Document:

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         This LOAN AND SECURITY AGREEMENT (this "Agreement") dated December ___,
2001 between SILICON VALLEY BANK ("Bank") and Lantronix, Inc., UNITED STATES
SOFTWARE CORPORATION, LIGHTWAVE COMMUNICATION, INC. and SYNERGETIC MICRO
SYSTEMS, INC. (jointly and severally referred to herein as the "Borrower"),
provides the terms on which Bank will lend to Borrower and Borrower will repay
Bank. The parties agree as follows:

1.       ACCOUNTING AND OTHER TERMS
         --------------------------

         Accounting terms not defined in this Agreement will be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation" in this or any Loan Document. Capitalized terms in this Agreement
shall have the meanings set forth in Section 13.

2.       LOAN AND TERMS OF PAYMENT
         -------------------------

2.1      Credit Extensions. Borrower will pay Bank the unpaid principal amount
         -----------------
of all Credit Extensions and interest on the unpaid principal amount of the
Credit Extensions.

2.1.1    Revolving Advances.
         ------------------

         (a)  Bank will make Advances not exceeding (i) the Committed Revolving
Line, minus (ii) all amounts for services utilized under the Cash Management
Services Sublimit, minus (iii) the amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit), and minus (iv) the FX
Reserve. Amounts borrowed under this Section may be repaid and reborrowed during
the term of this Agreement.

         (b)  To obtain an Advance, Borrower must notify Bank by facsimile or
telephone by 12:00 p.m. Pacific time on the Business Day the Advance is to be
made. Borrower must promptly confirm the notification by delivering to Bank the
Payment/Advance Form attached as Exhibit B. Bank will credit Advances to
Borrower's deposit account. Bank may make Advances under this Agreement based on
instructions from a Responsible Officer or his or her designee or without
instructions if the Advances are necessary to meet Obligations which have become
due. Bank may rely on any telephone notice given by a person whom Bank believes
is a Responsible Officer or designee. Borrower will indemnify Bank for any loss
Bank suffers due to such reliance.

         (c)  The Committed Revolving Line terminates on the Revolving Maturity
Date, when all Advances are immediately payable.

2.1.2    Letters of Credit. Bank will issue or have issued letters of credit for
         -----------------
Borrower's account (individually referred as a "Letter of Credit" and
collectively referred to herein as the "Letters of Credit") not exceeding (i)
the Committed Revolving Line, minus (ii) the outstanding principal

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balance of the Advances, minus (iii) the Cash Management Sublimit, and minus
(iv) the FX Reserve; provided, however, the face amount of outstanding Letters
of Credit (including drawn but unreimbursed Letters of Credit) may not exceed
$1,000,000, on a joint basis for all Borrowers. Each Letter of Credit will have
an expiry date of no later than 180 days after the Revolving Maturity Date, but
Borrower's reimbursement obligation shall be secured by cash on terms acceptable
to Bank at any time after the Revolving Maturity Date if the term of this
Agreement is not extended by Bank. Borrower agrees to execute any further
documentation in connection with the Letters of Credit as Bank may reasonably
request.

2.1.3    Foreign Exchange Sublimit. If there is availability under the Committed
         -------------------------
Revolving Line for new Advances, then Borrower may enter in foreign exchange
forward contracts with the Bank under which Borrower commits to purchase from or
sell to Bank a set amount of foreign currency more than one business day after
the contract date (the "FX Forward Contract"). Bank will subtract 10% of each
outstanding FX Forward Contract from the foreign exchange sublimit which is a
maximum of $500,000, on a joint basis for all Borrowers (the "FX Reserve"). The
total FX Forward Contracts at any one time may not exceed 10 times the amount of
the FX Reserve and a proposed new FX Forward Contract may be entered into only
if the amount of the increase in the FX Reserve relating thereto would otherwise
be available for the making of an Advance in such amount. Bank may terminate the
FX Forward Contracts if an Event of Default occurs.

2.1.4    Cash Management Sublimit. Borrower may use up to $1,000,000 on a joint
         ------------------------
basis for all Borrowers (the "Cash Management Services Sublimit") for Bank's
cash management services, which may include merchant services, direct deposit of
payroll, business credit card, and check cashing services identified in various
cash management services agreements related to such services (the "Cash
Management Services"). The aggregate amounts utilized under the Cash Management
Services Sublimit will at all times reduce the amount otherwise available to be
borrowed under the Committed Revolving Line and new Cash Management Services may
be extended only if the amount of such proposed new extension of such services
would otherwise be available for the making of an Advance in such amount. Any
amounts Bank pays on behalf of Borrower or any amounts that are not paid by
Borrower for any Cash Management Services will be treated as Advances under the
Committed Revolving Line and will accrue interest at the rate for Advances

2.2      Overadvances. If Borrower's Obligations under Section 2.1.1, 2.1.2,
         ------------
2.1.3 or 2.1.4 exceed the applicable limitations set forth therein, Borrower
must immediately pay any such excess in cash to Bank.

2.3      Interest Rate; Payments.
         -----------------------

         (a)  Interest Rate. At Borrower's option, and all as more fully set
forth in the Interest Rate Supplement, Advances accrue interest on the
outstanding principal balance at a per annum rate equal to either (i) the Prime
Rate or (ii) the LIBOR Rate plus 200 basis points. Any prepayment of Advances
that is requested at the LIBOR Rate must include the applicable Prepayment Fee.
After an Event of Default, Obligations accrue interest at 5 percent above the

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rate effective immediately before the Event of Default. If the applicable
interest rate is the Prime Rate, the interest rate increases or decreases when
the Prime Rate changes. Interest is computed on a 360 day year for the actual
number of days elapsed. Further, reference is made to the Interest Rate
Supplement, which is attached hereto as Exhibit A-1, and the terms and
provisions thereof are hereby incorporated herein by this reference, as if such
terms and provisions were fully set forth herein.

         (b) Payments. Interest is payable no later than the twenty-second
(22/nd/) day of each month. Bank may debit any of Borrower's deposit accounts
including Account Number _______________ for principal and interest payments or
any amounts Borrower owes Bank. Bank will notify Borrower when it debits
Borrower's accounts. These debits are not set-offs. Payments received after
12:00 noon Pacific time are considered received at the opening of business on
the next Business Day. When a payment is due on a day that is not a Business
Day, the payment is due the next Business Day and additional fees or interest
accrue.

2.4      Fees.  Borrower will pay to Bank:
         ----

         (a) Facility Fee. A fully earned, non-refundable facility fee of
$50,000 due on the Closing Date; and

         (b) Bank Expenses. All Bank Expenses (including reasonable attorneys'
fees and expenses) incurred through and after the Closing Date when due,
provided it is understood that the attorneys' fees and expenses incurred in
connection with the negotiation and documentation of the Loan Documents will not
exceed $16,000.

         (c) Unused Line Fee. Borrower shall pay Bank the "Unused Line Fee", in
addition to all interest and other fees payable hereunder. The "Unused Line Fee"
shall be .125% per annum multiplied by an amount equal to Committed Revolving
Line minus the average daily balance of the outstanding Advances, and shall be
computed and paid quarterly, in arrears, on the last day of March, June,
September and December, commencing on December 31, 2001 during the term of this
Agreement.

3.       CONDITIONS OF LOANS
         -------------------

3.1      Conditions Precedent to Initial Credit Extension. Bank's obligation to
         ------------------------------------------------
make the initial Credit Extension is subject to the condition precedent that it
receive the agreements, documents and fees it requires, including, without
limitation, the following:

         (a)      this Agreement;

         (b)      the Guaranty;

         (c)      Certificate of the Secretary of Borrower with respect to
incumbency and resolutions authorizing the execution and delivery of this
Agreement and the Guaranty;

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         (d)      Legal opinion of counsel to Borrower, in form acceptable to
the Bank;

         (e)      financing statements (Forms UCC-1);

         (f)      insurance certificate;

         (g)      payment of the fees and Bank Expenses then due;

         (h)      Certificate(s) of good standing regarding Borrower in
applicable jurisdictions; and

         (i)      such other documents, and completion of such other matters, as
Bank may reasonably deem necessary or appropriate.

3.2      Conditions Precedent to all Credit Extensions. Bank's obligations to
         ---------------------------------------------
make each Credit Extension, including the initial Credit Extension, is subject
to the following:

         (a)  timely receipt of any Payment/Advance Form; and

         (b)  the representations and warranties in Section 5 must be materially
true on the date of the Payment/Advance Form and on the effective date of each
Credit Extension and no Event of Default may have occurred and be continuing, or
result from the Credit Extension. Each Credit Extension is Borrower's
representation and warranty on that date that the representations and warranties
in Section 5 remain true.

4.       CREATION OF SECURITY INTEREST
         -----------------------------

4.1      Grant of Security Interest. Borrower grants Bank a continuing security
         --------------------------
interest in all presently existing and later acquired Collateral to secure all
Obligations and performance of each of Borrower's duties under the Loan
Documents. Except for Permitted Liens, any security interest will be a first
priority security interest in the Collateral. Bank may place a "hold" on any
deposit account pledged as Collateral. If the Agreement is terminated, Bank's
lien and security interest in the Collateral will continue until Borrower fully
satisfies its Obligations.

5.       REPRESENTATIONS AND WARRANTIES
         ------------------------------

         Borrower represents and warrants as follows:

5.1      Due Organization and Authorization. Borrower and each Subsidiary is
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duly existing and in good standing in its state of formation and qualified and
licensed to do business in, and in good standing in, any state in which the
conduct of its business or its ownership of property requires that it be
qualified except where the failure to do so could not reasonably be expected to
cause a Material Adverse Change.

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         The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's formations documents, nor
constitute an event of default under any material agreement by which Borrower is
bound. Borrower is not in default under any agreement to which or by which it is
bound in which the default could reasonably be expected to cause a Material
Adverse Change.

5.2      Collateral. Borrower has good title to the Collateral, free of Liens
         ----------
except Permitted Liens. All Inventory is in all material respects of good and
marketable quality, free from material defects. Borrower is the sole owner of
the Intellectual Property, except for non-exclusive licenses granted to its
customers in the ordinary course of business. Each Patent is valid and
enforceable and no part of the Intellectual Property has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of
the Intellectual Property violates the rights of any third party except to the
extent such claim could not reasonably be expected to cause a Material Adverse
Change.

5.3      Litigation. Except as shown in the Schedule, there are no actions or
         ----------
proceedings pending or, to Borrower's knowledge, to the knowledge of Borrower's
Responsible Officers and legal counsel, threatened by or against Borrower or any
Subsidiary in which an adverse decision could reasonably be expected to cause a
Material Adverse Change.

5.4      No Material Adverse Change in Financial Statements. All consolidated
         --------------------------------------------------
financial statements for Borrower and any Subsidiary delivered to Bank fairly
present in all material respects Borrower's consolidated financial condition and
Borrower's consolidated results of operations. There has not been any material
deterioration in Borrower's consolidated financial condition since the date of
the most recent financial statements submitted to Bank.

5.5      Solvency. The fair salable value of Borrower's assets (including
         --------
goodwill minus disposition costs) exceeds the fair value of its liabilities; the
Borrower is not left with unreasonably small capital after the transactions in
this Agreement; and Borrower is able to pay its debts (including trade debts) as
they mature.

5.6      Regulatory Compliance. Borrower is not an "investment company" or a
         ---------------------
company "controlled" by an "investment company" under the Investment Company
Act. Borrower is not engaged as one of its important activities in extending
credit for margin stock (under Regulations T and U of the Federal Reserve Board
of Governors). Borrower has complied in all material respects with the Federal
Fair Labor Standards Act. Borrower has not violated any laws, ordinances or
rules, the violation of which could cause a Material Adverse Change. None of
Borrower's or any Subsidiary's properties or assets has been used by Borrower or
any Subsidiary or, to the best of Borrower's knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower and each Subsidiary has timely filed all required
tax returns and paid, or made adequate provision to pay, all material taxes,
except those being contested in good faith with adequate reserves under GAAP.
Borrower and each Subsidiary has obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all government authorities that

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are necessary to continue its business as currently conducted except where the
failure to do so could not reasonably be expected to cause a Material Adverse
Change.

5.7  Subsidiaries. Borrower does not own any stock, partnership interest or
     ------------
other equity securities except for Permitted Investments.

5.8  Full Disclosure. No written representation, warranty or other written
     ---------------
statement of Borrower in any certificate or written statement given to Bank
taken together with all such certificates and written statements given to Bank
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained in the certificates or
statements not misleading (it being recognized by Bank that the projections and
forecasts provided by Borrower in good faith and based upon reasonable
assumptions are not to be viewed as facts and that actual results during the
period or periods covered by any such projections and forecasts may differ from
the projected or forecasted results).

6.   AFFIRMATIVE COVENANTS
     ---------------------

     Borrower will do all of the following:

6.1  Government Compliance. Borrower will maintain its and all Subsidiaries'
     ---------------------
corporate existence and good standing in its jurisdiction of incorporation and
maintain qualification in each jurisdiction in which the failure to so qualify
could have a material adverse effect on Borrower's business or operations.
Borrower will comply, and have each Subsidiary comply, with all laws, ordinances
and regulations to which it is subject, noncompliance with which could have a
material adverse effect on Borrower's business or operations or cause a Material
Adverse Change.

6.2  Financial Statements, Reports, Certificates.
     -------------------------------------------

     (a) Borrower will deliver to Bank: (i) within 5 days of filing, copies of
all statements, reports and notices made available to Borrower's security
holders or to any holders of Subordinated Debt and all reports and all related
financial statements on each of Forms 10-K and 10-Q filed with the Securities
and Exchange Commission regarding Lantronix, Inc. together with, if not already
included in the foregoing, consolidating and consolidated financial statements;
(ii) a prompt report of any legal actions pending or threatened against Borrower
or any Subsidiary that could result in damages or costs to Borrower or any
Subsidiary of $100,000 or more; (iii) prompt notice of any material change in
the composition of the Intellectual Property, including any subsequent ownership
right of Borrower in or to any Copyright, Patent or Trademark not shown in any
intellectual property security agreement between Borrower and Bank or knowledge
of an event that materially adversely affects the value of the Intellectual
Property; and (iv) budgets, sales projections, operating plans or other
financial information Bank requests.

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     (b) At all times that any Advances are outstanding, Lantronix, Inc. will
deliver to Bank a monthly Compliance Certificate signed by a Responsible
Officer, within 30 days of each month end, and such Certificate shall also be
delivered to the Bank immediately prior to the time that any new Advances are
being requested when none are then outstanding.

     (c) Bank has the right to audit Borrower's Accounts at Borrower's expense,
but such audits at Borrower's expense will be conducted no more often than once
every 12 months, unless an Event of Default has occurred and is continuing.
Audits may otherwise be conducted at the Bank's expense at reasonable intervals.

6.3  Inventory; Returns. Borrower will keep all Inventory in good and marketable
     ------------------
condition, free from material defects. Returns and allowances between Borrower
and its account debtors will follow Borrower's customary practices as they exist
at the Closing Date. Borrower must promptly notify Bank of all returns,
recoveries, disputes and claims that involve more than $100,000. Stock rotations
that are in the ordinary course of business and are in accordance with a
contractual obligation shall be excluded from this requirement.

6.4  Taxes. Borrower will make, and cause each Subsidiary to make, timely
     -----
payment of all material federal, state, and local taxes or assessments and will
deliver to Bank, on demand, appropriate certificates attesting to the payment.

6.5  Insurance. Borrower will keep its business and the Collateral insured for
     ---------
risks and in amounts, as Bank requests. Insurance policies will be in a form,
with companies, and in amounts that are satisfactory to Bank. All property
policies will have a lender's loss payable endorsement showing Bank as a loss
payee and all liability policies will show the Bank as an additional insured and
provide that the insurer must give Bank at least 20 days notice before canceling
its policy. At Bank's request, Borrower will deliver certified copies of
policies and evidence of all premium payments. Proceeds payable under any policy
will, at Bank's option, be payable to Bank on account of the Obligations.

6.6  Minimum Bank Deposits. Borrower will maintain in its bank or investment
     ---------------------
accounts at Bank or held through Bank minimum unrestricted cash deposits equal
to the lesser of: (A) $7,000,000 or (B) 30% of the aggregate amount of all of
its cash and cash equivalents, on a consolidated basis for all Borrowers.

6.7  Financial Covenants.
     -------------------

     Lantronix, Inc. will maintain, on consolidated basis, as of the last day of
each quarter:

          (A) Quick Ratio Adjusted. A ratio of Quick Assets to Current
Liabilities minus deferred revenue of at least 1.75 to 1.0.

          (B) Net Income. Borrower will have a minimum net income (after taxes)
plus non-cash charges of $1.00 for each fiscal quarter.

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6.8  Further Assurances. Borrower will execute any further instruments and take
     ------------------
further action as Bank requests to perfect or continue Bank's security interest
in the Collateral or to effect the purposes of this Agreement.

7.   NEGATIVE COVENANTS
     ------------------

     Borrower will not do any of the following without the Bank's written
consent, which will not be unreasonably withheld:

7.1  Dispositions. Convey, sell, lease, transfer or otherwise dispose of
     ------------
(collectively a "Transfer"), or permit any of its Subsidiaries to Transfer, all
or any part of its business or property, other than a Transfer (i) of Inventory
in the ordinary course of business; (ii) of non-exclusive licenses and similar
arrangements for the use of the property of Borrower or its Subsidiaries in the
ordinary course of business; or (iii) of worn-out or obsolete Equipment.

