Document:

<PAGE>

                                  EXHIBIT 4.2

                              CURAGEN CORPORATION
                                    Issuer

                                      AND

                                   [     ],
                                    Trustee

                                   INDENTURE

                           Dated as of [     ], 2000

                         Subordinated Debt Securities
<PAGE>

                            CROSS-REFERENCE TABLE(1)

<TABLE>
<CAPTION>
         Section of
Trust Indenture Act                                       Section of
of 1939, as amended                                       Indenture
                                                          ---------
<S>                                                       <C>
310(a)................................................       7.09
310(b)................................................       7.08
                                                             7.10

310(c)................................................       Inapplicable
311(a)................................................       7.13(a)
311(b)................................................       7.13(b)
311(c)................................................       Inapplicable
312(a)................................................       5.02(a)
312(b)................................................       5.02(b)
312(c)................................................       5.02(c)
313(a)................................................       5.04(a)
313(b)................................................       5.04(b)
313(c)................................................       5.04(a)
                                                             5.04(b)

313(d)................................................       5.04(c)
314(a)................................................       5.03
314(b)................................................       Inapplicable
314(c)................................................       13.06
314(d)................................................       Inapplicable
314(e)................................................       13.06
314(f)................................................       Inapplicable
315(a)................................................       7.01(a)
                                                             7.02

315(b)................................................       6.07
315(c)................................................       7.01
315(d)................................................       7.01(b)
                                                             7.01(c)

315(e)................................................       6.07
316(a)................................................       6.06
                                                             8.04

316(b)................................................       6.04
316(c)................................................       8.01
317(a)................................................       6.02
317(b)................................................       4.03
318(a)................................................       13.08
</TABLE>
(1) This Cross-Reference Table does not constitute part of the Indenture and
shall not have any bearing on the interpretation of any of its terms or
provisions.

                                      -i-
<PAGE>

                             TABLE OF CONTENTS(2)

<TABLE>
<S>                                                                                                                   <C>
ARTICLE I   DEFINITIONS...........................................................................................      1
          SECTION 1.01           Definitions of Terms..............................................................     1

ARTICLE II   ISSUE, DESCRIPTION, TERMS, EXECUTION,
REGISTRATION AND EXCHANGE OF SECURITIES............................................................................     5
          SECTION 2.01           Designation and Terms of Securities...............................................     5
          SECTION 2.02           Form of Securities and Trustee's Certificate......................................     6
          SECTION 2.03           Denominations:   Provisions for Payment...........................................     7
          SECTION 2.04           Execution and Authentications.....................................................     8
          SECTION 2.05           Registration of Transfer and Exchange.............................................     9
          SECTION 2.06           Temporary Securities..............................................................    10
          SECTION 2.07           Mutilated, Destroyed, Lost or Stolen Securities...................................    10
          SECTION 2.08           Cancellation......................................................................    11
          SECTION 2.09           Benefits of Indenture.............................................................    11
          SECTION 2.10           Authenticating Agent..............................................................    12
          SECTION 2.11           Global Securities.................................................................    12

ARTICLE III   REDEMPTION OF SECURITIES AND SINKING FUND PROVISIONS.................................................    13
          SECTION 3.01           Redemption........................................................................    13
          SECTION 3.02           Notice of Redemption..............................................................    13
          SECTION 3.03           Payment Upon Redemption...........................................................    15
          SECTION 3.04           Sinking Fund......................................................................    15
          SECTION 3.05           Satisfaction of Sinking Fund Payments with Securities.............................    15
          SECTION 3.06           Redemption of Securities for Sinking Fund.........................................    16

ARTICLE IV   COVENANTS.............................................................................................    16
          SECTION 4.01           Payment of Principal, Premium and Interest........................................    16
          SECTION 4.02           Maintenance of Office or Agency...................................................    16
          SECTION 4.03           Paying Agents.....................................................................    16
          SECTION 4.04           Appointment to Fill Vacancy in Office of Trustee..................................    17
          SECTION 4.05           Compliance with Consolidation Provisions..........................................    18

ARTICLE V   SECURITYHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE.....................................................................................    18
          SECTION 5.01           Company to Furnish Trustee Names and Addresses
          of Securityholders.......................................................................................    18
          SECTION 5.02           Preservation Of Information; Communications With Securityholders..................    18
          SECTION 5.03           Reports by the Company............................................................    18
          SECTION 5.04           Reports by the Trustee............................................................    19

ARTICLE VI   REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT................................................................................................    19
          SECTION 6.01           Events of Default.................................................................    19
          SECTION 6.02           Collection of Indebtedness and Suits for Enforcement by Trustee...................    21
          SECTION 6.03           Application of Moneys Collected...................................................    22
</TABLE>

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<TABLE>
<S>                                                                                                                   <C>
          SECTION 6.04           Limitation on Suits...............................................................    23
          SECTION 6.05           Rights and Remedies Cumulative; Delay or Omission Not Waiver......................    23
          SECTION 6.06           Control by Securityholders........................................................    24
          SECTION 6.07           Undertaking to Pay Costs..........................................................    24

ARTICLE VII   CONCERNING THE TRUSTEE...............................................................................    25
          SECTION 7.01           Certain Duties and Responsibilities of Trustee....................................    25
          SECTION 7.02           Certain Rights of Trustee.........................................................    26
          SECTION 7.03           Trustee Not Responsible for Recitals or Issuance or Securities....................    27
          SECTION 7.04           May Hold Securities...............................................................    27
          SECTION 7.05           Moneys Held in Trust..............................................................    27
          SECTION 7.06           Compensation and Reimbursement....................................................    28
          SECTION 7.07           Reliance on Officers' Certificate.................................................    28
          SECTION 7.08           Disqualification; Conflicting Interests...........................................    28
          SECTION 7.09           Corporate Trustee Required; Eligibility...........................................    28
          SECTION 7.10           Resignation and Removal; Appointment of Successor.................................    29
          SECTION 7.11           Acceptance of Appointment By Successor............................................    30
          SECTION 7.12           Merger, Conversion, Consolidation or Succession to Business.......................    31
          SECTION 7.13           Preferential Collection of Claims Against the Company.............................    32

ARTICLE VIII   CONCERNING THE SECURITYHOLDERS......................................................................    32
          SECTION 8.01           Evidence of Action by Securityholders.............................................    32
          SECTION 8.02           Proof of Execution by Securityholders.............................................    32
          SECTION 8.03           Who May be Deemed Owners..........................................................    33
          SECTION 8.04           Certain Securities Owned by Company Disregarded...................................    33
          SECTION 8.05           Actions Binding on Future Securityholders.........................................    33

ARTICLE IX   SUPPLEMENTAL INDENTURES...............................................................................    34
          SECTION 9.01           Supplemental Indentures Without the Consent of Securityholders....................    34
          SECTION 9.02           Supplemental Indentures With Consent of Securityholders...........................    35
          SECTION 9.03           Effect of Supplemental Indentures.................................................    35
          SECTION 9.04           Securities Affected by Supplemental Indentures....................................    35
          SECTION 9.05           Execution of Supplemental Indentures..............................................    36

ARTICLE X   SUCCESSOR ENTITY.......................................................................................    36
          SECTION 10.01          Company May Consolidate, Etc......................................................    36
          SECTION 10.02          Successor Entity Substituted......................................................    37
          SECTION 10.03          Evidence of Consolidation, Etc. to Trustee........................................    37

ARTICLE XI   SATISFACTION AND DISCHARGE............................................................................    37
          SECTION 11.01          Satisfaction and Discharge of Indenture...........................................    37
          SECTION 11.02          Discharge of Obligations..........................................................    38
          SECTION 11.03          Deposited Moneys to be Held in Trust..............................................    38
          SECTION 11.04          Payment of Moneys Held by Paying Agents...........................................    38
          SECTION 11.05          Repayment to Company..............................................................    39
</TABLE>

                                       -iii-
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<TABLE>
<S>                                                                                                                   <C>
ARTICLE XII  IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS   AND DIRECTORS...........................................................................................    39
          SECTION 12.01          No Recourse.......................................................................    39

ARTICLE XIII   MISCELLANEOUS PROVISIONS............................................................................    39
          SECTION 13.01          Effect on Successors and Assigns..................................................    39
          SECTION 13.02          Actions by Successor..............................................................    40
          SECTION 13.03          Surrender of Company Powers.......................................................    40
          SECTION 13.04          Notices...........................................................................    40
          SECTION 13.05          Governing Law.....................................................................    40
          SECTION 13.06          Treatment of Securities as Debt...................................................    40
          SECTION 13.07          Compliance Certificates and Opinions..............................................    40
          SECTION 13.08          Payments on Business Days.........................................................    41
          SECTION 13.09          Conflict with Trust Indenture Act.................................................    41
          SECTION 13.10          Counterparts......................................................................    41
          SECTION 13.11          Separability......................................................................    41
          SECTION 13.12          Assignment........................................................................    41

ARTICLE XIV   SUBORDINATION OF SECURITIES..........................................................................    42
          SECTION 14.01          Subordination Terms...............................................................    42
</TABLE>

(2) This Table of Contents does not constitute part of the Indenture and shall
not have any bearing on the interpretation of any of its terms or provisions.

