any accounts for which we are
      acting as hereinafter stated, that if we should sell any Securities prior
      to the date that is two years after the original issuance of the
      Securities, we will do so only (i) to the Company or any of its
      subsidiaries, (ii) inside the United States in accordance with Rule 144A
      under the Securities Act to a "qualified institutional buyer" (as defined
      in Rule 144A under the Securities Act), (iii) inside the United States to
      an institutional "accredited investor" (as defined below) that, prior to
      such transfer, furnishes (or has furnished on its behalf by a U.S.
      broker-dealer) to the Trustee (as defined in the Indenture relating to the
      Securities), a signed letter containing certain representations and
      agreements relating to the restrictions on transfer of the Securities (the
      form of which letter can be obtained from the Trustee), (iv) outside the
      United States in accordance with Rule 904 of Regulation S under the
      Securi-

                                      C-1
<PAGE>

      ties Act, (v) pursuant to the exemption from registration provided by Rule
      144 under the Securities Act (if available), or (vi) pursuant to an
      effective registration statement under the Securities Act, and we further
      agree to provide to any person purchasing any of the Securities from us a
      notice advising such purchaser that resales of the Securities are
      restricted as stared herein.

            4. We are not acquiring the Securities for or on behalf of, and will
      not transfer the Securities to, any pension or welfare plan (as defined in
      Section 3 of the Employee Retirement Income Security Act of 1974), except
      as permitted by law.

            5. We understand that, on any proposed resale of any Securities, we
      will be required to furnish to the Trustee and the Company such
      certification, legal opinions and other information as the Trustee and the
      Company may reasonably require to confirm that the proposed sale complies
      with the foregoing restrictions. We further understand that the Securities
      purchased by us will bear a legend to the foregoing effect.

            6. We are an institutional "accredited investor" (as defined in Rule
      50l(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
      have such knowledge and experience in financial and business matters as to
      be capable of evaluating the merits and risks of our investment in the
      Securities, and we and any accounts for which we are acting are each able
      to bear the economic risk of our or their investment, as the case may be.

            7. We are acquiring the Securities purchased by us for our account
      or for one or more accounts (each of which is an institutional "accredited
      investor") as to each of which we exercise sole investment discretion.

                                      C-2
<PAGE>

            You, the Company, the Trustee and others are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.

                                        Very truly yours,

                                        [Name of Transferee]

                                        By: ____________________________________
                                            Name:
                                            Title:

                                      C-3
<PAGE>

                                                                       EXHIBIT D

                      Form of Certificate To Be Delivered
                          in Connection with Transfers
                            Pursuant to Regulation S

                                                                          [Date]

The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001
Attention: Capital Markets Fiduciary Services

                  Re: Alexion Pharmaceuticals, Inc. (the "Company")
                      5 3/4% Convertible Subordinated Notes
                      due 2007 (the "Securities")

Ladies and Gentlemen:

            In connection with our proposed purchase of $       aggregate
principal amount of the Securities, we confirm that such purchase has been
effected pursuant to and in accordance with Regulation S under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:

            (1)* [We are not a U.S. person and are not acquiring the Securities
      for the account or benefit of any U.S. person]. [We are a U.S. person who
      purchased securities in a transaction that did not require registration
      under the Act.]

            (2) We agree to resell the Securities only in accordance with the
      provisions of Regulation S, pursuant to registration under the Securities
      Act, or pursuant to an available exemption from registration; and we agree
      not to engage in hedging transactions with regard to such securities
      unless in compliance with the Securities Act.

----------
*     One of the two following sentences must be used.

                                      D-1
<PAGE>

            You, the Company and counsel for the Company are entitled to rely
upon this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.

                                        Very truly yours,

                                        [Name of Transferor]

                                        By: ____________________________________
                                            Authorized Signature

                                      D-2
<PAGE>

                                                                       EXHIBIT E

         Form of Notice of Transfer Pursuant to Registration Statement

                                                                          [Date]

Alexion Pharmaceuticals, Inc.
25 Science Park
New Haven, Connecticut 06511

The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY
Attention: Capital Markets Fiduciary Services

            Re: Alexion Pharmaceuticals, Inc. (the "Company")
                5 3/4% Convertible Subordinated Notes Due 2007
                (the "Securities")

Ladies and Gentlemen:

            Please be advised that ______________ has transferred $ ____________
aggregate principal amount of the Securities or __ shares of the Company's
common stock, $0.0001 par value per share, issuable on conversion of the
Securities ("Stock") pursuant to an effective Shelf Registration Statement on
Form S-3 (File No. 333-     ) filed by the Company.

            We hereby certify that the prospectus delivery requirements, if any,
of the Securities Act of 1933 as amended, have been satisfied with respect to
the transfer described above and that the above-named beneficial owner of the
Securities or Stock is named as a "Selling Security Holder" in the Prospectus
dated        or in amendments or supplements thereto, and that the aggregate
principal amount of the Securities, or number of shares of Stock transferred are
[a portion of] the Securities or Stock listed in such Prospectus, as amended or
supplemented, opposite such owner's name.

                                        Very truly yours,

                                        ________________________________________
                                                      (Name)

                                      E-1
<PAGE>

                                                                       EXHIBIT F

    Form of Opinion of Counsel in Connection with Registration of Securities

                                                                          [Date]

The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001
Attention: Capital Markets Fiduciary Services

            Re: Alexion Pharmaceuticals, Inc. (the "Company")
                5 3/4% Subordinated Convertible Notes Due 2007
                (the "Securities")

Ladies and Gentlemen:

            Reference is made to the Securities issued pursuant to a certain
indenture dated as of March 1, 2000 by and between the Company and The Chase
Manhattan Bank, as trustee (the "Trustee"). The Securities were issued in
transactions exempt from registration under the Securities Act of 1933, as
amended (the "Securities Act"). The Company has filed with the Securities and
Exchange Commission (the "SEC") a registration statement on Form S-3 (number
333-______) (the "Registration Statement") relating to the registration under
the Securities Act of $[______________] principal amount of the Securities and
the shares of Common Stock of the Company (the "Shares") issuable upon
conversion of the Securities being registered. The Registration Statement was
declared effective by order of the SEC dated [_____].

            We have acted as counsel for the Company in connection with the
issuance of the Securities and the preparation and filing of the Registration
Statement and are familiar with the Securities, the Indenture, the Registration
Statement, the above-mentioned SEC order and such other documents as are
necessary to render this opinion.

            Based on the foregoing, it is our opinion that (1) the Registration
Statement has become and is currently effective under the Securities act so that
the Securities covered thereby and the Shares issuable upon conversion of such
Securities are duly registered under the Securities Act; and (2) the Indenture
has been duly qualified under the Trust Indenture Act of 1939, as amended.

                                        Yours truly,

                                      F-1

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