7.2  Changes in Business, Ownership, Management or Business Locations. Engage in
     ----------------------------------------------------------------
or permit any of its Subsidiaries to engage in any business other than the
businesses currently engaged in by Borrower or reasonably related thereto, or
have a material change in its ownership (other than the sale of Borrower's
equity securities in a public offering or to venture capital investors
identified to Bank) of greater than 25%. Borrower will not, without at least 30
days prior written notice to Bank, relocate its principal executive office or
add any new offices or business locations.

7.3  Mergers or Acquisitions. Merge or consolidate, or permit any of its
     -----------------------
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person except where (i) such transactions
do not in the aggregate result in a decrease of more than 25% of Tangible Net
Worth and (ii) no Default or Event of Default has occurred and is continuing or
would exist after giving effect to the transactions. A Subsidiary may merge or
consolidate into another Subsidiary or into Borrower as long as no Default or
Event of Default has occurred and is continuing or would exist after giving
effect thereto.

7.4  Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or
     ------------
permit any Subsidiary to do so, other than Permitted Indebtedness; and the
foregoing shall mean and include without limitation, that no Foreign Subsidiary
shall incur additional Indebtedness other than as is now incurred and
outstanding as of the date hereof.

7.5  Encumbrance. Create, incur, or allow any Lien on any of its property, or
     -----------
assign or convey any right to receive income, including the sale of any
Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to Bank's first priority
security interest in the Collateral granted herein, subject only to Permitted
Liens. Borrower currently has approximately $2,000,000.00 in capital equipment
lease facilities. Borrower shall be permitted to maintain an equivalent amount
of such indebtedness, and shall be

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permitted to increase such indebtedness for capital acquisitions by up to 10%
per annum (compounded annually) without obtaining Bank's consent.

7.6  Investments; Distributions. (i) Directly or indirectly acquire or own any
     --------------------------
Person, or make any Investment in any Person, other than Permitted Investments,
or permit any of its Subsidiaries to do so; or (ii) pay any dividends or make
any distribution or payment or redeem, retire or purchase any capital stock.

7.7  Transactions with Affiliates. Directly or indirectly enter or permit any
     ----------------------------
material transaction with any Affiliate, except transactions that are in the
ordinary course of Borrower's business, on terms less favorable to Borrower than
would be obtained in an arm's length transaction with a non-affiliated Person.

7.8  Subordinated Debt. Make or permit any payment on any Subordinated Debt,
     -----------------
except under the terms of the Subordinated Debt, or amend any provision in any
document relating to the Subordinated Debt, without Bank's prior written
consent.

7.9  Compliance. Become an "investment company" or a company controlled by an
     ----------
"investment company" under the Investment Company Act of 1940 or undertake as
one of its important activities extending credit to purchase or carry margin
stock, or use the proceeds of any Advance for that purpose; fail to meet the
minimum funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, each as defined in ERISA, to occur; fail to comply with the Federal
Fair Labor Standards Act or violate any other law or regulation, if the
violation could reasonably be expected to have a material adverse effect on
Borrower's business or operations or cause a Material Adverse Change, or permit
any of its Subsidiaries to do so.

8.   EVENTS OF DEFAULT
     -----------------

     Any one of the following is an event of default hereunder (referred to as
an "Event of Default"):

8.1  Payment Default. Borrower fails to pay any of the Obligations within 5 days
     ----------------
after their due date. During the additional period the failure to cure the
default is not an Event of Default (but no Credit Extensions will be made during
the cure period);

8.2  Covenant Default. If Borrower does not perform any obligation in Section 6
     ----------------
or violates any covenant in Section 7; or

     If Borrower does not perform or observe any other material term, condition
or covenant in this Agreement, any Loan Documents, or in any agreement between
Borrower and Bank and as to any default under such other term, condition or
covenant that can be cured, has not cured the default within 10 days after it
occurs, or if the default relating thereto cannot be cured within 10 days or
cannot be cured after Borrower's attempts within 10 day period, and the default
may be cured within a reasonable time, then Borrower has an additional period
(of not more than 30

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days) to attempt to cure the default. During the additional time, the failure to
cure the default is not an Event of Default (but no Credit Extensions will be
made during the cure period);

8.3  Material Adverse Change. If there (i) occurs a material adverse change in
     -----------------------
the business, operations, or condition (financial or otherwise) of the Borrower,
or (ii) is a material impairment of the prospect of repayment of any portion of
the Obligations or (iii) is a material impairment of the value or priority of
Bank's security interests in the Collateral (any of the foregoing events or
occurrences is referred to herein as a "Material Adverse Change");

8.4  Attachment. (i) Any material portion of Borrower's assets is attached,
     ----------
seized, levied on, or comes into possession of a trustee or receiver and the
attachment, seizure or levy is not removed in 10 days; (ii) Borrower is
enjoined, restrained, or prevented by court order from conducting a material
part of its business; (iii) a judgment or other claim becomes a Lien on a
material portion of Borrower's assets; or (iv) a notice of lien, levy, or
assessment is filed against any of Borrower's assets by any government agency
and not paid within 10 days after Borrower receives notice. These are not Events
of Default if stayed or if a bond is posted pending contest by Borrower (but no
Credit Extensions will be made during the cure period);

8.5  Insolvency. (i) Borrower becomes insolvent; (ii) Borrower begins an
     ----------
Insolvency Proceeding; or (iii) an Insolvency Proceeding is begun against
Borrower and not dismissed or stayed within 30 days (but no Credit Extensions
will be made before any Insolvency Proceeding is dismissed);

8.6  Other Agreements. If there is a default in any agreement between Borrower
     -----------------
and a third party that gives the third party the right to accelerate any
Indebtedness exceeding $100,000 or that could cause a Material Adverse Change;

8.7  Judgments. If a money judgment or judgments in the aggregate of at least
     ---------
$100,000 is rendered against the Borrower and is unsatisfied and unstayed for 10
days (but no Credit Extensions will be made before the judgment is stayed or
satisfied);

8.8  Misrepresentations. If Borrower or any Person acting for Borrower makes any
     ------------------
material misrepresentation or material misstatement now or later in any warranty
or representation in this Agreement or in any communication delivered to Bank or
to induce Bank to enter this Agreement or any Loan Document; or

8.9  Guaranty. Any guaranty of any Obligations ceases for any reason to be in
     --------
full force or any Guarantor does not perform any obligation under any guaranty
of the Obligations, or any material misrepresentation or material misstatement
exists now or later in any warranty or representation in any guaranty of the
Obligations or in any certificate delivered to Bank in connection with the
guaranty, or any circumstance described in Sections 8.4, 8.5 or 8.7 occurs to
any Guarantor.

9.   BANK'S RIGHTS AND REMEDIES
     --------------------------

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9.1  Rights and Remedies. When an Event of Default occurs and continues Bank
     -------------------
may, without notice or demand, do any or all of the following:

     (a)  Declare all Obligations immediately due and payable (but if an Event
of Default described in Section 8.5 occurs all Obligations are immediately due
and payable without any action by Bank);

     (b)  Stop advancing money or extending credit for Borrower's benefit under
this Agreement or under any other agreement between Borrower and Bank;

     (c)  Settle or adjust disputes and claims directly with account debtors for
amounts, on terms and in any order that Bank considers advisable;

     (d)  Make any payments and do any acts it considers necessary or reasonable
to protect its security interest in the Collateral. Borrower will assemble the
Collateral if Bank requests and make it available as Bank designates. Bank may
enter premises where the Collateral is located, take and maintain possession of
any part of the Collateral, and pay, purchase, contest, or compromise any Lien
which appears to be prior or superior to its security interest and pay all
expenses incurred. Borrower grants Bank a license to enter and occupy any of its
premises, without charge, to exercise any of Bank's rights or remedies;

     (e)  Apply to the Obligations any (i) balances and deposits of Borrower it
holds, or (ii) any amount held by Bank owing to or for the credit or the account
of Borrower;

     (f)  Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell the Collateral. Bank is granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower's labels, Patents, Copyrights, Mask Works, rights of use of any name,
trade secrets, trade names, Trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this Section, Borrower's
rights under all licenses and all franchise agreements inure to Bank's benefit;
and

     (g)  Dispose of the Collateral according to the Code.

9.2  Power of Attorney. When an Event of Default occurs and continues, Borrower
     -----------------
irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower's name
on any checks or other forms of payment or security; (ii) sign Borrower's name
on any invoice or bill of lading for any Account or drafts against account
debtors, (iii) make, settle, and adjust all claims under Borrower's insurance
policies; (iv) settle and adjust disputes and claims about the Accounts directly
with account debtors, for amounts and on terms Bank determines reasonable; and
(v) transfer the Collateral into the name of Bank or a third party as the Code
permits. Bank may exercise the power of attorney to sign Borrower's name on any
documents necessary to perfect or continue the perfection of any security
interest regardless of whether an Event of Default has occurred. Bank's
appointment as Borrower's attorney in fact, and all of Bank's rights and

                                       11

<PAGE>

powers, coupled with an interest, are irrevocable until all Obligations have
been fully repaid and performed and Bank's obligation to provide Credit
Extensions terminates. `

9.3  Accounts Collection. When an Event of Default occurs and continues, Bank
     -------------------
may notify any Person owing Borrower money of Bank's security interest in the
funds and verify the amount of the Account. Borrower must collect all payments
in trust for Bank and, if requested by Bank, immediately deliver the payments to
Bank in the form received from the account debtor, with proper endorsements for
deposit.

9.4  Bank Expenses. If Borrower fails to pay any amount or furnish any required
     -------------
proof of payment to third persons Bank may make all or part of the payment or
obtain insurance policies required in Section 6.5, and take any action under the
policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then applicable rate and
secured by the Collateral. No payments by Bank are deemed an agreement to make
similar payments in the future or Bank's waiver of any Event of Default.

9.5  Bank's Liability for Collateral. If Bank complies with reasonable banking
     -------------------------------
practices and the applicable provisions of the Code, it is not liable or
responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage
to the Collateral; (c) any diminution in the value of the Collateral; or (d) any
act or default of any carrier, warehouseman, bailee, or other person. Borrower
bears all risk of loss, damage or destruction of the Collateral.

9.6  Remedies Cumulative. Bank's rights and remedies under this Agreement, the
     -------------------
Loan Documents, and all other agreements are cumulative. Bank has all rights and
remedies provided under the Code, by law, or in equity. Bank's exercise of one
right or remedy is not an election, and Bank's waiver of any Event of Default is
not a continuing waiver. Bank's delay is not a waiver, election, or
acquiescence. No waiver is effective unless signed by Bank and then is only
effective for the specific instance and purpose for which it was given.

9.7  Demand Waiver. Borrower waives demand, notice of default or dishonor,
     -------------
notice of payment and nonpayment, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guaranties held by Bank on which Borrower is
liable.

10.  NOTICES
     -------

     Unless otherwise provided in this Agreement, all notices or demands by any
party relating to this Agreement or any other agreement entered into in
connection herewith shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by a recognized overnight
delivery service, by certified mail, postage prepaid, return receipt requested,
or by telefacsimile to Borrower or to Bank, as the case may be, at its addresses
set forth below:

     If to Borrower:   c/o Lantronix, Inc.

                                       12

<PAGE>

                      15353 Barranca Parkway
                      Irvine, California  92618
                      Attention: Kathy McDermott
                      Fax: 949-450-7216

     If to Bank:      Silicon Valley Bank
                      38 Technology Drive, Suite 150
                      Irvine, California  92618
                      Attn: Manager
                      Fax:  949-789-1930

     With a copy to:  Silicon Valley Bank
                      3003 Tasman Drive
                      Santa Clara, California  95054
                      Attn: General Counsel
                      Fax:  408-496-2419

11.  CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
     -------------------------------------------

     California law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of
the State and Federal courts in Orange County, California. BORROWER AND BANK
EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING
OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

12.  GENERAL PROVISIONS
     ------------------

12.1 Successors and Assigns. This Agreement binds and is for the benefit of the
     ----------------------
successors and permitted assigns of each party. Borrower may not assign this
Agreement or any rights or Obligations under it without Bank's prior written
consent which may be granted or withheld in Bank's discretion. Bank has the
right, without the consent of or notice to Borrower, to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank's obligations, rights and benefits under this Agreement, the Loan Documents
or any related agreement.

12.2 Indemnification. Borrower will indemnify, defend and hold harmless Bank and
     ---------------
its officers, employees and agents against: (a) all obligations, demands,
claims, and liabilities asserted by any other party in connection with the
transactions as contemplated by the Loan Documents; and (b) all losses or Bank
Expenses incurred, or paid by Bank from, following, or

                                       13

<PAGE>

consequential to transactions as contemplated by the Loan Documents (including
reasonable attorneys' fees and expenses), except for losses caused by Bank's
gross negligence or willful misconduct.

12.3 Time of Essence. Time is of the essence for the performance of all
     ---------------
Obligations in this Agreement.

12.4 Severability of Provision. Each provision of this Agreement is severable
     -------------------------
from every other provision in determining the enforceability of any provision.

12.5 Amendments in Writing, Integration. All amendments to this Agreement must
     ----------------------------------
be in writing signed by both Bank and Borrower. This Agreement and the Loan
Documents represent the entire agreement about this subject matter, and
supersedes prior or contemporaneous negotiations or agreements. All prior or
contemporaneous agreements, understandings, representations, warranties, and
negotiations between the parties about the subject matter of this Agreement and
the Loan Documents merge into this Agreement and the Loan Documents.

12.6 Counterparts. This Agreement may be executed in any number of counterparts
     ------------
and by different parties on separate counterparts, each of which, when executed
and delivered, are an original, and all taken together, are one Agreement.

12.7 Survival. All covenants, representations and warranties made in this
     --------
Agreement continue in full force while any Obligations remain outstanding. The
obligations of Borrower in Section 12.2 to indemnify Bank will survive until all
statutes of limitations for actions that may be brought against Bank have run.

12.8 Confidentiality. In handling any confidential information, Bank will
     ---------------
exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (i) to Bank's
subsidiaries or affiliates in connection with their present or prospective
business relations with Borrower; (ii) to prospective transferees or purchasers
of any interest in the Loans; (iii) as required by law, regulation, subpoena, or
other order (with the understanding that Bank will undertake reasonable efforts
to provide notice to Borrower of any such requirement as may be appropriate
under the then existing circumstances, although Bank shall acquire no liability
if it fails to do so or if Borrower otherwise is unable to take actions to
prevent disclosure under such circumstances), (iv) as required in connection
with Bank's examination or audit; Confidential information does not include
information that either: (a) is in the public domain or in Bank's possession
when disclosed to Bank, or becomes part of the public domain after disclosure to
Bank through no fault of Bank; or (b) is disclosed to Bank by a third party, if
Bank does not know, or Bank is not in a position reasonably to know, that the
third party is prohibited from disclosing the information.

12.9 Attorneys' Fees, Costs and Expenses. In any action or proceeding between
     -----------------------------------
Borrower and Bank arising out of the Loan Documents, the prevailing party will
be entitled to recover its reasonable attorneys' fees and other costs and
expenses incurred, in addition to any other relief to which it may be entitled,
whether or not a lawsuit is filed.

                                       14

<PAGE>

13.  DEFINITIONS
     -----------

13.1 Definitions.
     -----------

     "Accounts" are all existing and later arising accounts, contract rights,
and other obligations owed Borrower in connection with its sale or lease of
goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.

     "Advance" or "Advances" is a loan advance (or advances) under the Committed
Revolving Line.

     "Affiliate" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.

     "Bank Expenses" are all audit fees and expenses and reasonable costs or
expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).

     "Borrower's Books" are all Borrower's books and records including ledgers,
records regarding Borrower's assets or liabilities, the Collateral, business
operations or financial condition and all computer programs or discs or any
equipment containing the information.

     "Business Day" is any day that is not a Saturday, Sunday or a day on which
the Bank is closed.

     "Cash Management Services" shall have the meaning ascribed to such term in
Section 2.1.4 hereof.

     "Closing Date" is the date of this Agreement.

     "Code" is the California Uniform Commercial Code, as amended or modified
from time to time.

     "Collateral" is the property described on Exhibit A.

     "Committed Revolving Line" is a Credit Extension of up to Twenty Million
Dollars ($20,000,000) on a joint, and not several, basis for all Borrowers.

     "Compliance Certificate" shall mean that certain compliance certificate in
the form of

                                       15

<PAGE>

Exhibit D attached hereto.

         "Contingent Obligation" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.

         "Copyrights" are all copyright rights, applications or registrations
and like protections in each work of authorship or derivative work, whether
published or not (whether or not it is a trade secret) now or later existing,
created, acquired or held.

         "Credit Extension" is each Advance, Letter of Credit, Exchange Contract
and each other extension of credit by Bank for Borrower's benefit.

         "Current Liabilities" are the aggregate amount of Borrower's Total
Liabilities which mature within one (1) year and shall also include all
Obligations outstanding hereunder from time to time.

         "Default" means any event which with the passing of time or the giving
of notice or both would become an Event of Default hereunder.

         "Equipment" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.

         "ERISA" is the Employment Retirement Income Security Act of 1974, and
its regulations.

         "Foreign Subsidiaries" shall mean all Subsidiaries of Borrower that are
organized under the law of a jurisdiction outside of the United States of
America.