                                     -iv-
<PAGE>

INDENTURE, dated as of [ ], 2000, among CuraGen Corporation, a Delaware
corporation (the "Company"), and [ ], as trustee (the "Trustee"):

WHEREAS, for its lawful corporate purposes, the Company has duly authorized the
execution and delivery of this Indenture to provide for the issuance of
unsecured subordinated debt securities (hereinafter referred to as the
"Securities"), in an unlimited aggregate principal amount to be issued from time
to time in one or more series as in this Indenture provided, as registered
Securities without coupons, to be authenticated by the certificate of the
Trustee;

WHEREAS, to provide the terms and conditions upon which the Securities are to be
authenticated, issued and delivered, the Company has duly authorized the
execution of this Indenture; and

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

NOW, THEREFORE, 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 Securities:

                                   ARTICLE I

                                  DEFINITIONS

SECTION 1.01  Definitions of Terms.

The terms defined in this Section (except as in this Indenture otherwise
expressly provided or unless the context otherwise requires) for all purposes of
this Indenture and of any indenture supplemental hereto shall have the
respective meanings specified in this Section and shall include the plural as
well as the singular. All other terms used in this Indenture that are defined in
the Trust Indenture Act of 1939, as amended, or that are by reference in such
Act defined in the Securities Act of 1933,as amended (except as herein otherwise
expressly provided or unless the context otherwise requires), shall have the
meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of the execution of this instrument.

"Authenticating Agent" means an authenticating agent with respect to all or any
of the series of Securities appointed with respect to all or any series of the
Securities by the Trustee pursuant to Section 2.10.

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

"Board of Directors" means the Board of Directors of the Company or any duly
authorized committee of such Board.
<PAGE>

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

"Business Day" means, with respect to any series of Securities, any day other
than a day on which Federal or State banking institutions in the Borough of
Manhattan, The City of New York, are authorized or obligated by law, executive
order or regulation to close.

"Certificate" means a certificate signed by the principal executive officer, the
principal financial officer or the principal accounting officer of the Company.
The Certificate need not comply with the provisions of Section 13.07.

"Company" means CuraGen Corporation, a corporation duly organized and existing
under the laws of the State of Delaware, and, subject to the provisions of
Article Ten, shall also include its successors and assigns.

"Corporate Trust Office" means the office of the Trustee at which, at any
particular time, its corporate trust business shall be principally administered,
which office at the date hereof is located at [ ], except that whenever a
provision herein refers to an office or agency of the Trustee in the Borough of
Manhattan, The City of New York, such office is located, at the date hereof, at
[ ].

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

"Default" means any event, act or condition that with notice or lapse of time,
or both, would constitute an Event of Default.

"Depositary" means, with respect to Securities of any series, for which the
Company shall determine that such Securities will be issued as a Global
Security, The Depository Trust Company, New York, New York, another clearing
agency, or any successor registered as a clearing agency under the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), or other applicable
statute or regulation, which, in each case, shall be designated by the Company
pursuant to either Section 2.01 or 2.11.

"Event of Default" means, with respect to Securities of a particular series any
event specified in Section 6.01, continued for the period of time, if any,
therein designated.

"Global Security" means, with respect to any series of Securities, a Security
executed by the Company and delivered by the Trustee to the Depositary or
pursuant to the Depositary's instruction, all in accordance with the Indenture,
which shall be registered in the name of the Depositary or its nominee.

"Governmental 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 that, in either case, are not
callable or redeemable at

                                      -2-
<PAGE>

the option of the issuer thereof, and shall also include a depositary receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933,
as amended) as custodian with respect to any such Governmental Obligation or a
specific payment of principal of or interest on any such Governmental Obligation
held by such custodian for the account of the holder of such depositary receipt;
provided, however, that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depositary receipt from any amount received by the custodian in respect of the
Governmental Obligation or the specific payment of principal of or interest on
the Governmental Obligation evidenced by such depositary receipt.

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

"Indenture" means this instrument as originally executed or as it may from time
to time be supplemented or amended by one or more indentures supplemental hereto
entered into in accordance with the terms hereof.

"Interest Payment Date", when used with respect to any installment of interest
on a Security of a particular series, means the date specified in such Security
or in a Board Resolution or in an indenture supplemental hereto with respect to
such series as the fixed date on which an installment of interest with respect
to Securities of that series is due and payable.

"Officers' Certificate" means a certificate signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the Controller or an
Assistant Controller or the Secretary or an Assistant Secretary of the Company
that is delivered to the Trustee in accordance with the terms hereof. Each such
certificate shall include the statements provided for in Section 13.07, if and
to the extent required by the provisions thereof.

"Opinion of Counsel" means an opinion in writing of legal counsel, who may be an
employee of or counsel for the Company that is delivered to the Trustee in
accordance with the terms hereof. Each such opinion shall include the statements
provided for in Section 13.07, if and to the extent required by the provisions
thereof.

"Outstanding", when used with reference to Securities of any series, means,
subject to the provisions of Section 8.04, as of any particular time, all
Securities of that series theretofore authenticated and delivered by the Trustee
under this Indenture, except (a) Securities theretofore canceled by the Trustee
or any paying agent, or delivered to the Trustee or any paying agent for
cancellation or that have previously been canceled; (b) Securities or portions
thereof for the payment or redemption of which moneys or Governmental
Obligations in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or shall have been set
aside and segregated in trust by the Company (if the Company shall act as its
own paying agent); provided, however, that if such Securities or portions of
such Securities are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given as in Article Three provided, or provision
satisfactory to the Trustee shall have been made for giving such notice; and (c)
Securities in lieu of or in substitution for which other Securities shall have
been authenticated and delivered pursuant to the terms of Section 2.07.

                                      -3-
<PAGE>

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

"Predecessor Security" of any particular Security means every previous Security
evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 2.07 in lieu of a lost, destroyed or
stolen Security shall be deemed to evidence the same debt as the lost, destroyed
or stolen Security.

"Responsible Officer" when used with respect to the Trustee means the Chairman
of the Board of Directors, the President, any Vice President, the Secretary, the
Treasurer, any trust officer, any corporate trust officer or any other officer
or assistant officer of the Trustee customarily performing functions similar to
those performed by the Persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of his
or her knowledge of and familiarity with the particular subject.

"Securities" means the debt Securities authenticated and delivered under this
Indenture.

"Securityholder", "holder of Securities", "registered holder", or other similar
term, means the Person or Persons in whose name or names a particular Security
shall be registered on the books of the Company kept for that purpose in
accordance with the terms of this Indenture.

"Subsidiary" means, with respect to any Person, (i) any corporation at least a
majority of whose outstanding Voting Stock shall at the time be owned, directly
or indirectly, by such Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries, (ii) any general partnership, joint
venture or similar entity, at least a majority of whose outstanding partnership
or similar interests shall at the time be owned by such Person, or by one or
more of its Subsidiaries, or by such Person and one or more of its Subsidiaries
and (iii) any limited partnership of which such Person or any of its
Subsidiaries is a general partner.

"Trustee" means [ ], and, subject to the provisions of Article Seven, shall also
include its successors and assigns, and, if at any time there is more than one
Person acting in such capacity hereunder, "Trustee" shall mean each such Person.
The term "Trustee" as used with respect to a particular series of the Securities
shall mean the trustee with respect to that series.

"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, subject
to the provisions of Sections 9.01, 9.02, and 10.01, as in effect at the date of
execution of this instrument.

"Voting Stock", as applied to stock of any Person, means shares, interests,
participations or other equivalents in the equity interest (however designated)
in such Person having ordinary voting power for the election of a majority of
the directors (or the equivalent) of such Person, other than shares, interests,
participations or other equivalents having such power only by reason of the
occurrence of a contingency.

                                   ARTICLE II

                                      -4-
<PAGE>

                     ISSUE, DESCRIPTION, TERMS, EXECUTION,
                    REGISTRATION AND EXCHANGE OF SECURITIES

SECTION 2.01  Designation and Terms of Securities.

      (a) The aggregate principal amount of Securities that may be authenticated
      and delivered under this Indenture is unlimited. The Securities may be
      issued in one or more series up to the aggregate principal amount of
      Securities of that series from time to time authorized by or pursuant to a
      Board Resolution of the Company or pursuant to one or more indentures
      supplemental hereto. Prior to the initial issuance of Securities of any
      series, there shall be established in or pursuant to a Board Resolution of
      the Company, and set forth in an Officers' Certificate of the Company, or
      established in one or more indentures supplemental hereto:

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

            (2) any limit upon the aggregate principal amount of the Securities
            of that series that may be authenticated and delivered under this
            Indenture (except for Securities authenticated and delivered upon
            registration of transfer of, or in exchange for, or in lieu of,
            other Securities of that series);

            (3) the date or dates on which the principal of the Securities of
            the series is payable and the place(s) of payment;

            (4) the rate or rates at which the Securities of the series shall
            bear interest or the manner of calculation of such rate or rates, if
            any;

            (5) the date or dates from which such interest shall accrue, the
            Interest Payment Dates on which such interest will be payable or the
            manner of determination of such Interest Payment Dates, the place(s)
            of payment, and the record date for the determination of holders to
            whom interest is payable on any such Interest Payment Dates;

            (6) the right, if any, to extend the interest payment periods and
            the duration of such extension;

            (7) the period or periods within which, the price or prices at which
            and the terms and conditions upon which, Securities of the series
            may be redeemed, in whole or in part, at the option of the Company;

            (8) the obligation, if any, of the Company to redeem or purchase
            Securities of the series pursuant to any sinking fund or analogous
            provisions (including payments made in cash in satisfaction of
            future sinking fund obligations) or at the option of a holder
            thereof and the period or periods within which, the price or prices
            at which, and the terms and conditions upon which, Securities of the
            series shall be redeemed or purchased, in whole or in part, pursuant
            to such obligation;

            (9) the subordination terms of the Securities of the series;

                                      -5-
<PAGE>

            (10) the form of the Securities of the series including the form of
            the Certificate of Authentication for such series;

            (11) if other than denominations of one thousand U.S. dollars
            ($1,000) or any integral multiple thereof, the denominations in
            which the Securities of the series shall be issuable;

            (12) any and all other terms with respect to such series (which
            terms shall not be inconsistent with the terms of this Indenture, as
            amended by any supplemental indenture) including any terms which may
            be required by or advisable under United States laws or regulations
            or advisable in connection with the marketing of Securities of that
            series;

            (13) whether the Securities are issuable as a Global Security and,
            in such case, the identity of the Depositary for such series;

            (14) whether the Securities will be convertible into shares of
            common stock or other securities of the Company and, if so, the
            terms and conditions upon which such Securities will be so
            convertible, including the conversion price and the conversion
            period;

            (15) if other than the principal amount thereof, the portion of the
            principal amount of Securities of the series which shall be payable
            upon declaration of acceleration of the maturity thereof pursuant to
            Section 6.01; and

            (16) any additional or different Events of Default or restrictive
            covenants provided for with respect to the Securities of the series.