         "FX Forward Contract" is defined in Section 2.1.3.

         "FX Reserve" is defined in Section 2.1.3.

         "GAAP" is generally accepted accounting principles, consistently
applied.

                                       16

<PAGE>

         "Guarantor" is any present or future guarantor of the Obligations.

         "Guaranty" shall mean the cross corporate continuing guaranty by each
Borrower relating to each other Borrower in form acceptable to the Bank.

         "Indebtedness" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.

         "Insolvency Proceeding" is any proceeding by or against any Person
under the United States Bankruptcy Code, or any other bankruptcy or insolvency
law, including assignments for the benefit of creditors, compositions,
extensions generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

         "Intellectual Property" is:

         (a) Copyrights, Trademarks, Patents, and Mask Works including
amendments, renewals, extensions, and all licenses or other rights to use and
all license fees and royalties from the use;

         (b) Any trade secrets and any Intellectual Property Rights in computer
software and computer software products now or later existing, created, acquired
or held;

         (c) All design rights which may be available to Borrower now or later
created, acquired or held;

         (d) Any claims for damages (past, present or future) for infringement
of any of the rights above, with the right, but not the obligation, to sue and
collect damages for use or infringement of the intellectual property rights
above; and

         (e) All proceeds and products of the foregoing, including all
insurance, indemnity or warranty payments.

         "Interest Rate Supplement" shall mean that certain LIBOR Supplement to
Loan and Security Agreement dated as of the date hereof as attached hereto as
Exhibit A-1.

         "Inventory" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.

         "Investment" is any beneficial ownership of (including stock,
partnership interest or

                                       17

<PAGE>

other securities) any Person, or any loan, advance or capital contribution to
any Person.

         "Letter of Credit" and "Letters of Credit" shall have the meaning
ascribed to such terms in Section 2.1.2 hereof.

         "LIBOR Rate" shall have the meaning ascribed to such term as is set
forth in the Interest Rate Supplement.

         "Lien" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.

         "Loan Documents" are, collectively, this Agreement, the Interest Rate
Supplement, any note, or notes or guaranties executed by Borrower or Guarantor,
and any other present or future agreement between Borrower and/or for the
benefit of Bank in connection with this Agreement, all as amended, extended or
restated.

         "Mask Works" are all mask works or similar rights available for the
protection of semiconductor chips, now owned or later acquired.

         "Material Adverse Change" has the meaning set forth in Section 8.3
hereof.

         "Obligations" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including letters of credit and foreign
exchange contracts, if any, and including interest accruing after Insolvency
Proceedings begin and debts, liabilities, or obligations of Borrower assigned to
Bank.

         "Patents" are patents, patent applications and like protections,
including improvements, divisions, continuations, renewals, reissues, extensions
and continuations-in-part of the same.

         "Permitted Indebtedness" is:

         (a) Borrower's indebtedness to Bank under this Agreement or the Loan
Documents;

         (b) Indebtedness existing on the Closing Date and shown on the
Schedule;

         (c) Subordinated Debt;

         (d) Indebtedness to trade creditors incurred in the ordinary course of
business

         (e) Indebtedness consisting of Contingent Obligations in aggregate
amounts not the exceed the dollar amount limitations set forth in clause (g) of
the definition of Permitted Investments, with the understanding that the
aggregate amount of Contingent Indebtedness incurred pursuant hereto shall be
counted in and limited by the aggregate amount of Permitted Investments as set
forth in such clause (g) and thus no additional Contingent Indebtedness may be
incurred unless a new Investment in the same amount would otherwise be permitted
to be

                                       18

<PAGE>

made and funded pursuant to the terms and conditions of such clause (g);
provided that no such Indebtedness shall be permitted to be made or otherwise
--------
funded upon the occurrence and during the continuance of a Default or an Event
of Default; and

         (f) Indebtedness secured by Permitted Liens.

         "Permitted Investments" are:

         (a) Investments shown on the Schedule and existing on the Closing Date;

         (b) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any State maturing within 1
year from its acquisition, (ii) commercial paper maturing no more than 1 year
after its creation and having the highest rating from either Standard & Poor's
Corporation or Moody's Investors Service, Inc., (iii) Bank's certificates of
deposit issued maturing no more than 1 year after issue and (iv) any Investments
permitted by Borrower's investment policy, as amended from time to time,
provided that such investment policy has been provided to the Bank and such
Investment does not otherwise result in an Event of Default hereunder;

         (c) Investments consisting of the endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
Borrower;

         (d) Investments consisting of travel advances and employee relocation
loans made in the ordinary course of business;

                                       19

<PAGE>

         (e) Investments (including debt obligations) received in connection
with the bankruptcy or reorganization of customers or suppliers and in
settlement of delinquent obligations of, and other disputes with, customers or
suppliers arising in the ordinary course of business;

         (f) Other Investments consisting of the transfer of funds and other
transfers of consideration, whether as a loan, capital contribution or however
else characterized, to Foreign Subsidiaries in an aggregate amount for all of
the such transfers not to exceed the Excess Available Investment Amount (as
defined in clause (g) below) up to $2,500,000, determined and viewed on a joint
basis for all Borrowers with respect to each fiscal year of Lantronix, Inc.,
provided that no such Investment shall be permitted to be made or otherwise
--------
funded upon the occurrence and during the continuance of a Default or an Event
of Default;

         (g) Other Investments consisting of loans or other Investments in
entities that are not Affiliates in an amount per transaction not to exceed
$2,500,000, and $10,000,000 in the aggregate in each fiscal year of the
Borrower, with the understanding that the above amounts are to be determined on
a joint basis for all Borrowers (such dollar amounts that are not being used for
such Investments during any fiscal year of Lantronix, Inc. being referred to
herein as the "Excess Available Investment Amount"); provided that the available
                                                     --------
amounts for Investments otherwise permitted by the terms and conditions of this
clause (g) shall be reduced during any fiscal year by (i) the aggregate amount
of Investments made in such fiscal year pursuant to clause (f) above and (ii)
the aggregate amount of Indebtedness incurred under clause (e) of the definition
of Permitted Indebtedness and outstanding from time to time; provided, further,
                                                             --------  -------
that only $2,500,000 of the above amount may be used for Investments in entities
not organized or located in the United States of America; provided, further,
                                                          --------  -------
that the currently contemplated Investment in Xanboo in an aggregate amount of
up to $4,000,000 shall be permitted and shall not be included in the foregoing
dollar amount limitations, provided, further, no such Investment shall be
                           --------  -------
permitted to be made or otherwise funded upon the occurrence and during the
continuance of a Default or an Event of Default.

         (h) Other Investments by one Borrower in another Borrower, as long as
no Default or Event of Default is then existing upon the making of any such
Investment or would arise thereupon.

         "Permitted Liens" are:

         (a) Liens existing on the Closing Date and shown on the Schedule or
arising under this Agreement or other Loan Documents;

         (b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
                                                   --
any of Bank's security interests;

         (c) Purchase money Liens (i) on Equipment acquired or held by Borrower
or its Subsidiaries incurred for financing the acquisition of the Equipment, or
(ii) existing on

                                       20

<PAGE>

equipment when acquired, if the Lien is confined to the property and
                         --
improvements and the proceeds of the equipment;

     (d)  Leases or subleases and non-exclusive licenses or non-exclusive
sublicenses granted in the ordinary course of Borrower's business, if the
                                                                   --
leases, subleases, licenses and sublicenses permit granting Bank a security
interest; and

     (e)  Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
                                                            ---
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase.

     "Person" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.

     "Prepayment Fee" is a fee on any portion of the Obligations with a fixed
interest rate (the "Fixed Obligations") paid before the payment due date. "Base
Interest Rate" means Bank's initial cost of funding the Fixed Obligations. The
Prepayment Fee is calculated as follows: First, Bank determines a "Current
Market Rate" based on what the Bank would receive if it loaned the remaining
amount on the prepayment date in a wholesale funding market matching maturity,
remaining principal and interest amounts and principal and interest payment
dates (the aggregate payments received are the "Current Market Rate Amount").
Bank may select any wholesale funding market rate as the Current Market Rate.
Second, Bank will take the prepayment amount and calculate the present value of
each remaining principal and interest payment which, without prepayment, the
Bank would have received during the term of the Fixed Obligations using the Base
Interest Rate. The sum of the present value calculations is the "Mark to Market
Amount." Third, the Bank will subtract the Current Market Rate Amount from the
Mark to Market Amount. Any amount greater than zero is the Prepayment Fee.

     "Prime Rate" is Bank's most recently announced "prime rate," even if it is
not Bank's lowest rate.

     "Quick Assets" is, on any date, the Borrower's consolidated, unrestricted
cash, cash equivalents, net billed accounts receivable and investments with
maturities of less than 12 months determined according to GAAP.

     "Responsible Officer" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.

     "Revolving Maturity Date" is December ___, 2003.

     "Schedule" is any attached schedule of exceptions.

     "Subordinated Debt" is debt incurred by Borrower subordinated to Borrower's

                                       21

<PAGE>

indebtedness owed to Bank and which is reflected in a written agreement in a
manner and form acceptable to Bank and approved by Bank in writing.

     "Subsidiary" is for any Person, joint venture, or any other business entity
of which more than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by the Person or one or more Affiliates of
the Person, and unless otherwise specifically indicated herein, reference to
"Subsidiary" shall mean and refer to a "Subsidiary" of Borrower.

     "Tangible Net Worth" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries minus, without duplication, (i) any amounts
                              -----
attributable to (a) goodwill, (b) intangible items such as unamortized debt
discount and expense, Patents, trade and service marks and names, Copyrights and
research and development expenses except prepaid expenses, and (c) reserves not
already deducted from assets, and (ii) Total Liabilities plus Subordinated Debt.
                              ---

     "Total Liabilities" is on any day, obligations that should, under GAAP, be
classified as liabilities on Borrower's consolidated balance sheet, including
all Indebtedness, and current portion Subordinated Debt allowed to be paid, but
excluding all other Subordinated Debt.

     "Trademarks" are trademark and service mark rights, registered or not,
applications to register and registrations and like protections, and the entire
goodwill of the business of Assignor connected with the trademarks.

                                       22

<PAGE>

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

                                             BORROWER:

                                             LANTRONIX, INC.

                                             By: _______________________________

                                             Title: ____________________________

                                             UNITED STATES SOFTWARE CORPORATION

                                             By: _______________________________

                                             Title: ____________________________

                                             LIGHTWAVE COMMUNICATION, INC.

                                             By: _______________________________

                                             Title: ____________________________

                                             SYNERGETIC MICRO SYSTEMS, INC.

                                             By: _______________________________

                                             Title: ____________________________

                                             BANK:

                                             SILICON VALLEY BANK

                                       23

<PAGE>

                                                By: ____________________________

                                                Title: _________________________

                                       24

<PAGE>

                                    EXHIBIT A
                                    ---------

     The Collateral consists of all of Borrower's right, title and interest in
and to all of Borrower's personal property, including without limitation the
following:

     All goods and equipment now owned or hereafter acquired, including, without
limitation, all machinery, fixtures, vehicles (including motor vehicles and
trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;

     All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;

     All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;

     All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower;

     All documents, cash, deposit accounts, securities, securities entitlements,
securities accounts, investment property, financial assets, letters of credit,
letter-of-credit rights, commercial tort claims, certificates of deposit,
instruments and chattel paper now owned or hereafter acquired and Borrower's
Books relating to the foregoing; and

     All copyright rights, copyright applications, copyright registrations and
like protections in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; all trade secret
rights, including all rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; all mask work or similar rights available for the
protection of semiconductor chips, now owned or hereafter acquired; all claims
for damages by way of any past, present and future infringement of any of the
foregoing; and

<PAGE>

All Borrower's Books relating to the foregoing and any and all claims, rights
and interests in any of the above and all substitutions for, additions and
accessions to and proceeds thereof.

                                       26

<PAGE>

                                    EXHIBIT B
                                    ---------

                   LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
             DEADLINE FOR SAME DAY PROCESSING IS 12:00 P.M., P.S.T.

TO:  CENTRAL CLIENT SERVICE DIVISION                          DATE:
FAX#:  (408) 496-2426                                         TIME:

--------------------------------------------------------------------------------
FROM: __________________________________________________________________________
                               CLIENT NAME (BORROWER)

REQUESTED BY: __________________________________________________________________
                              AUTHORIZED SIGNER'S NAME

AUTHORIZED SIGNATURE: __________________________________________________________

PHONE NUMBER: __________________________________________________________________

FROM ACCOUNT # ________________  TO ACCOUNT # __________________________________

REQUESTED TRANSACTION TYPE              REQUEST DOLLAR AMOUNT
--------------------------              ---------------------

PRINCIPAL INCREASE (ADVANCE)            $_______________________________________

PRINCIPAL PAYMENT (ONLY)                $_______________________________________

INTEREST PAYMENT (ONLY)                 $_______________________________________

PRINCIPAL AND INTEREST (PAYMENT)        $_______________________________________

OTHER INSTRUCTIONS: ____________________________________________________________

________________________________________________________________________________

All Borrower's representations and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
telephone request for and Advance confirmed by this Borrowing Certificate; but
those representations and warranties expressly referring to another date shall
be true, correct and complete in all material respects as of that date.

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

--------------------------------------------------------------------------------
                                  BANK USE ONLY

TELEPHONE REQUEST:
-----------------

The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.

________________________________________     ___________________________________
          Authorized Requester                            Phone #

________________________________________     ___________________________________
           Received By (Bank)                             Phone #

                  _____________________________________________
                           Authorized Signature (Bank)

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

<PAGE>

                                    EXHIBIT C

                                   [Reserved]

<PAGE>

                                    EXHIBIT D
                             COMPLIANCE CERTIFICATE

TO:     SILICON VALLEY BANK

FROM:   LANTRONIX, INC.

     The undersigned authorized officer of LANTRONIX, INC. certifies that under
the terms and conditions of the Loan and Security Agreement between Borrower and
Bank (the "Agreement"), (i) Borrower is in complete compliance for the period
ending _______________ with all required covenants except as noted below and
(ii) all representations and warranties in the Agreement are true and correct in
all material respects on this date. Attached are the required documents
supporting the certification. The Officer certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) consistently
applied from one period to the next except as explained in an accompanying
letter or footnotes. The Officer acknowledges that no borrowings may be
requested at any time or date of determination that Borrower is not in
compliance with any of the terms of the Agreement, and that compliance is
determined on an ongoing basis and not just as of the date this certificate is
delivered.

           Please indicate compliance status by circling Yes/No under
                               "Complies" column.

<TABLE>
<CAPTION>
     Reporting Covenant                   Required                                     Complies
     ------------------                   --------                                     --------
     <S>                                  <C>                                          <C>
     Compliance Certificate               Monthly within 30 days (when borrowing)      Yes     No
     10-Q, 10-K with
       consolidating statements           Within 5 days after filing with SEC          Yes     No

     Financial Covenant                   Required                  Actual             Complies
     ------------------                   --------                  ------             --------

     Maintain on a Quarterly Basis:
       Minimum Quick Ratio                1.75:1.0                  _____:1.0          Yes     No
       Profitability                      $1.00                     $________          Yes     No
</TABLE>

<TABLE>
<S>                                                    <C>
                                                       -------------------------------------------------
Comments Regarding Exceptions:  See Attached.                            BANK USE ONLY

                                                       Received by: __________________________________
Sincerely,                                                               AUTHORIZED SIGNER

______________________________________________         Date: _________________________________________
SIGNATURE
                                                       Verified: _____________________________________
______________________________________________                           AUTHORIZED SIGNER
TITLE
                                                       Date: _________________________________________
______________________________________________
DATE                                                   Compliance Status:                  Yes     No
                                                       -------------------------------------------------

</TABLE>

<PAGE>

                               Exhibit E- Schedule

5.1 - Litigation
----------------

Lantronix is a defendant in a patent infringement suit filed by Digi,
International, a Lantronix competitor.

Lantronix is also among the list of defendants in a 1996 patent infringement
suit filed by Datapoint, Inc. Other defendants include Intel, Cisco, Dayna, Sun
Microsystems, IBM and NBASE. The case was heard in New York, with the court
issuing a verdict of non-infringement (unpublished opinion). The plaintiff
appealed to the Court of Appeals for the Federal Circuit, which heard oral
arguments in the appeal on December 3, 2001.Lantronix has been represented by
counsel for NBASE under an indemnification agreement.

5.7 - Subsidiaries
------------------

Lantronix has the following subsidiaries:

Lantronix International A.G., including its subsidiaries:
 - Lantronix Networking Solutions Asia Pacific Pte Ltd (Singapore)
 - Lantronix Australia Pty Ltd.
 - Lantronix UK Ltd.
 - Lantronix France SARL
 - Lantronix Iberica S.L. (Spain)
 - Lantronix Netherlands B.V.

Lantronix International Inc. (Foreign Sales Corp.)

Lantronix Deutschland GmbH

Lantronix Europe GmbH and its subsidiary, Acola Kommunikation + LAN-Tecknik GmbH

United States Software Corp.

Lightwave Communication, Inc.

Synergetic Micro Systems, Inc.

Premise Systems (acquisition expected to close in January, 2002)<PAGE>
                                                                     Exhibit 4.1

                       KULICKE AND SOFFA INDUSTRIES, INC.