All Securities of any one series shall be substantially identical except as to
denomination and except as may otherwise be provided in or pursuant to any such
Board Resolution or in any indentures supplemental hereto.

If any of the terms of the series are established by action taken pursuant to a
Board Resolution of the Company, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate of the Company setting forth the terms of the series.

Securities of any particular series may be issued at various times, with
different dates on which the principal or any installment of principal is
payable, with different rates of interest, if any, or different methods by which
rates of interest may be determined, with different dates on which such interest
may be payable and with different redemption dates.

SECTION 2.02  Form of Securities and Trustee's Certificate.

The Securities of any series and the Trustee's certificate of authentication to
be borne by such Securities shall be substantially of the tenor and purport as
set forth in one or more indentures supplemental hereto or as provided in a
Board Resolution of the Company and as set forth in an Officers' Certificate of
the Company and the and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as the Company may deem appropriate and as are
not

                                      -6-
<PAGE>

inconsistent with the provisions of this Indenture, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which Securities of that series
may be listed, or to conform to usage.

SECTION 2.03  Denominations:  Provisions for Payment.

The Securities shall be issuable as registered Securities and in the
denominations of one thousand U.S. dollars ($1,000) or any integral multiple
thereof, subject to Section 2.01(11). The Securities of a particular series
shall bear interest payable on the dates and at the rate specified with respect
to that series. The principal of and the interest on the Securities of any
series, as well as any premium thereon in case of redemption thereof prior to
maturity, shall be payable in the coin or currency of the United States of
America that at the time is legal tender for public and private debt, at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, the City and State of New York. Each Security shall be dated the date
of its authentication. Interest on the Securities shall be computed on the basis
of a 360-day year composed of twelve 30-day months.

The interest installment on any Security that is payable, and is punctually paid
or duly provided for, on any Interest Payment Date for Securities of that series
shall be paid to the Person in whose name said Security (or one or more
Predecessor Securities) is registered at the close of business on the regular
record date for such interest installment. In the event that any Security of a
particular series or portion thereof is called for redemption and the redemption
date is subsequent to a regular record date with respect to any Interest Payment
Date and prior to such Interest Payment Date, interest on such Security will be
paid upon presentation and surrender of such Security as provided in Section
3.03.

Any interest on any Security that is payable, but is not punctually paid or duly
provided for, on any Interest Payment Date for Securities of the same series
(herein called "Defaulted Interest") shall forthwith cease to be payable to the
registered holder on the relevant regular record date by virtue of having been
such holder; and such Defaulted Interest shall be paid by the Company, at its
election, as provided in clause (1) or clause (2) below:

            (1)   The Company may make payment of any Defaulted Interest on
            Securities to the Persons in whose names such Securities (or their
            respective Predecessor Securities) are registered at the close of
            business on a special record date for the payment of such Defaulted
            Interest, which shall be fixed in the following manner: the Company
            shall notify the Trustee in writing of the amount of Defaulted
            Interest proposed to be paid on each such Security and the date of
            the proposed payment, and at the same time the Company shall deposit
            with the Trustee an amount of money equal to the aggregate amount
            proposed to be paid in respect of such Defaulted Interest or shall
            make arrangements satisfactory to the Trustee for such deposit prior
            to the date of the proposed payment, such money when deposited to be
            held in trust for the benefit of the Persons entitled to such
            Defaulted Interest as in this clause provided. Thereupon the Trustee
            shall fix a special record date for the payment of such Defaulted
            Interest which shall not be more than 15 nor less than 10 days prior
            to the date of the proposed payment and not less than 10 days after
            the receipt by the Trustee of the notice of the proposed payment.
            The Trustee shall promptly notify the Company of such special record
            date and, in the name and at the expense of the Company, shall cause
            notice of the proposed payment of such Defaulted Interest and the

                                      -7-
<PAGE>

special record date therefor to be mailed, first class postage prepaid, to each
Securityholder at his or her address as it appears in the Security Register (as
hereinafter defined), not less than 10 days prior to such special record date.
Notice of the proposed payment of such Defaulted Interest and the special record
date therefor having been mailed as aforesaid, such Defaulted Interest shall be
paid to the Persons in whose names such Securities (or their respective
Predecessor Securities) are registered on such special record date.

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

Unless otherwise set forth in a Board Resolution of the Company or one or more
indentures supplemental hereto establishing the terms of any series of
Securities pursuant to Section 2.01 hereof, the term "regular record date" as
used in this Section with respect to a series of Securities with respect to any
Interest Payment Date for such series shall mean either the fifteenth day of the
month immediately preceding the month in which an Interest Payment Date
established for such series pursuant to Section 2.01 hereof shall occur, if such
Interest Payment Date is the first day of a month, or the last day of the month
immediately preceding the month in which an Interest Payment Date established
for such series pursuant to Section 2.01 hereof shall occur, if such Interest
Payment Date is the fifteenth day of a month, whether or not such date is a
Business Day.

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

SECTION 2.04  Execution and Authentications.

The Securities shall be signed on behalf of the Company by its President, or one
of its Vice Presidents, or its Treasurer, or one of its Assistant Treasurers, or
its Secretary, or one of its Assistant Secretaries, under its corporate seal
attested by its Secretary or one of its Assistant Secretaries. Signatures may be
in the form of a manual or facsimile signature. The Company may use the
facsimile signature of any Person who shall have been a President or Vice
President thereof, or of any Person who shall have been a Secretary or Assistant
Secretary thereof, notwithstanding the fact that at the time the Securities
shall be authenticated and delivered or disposed of such Person shall have
ceased to be the President or a Vice President, or the Secretary or an Assistant
Secretary, of the Company. The seal of the Company may be in the form of a
facsimile of such seal and may be impressed, affixed, imprinted or otherwise
reproduced on the Securities. The Securities may contain such notations, legends
or endorsements required by law, stock exchange rule or usage. Each Security
shall be dated the date of its authentication by the Trustee.

A Security shall not be valid until authenticated manually by an authorized
signatory of the Trustee, or by an Authenticating Agent. Such signature shall be
conclusive evidence that the

                                      -8-
<PAGE>

Security so authenticated has been duly authenticated and delivered hereunder
and that the holder is entitled to the benefits of this Indenture.

At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a written order of the
Company for the authentication and delivery of such Securities, signed by its
President or any Vice President and its Secretary or any Assistant Secretary,
and the Trustee in accordance with such written order shall authenticate and
deliver such Securities.

In authenticating such Securities and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to Section 7.01) shall be fully protected in
relying upon, an Opinion of Counsel stating that the form and terms thereof have
been established in conformity with the provisions of this Indenture.

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

SECTION 2.05  Registration of Transfer and Exchange.

              (1)   Securities of any series may be exchanged upon presentation
              thereof at the office or agency of the Company designated for such
              purpose in the Borough of Manhattan, the City and State of New
              York, for other Securities of such series of authorized
              denominations, and for a like aggregate principal amount, upon
              payment of a sum sufficient to cover any tax or other governmental
              charge in relation thereto, all as provided in this Section. In
              respect of any Securities so surrendered for exchange, the Company
              shall execute, the Trustee shall authenticate and such office or
              agency shall deliver in exchange therefor the Security or
              Securities of the same series that the Securityholder making the
              exchange shall be entitled to receive, bearing numbers not
              contemporaneously outstanding.

              (2)   The Company shall keep, or cause to be kept, at its office
              or agency designated for such purpose in the Borough of Manhattan,
              the City and State of New York, or such other location designated
              by the Company a register or registers (herein referred to as the
              "Security Register") in which, subject to such reasonable
              regulations as it may prescribe, the Company shall register the
              Securities and the transfers of Securities as in this Article
              provided and which at all reasonable times shall be open for
              inspection by the Trustee. The registrar for the purpose of
              registering Securities and transfer of Securities as herein
              provided shall be appointed as authorized by Board Resolution (the
              "Security Registrar").

Upon surrender for transfer of any Security at the office or agency of the
Company designated for such purpose, the Company shall execute, the Trustee
shall authenticate and such office or agency shall deliver in the name of the
transferee or transferees a new Security or Securities of the same series as the
Security presented for a like aggregate principal amount.