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

                                     SENIOR

                                    INDENTURE

                       Dated as of ________________, 2002

           Providing for Issuance of Senior Debt Securities in Series

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

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

                        LaSalle Bank National Association

                                   as Trustee

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

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

<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

<S>                      <C>                                                         <C>
Article 1.        DEFINITIONS AND INCORPORATION BY REFERENCE .........................  1
    Section 1.01.     Definitions ....................................................  1
    Section 1.02.     Other Definitions ..............................................  4
    Section 1.03.     Incorporation by Reference of Trust Indenture Act ..............  4
    Section 1.04.     Rules of Construction ..........................................  5
    Section 1.05.     Acts of Holders ................................................  5
Article 2.        THE SECURITIES .....................................................  6
    Section 2.01.     Form and Dating ................................................  6
    Section 2.02.     Amount Unlimited; Issuable in Series ...........................  7
    Section 2.03.     Denominations .................................................. 10
    Section 2.04.     Execution and Authentication ................................... 10
    Section 2.05.     Registrar and Paying Agent; Appointment of Depositary .......... 11
    Section 2.06.     Paying Agent to Hold Money in Trust ............................ 11
    Section 2.07.     Holder Lists ................................................... 12
    Section 2.08.     Transfer and Exchange .......................................... 12
    Section 2.09.     Replacement Securities ......................................... 15
    Section 2.10.     Outstanding Securities ......................................... 16
    Section 2.11.     Treasury Securities ............................................ 16
    Section 2.12.     Temporary Securities ........................................... 16
    Section 2.13.     Cancellation ................................................... 16
    Section 2.14.     Defaulted Interest ............................................. 17
Article 3.        REDEMPTION AND PREPAYMENT .......................................... 17
    Section 3.01.     Applicability of Article ....................................... 17
    Section 3.02.     Selection of Securities to Be Redeemed ......................... 17
    Section 3.03.     Notice of Redemption ........................................... 18
    Section 3.04.     Effect of Notice of Redemption ................................. 19
    Section 3.05.     Deposit of Redemption or Purchase Price ........................ 19
    Section 3.06.     Securities Redeemed or Purchased in Part ....................... 19
    Section 3.07.     Mandatory Redemption; Sinking Fund ............................. 19
Article 4.        COVENANTS .......................................................... 21
    Section 4.01.     Payment of Securities .......................................... 21
    Section 4.02.     Maintenance of Office or Agency ................................ 21
    Section 4.03.     Reports ........................................................ 22
    Section 4.04.     Compliance Certificate ......................................... 22
    Section 4.05.     Continued Existence ............................................ 23
    Section 4.06.     Stay, Extension and Usury Laws ................................. 23
Article 5.        SUCCESSORS ......................................................... 23
    Section 5.01.     Merger, Consolidation, or Sale of Assets ....................... 23
    Section 5.02.     Successor Person Substituted ................................... 24
Article 6.        DEFAULTS AND REMEDIES .............................................. 24
    Section 6.01.     Events of Default .............................................. 24
    Section 6.02.     Acceleration ................................................... 25
    Section 6.03.     Other Remedies ................................................. 26
    Section 6.04.     Waiver of Past Defaults; Rescission of Acceleration ............ 26

</TABLE>

<PAGE>

<TABLE>

<S>                     <C>                                                                          <C>
    Section 6.05.     Control by Majority ............................................................ 26
    Section 6.06.     Limitation on Suits ............................................................ 27
    Section 6.07.     Rights of Holders of Securities to Receive Payment ............................. 27
    Section 6.08.     Collection Suit by Trustee ..................................................... 27
    Section 6.09.     Trustee May File Proofs of Claim ............................................... 27
    Section 6.10.     Priorities ..................................................................... 28
    Section 6.11.     Undertaking for Costs .......................................................... 28
Article 7.        TRUSTEE ............................................................................ 29
    Section 7.01.     Duties of Trustee .............................................................. 29
    Section 7.02.     Rights of Trustee .............................................................. 30
    Section 7.03.     Individual Rights of Trustee ................................................... 30
    Section 7.04.     Trustee's Disclaimer ........................................................... 31
    Section 7.05.     Notice of Defaults ............................................................. 31
    Section 7.06.     Reports by Trustee to Holders of the Securities ................................ 31
    Section 7.07.     Compensation and Indemnity ..................................................... 31
    Section 7.08.     Replacement of Trustee ......................................................... 32
    Section 7.09.     Successor Trustee by Merger, etc. .............................................. 33
    Section 7.10.     Eligibility; Disqualification .................................................. 33
    Section 7.11.     Preferential Collection of Claims Against Company .............................. 34
Article 8.        LEGAL DEFEASANCE AND COVENANT DEFEASANCE ........................................... 34
    Section 8.01.     Option to Effect Legal Defeasance or Covenant Defeasance ....................... 34
    Section 8.02.     Legal Defeasance and Discharge ................................................. 35
    Section 8.03.     Covenant Defeasance ............................................................ 36
    Section 8.04.     Conditions to Legal or Covenant Defeasance ..................................... 36
    Section 8.05.     Deposited Money and U.S. Government Obligations to be Held in Trust; Other
                      Miscellaneous Provisions ....................................................... 37
    Section 8.06.     Repayment to Company ........................................................... 38
    Section 8.07.     Reinstatement .................................................................. 38
Article 9.        AMENDMENT, SUPPLEMENT AND WAIVER ................................................... 39
    Section 9.01.     Without Consent of Holders of Securities ....................................... 39
    Section 9.02.     With Consent of Holders of Securities .......................................... 40
    Section 9.03.     Compliance with Trust Indenture Act ............................................ 41
    Section 9.04.     Revocation and Effect of Consents .............................................. 41
    Section 9.05.     Notation on or Exchange of Securities .......................................... 42
    Section 9.06.     Trustee to Sign Amendments, etc. ............................................... 42
Article 10.       MEETINGS OF HOLDERS ................................................................ 42
    Section 10.01.    Purposes for Which Meeting  May Be Called. ..................................... 42
    Section 10.02.    Call, Notice and Place of Meetings. ............................................ 42
    Section 10.03.    Persons Entitled to Vote at Meetings. .......................................... 43
    Section 10.04.    Quorum; Action. ................................................................ 43
    Section 10.05.    Determination of Voting  Rights; Conduct and Adjournment of Meetings. .......... 44
    Section 10.06.    Counting Votes and Recording Action of Meetings. ............................... 44
    Section 10.07.    Article Subject to Other Provisions ............................................ 45
Article 11.       MISCELLANEOUS ...................................................................... 45
    Section 11.01.    Trust Indenture Act Controls ................................................... 45
    Section 11.02.    Notices ........................................................................ 45
</TABLE>

<PAGE>

<TABLE>

<S>                      <C>                                                                         <C>
    Section 11.03.    Communication by Holders of Securities with Other Holders of Securities ........ 46
    Section 11.04.    Certificate and Opinion as to Conditions Precedent ............................. 46
    Section 11.05.    Statements Required in Certificate or Opinion .................................. 46
    Section 11.06.    Rules by Trustee and Agents .................................................... 47
    Section 11.07.    No Personal Liability of Directors, Officers, Employees and Stockholders ....... 47
    Section 11.08.    Governing Law .................................................................. 47
    Section 11.09.    No Adverse Interpretation of Other Agreements .................................. 47
    Section 11.10.    Successors ..................................................................... 47
    Section 11.11.    Severability ................................................................... 47
    Section 11.12.    Counterpart Originals .......................................................... 48
    Section 11.13.    Table of Contents, Headings, etc. .............................................. 48

</TABLE>

<PAGE>

Reconciliation and Tie Between the Trust Indenture Act of 1939 and Indenture
dated as of February __, 2002, between Kulicke and Soffa Industries, Inc. and
LaSalle Bank National Association, as Trustee

Act Section                            Indenture Section
-----------                            -----------------

310(a)(1)                              7.10
310(a)(2)                              7.10
310(a)(3)                              N/A
310(a)(4)                              N/A
310(a)(5)                              7.10
310(b)                                 7.03, 7.08, 7.10
310(c)                                 N/A
311(a)                                 7.11
311(b)                                 7.11
311(c)                                 N/A
312(a)                                 2.07
312(b)                                 11.03
312(c)                                 11.03
313(a)                                 7.06
313(b)                                 7.06
313(c)                                 7.06, 11.02
313(d)                                 7.06
314(a)                                 4.03
314(b)                                 N/A
314(c)                                 4.04, 11.05
314(d)                                 N/A
314(e)                                 11.05
314(f)                                 N/A
315(a)                                 7.01
315(b)                                 7.05
315(c)                                 7.01
315(d)                                 7.01
315(e)                                 6.11
316(a)(1)                              6.04, 6.05
316(a)(2)                              N/A
316(a) last sentence                   2.11
316(b)                                 6.07
317(a)                                 6.08, 6.09
317(b)                                 2.06
318(a)                                 11.01
318(c)                                 11.01

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

<PAGE>

                  INDENTURE dated as of __________________ between Kulicke and
Soffa Industries, Inc., a Pennsylvania corporation, and LaSalle Bank National
Association, as Trustee.

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

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

                  For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted and agreed as
follows for the equal and ratable benefit of the Holders of the Securities:

Article 1.
                          DEFINITIONS AND INCORPORATION

                                  BY REFERENCE

SECTION 1.01.     DEFINITIONS.

                  "Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided, however, that beneficial ownership of 10% or more of the voting
securities of a Person shall be deemed to be control.

                  "Agent" means any Registrar or Paying Agent.

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

                  "Board" or "Board of Directors" means the Board of Directors
of the Company or any authorized committee of the Board of Directors.

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

                  "Business Day" means any day other than a Legal Holiday.

                  "Code" means the Internal Revenue Code of 1986, as amended.

                  "Company" means Kulicke and Soffa Industries, Inc., a
Pennsylvania corporation, and any and all successors thereto.

<PAGE>

                  "Corporate Trust Office of the Trustee" shall be the address
of the Trustee specified in Section 11.02 hereof or such other address as to
which the Trustee may give notice to the Company.

                  "Custodian" means the Trustee, as custodian with respect to
Securities in global form, or any successor entity thereto.

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

                  "Depositary" means, with respect to any series of Securities
issuable or issued in whole or in part in global form, the Person specified in
Section 2.05 hereof as the Depositary with respect to the Global Securities of
that series, and any and all successors thereto registered and in good standing
as a clearing agency under the Exchange Act, appointed as depositary hereunder
and having become such pursuant to the applicable provision of this Indenture.

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

                  "Global Securities" means, individually and collectively, the
Securities issued in global form issued in accordance with Sections 2.01 and
2.08 hereof.

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

                  "Indenture" means this Indenture, as amended and restated
hereby or as amended, waived or supplemented from time to time and shall include
and incorporate by reference the forms and terms of particular series of
Securities established as contemplated hereunder.

                  "Indirect Participant" means a Person who holds a beneficial
interest in a Global Security through a Participant.

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

                  "Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. 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 such payment for the intervening period.

                  "Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary, any Assistant Secretary, any Vice President or
any Assistant Vice President of such Person.

                  "Officers' Certificate" means a certificate signed on behalf
of the Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 11.05 hereof.

                                      -2-

<PAGE>

                  "Opinion of Counsel" means an opinion from legal counsel that
meets the requirements of Section 11.05 hereof. The counsel may be an employee
of or counsel to the Company, any Subsidiary of the Company or the Trustee.

                  "Participant" means, with respect to the Depositary, a Person
who has an account with the Depositary.

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

                  "Responsible Officer" when used with respect to the Trustee,
means any officer within the Corporate Trust Administration department of the
Trustee (or any successor group of the Trustee) or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.

                  "SEC" means the Securities and Exchange Commission.

                  "Securities" has the meaning assigned to it in the preamble to
this Indenture.

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

                  "Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.

                  "Stated Maturity" means, with respect to any interest or
principal on any series of Securities, the date on which such payment of
interest or principal is scheduled to be paid thereon by its terms as in effect
from time to time, and does not include any contingent obligation to repay,
redeem or repurchase any such interest or principal prior to the date scheduled
for the payment thereof.

                  "Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of capital stock or other equity interests entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
(of such Person or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such a Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or one or more Subsidiaries of such Person (or any combination thereof.)

                  "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb as amended) as in effect on the date on which this Indenture is
qualified under the TIA.

                                      - 3 -

<PAGE>

                  "Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.

                  "U.S. Government Obligations" means securities that are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii), are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such U.S. Government Obligation or a
specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt, provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.

SECTION 1.02.     OTHER DEFINITIONS

                                                   Defined in
Term                                               Section

"Act" ...........................................  1.05
"Authentication Order" ..........................  2.04
"Covenant Defeasance" ...........................  8.03
"custodian" .....................................  6.01
"Event of Default" ..............................  6.01
"Legal Defeasance" ..............................  8.02
"mandatory sinking fund payment" ................  3.07
"Notice of Default" .............................  6.01
"optional sinking fund payment" .................  3.07
"outstanding" ...................................  8.02
"Paying Agent" ..................................  2.05
"Registrar" .....................................  2.05
"sinking fund payment date" .....................  3.07

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:

                  "indenture security holder" means a Holder of a Security;

                  "indenture to be qualified" means this Indenture;

                                      - 4 -

<PAGE>

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

                  "obligor" on the Securities means the Company and any
successor obligor upon the Securities.

                  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.

                  For the purposes of this Indenture, 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 United States generally accepted
accounting principles;

                  (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) references to sections of or rules under the Securities
Act shall be deemed to include substitute, replacement of successor sections or
rules adopted by the SEC from time to time.

SECTION 1.05.     ACTS OF HOLDERS.

     (a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders, in person or by an agent duly appointed in writing
or may be embodied in and evidenced by the record of Holders voting in favor
thereof, either in person or by proxies duly appointed in writing, at any
meeting of Holders duly called and held in accordance with the provisions of
Article 10, or a combination of such instruments or record and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments or record or both are delivered to the Trustee and,
where it is hereby expressly required, to the Company. Such instrument or
instruments and any such record (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of Holders signing such
instrument or instruments and so voting at any such meeting. Proof of execution
of any such instrument or of a writing appointing any such agent or proxy shall
be sufficient for any purpose of this Indenture and conclusive in favor of the
Trustee and the Company, if made in the manner provided in this Section and
Section 10.06. The record of any meeting of Holders shall be proved in the
manner provided in Section 10.06.

                                      - 5 -

<PAGE>

     (b) Without limiting the generality of this Section, unless otherwise
provided in or pursuant to this Indenture, a Holder, including a Depositary that
is a Holder of a Global Security, may make, give or take, by a proxy, or
proxies, duly appointed in writing, any request, demand, authorization,
direction, notice, consent, waiver or other action provided in or pursuant to
this Indenture to be made, given or taken by Holders, and a Depositary that is a
Holder of a Global Security may provide its proxy or proxies to the beneficial
owners of interests in any such Global Security through such Depositary's
standing instructions and customary practices.

     (c) The fact and date of the execution by any Person of any such instrument
or writing may be proved in any manner which the Trustee deems sufficient.

     (d) The ownership of Securities shall be proved by the Register.

Article 2.
                                 THE SECURITIES

SECTION 2.01.     FORM AND DATING.

     (a) General. The Securities of each series shall be in substantially such
form as shall be established by or pursuant to a Board Resolution or in one or
more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any applicable securities exchange,
organizational document, governing instrument or law or as may, consistently
herewith, be determined by the officers executing such Securities as evidenced
by their execution of the Securities. If temporary Securities of any series are
issued as permitted by Section 2.12, the form thereof also shall be established
as provided in the preceding sentence. If the forms of Securities of any series
are established by, or by action taken pursuant to, a Board Resolution, a copy
of the Board 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 the certificate, together with an
appropriate record of any such action taken pursuant thereto, including a copy
of the approved form of Securities shall be delivered to the Trustee at or prior
to the delivery of the Authentication Order contemplated by Section 2.04 for the
authentication and delivery of such Securities. The Trustee's certificate of
authentication shall be in substantially the following form:

                           This is one of the Securities of the series described
in the within-mentioned Indenture.

                                   --------------------------------------,
                                   as Trustee

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

                                      - 6 -

<PAGE>

(b) Global Securities. If Securities of or within a series are issuable in whole
or in part in global form, any such Security may provide that it shall represent
the aggregate or specified amount of outstanding Securities from time to time
endorsed thereon and may also provide that the aggregate amount of outstanding
Securities represented thereby may from time to time be reduced or increased to
reflect exchanges. Any endorsement of a Security in global form to reflect the
amount, or any increase or decrease in the amount, or changes in the rights of
Holders, of outstanding Securities represented thereby, shall be made in such
manner and by such Person or Persons as shall be specified therein or upon the
written order of the Company signed by an Officer to be delivered to the Trustee
pursuant to Section 2.04 or 2.12. Subject to the provisions of Section 2.04,
Section 2.12, if applicable, and Section 2.08, the Trustee shall deliver and
redeliver any Security in permanent global form in the manner and upon
instructions given by the Person or Persons specified therein or in the
applicable written order of the Company signed by an Officer. Any instructions
by the Company with respect to endorsement or delivery or redelivery of a
Security in global form shall be in writing.

         The provisions of the last paragraph of Section 2.04 shall apply to any
Security in global form if such Security was never issued and sold by the
Company and the Company delivers to the Trustee the Security in global form
together with a written instructions with regard to the reduction in the
principal amount of Securities represented thereby, together with the written
statement contemplated by the last paragraph of Section 2.04.

         Notwithstanding the provisions of this Section 2.01, unless otherwise
specified as contemplated by Section 2.02, payment of principal of, premium, if
any, and interest on any Security in permanent global form shall be made to the
Holder thereof.

SECTION 2.02.     AMOUNT UNLIMITED; ISSUABLE IN SERIES.

     (a) The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited. The Securities may be issued
from time to time in one or more series.

     (b) The following matters shall be established with respect to each series
of Securities issued hereunder (i) by a Board Resolution, (ii) by action taken
pursuant to a Board Resolution and set forth, or determined in the manner
provided, in an Officers' Certificate or (iii) in one or more indentures
supplemental hereto:

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

     (2) any limit upon the aggregate principal amount of the Securities of the
series which may be authenticated and delivered under this Indenture (which
limit shall not pertain to Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Securities
of the series pursuant to Section 2.08, 2.09, 2.12, 3.06 or 9.05 or any
Securities that, pursuant to Section 2.04, are deemed never to have been
authenticated and delivered hereunder);

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

                                      - 7 -

<PAGE>

     (4) the rate or rates at which the Securities of the series shall bear
interest, if any, or the method or methods of calculating such rate or rates of
interest, the date or dates from which such interest shall accrue or the method
or methods by which such date or dates shall be determined, the Interest Payment
Dates on which any such interest shall be payable, the right, if any, of the
Company to defer or extend an Interest Payment Date, the record date, if any,
for the interest payable on any Security on any Interest Payment Date, and the
basis upon which interest shall be calculated if other than that of a 360-day
year of twelve 30-day months;

     (5) the place or places where the principal of, premium, if any, and
interest, if any, on Securities of the series shall be payable, any Securities
of the series may be surrendered for registration of transfer, Securities of the
series may be surrendered for exchange and notices and demands to or upon the
Company in respect of the Securities of the series and this Indenture may be
served and notices to Holders pursuant to Section 11.02 will be published;

     (6) the period or periods within which, the price or prices at which, the
currency or currencies (including currency unit or units) in which, and the
other terms and conditions upon which, Securities of the series may be redeemed,
in whole or in part, at the option of the Company and, if other than as provided
in Section 3.03, the manner in which the particular Securities of such series
(if less than all Securities of such series are to be redeemed) are to be
selected for redemption;

     (7) the obligation, if any, of the Company to redeem or purchase Securities
of the series pursuant to any sinking fund or analogous provisions or upon the
happening of a specified event or at the option of a Holder thereof and the
period or periods within which, the price or prices at which, the currency or
currencies (including currency unit or units) in which, and the other terms and
conditions upon which, Securities of the series shall be redeemed or purchased,
in whole or in part, pursuant to such obligation;

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

     (9) if other than U.S. dollars, the currency or currencies (including
currency unit or units) in which the principal of, premium, if any, and
interest, if any, on the Securities of the series shall be payable, or in which
the Securities of the series shall be denominated, and the particular provisions
applicable;

     (10) if the payments of principal of, premium, if any, or interest, if any,
on the Securities of the series are to be made, at the election of the Company
or a Holder, in a currency or currencies (including currency unit or units)
other than that in which such Securities are denominated or designated to be
payable, the currency or currencies (including currency unit or units) in which
such payments are to be made, the terms and conditions of such payments and the
manner in which the exchange rate with respect to such payments shall be
determined, and the particular provisions applicable thereto;

     (11) if the amount of payments of principal of, premium, if any, and
interest, if any, on the Securities of the series shall be determined with
reference to an index, formula or other method (which index, formula or method
may be based, without limitation, on a currency

                                      - 8 -

<PAGE>

or currencies (including currency unit or units) other than that in which the
Securities of the series are denominated or designated to be payable), the
index, formula or other method by which such amounts shall be determined and any
special voting or defeasance provisions in connection therewith;

     (12) if other than the principal amount thereof, the portion of the
principal amount of such Securities of the series which shall be payable upon
declaration of acceleration thereof pursuant to Section 6.02 or the method by
which such portion shall be determined;

     (13) the Person to whom any interest on any Security of the series shall be
payable;

     (14) provisions, if any, granting special rights to the Holders of
Securities of the series upon the occurrence of such events as may be specified;

     (15) any deletions from, modifications of or additions to the Events of
Default set forth in Section 6.01 or covenants of the Company set forth in
Article 4 pertaining to the Securities of the series;

     (16) under what circumstances, if any, and with what procedures and
documentation the Company will pay additional amounts on the Securities of that
series held by a Person who is not a U.S. Person (including any definition of
such term) in respect of taxes, assessments or similar charges withheld or
deducted and, if so, whether the Company will have the option to redeem such
Securities rather than pay such additional amounts (and the terms of any such
option);

     (17) the forms of the Securities of the series;

     (18) the applicability, if any, to the Securities of the series of Sections
8.02 and 8.03, or such other means of defeasance or covenant defeasance as may
be specified for the Securities of such series;

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

     (20) if the Securities of the series shall be issued in whole or in part in
global form, (A) the Depositary for such Global Securities, (B) whether
beneficial owners of interests in any Securities of the series in global form
may exchange such interests for certificated Securities of such series, to be
registered in the names of or to be held by such beneficial owners or their
nominees and to be of like tenor of any authorized form and denomination, and
(C) if other than as provided in Section 2.08, the circumstances under which any
such exchange may occur;

     (21) the designation of the Depositary;

     (22) any restrictions on the registration, transfer or exchange of the
Securities;

     (23) if the Securities of the series may be issued or delivered (whether
upon original issuance or upon exchange of a temporary Security of such series
or otherwise), or any

                                      - 9 -

<PAGE>

installment of principal or interest is payable, only upon receipt of certain
certificates or other documents or satisfaction of other conditions in addition
to those specified in this Indenture, the form and terms of such certificates,
documents or conditions;

     (24) the terms and conditions of any right to convert or exchange
Securities of the series into or for other securities or property of the
Company;

     (25) whether the Securities are secured or unsecured, and if secured, the
security and related terms in connection therewith; and

     (26) any other terms of the series (which terms shall not be inconsistent
with the provisions of this Indenture) including any terms which may be required
by or advisable under United States laws or regulations or advisable (as
determined by the Company) in connection with the marketing of Securities of the
series.

     (c) All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided (i) by a Board
Resolution, (ii) by action taken pursuant to a Board Resolution and set forth,
or determined in the manner provided, in the related Officers' Certificate or
(iii) in an indenture supplemental hereto. All Securities of any one series need
not be issued at the same time and, unless otherwise provided, a series may be
reopened, without the consent of the Holders, for issuances of additional
Securities of such series.

     (d) If any of the terms of the Securities of any series are established by
action taken pursuant to a Board Resolution, a copy of such Board Resolution
shall be delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth, or providing the manner for determining, the terms of
the Securities of such series, and an appropriate record of any action taken
pursuant thereto in connection with the issuance of any Securities of such
series shall be delivered to the Trustee prior to the authentication and
delivery thereof.

SECTION 2.03.     DENOMINATIONS.

                  Unless otherwise provided as contemplated by Section 2.02,
Securities of a series denominated in Dollars shall be issuable in denominations
of U.S. $1,000 and any integral multiple thereof. Securities denominated in a
foreign currency shall be issuable in such denominations as are established with
respect to such Securities in or pursuant to this Indenture.

SECTION 2.04.     EXECUTION AND AUTHENTICATION.

                  An Officer 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 a 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.

                                     - 10 -

<PAGE>

                  The Trustee shall, upon a written order of the Company signed
by an Officer (an "Authentication Order"), together with an Officers'
Certificate and an Opinion of Counsel, authenticate Securities for original
issue in the aggregate principal amount stated in the Authentication Order.

                  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 Holders or an
Affiliate of the Company.

                  Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Security to the Trustee for cancellation as
provided in Section 2.13 together with a written statement stating that such
Security has never been issued and sold by the Company, for all purposes of this
Indenture such Security shall be deemed never to have been authenticated and
delivered hereunder and shall not be entitled to the benefits of this Indenture.

SECTION 2.05.     REGISTRAR AND PAYING AGENT; APPOINTMENT OF DEPOSITARY.

                  The Company shall maintain an office or agency where
Securities may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Securities may be presented for
payment ("Paying Agent"). The Registrar shall keep a register of the Securities
and of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term "Registrar"
includes any co-registrar and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall promptly notify the Trustee in writing
of the name and address of any Agent not a party to this Indenture. If the
Company fails to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may
act as Paying Agent or Registrar.

                  The Company initially appoints The Depository Trust Company to
act as Depositary with respect to the Global Securities.

                  The Company initially appoints the Trustee to act as the
Registrar and Paying Agent with respect to the Securities and to act as
Custodian with respect to the Global Securities.

SECTION 2.06.     PAYING AGENT TO HOLD MONEY IN TRUST.

                  The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal, premium or interest on the Securities or other payments in
respect of the Securities or otherwise held by it as Paying Agent, and will
notify the Trustee of any default by the Company in making any such payment when
due. 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 (if other

                                     - 11 -

<PAGE>

than the Company or a Subsidiary) shall have no further liability for the money.
If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold
in a separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Company, the Trustee shall serve as Paying Agent for the Securities.

SECTION 2.07.     HOLDER LISTS.

                  The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA ss.312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at least
seven Business Days 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 the Holders of
Securities, and the Company shall otherwise comply with TIA ss.312(a).

SECTION 2.08.     TRANSFER AND EXCHANGE.

     (a) Upon surrender for registration of transfer of any certificated
Security of any series at the office or agency maintained pursuant to Section
4.02 in a place of payment for that series, the Company shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new certificated Securities of the same series, of
any authorized denominations and of a same aggregate principal amount and like
tenor and containing identical terms and provisions.

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

     (c) Notwithstanding any other provision of this Section, unless and until
it is exchanged in whole or in part for Securities in certificated form, a
Security in global form representing all or a portion of the Securities of a
series may not be transferred except as a whole by the Depositary for such
series to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by such Depositary or
any such nominee to a successor Depositary for such series or a nominee of such
successor Depositary.

     (d) If at any time the Depositary for the Securities of a series notifies
the Company that it is unwilling or unable to continue as Depositary for the
Securities of such series or if at any time the Depositary for the Securities of
such series shall no longer be registered and in good standing as a clearing
agency under the Exchange Act, the Company shall appoint a successor Depositary
with respect to the Securities of such series. If a successor Depositary for the
Securities of such series is not appointed by the Company prior to the
resignation of the Depositary and, in any event, within 90 days after the
Company receives such notice or becomes aware of such

                                     - 12 -

<PAGE>

ineligibility, the Company's designation of the Depositary pursuant to Section
2.02(b)(21) shall no longer be effective with respect to the Securities of such
series and the Company shall execute, and the Trustee, upon receipt of an
Authentication Order for the authentication and delivery of certificated
Securities of such series of like tenor, shall authenticate and deliver,
Securities of such series of like tenor in certificated form, in authorized
denominations and in an aggregate principal amount equal to the principal amount
of the Security or Securities of such series of like tenor in global form in
exchange for such Security or Securities in global form.

     (e) The Company may at any time in its sole discretion determine that all
(but not less than all) Securities of a series issued in global form shall no
longer be represented by such a Security or Securities in global form. In such
event the Company shall execute, and the Trustee, upon receipt of an
Authentication Order for the authentication and delivery of certificated
Securities of such series of like tenor, shall authenticate and deliver,
Securities of such series of like tenor in certificated form, in authorized
denominations and in an aggregate principal amount equal to the principal amount
of the Security or Securities of such series of like tenor in global form in
exchange for such Security or Securities in global form.

     (f) If specified by the Company pursuant to Section 2.02 with respect to a
series of Securities, the Depositary for such series may surrender a Security in
global form of such series in exchange in whole or in part for Securities of
such series in certificated form on such terms as are acceptable to the Company
and such Depositary. Thereupon, the Company shall execute, and the Trustee shall
authenticate and deliver, without service charge,

               (i)         to each Person specified by such depositary a new
                           certificated Security or Securities of the same
                           series of like tenor, of any authorized denomination
                           as requested by such Person in aggregate principal
                           amount equal to and in exchange for such Person's
                           beneficial interest in the Security in global form;

                           and

               (ii)        to such Depositary a new Security in global form of
                           like tenor in a denomination equal to the difference,
                           if any, between the principal amount of the
                           surrendered Security in global form and the aggregate
                           principal amount of certificated Securities delivered
                           to Holders thereof.

     (g) Upon the exchange of a Security in global form for Securities in
certificated form, such Security in global form shall be canceled by the
Trustee. Securities in certificated form issued in exchange for a Security in
global form pursuant to this Section shall be registered in such names and in
such authorized denominations as the Depositary for such Security in global
form, pursuant to instructions from its direct or Indirect Participants or
otherwise, shall instruct the Trustee in writing. The Trustee shall deliver such
Securities to the Persons in whose names such Securities are so registered.

     (h) Whenever any Securities are surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.

                                     - 13 -

<PAGE>

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

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

     (k) No service charge shall be made for any registration of transfer or for
any exchange 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 registration or transfer or exchange of Securities, other
than exchanges pursuant to Section 2.12 or 3.06 not involving any transfer.

     (l) The Company shall not be required (i) to issue, register the transfer
of, or exchange any Securities for a period beginning at the opening of business
15 days before any selection for redemption of Securities of like tenor and of
the series of which such Security is a part and ending at the close of business
on the earliest date on which the relevant notice of redemption is deemed to
have been given to all Holders of Securities of like tenor and of such series to
be redeemed; or (ii) to register the transfer of or exchange any Security so
selected for redemption, in whole or in part, except the unredeemed portion of
any Security being redeemed in part.

     (m) The foregoing provisions relating to registration, transfer and
exchange may be modified, supplemented or superseded with respect to any series
of Securities by a Board Resolution or in one or more indentures supplemental
hereto.

     (n) The following legend shall appear on the face of all Global Securities
unless specifically stated otherwise in the applicable provision of this
Indenture:

         "THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
         INDENTURE GOVERNING THIS SECURITY) OR ITS NOMINEE IN CUSTODY FOR THE
         BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND, UNLESS AND UNTIL IT IS
         EXCHANGED FOR SECURITIES IN DEFINITIVE FORM IN ACCORDANCE WITH THE
         INDENTURE, (I) IS NOT TRANSFERABLE EXCEPT AS A WHOLE BY THE DEPOSITARY
         TO A NOMINEE OF THE DEPOSITARY, OR BY A NOMINEE OF THE DEPOSITARY TO
         THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY, OR BY THE
         DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR SUCCESSOR
         NOMINEE, AND (II) MAY NOT BE EXCHANGED OR CANCELLED EXCEPT IN THE
         LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE."

     (o) At such time as all beneficial interests in a particular Global
Security have been exchanged for definitive Securities or a particular Global
Security has been redeemed,

                                     - 14 -

<PAGE>

repurchased or canceled in whole and not in part, each such Global Security
shall be returned to or retained and canceled by the Trustee in accordance with
Section 2.13 hereof. At any time prior to such cancellation, if any beneficial
interest in a Global Security is exchanged for or transferred to a Person who
will take delivery thereof in the form of a beneficial interest in another
Global Security or for definitive Securities, the principal amount of Securities
represented by such Global Security shall be reduced accordingly and an
endorsement shall be made on such Global Security by the Trustee or by the
Depositary at the direction of the Trustee to reflect such reduction; and if the
beneficial interest is being exchanged for or transferred to a Person who will
take delivery thereof in the form of a beneficial interest in another Global
Security, such other Global Security shall be increased accordingly and an
endorsement shall be made on such Global Security by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.

     (p) Prior to due presentment for the registration of a transfer of any
Security, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Security is registered as the absolute owner of such Security
for the purpose of receiving payment of principal of and interest on such
Securities and for all other purposes, and neither the Trustee, any Agent nor
the Company shall be affected by notice to the contrary. Notwithstanding the
foregoing, with respect to any Global Security, 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
any Depositary, as a Holder, with respect to such Global Security or impair, as
between such Depositary and owners of beneficial interests in such Global
Security, the operation of customary practices governing the exercise of the
rights of such Depositary (or its nominee) as Holder of such Global Security.

SECTION 2.09.     REPLACEMENT SECURITIES.

                  If any mutilated Security is surrendered to the Trustee or the
Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Security, the Company shall issue and the
Trustee, upon receipt of an Authentication Order, shall authenticate a
replacement Security if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Security is replaced. The Company may charge for its
expenses in replacing a Security.

                  Every replacement Security is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Securities duly issued hereunder.

SECTION 2.10.     OUTSTANDING SECURITIES.

                  The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Security
effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding. Except as set forth in Section
2.11 hereof,

                                     - 15 -

<PAGE>

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

                  If a Security is replaced pursuant to Section 2.09 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Security is held by a "protected purchaser" (within the
meaning of Article 8 of the Uniform Commercial Code) or a Person with comparable
status under other applicable law.

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

                  If the Paying Agent (other than the Company, a Subsidiary or
an Affiliate of any thereof) 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 shall cease to
accrue interest.

SECTION 2.11.     TREASURY SECURITIES.

                  In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company, or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company, shall be considered as though not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Securities that the Trustee knows are so
owned shall be so disregarded.

SECTION 2.12.     TEMPORARY SECURITIES.