All Securities presented or surrendered for exchange or registration of
transfer, as provided in this Section, shall be accompanied (if so required by
the Company or the Security

                                      -9-
<PAGE>

Registrar) by a written instrument or instruments of transfer, in form
satisfactory to the Company or the Security Registrar, duly executed by the
registered holder or by such holder's duly authorized attorney in writing.

              (3)   No service charge shall be made for any exchange or
              registration of transfer of Securities, or issue of new Securities
              in case of partial redemption of any series, but the Company may
              require payment of a sum sufficient to cover any tax or other
              governmental charge in relation thereto, other than exchanges
              pursuant to Section 2.06, Section 3.03(b) and Section 9.04 not
              involving any transfer.

The Company shall not be required (i) to issue, exchange or register the
transfer of any Securities during a period beginning at the opening of business
15 days before the day of the mailing of a notice of redemption of less than all
the Outstanding Securities of the same series and ending at the close of
business on the day of such mailing, nor (ii) to register the transfer of or
exchange any Securities of any series or portions thereof called for redemption.
The provisions of this Section 2.05 are, with respect to any Global Security,
subject to Section 2.11 hereof.

SECTION 2.06  Temporary Securities.

Pending the preparation of definitive Securities of any series, the Company may
execute, and the Trustee shall authenticate and deliver, temporary Securities
(printed, lithographed or typewritten) of any authorized denomination. Such
temporary Securities shall be substantially in the form of the definitive
Securities in lieu of which they are issued, but with such omissions, insertions
and variations as may be appropriate for temporary Securities, all as may be
determined by the Company. Every temporary Security of any series shall be
executed by the Company and be authenticated by the Trustee upon the same
conditions and in substantially the same manner, and with like effect, as the
definitive Securities of such series. Without unnecessary delay the Company will
execute and will furnish definitive Securities of such series and thereupon any
or all temporary Securities of such series may be surrendered in exchange
therefor (without charge to the holders), at the office or agency of the Company
designated for the purpose in the Borough of Manhattan, the City and State of
New York, and the Trustee shall authenticate and such office or agency shall
deliver in exchange for such temporary Securities an equal aggregate principal
amount of definitive Securities of such series, unless the Company advises the
Trustee to the effect that definitive Securities need not be executed and
furnished until further notice from the Company. Until so exchanged, the
temporary Securities of such series shall be entitled to the same benefits under
this Indenture as definitive Securities of such series authenticated and
delivered hereunder.

SECTION 2.07  Mutilated, Destroyed, Lost or Stolen Securities.

In case any temporary or definitive Security shall become mutilated or be
destroyed, lost or stolen, the Company (subject to the next succeeding sentence)
shall execute, and upon the Company's request the Trustee (subject as aforesaid)
shall authenticate and deliver, a new Security of the same series, bearing a
number not contemporaneously outstanding, in exchange and substitution for the
mutilated Security, or in lieu of and in substitution for the Security so
destroyed, lost or stolen. In every case the applicant for a substituted
Security shall furnish to the

                                      -10-
<PAGE>

Company and the Trustee such security or indemnity as may be required by them to
save each of them harmless, and, in every case of destruction, loss or theft,
the applicant shall also furnish to the Company and the Trustee evidence to
their satisfaction of the destruction, loss or theft of the applicant's Security
and of the ownership thereof. The Trustee may authenticate any such substituted
Security and deliver the same upon the written request or authorization of any
officer of the Company. Upon the issuance of any substituted Security, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
In case any Security that has matured or is about to mature shall become
mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a
substitute Security, pay or authorize the payment of the same (without surrender
thereof except in the case of a mutilated Security) if the applicant for such
payment shall furnish to the Company and the Trustee such security or indemnity
as they may require to save them harmless, and, in case of destruction, loss or
theft, evidence to the satisfaction of the Company and the Trustee of the
destruction, loss or theft of such Security and of the ownership thereof.

Every replacement Security issued pursuant to the provisions of this Section
shall constitute an additional contractual obligation of the Company whether or
not the mutilated, destroyed, lost or stolen Security shall be found at any
time, or be enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Securities of
the same series duly issued hereunder. All Securities shall be held and owned
upon the express condition that the foregoing provisions are exclusive with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Securities, and shall preclude (to the extent lawful) any and all other rights
or remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.

SECTION 2.08  Cancellation.

All Securities surrendered for the purpose of payment, redemption, exchange or
registration of transfer shall, if surrendered to the Company or any paying
agent, be delivered to the Trustee for cancellation, or, if surrendered to the
Trustee, shall be cancelled by it, and no Securities shall be issued in lieu
thereof except as expressly required or permitted by any of the provisions of
this Indenture. On request of the Company at the time of such surrender, the
Trustee shall deliver to the Company canceled Securities held by the Trustee. In
the absence of such request the Trustee may dispose of canceled Securities in
accordance with its standard procedures and deliver a certificate of disposition
to the Company. If the Company shall otherwise acquire any of the Securities,
however, such acquisition shall not operate as a redemption or satisfaction of
the indebtedness represented by such Securities unless and until the same are
delivered to the Trustee for cancellation.

SECTION 2.09  Benefits of Indenture.

Nothing in this Indenture or in the Securities, express or implied, shall give
or be construed to give to any Person, other than the parties hereto and the
holders of the Securities (and, with respect to the provisions of Article
Fourteen, the holders of Senior Indebtedness) any legal or equitable right,
remedy or claim under or in respect of this Indenture, or under any

                                      -11-
<PAGE>

covenant, condition or provision herein contained; all such covenants,
conditions and provisions being for the sole benefit of the parties hereto and
of the holders of the Securities (and, with respect to the provisions of Article
Fourteen, the holders of Senior Indebtedness).

SECTION 2.10  Authenticating Agent.

So long as any of the Securities of any series remain Outstanding there may be
an Authenticating Agent for any or all such series of Securities which the
Trustee shall have the right to appoint. Said Authenticating Agent shall be
authorized to act on behalf of the Trustee to authenticate Securities of such
series issued upon exchange, transfer or partial redemption thereof, and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. All references in this Indenture to the authentication of
Securities by the Trustee shall be deemed to include authentication by an
Authenticating Agent for such series. Each Authenticating Agent shall be
acceptable to the Company and shall be a corporation that has a combined capital
and surplus, as most recently reported or determined by it, sufficient under the
laws of any jurisdiction under which it is organized or in which it is doing
business to conduct a trust business, and that is otherwise authorized under
such laws to conduct such business and is subject to supervision or examination
by Federal or State authorities. If at any time any Authenticating Agent shall
cease to be eligible in accordance with these provisions, it shall resign
immediately.

Any Authenticating Agent may at any time resign by giving written notice of
resignation to the Trustee and to the Company. The Trustee may at any time (and
upon request by the Company shall) terminate the agency of any Authenticating
Agent by giving written notice of termination to such Authenticating Agent and
to the Company. Upon resignation, termination or cessation of eligibility of any
Authenticating Agent, the Trustee may appoint an eligible successor
Authenticating Agent acceptable to the Company. Any successor Authenticating
Agent, upon acceptance of its appointment hereunder, shall become vested with
all the rights, powers and duties of its predecessor hereunder as if originally
named as an Authenticating Agent pursuant hereto.

SECTION 2.11  Global Securities.

      (a) If the Company shall establish pursuant to Section 2.01 that the
      Securities of a particular series are to be issued as a Global Security,
      then the Company shall execute and the Trustee shall, in accordance with
      Section 2.04, authenticate and deliver, a Global Security that (i) shall
      represent, and shall be denominated in an amount equal to the aggregate
      principal amount of, all of the Outstanding Securities of such series,
      (ii) shall be registered in the name of the Depositary or its nominee,
      (iii) shall be delivered by the Trustee to the Depositary or pursuant to
      the Depositary's instruction and (iv) shall bear a legend substantially to
      the following effect: "Except as otherwise provided in Section 2.11 of the
      Indenture, this Security may be transferred, in whole but not in part,
      only to another nominee of the Depositary or to a successor Depositary or
      to a nominee of such successor Depositary."

      (b) Notwithstanding the provisions of Section 2.05, the Global Security of
      a series may be transferred, in whole but not in part and in the manner
      provided in Section 2.05, only to

                                      -12-
<PAGE>

another nominee of the Depositary for such series, or to a successor Depositary
for such series selected or approved by the Company or to a nominee of such
successor Depositary.

      (c) If at any time the Depositary for a series of the Securities notifies
      the Company that it is unwilling or unable to continue as Depositary for
      such series or if at any time the Depositary for such series shall no
      longer be registered or in good standing under the Exchange Act, or other
      applicable statute or regulation, and a successor Depositary for such
      series is not appointed by the Company within 90 days after the Company
      receives such notice or becomes aware of such condition, as the case may
      be, this Section 2.11 shall no longer be applicable to the Securities of
      such series and the Company will execute, and subject to Section 2.05, the
      Trustee will authenticate and deliver the Securities of such series in
      definitive registered form without coupons, in authorized denominations,
      and in an aggregate principal amount equal to the principal amount of the
      Global Security of such series in exchange for such Global Security. In
      addition, the Company may at any time determine that the Securities of any
      series shall no longer be represented by a Global Security and that the
      provisions of this Section 2.11 shall no longer apply to the Securities of
      such series. In such event the Company will execute and subject to Section
      2.05, the Trustee, upon receipt of an Officers' Certificate evidencing
      such determination by the Company, will authenticate and deliver the
      Securities of such series in definitive registered form without coupons,
      in authorized denominations, and in an aggregate principal amount equal to
      the principal amount of the Global Security of such series in exchange for
      such Global Security. Upon the exchange of the Global Security for such
      Securities in definitive registered form without coupons, in authorized
      denominations, the Global Security shall be canceled by the Trustee. Such
      Securities in definitive registered form issued in exchange for the Global
      Security pursuant to this Section 2.11(c) shall be registered in such
      names and in such authorized denominations as the Depositary, pursuant to
      instructions from its direct or indirect participants or otherwise, shall
      instruct the Trustee. The Trustee shall deliver such Securities to the
      Depositary for delivery to the Persons in whose names such Securities are
      so registered.