                  Until certificates representing Securities are ready for
delivery, the Company may prepare and the Trustee, upon receipt of an
Authentication Order, shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of certificated Securities but may
have variations that the Company considers appropriate for temporary Securities
and as shall be reasonably acceptable to the Trustee. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities.

                  Holders of temporary Securities shall be entitled to all of
the benefits of this Indenture.

SECTION 2.13.     CANCELLATION.

                  The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel all Securities surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall destroy canceled Securities (subject to the record retention requirement
of the Exchange Act). Certification of the destruction of all canceled
Securities shall be delivered to the Company. The Company may not issue new
Securities to replace Securities that it has paid or that have been delivered to
the Trustee for cancellation.

                                     - 16 -

<PAGE>

SECTION 2.14.  DEFAULTED INTEREST.

          If 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
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Securities. The Company shall notify the Trustee in writing of the amount
of defaulted interest proposed to be paid on each Security and the date of the
proposed payment. The Company shall fix or cause to be fixed each such special
record date and payment date, provided that no such special record date shall be
less than 10 days prior to the related payment date for such defaulted interest.
At least 15 days before the special record date, the Company (or, upon the
written request of the Company, the Trustee in the name and at the expense of
the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid. Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.

                                   ARTICLE 3.
                            REDEMPTION AND PREPAYMENT

SECTION 3.01.  APPLICABILITY OF ARTICLE.

          The provisions of this Article shall be applicable to the Securities
of any series which are redeemable before their maturity or to any sinking fund
for the retirement of Securities of a series except as otherwise specified as
contemplated by Section 2.02 for Securities of such series.

SECTION 3.02.  SELECTION OF SECURITIES TO BE REDEEMED.

          If less than all of the Securities of any series are to be redeemed at
any time, the Trustee shall select the Securities of such series to be redeemed
among the Holders of the Securities of such series in compliance with the
requirements of the principal national securities exchange, if any, on which the
Securities of such series are listed or, if the Securities of such series are
not so listed, to be redeemed among the Holders of Securities of such series on
a pro rata basis, by lot or by such method as the Trustee deems fair and
appropriate; provided that no Securities of $1,000 or less shall be redeemed in
part. In the event of partial redemption by lot, the particular Securities of
such series to be redeemed shall be selected, unless otherwise provided herein,
not less than 30 nor more than 60 days prior to the redemption date by the
Trustee from the outstanding Securities of the series not previously called for
redemption.

          The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Security selected for
partial redemption, the principal amount thereof to be redeemed. Securities and
portions of Securities selected shall be in amounts of $1,000 or whole multiples
of $1,000; except that if all of the Securities of a series of a Holder are to
be redeemed, the entire outstanding amount of Securities of such series held by
such Holder, even if not a multiple of $1,000, shall be redeemed. A new Security
of the same series in principal amount equal to the unredeemed portion thereof
will be issued in the name of

                                     - 17 -

<PAGE>

the Holder thereof upon cancellation of the original Security. Securities called
for redemption shall become due on the redemption date. On and after the
redemption date, interest will cease to accrue on the Securities or portions of
them called for redemption. Except as provided in this Section 3.02, provisions
of this Indenture that apply to Securities called for redemption shall also
apply to portions of Securities called for redemption.

SECTION 3.03.  NOTICE OF REDEMPTION.

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

          The notice shall identify the Securities to be redeemed, including the
series thereof, and shall state:

     (a) the redemption date;

     (b) the redemption price;

     (c) the name and address of the Paying Agent;

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

     (e) that, unless the Company defaults in making such redemption payment,
interest on Securities called for redemption will cease to accrue on and after
the redemption date;

     (f) that any Security being redeemed in part, the portion of the principal
amount of such Security to be redeemed and that, after the redemption date upon
surrender of such Security, a new Security or Securities of the same series in
principal amount equal to the unredeemed portion shall be issued upon
cancellation of the original;

     (g) the paragraph of the Securities and/or Section of this Indenture
pursuant to which the Securities called for redemption are being redeemed; and

     (h) that no representation is made as to the correctness or accuracy of the
CUSIP number, if any, listed in such notice or printed on the Securities.

          At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense; provided,
however, that the Company shall have delivered to the Trustee, at least 30 days
prior to the redemption date, an Officers' Certificate requesting that the
Trustee give such notice and setting forth the information to be stated in such
notice as provided in the preceding paragraph.

                                     - 18 -

<PAGE>

SECTION 3.04.  EFFECT OF NOTICE OF REDEMPTION.

          Once notice of redemption is mailed in accordance with Section 3.03
hereof, Securities called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.

SECTION 3.05.  DEPOSIT OF REDEMPTION OR PURCHASE PRICE.

          One Business Day prior to 10:00 a.m., Eastern Time, on any redemption
date, the Company shall deposit with the Trustee or with the Paying Agent money
in immediately available funds sufficient to pay the redemption or purchase
price of and accrued interest, if any, on all Securities to be redeemed or
purchased on that date. The Trustee or the Paying Agent shall promptly return to
the Company any money deposited with the Trustee or the Paying Agent by the
Company in excess of the amounts necessary to pay the redemption or purchase
price of, and accrued interest on, all Securities to be redeemed or purchased.

SECTION 3.06.  SECURITIES REDEEMED OR PURCHASED IN PART.

          Upon surrender of a Security that is redeemed or purchased in part,
the Company shall issue and, upon the Company's written request, the Trustee
shall authenticate for the Holder at the expense of the Company a new Security
of the same series equal in principal amount to the unredeemed or unpurchased
portion of the Security surrendered.

SECTION 3.07.  MANDATORY REDEMPTION; SINKING FUND.

          The Company shall not be required to make mandatory redemption or
sinking fund payments with respect to the Securities, unless otherwise specified
in the terms of a particular series of Securities. If a mandatory or optional
sinking fund is specified in the terms of a particular series of Securities, the
following provisions will apply thereto (unless otherwise specified):

          The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "optional
sinking fund payment." The last date on which any such payment may be made is
herein referred to as a "sinking fund payment date."

          In lieu of making all or any part of any mandatory sinking fund
payment with respect to any Securities of a series in cash, the Company may at
its option (a) deliver to the Trustee Securities of that series theretofore
purchased by the Company and (b) may apply as a credit Securities of that series
which have been redeemed either at the election of the Company pursuant to the
terms of such Securities or through the application of optional sinking fund
payments pursuant to the next succeeding paragraph, in each case in satisfaction
of all or any part of any mandatory sinking fund payment, provided that such
Securities have not been previously so credited. Each such Security so delivered
or applied as a credit shall be credited at the sinking fund redemption price
for such Securities and the amount of any mandatory sinking fund shall be
reduced accordingly. If the Company intends so to deliver or credit such
Securities with respect to any mandatory sinking fund payment it shall deliver
to the Trustee at least 30

                                     - 19 -

<PAGE>

days prior to the next succeeding sinking fund payment date for such series (a)
a certificate signed by any Officer specifying the portion of such sinking fund
payment, if any, to be satisfied by payment of cash and the portion of such
sinking fund payment, if any, which is to be satisfied by delivering and
crediting such Securities and (b) any Securities to be so delivered. All
Securities so delivered to the Trustee shall be cancelled by the Trustee and no
Securities shall be authenticated in lieu thereof. If the Company fails to
deliver such certificate and Securities at or before the time provided above,
the Company shall not be permitted to satisfy any portion of such mandatory
sinking fund payment by delivery or credit of Securities.

          At its option the Company may pay into the sinking fund for the
retirement of Securities of any particular series, on or before each sinking
fund payment date for such series, any additional sum in cash as specified by
the terms of such series of Securities. If the Company intends to exercise its
right to make any such optional sinking fund payment, it shall deliver to the
Trustee at least 30 days prior to the next succeeding sinking fund payment date
for such series of Securities a certificate signed by any Officer stating that
the Company intends to exercise such optional right and specifying the amount
which the Company intends to pay on such sinking fund payment date. If the
Company fails to deliver such certificate at or before the time provided above,
the Company shall not be permitted to make any optional sinking fund payment
with respect to such sinking fund payment date. To the extent that such right is
not exercised in any year it shall not be cumulative or carried forward to any
subsequent year.

          If the sinking fund payment or payments (mandatory or optional) made
in cash plus any unused balance of any preceding sinking fund payments made in
cash shall exceed $50,000 (or a lesser sum if the Company shall so request) with
respect to the Securities of any particular series, it shall be applied by the
Trustee or one or more Paying Agents on the next succeeding sinking fund payment
date to the redemption of Securities of such series at the sinking fund
redemption price together with accrued interest to the date fixed for
redemption. The Trustee shall select, in the manner provided in Section 3.02,
for redemption on such sinking fund payment date a sufficient principal amount
of Securities of such series to exhaust said cash, as nearly as may be, and the
Trustee shall, at the expense and in the name of the Company, thereupon cause
notice of redemption of Securities of such series to be given in substantially
the manner and with the effect provided in Sections 3.02 and 3.03 for the
redemption of Securities of that series in part at the option of the Company,
except that the notice of redemption shall also state that the Securities of
such series are being redeemed for the sinking fund. Any sinking fund moneys not
so applied or allocated by the Trustee or any Paying Agent to the redemption of
Securities of that series shall be added to the next cash sinking fund payment
received by the Trustee or the Paying Agent and, together with such payment,
shall be applied in accordance with the provisions of this Section 3.07. Any and
all sinking fund moneys held by the Trustee or any Paying Agent on the maturity
date of the Securities of any particular series, and not held for the payment or
redemption of particular Securities of such series, shall be applied by the
Trustee or such Paying Agent, together with other moneys, if necessary, to be
deposited sufficient for the purpose, to the payment of the principal of the
Securities of that series at maturity. On or before each sinking fund payment
date, the Company shall pay to the Trustee or to one or more Paying Agents in
cash a sum equal to all interest accrued to the date fixed for redemption on
Securities to be redeemed on the next following sinking fund payment date
pursuant to this Section. Neither the Trustee nor any Paying Agent shall redeem
any Securities of a series with sinking fund moneys, and the Trustee shall not
mail any notice of redemption of Securities for such series by

                                     - 20 -

<PAGE>

operation of the sinking fund, during the continuance of a default in payment of
interest on such Securities or of any Event of Default (other than an Event of
Default occurring as a consequence of this paragraph), except that if the notice
of redemption of any Securities shall theretofore have been mailed in accordance
with the provisions hereof, the Trustee or any paying agent shall redeem such
Securities if cash sufficient for that purpose shall be deposited with the
Trustee or such paying agent for that purpose in accordance with the terms of
this Article 3. Except as aforesaid, any moneys in the sinking fund for such
series at the time when any such default or Event of Default shall occur and any
moneys thereafter paid into the sinking fund shall, during the continuance of
such default or Event of Default, be held as security for the payment of all
such Securities; provided, however, that in case such Event of Default or
default shall have been cured or waived as provided herein, such moneys shall
thereafter be applied on the next succeeding sinking fund payment date on which
such moneys may be applied pursuant to the provisions of this Section 3.07.

                                   ARTICLE 4.
                                    COVENANTS

SECTION 4.01.  PAYMENT OF SECURITIES.

          The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Securities on the dates and in the manner provided
in the Securities. Principal, premium, if any, and interest shall be considered
paid on the date due if the Paying Agent, if other than the Company or a
Subsidiary thereof, holds as of 10:00 a.m., Eastern Time, on the due date money
deposited by the Company in immediately available funds and designated for and
sufficient to pay all principal, premium, if any, and interest then due.

SECTION 4.02.  MAINTENANCE OF OFFICE OR AGENCY.

          The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-Registrar) where Securities may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The Company shall 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
Trustee's principal agency in the City of New York, which currently is located
at LaSalle Bank National Association c/o The Bank of New York, 15 Broad Street,
16/th/ Floor, New York, NY 10286.

          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 shall
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.

                                     - 21 -

<PAGE>

SECTION 4.03.  REPORTS.

     (a) Whether or not the Company is subject to Section 13 or 15(d) of the
Exchange Act, the Company covenants and agrees to file with the Trustee, and to
provide by mail to each Holder, within 15 days after the Company is or would be
required to file the same with the SEC, copies of the annual reports, quarterly
reports and the information, documents and other reports which the Company is or
would be required to file with the SEC pursuant to Section 13 or Section 15(d)
of the Exchange Act.

     (b) The Company covenants and agrees to file with the Trustee and the SEC,
in accordance with the rules and regulations prescribed from time to time by the
SEC, such additional information, documents and reports with respect to
compliance by the Company with the conditions and covenants provided for in this
Indenture as may be required from time to time by such rules and regulations.

     (c) The Company covenants and agrees to furnish to the Trustee within 120
days of the end of each fiscal year, the compliance certificate required by
Section 314(a)(4) of the Trust Indenture Act.

     (d) Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).

SECTION 4.04.  COMPLIANCE CERTIFICATE.

     (a) The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default, Event
of Default or other instance of non-compliance with any of the terms of this
Indenture shall have occurred, describing all such Defaults, Events of Default
or instances of non-compliance of which he or she may have knowledge and what
action the Company is taking or proposes to take with respect thereto) and that
to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of, premium,
if any, or interest on the Securities is prohibited or if such event has
occurred, a description of the event and what action the Company is taking or
proposes to take with respect thereto.

     (b) The Company shall, so long as any of the Securities are outstanding,
deliver to the Trustee, forthwith upon any Officer of the Company becoming aware
of any Default or Event of

                                     - 22 -

<PAGE>

Default, an Officers' Certificate specifying such Default or Event of Default
and what action the Company is taking or proposes to take with respect thereto.

     (c) The Company shall file with the Trustee and the SEC, in accordance with
the rules and regulations prescribed from time to time by the SEC, such
additional information, documents and reports with respect to compliance by the
Company with the conditions and covenants provided for in this Indenture, as may
be required from time to time by such rules and regulations.

SECTION 4.05.  CONTINUED EXISTENCE.

          Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Significant Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Company or any such Significant Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of the Company and any of its Significant
Subsidiaries; provided, however, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any of its Significant Subsidiaries, if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its Significant Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Securities.

SECTION 4.06.  STAY, EXTENSION AND USURY LAWS.

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

                                   ARTICLE 5.
                                   SUCCESSORS

SECTION 5.01.  MERGER, CONSOLIDATION, OR SALE OF ASSETS.

          The Company may consolidate or merge with or into, convert itself
into, or sell, assign, transfer, lease, convey or otherwise dispose of
(including any such disposition that might be deemed to occur as a result of the
conversion of the Company into another form of organization) all or
substantially all of its properties or assets in one or more related
transactions, to another Person (other than an individual, a government or an
agency or political subdivision of a government), but only if (a) either (i) the
Company is the surviving corporation or (ii) the Person formed by or surviving
any such consolidation, merger or conversion (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a Person organized or existing under the laws of the
United States, any

                                     - 23 -

<PAGE>

state thereof or the District of Columbia; (b) the Person formed by or surviving
any such consolidation, merger or conversion (if other than the Company) or the
Person to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of the Company
under the Securities and this Indenture pursuant to a supplemental indenture in
a form reasonably satisfactory to the Trustee; and (c) immediately after such
transaction no Default or Event of Default exists. If the Company requests the
Trustee to enter into any supplemental indenture, or to take any other action,
as a result of such consolidation, merger, sale, assignment, transfer, lease,
conveyance or other disposition, the Company will also furnish to the Trustee an
Officer's Certificate and an Opinion of Counsel, each to the effect that the
conditions precedent set forth in this Section 5.01 have been complied with.

SECTION 5.02.     SUCCESSOR PERSON SUBSTITUTED.

              Upon any consolidation, merger or conversion, or any sale,
assignment, transfer, lease, conveyance or other disposition of all or
substantially all of the assets of the Company in accordance with Section 5.01
hereof, the successor Person formed by such consolidation or into or with which
the Company is merged or converted or to which such sale, assignment, transfer,
lease, conveyance or other disposition is made shall succeed to, and be
substituted for (so that from and after the date of such consolidation, merger,
conversion, sale, lease, conveyance or other disposition, the provisions of this
Indenture referring to the "Company" shall refer instead to the successor Person
and not to the Company), and may exercise every right and power of the Company
under this Indenture with the same effect as if such successor Person had been
named as the Company herein; provided, however, that the predecessor Company
shall not be relieved from the obligation to pay the principal of and interest
on the Securities except in the case of a sale of all of the Company's assets
that meets the requirements of Section 5.01 hereof.

                                   ARTICLE 6.
                              DEFAULTS AND REMEDIES

SECTION 6.01.     EVENTS OF DEFAULT.

     An "Event of Default," with respect to Securities of any series shall have
occurred if:

     (a) the Company defaults in the payment when due of interest on, with
respect to, any Security of that series and such default continues for a period
of 30 days;

     (b) the Company defaults in the payment when due of principal of or
premium, if any, on, or sinking fund payment with respect to, any Security of
that series when the same becomes due and payable at maturity, upon redemption
or otherwise;

     (c) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture, with respect to
any Security of that series for 60 days after notice to comply;

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

                                     - 24 -

<PAGE>

          (i)      commences a voluntary case,

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

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

          (iv)     makes a general assignment for the benefit of its creditors,
or

          (v)      generally is not paying its debts as they become due;

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

          (i)      is for relief against the Company in an involuntary case;

          (ii)     appoints a custodian of the Company for all or substantially
all of the property of the Company; or

          (iii)    orders the liquidation of the Company;

and the order or decree remains unstayed and in effect for 60 consecutive days;
or

     (f) any other event provided with respect to Securities of that series in
the terms thereof as contemplated by Section 2.02 hereof shall occur.

                  The term "custodian" as used in this Article 6 means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.

                  A Default under clause (c) with respect to the Securities of
any series is not an Event of Default until the Trustee notifies the Company, or
the Holders of at least 25% in principal amount of the then outstanding
Securities of all series affected by the Default (treating all such series as a
single class) notify the Company and the Trustee, of the Default and the Company
does not cure the Default within 60 days after receipt of the notice. The notice
must specify the Default, demand that it be remedied and state that the notice
is a "Notice of Default."

SECTION 6.02.     ACCELERATION.

              If any Event of Default with respect to one or more series of
Securities (other than an Event of Default specified in clause (d) or (e) of
Section 6.01 hereof) occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Securities of all series
with respect to which an Event of Default shall have occurred and be continuing
(treating all such series as a single class) may declare all the Securities of
all such series to be due and payable immediately. Upon any such declaration,
the principal of, premium, if any, and accrued and unpaid interest with respect
to the Securities of all such series shall become due and payable immediately.
Notwithstanding the foregoing, if an Event of Default specified in clause (d) or
(e) of Section 6.01 hereof occurs with respect to the Company, all outstanding
Securities of all series shall be due and payable immediately without further
action or notice.

                                     - 25 -

<PAGE>

SECTION 6.03.     OTHER REMEDIES.

               If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, 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 of a Security 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 to the extent permitted by law.

SECTION 6.04.     WAIVER OF PAST DEFAULTS; RESCISSION OF ACCELERATION.

               Holders of a majority in aggregate principal amount of the then
outstanding Securities of all series affected (treating all such series as a
single class) may, by notice to the Trustee, on behalf of the Holders of all of
the Securities of all such series, waive an existing Default or Event of Default
and its consequences hereunder (including in connection with an offer to
purchase or exchange), except a continuing Default or Event of Default in the
payment of the principal of, premium, if any, interest on, or any sinking fund
payment with respect to, the Securities of such series, and except a continuing
Default or Event of Default under any provision of this Indenture that, under
Section 9.02, cannot be modified or waived without the consent of a greater
number of Holders or of each Holder affected. Upon any such waiver, such Default
or Event of Default shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon. The Holders of a
majority in aggregate principal amount of the then outstanding Securities of all
series affected (treating all such series as a single class) may also rescind an
acceleration and its consequences with respect to such series, including any
related payment default that resulted from such acceleration, but not including
any other payment default.

SECTION 6.05.     CONTROL BY MAJORITY.

               Holders of a majority in principal amount of the then outstanding
Securities of all series with respect to which an Event of Default shall have
occurred and be continuing (treating all such series as a single class) may
direct the time, method and place of conducting any proceeding for exercising
any remedy available to the Trustee or exercising any trust or power conferred
on it; provided that

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

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

               (iii)    the Trustee need not take any action which might involve
         it in personal liability or be unduly prejudicial to the Holders of
         Securities of such series not joining therein.

                                     - 26 -

<PAGE>

SECTION 6.06.     LIMITATION ON SUITS.

              A Holder of a Security of any series may pursue a remedy with
respect to this Indenture or the Securities of such series only if:

     (a) the Holder of a Security of any or all series affected gives to the
Trustee written notice of a continuing Event of Default;

     (b) the Holders of at least 25% in principal amount of the then outstanding
Securities of all affected series (treating all such series as a single class)
make a written request to the Trustee to pursue the remedy;

     (c) such Holder or Holders offer and, if requested, provide to the Trustee
indemnity satisfactory to the Trustee against any loss, liability or expense;

     (d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and

     (e) during such 60-day period the Holders of a majority in principal amount
of the then outstanding Securities of all such series (treating all such series
as a single class) do not give the Trustee a direction inconsistent with the
request.

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

SECTION 6.07.     RIGHTS OF HOLDERS OF SECURITIES TO RECEIVE PAYMENT.

              Notwithstanding any other provision of this Indenture, the right
of any Holder of a Security of any series to receive payment of principal,
premium, if any, and interest on such Security, on or after the respective due
dates expressed in such Security (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.

SECTION 6.08.     COLLECTION SUIT BY TRUSTEE.

              If an Event of Default specified in Section 6.01(a) or (b) occurs
and is continuing with respect to any series of Securities, the Trustee is
authorized to recover judgment in its own name and as Trustee of an express
trust against the Company for the whole amount of principal of, premium, if any,
and interest remaining unpaid on such Securities and interest on overdue
principal and, to the extent lawful, interest and such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.

SECTION 6.09.     TRUSTEE MAY FILE PROOFS OF CLAIM.

              The Trustee is authorized to 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 (including

                                     - 27 -

<PAGE>

any claim for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and the Holders of the Securities of any
series allowed in any judicial proceedings relative to the Company (or any other
obligor upon the Securities), its creditors or its property and shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities of any series or the rights of any Holder,
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 or other property pursuant to
this Article, it shall pay out the money or other property in the following
order:
              First:  to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;

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

              Third:  to the Company or to such party as a court of competent
jurisdiction shall direct.

              The Trustee may fix a record date and payment date for any payment
to Holders of Securities 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 a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good

                                     - 28 -

<PAGE>

faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder of a Security pursuant to
Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount
of the then outstanding Securities of any series.

                                   ARTICLE 7.
                                     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 or
an indenture supplemental hereto, and use the same degree of care and skill in
its exercise, as a prudent person would exercise or use under the circumstances
in the conduct of its own affairs.

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

             (i)    the duties of the Trustee shall be determined solely by the

         express provisions of this Indenture or an indenture supplemental
         hereto, and the Trustee need perform only those duties that are
         specifically set forth in this Indenture or an indenture supplemental
         hereto and no others, and no implied covenants or obligations shall be
         read into this Indenture or an indenture supplemental hereto against
         the Trustee; and

             (ii)   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. However, 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 liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

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

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

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

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

         (e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holders shall have

                                     - 29 -

<PAGE>

offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.

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

SECTION 7.02.     RIGHTS OF TRUSTEE.

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

     (b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. 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. The Trustee may consult with
counsel, and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.

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

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

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

     (f) 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 satisfactory to it against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction.

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 any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest (within the meaning of TIA ss. 310(b)) it must eliminate such
conflicting interest within 90 days after Default, apply to the SEC for
permission to continue as trustee, or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.

                                     - 30 -

<PAGE>

SECTION 7.04.     TRUSTEE'S DISCLAIMER.

              The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the
Securities; it shall not be accountable for the Company's use of the proceeds
from the Securities or any money paid to the Company or upon the Company's
direction under any provision of this Indenture; it shall not be responsible for
the use or application of any money received by any Paying Agent other than the
Trustee; and it shall not be responsible for any statement or recital herein or
any statement in the Securities or any other document in connection with the
sale of the Securities or pursuant to this Indenture 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 a
Responsible Officer of the Trustee has actual knowledge of such Default or Event
of Default, the Trustee shall mail to Holders of Securities a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, or interest on, any
Security, the Trustee may withhold the notice if and so long as a committee of
its Responsible Officers in good faith determines that withholding the notice is
in the interests of the Holders of the Securities.

SECTION 7.06.     REPORTS BY TRUSTEE TO HOLDERS OF THE SECURITIES.

              On or before July 31 of each year, beginning with the July 31
following the date on which Securities are first issued under this Indenture,
and for so long as Securities remain outstanding, the Trustee shall mail to the
Holders of the Securities a brief report dated as of such reporting date that
complies with TIA ss. 313(a) (but if no event described in TIA ss. 313(a) has
occurred within the twelve months preceding the reporting date, no report need
be transmitted). The Trustee also shall comply with TIA ss. 313(b)(2). The
Trustee shall also transmit by mail all reports as required by TIA ss. 313(c). A
copy of each report at the time of its mailing to the Holders of Securities
shall be mailed to the Company and filed with the SEC and each stock exchange on
which the Securities are listed in accordance with TIA ss. 313(d). 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 acceptance of this Indenture and services hereunder as the
Company and Trustee have separately agreed. 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 promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.

              The Company shall indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture,
including the costs and expenses of enforcing this Indenture against the Company
(including this Section 7.07) and defending itself against any claim

                                     - 31 -

<PAGE>

(whether asserted by the Company or any Holder or any other person) or liability
in connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability or expense may be
attributable to its negligence or willful misconduct. The Trustee shall notify
the Company promptly of any claim for which it may seek indemnity. Failure by
the Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim, and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel, and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need not
pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.

          The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.

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

          When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(e) or (f) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) 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.

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

     (a) the Trustee ceases to be eligible in accordance with Section 7.10
hereof;

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

     (c) a custodian or public officer takes charge of the Trustee or its
property; or

     (d) 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 principal amount of the then

                                     - 32 -

<PAGE>

outstanding Securities of a series may appoint a successor Trustee to replace
the successor Trustee appointed by the Company with respect to that series of
Securities.

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

          If the Trustee, after written request by any Holder of a Security who
has been a Holder of a Security for at least six months, ceases to be eligible
in accordance with Section 7.10, such Holder of a Security 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 of the Securities. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.

          If a successor Trustee is appointed with respect to the Securities of
one or more (but not all) series, the Company, the retiring Trustee and each
successor Trustee with respect to the Securities of any applicable series shall
execute and deliver an indenture supplemental hereto which shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of any series as to which the predecessor Trustee is not retiring
shall continue to be vested in the predecessor Trustee, and shall add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
Trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such Trustees as co-trustees of the same trust and
that each such Trustee shall be Trustee of a trust or trusts hereunder separate
and apart from any trust or trusts hereunder administered by any other such
Trustee.

SECTION 7.09.  SUCCESSOR TRUSTEE BY MERGER, ETC.

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

SECTION 7.10.  ELIGIBILITY; DISQUALIFICATION.

          There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trust powers, that is subject to supervision or

                                     - 33 -

<PAGE>

examination by federal or state authorities and that has a combined capital and
surplus of at least $50,000,000 as set forth in its most recent published annual
report of condition.

          This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA
(S) 310(b).

SECTION 7.11.  PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

          The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship described in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.

                                   ARTICLE 8.
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

SECTION 8.01.  OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.

     (a) The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof, with such modifications thereto as may be
specified in the Board Resolution or supplemental indenture establishing a
particular series of Securities, be applied to all outstanding Securities of one
or more series upon compliance with the conditions set forth below in this
Article 8.

     (b) As an alternative to having Section 8.02 or 8.03 be applied to all
outstanding Securities of one or more series, the Company may terminate its
obligations under the Securities of one or more series and its obligations under
this Indenture in respect of such series of Securities (except those obligations
referred to in the penultimate paragraph of this Section 8.01(b), and any
obligation of the Company to convert or exchange Securities of such series as
expressly provided for in the Board Resolution or indenture supplemental hereto
establishing such Series) (1) if (i) all Securities of such series theretofore
authenticated and delivered (except lost, stolen or destroyed Securities that
have been replaced or paid and Securities for whose payment cash in United
States dollars has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or discharged from
such trust as provided in Section 8.06) have been delivered to the Trustee for
cancellation; (ii) the Company has paid all sums payable by it hereunder or
under the applicable Board Resolution or indenture supplemental hereto in
respect of such series of Securities; and (iii) the Company shall have delivered
to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating
that all conditions precedent relating to the satisfaction and discharge of this
Indenture have been complied with; or (2) if (i) either (A) in the case of a
series of Securities redeemable prior to its stated maturity, the Company shall,
pursuant to Article 3, have given notice to the Trustee and mailed a notice of
redemption to each Holder of Securities of such series of the redemption of all
of such Securities under arrangements satisfactory to the Trustee for the giving
of such notice or (B) all Securities of such series have otherwise become due
and payable hereunder or will become due and payable within one year; (ii) the
Company shall have irrevocably deposited or caused to be deposited with the
Trustee (or a trustee satisfactory to the Trustee, under the terms of an
irrevocable trust agreement in form and substance satisfactory to the Trustee),
as trust funds in trust solely for the benefit of the Holders of Securities of
such

                                     - 34 -

<PAGE>

series for that purpose, cash in United States dollars in such amount as is
sufficient without consideration of reinvestment of interest or other earnings
on such cash, to pay the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for the principal of, premium, if
any, and interest on the outstanding Securities of such series to the date of
such deposit (in the case of Securities which have become due and payable) or to
the stated maturity or redemption date, as the case may be; (iii) no Default or
Event of Default with respect to this Indenture or the Securities shall have
occurred and be continuing on the date of such deposit or shall occur as a
result of such deposit and such deposit will not result in a breach or violation
of, or constitute a default under, any other instrument to which the Company is
bound; (iv) the Company shall have paid all other sums payable by it hereunder
in respect of Securities of such series; and (v) the Company shall have
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that all conditions precedent relating to the satisfaction and
discharge of this Indenture have been complied with.

          Notwithstanding the foregoing paragraph, the Company's obligations in
Sections 2.07, 2.08, 2.09, 2.10, 4.01, including any provision of the applicable
Board Resolution or indenture supplemental hereto relating to the payment of
principal, premium or interest, 4.02, 7.07, 8.06 and 8.07 shall survive with
respect to the Securities of the applicable series until they are no longer
outstanding pursuant to the last paragraph of Section 2.10. After the Securities
of the applicable series are no longer outstanding, the Issuer's obligations in
Sections 7.07, 8.06 and 8.07 shall survive in respect of Securities of the
applicable series.

          After such delivery or irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
the Securities of the applicable series and the Company's obligations under this
Indenture with respect to the Securities of such series, except for those
surviving obligations specified above.

SECTION 8.02.  LEGAL DEFEASANCE AND DISCHARGE.

          Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02 relating to one or more series of Securities,
the Company shall, upon the satisfaction of the conditions set forth in Section
8.04 hereof, be deemed to have been discharged from its obligations with respect
to all outstanding Securities of such series on the date the conditions set
forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose,
Legal Defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the outstanding Securities of
the applicable series, which shall thereafter be deemed to be "outstanding" only
for the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all of its other
obligations under the Securities of the applicable series and under the
provisions of this Indenture applicable to such series (and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Securities of the applicable series to receive solely from the trust
fund described in Section 8.04 hereof, and as more fully set forth in such
Section, payments in respect of the principal of, premium, if any, and interest,
on such Securities when such payments are due, (b) the Company's obligations
with respect to such Securities under Article 2 and Section 4.02 hereof, (c) the
rights, powers, trusts, duties and immunities of the Trustee hereunder, and the
Company's obligations in connection therewith and (d) this Article 8. Subject to
compliance

                                     - 35 -

<PAGE>

with this Article 8, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03 hereof.

SECTION 8.03.  COVENANT DEFEASANCE.

          Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03 relating to one or more series of Securities,
the Company shall, upon the satisfaction of the conditions set forth in Section
8.04 hereof, be released from its obligations under the covenants contained in
Sections 4.03, 4.04, 4.05 and 4.06 hereof with respect to the outstanding
Securities of the applicable series, and under any other covenants specified in
the supplemental indenture or other terms of the applicable series as covenants
to which this Section 8.03 apply, on and after the date the conditions set forth
below are satisfied (hereinafter, "Covenant Defeasance"), and the Securities of
the applicable series shall thereafter be deemed not "outstanding" for the
purposes of any direction, waiver, consent or declaration or act of Holders (and
the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that the Securities of the applicable series shall not be deemed
outstanding for accounting purposes). For this purpose, Covenant Defeasance
means that, with respect to the "outstanding" Securities of the applicable
series, the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.01 hereof,
but, except as specified above, the remainder of this Indenture and such
Securities shall be unaffected thereby.

SECTION 8.04.  CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.

          The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Securities of one or more series:

          In order to exercise either Legal Defeasance or Covenant Defeasance:

     (a) the Company must irrevocably deposit with the Trustee, (or another
trustee satisfying the requirements of Section 7.10, who shall agree to comply
with the provisions of this Article 8 applicable to it) in trust, for the
benefit of the Holders of the Securities of the applicable series, (i) an amount
of cash in United States dollars, (ii) non-callable U.S. Government Obligations
which, through scheduled payment of principal and interest in respect thereof in
accordance with their terms, will provide, not later than one Business Day
before the due date of any payment of principal of, premium, if any, or interest
on the Securities of such series, cash in an amount, or (iii) a combination
thereof, sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, interest and premium,
if any, on the outstanding Securities of the applicable series on the Stated
Maturity or on the applicable redemption date, as the case may be, and any
mandatory sinking fund payments applicable to the Securities of such series on
the day on which such payments are due, and the Company must specify whether the
Securities of the applicable series are being defeased to maturity or to a
particular redemption date;

                                     - 36 -

<PAGE>

     (b) in the case of an election under Section 8.02 hereof, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Securities of the applicable series will not recognize income, gain
or loss for federal income tax purposes as a result of such Legal Defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Legal Defeasance had
not occurred;

     (c) in the case of an election under Section 8.03 hereof, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Securities of the applicable series will not recognize income, gain
or loss for federal income tax purposes as a result of such Covenant Defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;

     (d) no Default or Event of Default shall have occurred and be continuing on
the date of such deposit (other than a Default or Event of Default resulting
from the borrowing of funds to be applied to such deposit) or insofar as
Sections 6.01(e) or (f) hereof are concerned, at any time in the period ending
on the 91st day after the date of deposit (or greater period of time in which
any such deposit of trust funds may remain subject to bankruptcy or insolvency
laws insofar as those apply to the deposit by the Company);

     (e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.