                                  ARTICLE III

              REDEMPTION OF SECURITIES AND SINKING FUND PROVISIONS

SECTION 3.01  Redemption.

The Company may redeem the Securities of any series issued hereunder on and
after the dates and in accordance with the terms established for such series
pursuant to Section 2.01 hereof.

SECTION 3.02  Notice of Redemption.

      (a) In case the Company shall desire to exercise such right to redeem all
      or, as the case may be, a portion of the Securities of any series in
      accordance with the right reserved so to do, the Company shall, or shall
      cause the Trustee to, give notice of such redemption to holders of the
      Securities of such series to be redeemed by mailing, first class postage
      prepaid, a notice of such redemption not less than 30 days and not more
      than 90 days before the date fixed for redemption of that series to such
      holders at their last addresses as they shall appear upon the Security
      Register unless a shorter period is specified in the Securities to be
      redeemed. Any

                                      -13-
<PAGE>

notice that is mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the registered holder receives
the notice. In any case, failure duly to give such notice to the holder of any
Security of any series designated for redemption in whole or in part, or any
defect in the notice, shall not affect the validity of the proceedings for the
redemption of any other Securities of such series or any other series. In the
case of any redemption of Securities prior to the expiration of any restriction
on such redemption provided in the terms of such Securities or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with any such restriction.

Each such notice of redemption shall specify the date fixed for redemption and
the redemption price at which Securities of that series are to be redeemed, and
shall state that payment of the redemption price of such Securities to be
redeemed will be made at the office or agency of the Company in the Borough of
Manhattan, the City and State of New York, upon presentation and surrender of
such Securities, that interest accrued to the date fixed for redemption will be
paid as specified in said notice, that from and after said date interest will
cease to accrue and that the redemption is for a sinking fund, if such is the
case. If less than all the Securities of a series are to be redeemed, the notice
to the holders of Securities of that series to be redeemed in whole or in part
shall specify the particular Securities to be so redeemed. In case any Security
is to be redeemed in part only, the notice that relates to such Security shall
state the portion of the principal amount thereof to be redeemed, and shall
state that on and after the redemption date, upon surrender of such Security, a
new Security or Securities of such series in principal amount equal to the
unredeemed portion thereof will be issued.

      (b) If less than all the Securities of a series are to be redeemed, the
      Company shall give the Trustee at least 45 days' notice in advance of the
      date fixed for redemption as to the aggregate principal amount of
      Securities of the series to be redeemed, and thereupon the Trustee shall
      select, by lot or in such other manner as it shall deem appropriate and
      fair in its discretion and that may provide for the selection of a portion
      or portions (equal to one thousand U.S. dollars ($1,000) or any integral
      multiple thereof) of the principal amount of such Securities of a
      denomination larger than $1,000, the Securities to be redeemed and shall
      thereafter promptly notify the Company in writing of the numbers of the
      Securities to be redeemed, in whole or in part.

The Company may, if and whenever it shall so elect, by delivery of instructions
signed on its behalf by its President or any Vice President, instruct the
Trustee or any paying agent to call all or any part of the Securities of a
particular series for redemption and to give notice of redemption in the manner
set forth in this Section, such notice to be in the name of the Company or its
own name as the Trustee or such paying agent may deem advisable. In any case in
which notice of redemption is to be given by the Trustee or any such paying
agent, the Company shall deliver or cause to be delivered to, or permit to
remain with, the Trustee or such paying agent, as the case may be, such Security
Register, transfer books or other records, or suitable copies or extracts
therefrom, sufficient to enable the Trustee or such paying agent to give any
notice by mail that may be required under the provisions of this Section.

                                      -14-
<PAGE>

SECTION 3.03  Payment Upon Redemption.

      (a) If the giving of notice of redemption shall have been completed as
      above provided, the Securities or portions of Securities of the series to
      be redeemed specified in such notice shall become due and payable on the
      date and at the place stated in such notice at the applicable redemption
      price, together with interest accrued to the date fixed for redemption and
      interest on such Securities or portions of Securities shall cease to
      accrue on and after the date fixed for redemption, unless the Company
      shall default in the payment of such redemption price and accrued interest
      with respect to any such Security or portion thereof. On presentation and
      surrender of such Securities on or after the date fixed for redemption at
      the place of payment specified in the notice, said Securities shall be
      paid and redeemed at the applicable redemption price for such series,
      together with interest accrued thereon to the date fixed for redemption
      (but if the date fixed for redemption is an interest payment date, the
      interest installment payable on such date shall be payable to the
      registered holder at the close of business on the applicable record date
      pursuant to Section 2.03).

      (b) Upon presentation of any Security of such series that is to be
      redeemed in part only, the Company shall execute and the Trustee shall
      authenticate and the office or agency where the Security is presented
      shall deliver to the holder thereof, at the expense of the Company, a new
      Security of the same series of authorized denominations in principal
      amount equal to the unredeemed portion of the Security so presented.

SECTION 3.04  Sinking Fund.

      The provisions of Sections 3.04, 3.05 and 3.06 shall be applicable to

any sinking fund for the retirement of Securities of a series, except as
otherwise specified as contemplated by Section 2.01 for Securities of such
series.

The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment," and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment". If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 3.05. Each sinking fund payment shall be applied to the redemption of
Securities of any series as provided for by the terms of Securities of such
series.

SECTION 3.05  Satisfaction of Sinking Fund Payments with Securities.

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

                                      -15-
<PAGE>

the Trustee at the redemption price specified in such Securities for redemption
through operation of the sinking fund and the amount of such sinking fund
payment shall be reduced accordingly.

SECTION 3.06  Redemption of Securities for Sinking Fund.

Not less than 45 days prior to each sinking fund payment date for any series of
Securities, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of the series, the portion thereof, if any, that is to be
satisfied by delivering and crediting Securities of that series pursuant to
Section 3.05 and the basis for such credit and will, together with such
Officers' Certificate, deliver to the Trustee any Securities to be so delivered.
Not less than 30 days before each such sinking fund payment date the Trustee
shall select the Securities to be redeemed upon such sinking fund payment date
in the manner specified in Section 3.02 and cause notice of the redemption
thereof to be given in the name of and at the expense of the Company in the
manner provided in Section 3.02. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Section 3.03.

                                  ARTICLE IV

                                   COVENANTS

SECTION 4.01  Payment of Principal, Premium and Interest.

The Company will duly and punctually pay or cause to be paid the principal of
(and premium, if any) and interest on the Securities of that series at the time
and place and in the manner provided herein and established with respect to such
Securities.

SECTION 4.02  Maintenance of Office or Agency.

So long as any series of the Securities remain Outstanding, the Company agrees
to maintain an office or agency in the Borough of Manhattan, the City and State
of New York, with respect to each such series and at such other location or
locations as may be designated as provided in this Section 4.02, where (i)
Securities of that series may be presented for payment, (ii) Securities of that
series may be presented as herein above authorized for registration of transfer
and exchange, and (iii) notices and demands to or upon the Company in respect of
the Securities of that series and this Indenture may be given or served, such
designation to continue with respect to such office or agency until the Company
shall, by written notice signed by its President or a Vice President and
delivered to the trustee, designate some other office or agency for such
purposes or any of them. 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, notices and demands may be made or served
at the Corporate Trust Office of the Trustee, and the Company hereby appoints
the Trustee as its agent to receive all such presentations, notices and demands.

SECTION 4.03  Paying Agents.

      (a) If the Company shall appoint one or more paying agents for all or any
      series of the Securities, other than the Trustee, the Company will cause
      each such paying agent to execute

                                      -16-
<PAGE>

and deliver to the Trustee an instrument in which such agent shall agree with
the Trustee, subject to the provisions of this Section:

            (1)   that it will hold all sums held by it as such agent for the
            payment of the principal of (and premium, if any) or interest on the
            Securities of that series (whether such sums have been paid to it by
            the Company or by any other obligor of such Securities) in trust for
            the benefit of the Persons entitled thereto;

            (2)   that it will give the Trustee notice of any failure by the
            Company (or by any other obligor of such Securities) to make any
            payment of the principal of (and premium, if any) or interest on the
            Securities of that series when the same shall be due and payable;

            (3)   that it will, at any time during the continuance of any
            failure referred to in the preceding paragraph (a)(2) above, upon
            the written request of the Trustee, forthwith pay to the Trustee all
            sums so held in trust by such paying agent; and

            (4)   that it will perform all other duties of paying agent as set
            forth in this Indenture.