SECTION 8.05.  DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN
               TRUST; OTHER MISCELLANEOUS PROVISIONS.

          Subject to Section 8.06 hereof, all money and non-callable U.S.
Government Obligations (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Securities of the applicable series shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as Paying Agent) as the Trustee may determine, to
the Holders of such Securities of all sums due and to become due thereon in
respect of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.

          The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable U.S.
Government Obligations deposited pursuant to Section 8.04 hereof or the
principal and interest received in respect thereof

                                     - 37 -

<PAGE>

other than any such tax, fee or other charge which by law is for the account of
the Holders of the outstanding Securities of the applicable series.

          Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable U.S. Government Obligations held by it
as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance of the applicable series.

SECTION 8.06.  REPAYMENT TO COMPANY.

          Any money and U.S. Government Obligations deposited with the Trustee
or any Paying Agent, or then held by the Company, in trust for the payment of
the principal of, premium or interest on any Security and remaining unclaimed
for two years after such principal, and premium, if any, or interest has become
due and payable shall be paid to the Company on its request or (if then held by
the Company) shall be discharged from such trust; and the Holder of such
Security shall thereafter look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such money and
U.S. Government Obligations, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.

SECTION 8.07.  REINSTATEMENT.

          If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable U.S. Government Obligations deposited pursuant to
Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the obligations of the Company
under this Indenture and the Securities shall be revived and reinstated as
though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02 or 8.03 hereof, as the case may be; provided,
however, that, if the Company makes any payment of principal of, premium or
interest on any Security following 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 held by the Trustee or Paying Agent.

                                     - 38 -

<PAGE>

                                   Article 9.
                        AMENDMENT, SUPPLEMENT AND WAIVER

SECTION 9.01.     WITHOUT CONSENT OF HOLDERS OF SECURITIES.

                  Notwithstanding Section 9.02 of this Indenture, the Company
and the Trustee may amend or supplement this Indenture or the Securities without
the consent of any Holder of a Security:

     (a) to evidence the succession of another Person to the Company, or
successive successions, and the assumption by the successor Person of the
covenants, agreements and obligations of the Company pursuant to Article 5
hereof;

     (b) to add to the covenants of the Company such further covenants,
restrictions or conditions for the protection of the Holders of all or any
series of Securities (and if such covenants are to be for the benefit of less
than all series of Securities stating that such covenants are expressly being
included for the benefit of such series) as the Board of Directors and the
Trustee shall consider to be for the protection of the Holders of such
Securities, and to make the occurrence, or the occurrence and continuance, of a
default in any of such additional covenants, restrictions or conditions a
default or an Event of Default permitting the enforcement of all or any of the
several remedies provided in this Indenture as herein set forth; provided,
however, that in respect of any such additional covenant, restriction or
condition such supplemental indenture may provide for a particular period of
grace after default (which period may be shorter or longer than that allowed in
the case of other defaults) or may provide for an immediate enforcement upon
such default or may limit the remedies available to the Trustee upon such
default;

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

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

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

     (f) to make any change that does not adversely affect the rights of any
Holder; or

     (g) to provide for the issuance of and establish the form and terms and
conditions of the Securities of any series, to establish the form of any
certifications required to be furnished pursuant to the terms of this Indenture
or any series of Securities, or to add to the rights of the Holders of any
series of Securities.

                                     - 39 -

<PAGE>

                  Upon the request of the Company accompanied by a copy of a
Board 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 the certificate, authorizing the execution of
any such amended or supplemental indenture, and upon receipt by the Trustee of
the documents described in Section 7.02 hereof, the Trustee shall join with the
Company in the execution of any amended or supplemental indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations that may be therein contained, but the Trustee shall
not be obligated to enter into such amended or supplemental indenture that
affects its own rights, duties or immunities under this Indenture or otherwise.

SECTION 9.02.     WITH CONSENT OF HOLDERS OF SECURITIES.

                  Except as provided below in this Section 9.02, the Company and
the Trustee may amend or supplement this Indenture, or the Securities of any
series may be amended or supplemented, with the consent of the Holders of a
majority in principal amount of the Securities then outstanding of all series
affected by such supplemental indenture (voting as a single class) (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Securities), and, subject to Sections 6.04
and 6.07 hereof, any existing Default or Event of Default (other than a Default
or Event of Default in the payment of the principal of, premium or interest on
the Securities) or compliance with any provision of this Indenture or the
Securities of such series may be waived with the consent of the Holders of a
majority in principal amount of the Securities then outstanding of all series
affected by such waiver (voting as a single class) (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for the Securities).

                  Upon the request of the Company accompanied by a copy of a
Board 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 the certificate, authorizing the execution of
any such amended or supplemental indenture, and upon the filing with the Trustee
of evidence satisfactory to the Trustee of the consent of the Holders of
Securities of each such series as aforesaid, and upon receipt by the Trustee of
the documents described in Section 7.02(b) hereof, the Trustee shall join with
the Company in the execution of such amended or supplemental indenture unless
such amended or supplemental indenture affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise, in which case the Trustee may
in its discretion, but shall not be obligated to, enter into such amended or
supplemental indenture.

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

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

                                     - 40 -

<PAGE>

                  However, without the consent of each Holder of Securities
affected, an amendment or waiver may not (with respect to any Securities held by
a non-consenting Holder):

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

     (b) reduce the principal of or change the fixed maturity of the principal
of, premium, if any, or mandatory sinking fund obligation, if any, with respect
to any Securities of any series or alter the provisions with respect to the
redemption of the Securities;

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

     (d) waive a Default or Event of Default in the payment of principal of or
interest or premium on the Securities of any series (except a rescission of
acceleration of the Securities by the Holders of a majority in aggregate
principal amount of the Securities of one or more affected series and a waiver
of the payment default that resulted from such acceleration);

     (e) make any Security of any series payable in currency other than that
stated in the Securities of such series;

     (f) make any change in the provisions of this Indenture relating to waivers
of past Defaults or the rights of Holders of Securities to receive payments of
principal of or interest or premium on the Securities;

     (g) waive a redemption payment with respect to any Security; or

     (h) make any change in Section 6.04 or 6.07 hereof or in the amendment and
waiver provisions of Section 9.01 or this Section 9.02.

SECTION 9.03.     COMPLIANCE WITH TRUST INDENTURE ACT.

                  Every amendment or supplement to this Indenture or the
Securities shall be set forth in an amended or supplemental indenture that
complies 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 of a Security is a continuing consent by the Holder of
a Security and every subsequent Holder of a Security or portion of a Security
that evidences the same debt as the consenting Holder's Securities, even if
notation of the consent is not made on any Securities. However, any such Holder
of a Security or subsequent Holder of a Security may revoke the consent as to
its Securities if the Trustee receives written notice of revocation before the
date the waiver, supplement or amendment becomes effective. An amendment,
supplement or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.

                                     - 41 -

<PAGE>

SECTION 9.05.     NOTATION ON OR EXCHANGE OF SECURITIES.

                  The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Securities thereafter authenticated. The
Company in exchange for all Securities may issue and the Trustee shall
authenticate new Securities that reflect the amendment, supplement or waiver.

                  Failure to make the appropriate notation or to issue new
Securities shall not affect the validity and effect of such amendment,
supplement or waiver.

SECTION 9.06.     TRUSTEE TO SIGN AMENDMENTS, ETC.

                  The Company may not sign an amendment or supplemental
indenture until its Board of Directors approves it. The Trustee shall sign any
amendment or supplemental indenture authorized pursuant to this Article 9 if the
amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but need
not, sign it. In signing or refusing to sign such amendment or supplemental
indenture, the Trustee shall be entitled to receive and, subject to Section 7.01
hereof, shall be fully protected in relying upon, an Officers' Certificate and
an Opinion of Counsel as conclusive evidence that such amendment or supplemental
indenture is authorized or permitted by this Indenture, that it is not
inconsistent herewith, and that it will be valid and binding upon the Company in
accordance with its terms.

                                  Article 10.
                               MEETINGS OF HOLDERS

SECTION 10.01.    PURPOSES FOR WHICH MEETING  MAY BE CALLED.

                  A meeting of Holders of Securities of any series may be called
at any time and from time to time pursuant to this Article 10 to make, give or
take any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Indenture to be made, given or taken by Holders of
Securities of such series.

SECTION 10.02.    CALL, NOTICE AND PLACE OF MEETINGS.

     (a) The Trustee may at any time call a meeting of Holders of Securities of
any series for any purpose specified in Section 10.01, to be held at such time
and at such place in the Borough of Manhattan, The City of New York, or in such
other place as the Trustee shall determine. Notice of every meeting of Holders
of Securities of any series, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting,
shall be given, in the manner provided in Section 11.02, not less than 20 nor
more than 180 days prior to the date fixed for the meeting.

     (b) In case at any time the Company, by or pursuant to a Board Resolution,
or the Holders of at least 25% in principal amount of the outstanding Securities
of any series shall have requested the Trustee to call a meeting of the Holders
of Securities of such series for any purpose specified in Section 10.01 by
written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed notice of such
meeting within 20 days after receipt of such request or shall not thereafter
proceed to cause the meeting to

                                     - 42 -

<PAGE>

be held as provided herein, then the Company or the Holders of Securities of
such series in the amount above specified, as the case may be, may determine the
time and the place for such meeting and may call such meeting for such purposes
by giving notice thereof as provided in clause (a) of this Section.

SECTION 10.03.    PERSONS ENTITLED TO VOTE AT MEETINGS.

                  To be entitled to vote at any meeting of Holders of Securities
of any series, a Person shall be (a) a Holder of one or more outstanding
Securities of such series, or (b) a Person appointed by an instrument in writing
as proxy for a Holder or Holders of one or more outstanding Securities of such
series by such Holder or Holders. The only Persons who shall be entitled to be
present or to speak at any meeting of Holders of Securities of any series shall
be the Persons entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel. SECTION 10.04. QUORUM; ACTION.

                  The Persons entitled to vote a majority in principal amount of
the outstanding Securities of a series shall constitute a quorum for a meeting
of Holders of Securities of such series; provided, however, that if any action
is to be taken at such meeting with respect to a consent or waiver which this
Indenture (or any Board Resolution or indenture supplemental hereto establishing
a series of Securities hereunder) expressly provides may be given by the Holders
of more or less than a majority in principal amount of the outstanding
Securities of a series, the Persons entitled to vote such percentage in
principal amount of the outstanding Securities of such series shall constitute a
quorum. In the absence of a quorum within 30 minutes after the time appointed
for any such meeting, the meeting shall, if convened at the request of Holders
of Securities of such series, be dissolved. In any other case the meeting may be
adjourned for a period of not less than 10 days as determined by the chairman of
the meeting prior to the adjournment of such meeting. In the absence of a quorum
at any such adjourned meeting, such adjourned meeting may be further adjourned
for a period of not less than 10 days as determined by the chairman of the
meeting prior to the adjournment of such adjourned meeting. Notice of the
reconvening of any such adjourned meeting shall be given as provided in Section
10.02(a), except that such notice need be given only once not less than five
days prior to the date on which the meeting is scheduled to be reconvened.
Notice of the reconvening of an adjourned meeting shall state expressly the
percentage, as provided above, of the principal amount of the outstanding
Securities of such series which shall constitute a quorum.

                  Except as otherwise provided in Section 6.02 or 9.02 (or in
any Board Resolution or indenture supplemental hereto establishing a series of
Securities hereunder), any resolution presented to a meeting or adjourned
meeting duly reconvened at which a quorum is present as aforesaid may be adopted
only by the affirmative vote of the Holders of a majority in principal amount of
the outstanding Securities of that series; provided, however, that, except as
otherwise provided in Section 6.02 or 9.02 (or in any Board Resolution or
indenture supplemental hereto establishing a series of Securities hereunder),
any resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action which this Indenture or any supplemental
indenture expressly provides may be made, given or taken by the Holders of a
specified percentage in principal amount of the outstanding Securities of a
series may be adopted at a meeting or an adjourned meeting duly reconvened and
at which a quorum is present as

                                     - 43 -

<PAGE>

aforesaid by the affirmative vote of the Holders of such specified percentage in
principal amount of the outstanding Securities of such series.

                  Any resolution passed or decision taken at any meeting of
Holders of Securities of any series duly held in accordance with this Section
shall be binding on all the Holders of Securities of such series, whether or not
such Holders were present or represented at the meeting.

SECTION 10.05.    DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT OF
                  MEETINGS.

     (a) Notwithstanding any other provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
Holders of Securities of a series in regard to proof of the holding of
Securities of such series and of the appointment of proxies and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall deem appropriate.
Except as otherwise permitted or required by any such regulations, the holding
of Securities shall be proved in the manner specified in Section 1.05 and the
appointment of any proxy shall be proved in the manner specified in Section
1.05. Such regulations may provide that written instruments appointing proxies,
regular on their face, may be presumed valid and genuine without the proof
specified in Section 1.05 or other proof.

     (b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders of Securities as provided in Section 10.02(b), in which
case the Company or the Holders of Securities of the series calling the meeting,
as the case may be, shall in like manner appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall be elected by
vote of the Persons entitled to vote at least a majority in principal amount of
the outstanding Securities of such series represented at the meeting.

     (c) At any meeting each Holder of a Security of such series or proxy shall
be entitled to one vote for each $25 principal amount of the outstanding
Securities of such series held or represented by him; provided, however, that no
vote shall be cast or counted at any meeting in respect of any Security
challenged as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote, except as
a Holder of a Security of such series or proxy.

     (d) Any meeting of Holders of Securities of any series duly called pursuant
to Section 10.02 at which a quorum is present may be adjourned from time to time
by Persons entitled to vote at least a majority in principal amount of the
outstanding Securities of such series represented at the meeting; and the
meeting may be held as so adjourned without further notice.

SECTION 10.06.    COUNTING VOTES AND RECORDING ACTION OF MEETINGS.

     (a) The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the outstanding Securities of such series held or represented by them. The

                                     - 44 -

<PAGE>

permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record, at least in
duplicate, of the proceedings of each meeting of Holders of Securities of any
series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 10.02 and, if
applicable, Section 10.04. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.

SECTION 10.07.    ARTICLE SUBJECT TO OTHER PROVISIONS.

                  Each provision of this Article 10 (whether or not expressly so
stated) is subject to any other provision of this Indenture (or any Board
Resolution or supplemental indenture establishing a series of Securities
hereunder) that provides that Securities of different series constitute a single
class.

                                   Article 11.
                                  MISCELLANEOUS

SECTION 11.01.    TRUST INDENTURE ACT CONTROLS.

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

SECTION 11.02.    NOTICES.

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

                  If to the Company:
                           Kulicke and Soffa Industries, Inc.
                           2101 Blair Mill Road
                           Willow Grove, PA  19090
                           Facsimile No.: (215) 784-6258
                           Attention: Clifford G. Sprague

                                     - 45 -

<PAGE>

                  If to the Trustee:

                  LaSalle Bank National Association
                  135 S. LaSalle Street
                  18/th/ Floor
                  Chicago, IL 60603

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

                  All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged or confirmed, if
telecopied; and the next Business Day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.

                  Any notice or communication to a Holder shall be mailed by
first class mail or by overnight courier guaranteeing next day delivery to its
address shown on the register kept by the Registrar. Any notice or communication
shall also be so mailed to any Person described in TIA ss. 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other Holders.

                  If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.

                  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.

SECTION 11.03.    COMMUNICATION BY HOLDERS OF SECURITIES WITH OTHER HOLDERS OF
                  SECURITIES.

                  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 11.04.    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:

     (a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 11.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and

     (b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 11.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.

                                     - 46 -

<PAGE>

SECTION 11.05.    STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.

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

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

     (b) 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;

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

     (d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.

SECTION 11.06.    RULES BY TRUSTEE AND AGENTS.

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

SECTION 11.07.    NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
                  STOCKHOLDERS.

                  No past, present or future director, officer, employee,
incorporator or stockholder of the Company, as such, shall have any liability
for any obligations of the Company under the Securities, this Indenture or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Securities by accepting a Security waives and releases
all such liability. The waiver and release are part of the consideration for
issuance of the Securities.

SECTION 11.08.    GOVERNING LAW.

                  THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE AND ENFORCE THIS INDENTURE AND THE SECURITIES.

SECTION 11.09.    NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.

                  This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.

                                     - 47 -

<PAGE>

SECTION 11.10.    SUCCESSORS.

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

SECTION 11.11.    SEVERABILITY.

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

SECTION 11.12.    COUNTERPART ORIGINALS.

                  The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement. This Indenture will be effective when each party shall have
signed and delivered (including delivery by facsimile transmission), one or more
counterparts to the other, but it shall not be necessary for both parties to
sign the same counterpart.

SECTION 11.13.    TABLE OF CONTENTS, HEADINGS, ETC.

                  The Table of Contents 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 of this Indenture and shall in no way modify or
restrict any of the terms or provisions hereof.

                            [Signature Page Follows]

                                     - 48 -

<PAGE>

                                   SIGNATURES

                  IN WITNESS WHEREOF, the parties have executed this Indenture
as of the date first written above.

                                     KULICKE AND SOFFA INDUSTRIES, INC.

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

LASALLE BANK NATIONAL ASSOCIATION,
as Trustee

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

                                     - 49 -

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