      (b) If the Company shall act as its own paying agent with respect to any
      series of the Securities, it will on or before each due date of the
      principal of (and premium, if any) or interest on Securities of that
      series, set aside, segregate and hold in trust for the benefit of the
      Persons entitled thereto a sum sufficient to pay such principal (and
      premium, if any) or interest so becoming due on Securities of that series
      until such sums shall be paid to such Persons or otherwise disposed of as
      herein provided and will promptly notify the Trustee of such action, or
      any failure (by it or any other obligor on such Securities) to take such
      action. Whenever the Company shall have one or more paying agents for any
      series of Securities, it will, prior to each due date of the principal of
      (and premium, if any) or interest on any Securities of that series,
      deposit with the paying agent a sum sufficient to pay the principal (an
      premium, if any) or interest so becoming due, such sum to be held in trust
      for the benefit of the Persons entitled to such principal, premium or
      interest, and (unless such paying agent is the Trustee) the Company will
      promptly notify the Trustee of this action or failure so to act.

      (c) Notwithstanding anything in this Section to the contrary, (i) the
      agreement to hold sums in trust as provided in this Section is subject to
      the provisions of Section 11.05, and (ii) the Company may at any time, for
      the purpose of obtaining the satisfaction and discharge of this Indenture
      or for any other purpose, pay, or direct any paying agent to pay, to the
      Trustee all sums held in trust by the Company or such paying agent, such
      sums to be held by the Trustee upon the same terms and conditions as those
      upon which such sums were held by the Company or such paying agent; and,
      upon such payment by any paying agent to the Trustee, such paying agent
      shall be released from all further liability with respect to such money.

SECTION 4.04 Appointment to Fill Vacancy in Office of Trustee.

The Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 7.10, a Trustee, so
that there shall at all times be a Trustee hereunder.

                                      -17-
<PAGE>

SECTION 4.05 Compliance with Consolidation Provisions.

The Company will not, while any of the Securities remain Outstanding,
consolidate with or merge into any other Person, in either case where the
Company is not the survivor of such transaction, or sell or convey all or
substantially all of its property to any other company unless the provisions of
Article Ten hereof are complied with.

                                   ARTICLE V

                      SECURITYHOLDERS' LISTS AND REPORTS
                        BY THE COMPANY AND THE TRUSTEE

SECTION 5.01 Company to Furnish Trustee Names and Addresses of Securityholders.

The Company will furnish or cause to be furnished to the Trustee (a) on each
regular record date (as defined in Section 2.03) a list, in such form as the
Trustee may reasonably require, of the names and addresses of the holders of
each series of Securities as of such regular record date, provided that the
Company shall not be obligated to furnish or cause to furnish such list at any
time that the list shall not differ in any respect from the most recent list
furnished to the Trustee by the Company and (b) at such other times as the
Trustee may request in writing within 30 days after the receipt by the Company
of any such request, a list of similar form and content as of a date not more
than 15 days prior to the time such list is furnished; provided, however, that,
in either case, no such list need be furnished for any series for which the
Trustee shall be the Security Registrar.

SECTION 5.02 Preservation Of Information; Communications With Securityholders.

      (a) The Trustee shall preserve, in as current a form as is reasonably
      practicable, all information as to the names and addresses of the holders
      of Securities contained in the most recent list furnished to it as
      provided in Section 5.01 and as to the names and addresses of holders of
      Securities received by the Trustee in its capacity as Security Registrar
      (if acting in such capacity).

      (b) The Trustee may destroy any list furnished to it as provided in
      Section 5.01 upon receipt of a new list so furnished.

      (c) Securityholders may communicate as provided in Section 312(b) of the
      Trust Indenture Act with other Securityholders with respect to their
      rights under this Indenture or under the Securities.

SECTION 5.03  Reports by the Company.

      (a) The Company covenants and agrees to file with the Trustee, within 15
      days after the Company is required to file the same with the Commission,
      copies of the annual reports and of the information, documents and other
      reports (or copies of such portions of any of the foregoing as the
      Commission may from time to time by rules and regulations prescribe) that
      the Company may be required to file with the Commission pursuant to
      Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not
      required to file information, documents or reports

                                      -18-
<PAGE>

pursuant to either of such sections, then to file with the Trustee and the
Commission, in accordance with the rules and regulations prescribed from time to
time by the Commission, such of the supplementary and periodic information,
documents and reports that may be required pursuant to Section 13 of the
Exchange Act, in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations.

      (b) The Company covenants and agrees to file with the Trustee and the
      Commission, in accordance with the rules and regulations prescribed from
      to time by the Commission, 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 transmit by mail, first class
      postage prepaid, or reputable over-night delivery service that provides
      for evidence of receipt, to the Securityholders, as their names and
      addresses appear upon the Security Register, within 30 days after the
      filing thereof with the Trustee, such summaries of any information,
      documents and reports required to be filed by the Company pursuant to
      subsections (a) and (b) of this Section as may be required by rules and
      regulations prescribed from time to time by the Commission.

SECTION 5.04  Reports by the Trustee.

      (a) On or before [ ] in each year in which any of the Securities are
      Outstanding, the Trustee shall transmit by mail, first class postage
      prepaid, to the Securityholders, as their names and addresses appear upon
      the Security Register, a brief report dated as of the preceding [ ], if
      and to the extent required under Section 313(a) of the Trust Indenture
      Act.

      (b) The Trustee shall comply with Section 313(b) and 313(c) of the Trust
      Indenture Act.

      (c) A copy of each such report shall, at the time of such transmission to
      Securityholders, be filed by the Trustee with the Company, with each stock
      exchange upon which any Securities are listed (if so listed) and also with
      the Commission. The Company agrees to notify the Trustee when any
      Securities become listed on any stock exchange.

                                  ARTICLE VI

                  REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
                              ON EVENT OF DEFAULT

SECTION 6.01  Events of Default.

      (a) Whenever used herein with respect to Securities of a particular
      series, "Event of Default" means any one or more of the following events
      that has occurred and is continuing:

          (1)   the Company defaults in the payment of any installment of
          interest upon any of the Securities of that series, as and when the
          same shall become due and payable, and continuance of such default for
          a period of 90 days; provided, however, that a valid extension of

                                      -19-
<PAGE>

an interest payment period by the Company in accordance with the terms of any
indenture supplemental hereto shall not constitute a default in the payment of
interest for this purpose;

(2)   the Company defaults in the payment of the principal of (or premium, if
any, on) any of the Securities of that series as and when the same shall become
due and payable whether at maturity, upon redemption, by declaration or
otherwise, or in any payment required by any sinking or analogous fund
established with respect to that series; provided, however, that a valid
extension of the maturity of such Securities in accordance with the terms of any
indenture supplemental hereto shall not constitute a default in the payment of
principal or premium, if any;

(3)   the Company fails to observe or perform any other of its covenants or
agreements with respect to that series contained in this Indenture or otherwise
established with respect to that series of Securities pursuant to Section 2.01
hereof (other than a covenant or agreement that has been expressly included in
this Indenture solely for the benefit of one or more series of Securities other
than such series) for a period of 90 days after the date on which written notice
of such failure, requiring the same to be remedied and stating that such notice
is a "Notice of Default" hereunder, shall have been given to the Company by the
Trustee, by registered or certified mail, or to the Company and the Trustee by
the holders of at least 25% in principal amount of the Securities of that series
at the time Outstanding;

(4)   the Company pursuant to or within the meaning of any Bankruptcy Law (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 or (iv) makes a
general assignment for the benefit of its creditors; or

(5)   a court of competent jurisdiction enters an order 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 its property, or
(iii) orders the liquidation of the Company, and the order or decree remains
unstayed and in effect for 90 days.

      (b) In each and every such case, unless the principal of all the
      Securities of that series shall have already become due and payable,
      either the Trustee or the holders of not less than 25% in aggregate
      principal amount of the Securities of that series then Outstanding
      hereunder, by notice in writing to the Company (and to the Trustee if
      given by such Securityholders), may declare the principal of all the
      Securities of that series to be due and payable immediately, and upon any
      such declaration the same shall become and shall be immediately due and
      payable, notwithstanding anything contained in this Indenture or in the
      Securities of that series or established with respect to that series
      pursuant to Section 2.01 to the contrary.

      (c) At any time after the principal of the Securities of that series shall
      have been so declared due and payable, and before any judgment or decree
      for the payment of the moneys due shall have been obtained or entered as
      hereinafter provided, the holders of a majority in aggregate principal
      amount of the Securities of that series then Outstanding hereunder, by
      written notice to the Company and the Trustee, may rescind and annul such
      declaration and its consequences if: (i) the Company has paid or deposited
      with the Trustee a sum sufficient to pay all matured installments of
      interest upon all the Securities of that series and the principal of (and
      premium, if any, on) any and all Securities of that series that shall have
      become due otherwise

                                      -20-
<PAGE>

than by acceleration (with interest upon such principal and premium, if any,
and, to the extent that such payment is enforceable under applicable law, upon
overdue installments of interest, at the rate per annum expressed in the
Securities of that series to the date of such payment or deposit) and the amount
payable to the Trustee under Section 7.06, and (ii) any and all Events of
Default under the Indenture with respect to such series, other than the
nonpayment of principal on Securities of that series that shall not have become
due by their terms, shall have been remedied or waived as provided in Section
6.06.

No such rescission and annulment shall extend to or shall affect any subsequent
default or impair any right consequent thereon.

      (d)    In case the Trustee shall have proceeded to enforce any right with
      respect to Securities of that series under this Indenture and such
      proceedings shall have been discontinued or abandoned because of such
      rescission or annulment or for any other reason or shall have been
      determined adversely to the Trustee, then and in every such case, subject
      to any determination in such proceedings, the Company, and the Trustee
      shall be restored respectively to their former positions and rights
      hereunder, and all rights, remedies and powers of the Company and the
      Trustee shall continue as though no such proceedings had been taken.

SECTION 6.02  Collection of Indebtedness and Suits for Enforcement by
             Trustee.

      (a)    The Company covenants that (1) in case it shall default in the
      payment of any installment of interest on any of the Securities of a
      series, or any payment required by any sinking or analogous fund
      established with respect to that series as and when the same shall have
      become due and payable, and such default shall have continued for a period
      of 90 Business Days, or (2) in case it shall default in the payment of the
      principal of (or premium, if any, on) any of the Securities of a series
      when the same shall have become due and payable, whether upon maturity of
      the Securities of a series or upon redemption or upon declaration or
      otherwise, then, upon demand of the Trustee, the Company will pay to the
      Trustee, for the benefit of the holders of the Securities of that series,
      the whole amount that then shall have been become due and payable on all
      such Securities for principal (and premium, if any) or interest, or both,
      as the case may be, with interest upon the overdue principal (and premium,
      if any) and (to the extent that payment of such interest is enforceable
      under applicable law) upon overdue installments of interest at the rate
      per annum expressed in the Securities of that series; and, in addition
      thereto, such further amount as shall be sufficient to cover the costs and
      expenses of collection, and the amount payable to the Trustee under
      Section 7.06.

      (b)    If the Company shall fail to pay such amounts forthwith upon such
      demand, the Trustee, in its own name and as trustee of an express trust,
      shall be entitled and empowered to institute any action or proceedings at
      law or in equity for the collection of the sums so due and unpaid, and may
      prosecute any such action or proceeding to judgment or final decree, and
      may enforce any such judgment or final decree against the Company or other
      obligor upon the Securities of that series and collect the moneys adjudged
      or decreed to be payable in the manner provided by law out of the property
      of the Company or other obligor upon the Securities of that series,
      wherever situated.

                                      -21-
<PAGE>

      (c)    In case of any receivership, insolvency, liquidation, bankruptcy,
      reorganization, readjustment, arrangement, composition or judicial
      proceedings affected the Company, or its creditors or property, the
      Trustee shall have power to intervene in such proceedings and take any
      action therein that may be permitted by the court and shall (except as may
      be otherwise provided by law) be entitled to file such proofs of claim and
      other papers and documents as may be necessary or advisable in order to
      have the claims of the Trustee and of the holders of Securities of such
      series allowed for the entire amount due and payable by the Company under
      the Indenture at the date of institution of such proceedings and for any
      additional amount that may become due and payable by the Company after
      such date, and to collect and receive any moneys or other property payable
      or deliverable on any such claim, and to distribute the same after the
      deduction of the amount payable to the Trustee under Section 7.06; and any
      receiver, assignee or trustee in bankruptcy or reorganization is hereby
      authorized by each of the holders of Securities of such series to make
      such payments to the Trustee, and, in the event that the Trustee shall
      consent to the making of such payments directly to such Securityholders,
      to pay to the Trustee any amount due it under Section 7.06.

      (d)    All rights of action and of asserting claims under this Indenture,
      or under any of the terms established with respect to Securities of that
      series, may be enforced by the Trustee without the possession of any of
      such Securities, or the production thereof at any trial or other
      proceeding relative thereto, and any such suit or proceeding instituted by
      the Trustee shall be brought in its own name as trustee of an express
      trust, and any recovery of judgment shall, after provision for payment to
      the Trustee of any amounts due under Section 7.06, be for the ratable
      benefit of the holders of the Securities of such series.

In case of an Event of Default hereunder, the Trustee may in its discretion
proceed to protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in the Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.

Nothing contained herein shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Securityholder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
of that series or the rights of any holder thereof or to authorize the Trustee
to vote in respect of the claim of any Securityholder in any such proceeding.

SECTION 6.03  Application of Moneys Collected.

Any moneys collected by the Trustee pursuant to this Article with respect to a
particular series of Securities shall be applied in the following order, at the
date or dates fixed by the Trustee and, in case of the distribution of such
moneys on account of principal (or premium, if any) or interest, upon
presentation of the Securities of that series, and notation thereon the payment,
if only partially paid, and upon surrender thereof if fully paid:

                                      -22-
<PAGE>

FIRST: To the payment of costs and expenses of collection and of all amounts
payable to the Trustee under Section 7.06;

SECOND: To the payment of all Senior Indebtedness of the Company if and to the
extent required by Article Fourteen; and

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

SECTION 6.04  Limitation on Suits.

No holder of any Security of any series shall have any right by virtue or by
availing of any provision of this Indenture to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Indenture
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless (i) such holder previously shall have given to the Trustee
written notice of an Event of Default and of the continuance thereof with
respect to the Securities of such series specifying such Event of Default, as
hereinbefore provided; (ii) the holders of not less than 25% in aggregate
principal amount of the Securities of such series then Outstanding shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as trustee hereunder; (iii) such holder or holders
shall have offered to the Trustee such reasonable indemnity as it may require
against the costs, expenses and liabilities to be incurred therein or thereby;
and (iv) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity, shall have failed to institute any such action, suit or
proceeding and (v) during such 60 day period, the holders of a majority in
principal amount of the Securities of that series do not give the Trustee a
direction inconsistent with the request.

Notwithstanding anything contained herein to the contrary, any other provisions
of this Indenture, the right of any holder of any Security to receive payment of
the principal of (and premium, if any) and interest on such Security, as therein
provided, on or after the respective due dates expressed in such Security (or in
the case of redemption, on the redemption date), or to institute suit for the
enforcement of any such payment on or after such respective dates or redemption
date, shall not be impaired or affected without the consent of such holder and
by accepting a Security hereunder it is expressly understood, intended and
covenanted by the taker and holder of every Security of such series with every
other such taker and holder and the Trustee, that no one or more holders of
Securities of such series shall have any right in any manner whatsoever by
virtue or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of the holders of any other of such Securities, or to
obtain or seek to obtain priority over or preference to any other such holder,
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal, ratable and common benefit of all holders of
Securities of such series. For the protection and enforcement of the provisions
of this Section, each and every Securityholder and the Trustee shall be entitled
to such relief as can be given either at law or in equity.

SECTION 6.05  Rights and Remedies Cumulative; Delay or Omission Not Waiver.

                                      -23-
<PAGE>

      (a)    Except as otherwise provided in Section 2.07, all powers and
      remedies given by this Article to the Trustee or to the Securityholders
      shall, to the extent permitted by law, be deemed cumulative and not
      exclusive of any other powers and remedies available to the Trustee or the
      holders of the Securities, by judicial proceedings or otherwise, to
      enforce the performance or observance of the covenants and agreements
      contained in this Indenture or otherwise established with respect to such
      Securities.

      (b)    No delay or omission of the Trustee or of any holder of any of the
      Securities to exercise any right or power accruing upon any Event of
      Default occurring and continuing as aforesaid shall impair any such right
      or power, or shall be construed to be a waiver of any such default or on
      acquiescence therein; and, subject to the provisions of Section 6.04,
      every power and remedy given by this Article or by law to the Trustee or
      the Securityholders may be exercised from time to time, and as often as
      shall be deemed expedient, by the Trustee or by the Securityholders.

SECTION 6.06  Control by Securityholders.

The holders of a majority in aggregate principal amount of the Securities of any
series at the time Outstanding, determined in accordance with Section 8.01,
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee with respect to such series; provided, however,
that such direction shall not be in conflict with any rule of law or with this
Indenture or be unduly prejudicial to the rights of holders of Securities of any
other series at the time Outstanding determined in accordance with Section 8.01.
Subject to the provisions of Section 7.01, the Trustee shall have the right to
decline to follow any such direction if the Trustee in good faith shall, by a
Responsible Officer or Officers of the Trustee, determine that the proceeding so
directed would involve the Trustee in personal liability. The holders of a
majority in aggregate principal amount of the Securities of any series at the
time Outstanding affected thereby, determined in accordance with Section 8.01,
may on behalf of the holders of all of the Securities of such series waive any
past default in the performance of any of the covenants contained herein or
established pursuant to Section 2.01 with respect to such series and its
consequences, except a default in the payment of the principal of, or premium,
if any, or interest on, any of the Securities of that series as and when the
same shall become due by the terms of such Securities otherwise than by
acceleration (unless such default has been cured and a sum sufficient to pay all
matured installments of interest and principal and any premium has been
deposited with the Trustee (in accordance with Section 6.01(c)). Upon any such
waiver, the default covered thereby shall be deemed to be cured for all purposes
of this Indenture and the Company, the Trustee and the holders of the Securities
of such series shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other default
or impair any right consequent thereon.

SECTION 6.07  Undertaking to Pay Costs.

All parties to this Indenture agree, and each holder of any Securities by such
holder's acceptance thereof shall be deemed to have agreed, that any court may
in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken or omitted by it as Trustee, the filing by any party litigant in

                                      -24-
<PAGE>

such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Securityholder, or group of
Securityholders, holding more than 10% in aggregate principal amount of the
Outstanding Securities of any series, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of (or
premium, if any) or interest on any Security of such series, on or after the
respective due dates expressed in such Security or established pursuant to this
Indenture.

                                  ARTICLE VII

                            CONCERNING THE TRUSTEE

SECTION 7.01  Certain Duties and Responsibilities of Trustee.

      (a)    The Trustee, prior to the occurrence of an Event of Default with
      respect to the Securities of a series and after the curing of all Events
      of Default with respect to the Securities of that series that may have
      occurred, shall undertake to perform with respect to the Securities of
      such series such duties and only such duties as are specifically set forth
      in this Indenture, and no implied covenants shall be read into this
      Indenture against the Trustee. In case an Event of Default with respect to
      the Securities of a series has occurred (that has not been cured or
      waived), the Trustee shall exercise with respect to Securities of that
      series such of the rights and powers vested in it by this Indenture, and
      use the same degree of care and skill in their exercise, as a prudent man
      would exercise or use under the circumstances in the conduct of his own
      affairs.

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

            (1)    prior to the occurrence of an Event of Default with respect
            to the Securities of a series and after the curing or waiving of all
            such Events of Default with respect to that series that may have
            occurred:

the duties and obligations of the Trustee shall with respect to the Securities
of such series be determined solely by the express provisions of this Indenture,
and the Trustee shall not be liable with respect to the Securities of such
series except for the performance of such duties and obligations as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and in the
absence of bad faith on the part of the Trustee, the Trustee may with respect to
the Securities of such series conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such certificates or
opinions that by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirement of this Indenture;

                                      -25-
<PAGE>

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

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

            (4)    None of the provisions contained in this Indenture shall
            require the Trustee to expend or risk its own funds or otherwise
            incur personal financial liability in the performance of any of its
            duties or in the exercise of any of its rights or powers, if there
            is reasonable ground for believing that the repayment of such funds
            or liability is not reasonably assured to it under the terms of this
            Indenture or adequate indemnity against such risk is not reasonably
            assured to it.

SECTION 7.02  Certain Rights of Trustee.

      Except as otherwise provided in Section 7.01:

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

      (b)    Any request, direction, order or demand of the Company mentioned
      herein shall be sufficiently evidenced by a Board Resolution or an
      instrument signed in the name of the Company, by the President or any Vice
      President and by the Secretary or an Assistant Secretary or the Treasurer
      or an Assistant Treasurer thereof (unless other evidence in respect
      thereof is specifically prescribed herein);

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

      (d)    The Trustee shall be under no obligation to exercise any of the
      rights or powers vested in it by this Indenture at the request, order or
      direction of any of the Securityholders, pursuant to the provisions of
      this Indenture, unless such Securityholders shall have offered to the
      Trustee reasonable security or indemnity against the costs, expenses and
      liabilities that may be incurred therein or thereby; nothing contained
      herein shall, however, relieve the Trustee of the obligation, upon the
      occurrence of an Event of Default with respect to a series of the
      Securities (that has not been cured or waived) to exercise with respect to
      Securities of that series such of the rights and powers vested in it by
      this Indenture, and to use the same degree of care and skill in their
      exercise, as a prudent man would exercise or use under the circumstances
      in the conduct of his own affairs;

                                      -26-
<PAGE>

      (e)    The Trustee shall not be liable for any action taken or omitted to
      be taken by it in good faith and believed by it to be authorized or within
      the discretion or rights or powers conferred upon it by this Indenture;

      (f)    The Trustee shall not be bound to make any investigation into the
      facts or matters stated in any resolution, certificate, statement,
      instrument, opinion, report, notice, request, consent, order, approval,
      bond, security, or other papers or documents, unless requested in writing
      so to do by the holders of not less than a majority in principal amount of
      the Outstanding Securities of the particular series affected thereby
      (determined as provided in Section 8.04); provided, however, that if the
      payment within a reasonable time to the Trustee of the costs, expenses or
      liabilities likely to be incurred by it in the making of such
      investigation is, in the opinion of the Trustee, not reasonably assured to
      the Trustee by the security afforded to it by the terms of this Indenture,
      the Trustee may require reasonable indemnity against such costs, expenses
      or liabilities as a condition to so proceeding. The reasonable expense of
      every such examination shall be paid by the Company or, if paid by the
      Trustee, shall be repaid by the Company upon demand; and

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

SECTION 7.03   Trustee Not Responsible for Recitals or Issuance or
               Securities.

      (a)    The recitals contained herein and in the Securities shall be taken
      as the statements of the Company, and the Trustee assumes no
      responsibility for the correctness of the same.

      (b)    The Trustee makes no representations as to the validity or
      sufficiency of this Indenture or of the Securities.

      (c)    The Trustee shall not be accountable for the use or application by
      the Company of any of the Securities or of the proceeds of such
      Securities, or for the use or application of any moneys paid over by the
      Trustee in accordance with any provision of this Indenture or established
      pursuant to Section 2.01, or for the use or application of any moneys
      received by any paying agent other than the Trustee.

SECTION 7.04  May Hold Securities.

The Trustee or any paying agent or Security Registrar, in its individual or any
other capacity, may become the owner or pledgee of Securities with the same
rights it would have if it were not Trustee, paying agent or Security Registrar.

SECTION 7.05  Moneys Held in Trust.

      Subject to the provisions of Section 11.05, all moneys received by the

Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received, but need not be segregated from other
funds except to the extent required by law. The

                                      -27-
<PAGE>

Trustee shall be under no liability for interest on any moneys received by it
hereunder except such as it may agree with the Company to pay thereon.

SECTION 7.06  Compensation and Reimbursement.

      (a)    The Company covenants and agrees to pay to the Trustee, and the
      Trustee shall be entitled to, such reasonable compensation (which shall
      not be limited by any provision of law in regard to the compensation of a
      trustee of an express trust), as the Company, and the Trustee may from
      time to time agree in writing, for all services rendered by it in the
      execution of the trusts hereby created and in the exercise and performance
      of any of the powers and duties hereunder of the Trustee, and, except as
      otherwise expressly provided herein, the Company will pay or reimburse the
      Trustee upon its request for all reasonable expenses, disbursements and
      advances incurred or made by the Trustee in accordance with any of the
      provisions of this Indenture (including the reasonable compensation and
      the expenses and disbursements of its counsel and of all Persons not
      regularly in its employ) except any such expense, disbursement or advance
      as may arise from its negligence or bad faith. The Company also covenants
      to indemnify the Trustee (and its officers, agents, directors and
      employees) for, and to hold it harmless against, any loss, liability or
      expense incurred without negligence or bad faith on the part of the
      Trustee and arising out of or in connection with the acceptance or
      administration of this trust, including the costs and expenses of
      defending itself against any claim of liability in the premises.

      (b)    The obligations of the Company under this Section to compensate and
      indemnify the Trustee and to pay or reimburse the Trustee for expenses,
      disbursements and advances shall constitute additional indebtedness
      hereunder. Such additional indebtedness shall be secured by a lien prior
      to that of the Securities upon all property and funds held or collected by
      the Trustee as such, except funds held in trust for the benefit of the
      holders of particular Securities.

SECTION 7.07  Reliance on Officers' Certificate.

      Except as otherwise provided in Section 7.01, whenever in the

administration of the provisions of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or
suffering or omitting to take any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to the
Trustee and such certificate, in the absence of negligence or bad faith on the
part of the Trustee, shall be full warrant to the Trustee for any action taken,
suffered or omitted to be taken by it under the provisions of this Indenture
upon the faith thereof.

SECTION 7.08  Disqualification; Conflicting Interests.

If the Trustee has or shall acquire any "conflicting interest" within the
meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the
Company shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.

SECTION 7.09  Corporate Trustee Required; Eligibility.

                                      -28-
<PAGE>

There shall at all times be a Trustee with respect to the Securities issued
hereunder which shall at all times be a corporation organized and doing business
under the laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or other Person permitted to
act as trustee by the Commission, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least 50
million U.S. dollars ($50,000,000), and subject to supervision or examination by
Federal, State, Territorial, or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. The Company may not, nor
may any Person directly or indirectly controlling, controlled by, or under
common control with the Company, serve as Trustee. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign immediately in the manner and with the effect
specified in Section 7.10.

SECTION 7.10  Resignation and Removal; Appointment of Successor.

      (a)    The Trustee or any successor hereafter appointed, may at any time
      resign with respect to the Securities of one or more series by giving
      written notice thereof to the Company and by transmitting notice of
      resignation by mail, first class postage prepaid, to the Securityholders
      of such series, as their names and addresses appear upon the Security
      Register. Upon receiving such notice of resignation, the Company shall
      promptly appoint a successor trustee with respect to Securities of such
      series by written instrument, in duplicate, executed by order of the Board
      of Directors, one copy of which instrument shall be delivered to the
      resigning Trustee and one copy to the successor trustee. If no successor
      trustee shall have been so appointed and have accepted appointment within
      30 days after the mailing of such notice of resignation, the resigning
      Trustee may petition any court of competent jurisdiction for the
      appointment of a successor trustee with respect to Securities of such
      series, or any Securityholder of that series who has been a bona fide
      holder of a Security or Securities for at least six months may on behalf
      of himself and all others similarly situated, petition any such court for
      the appointment of a successor trustee. Such court may thereupon after
      such notice, if any, as it may deem proper and prescribe, appoint a
      successor trustee.

      (b)    In case at any time any one of the following shall occur:

      (1)    the Trustee shall fail to comply with the provisions of Section
      7.08 after written request therefor by the Company or by any
      Securityholder who has been a bona fide holder of a Security or Securities
      for at least six months; or

            (2)    the Trustee shall cease to be eligible in accordance with the
            provisions of Section 7.09 and shall fail to resign after written
            request therefor by the Company or by any such Securityholder; or

            (3)    the Trustee shall become incapable of acting, or shall be
            adjudged a bankrupt or insolvent, or commence a voluntary bankruptcy
            proceeding, or a receiver of the Trustee or of its property shall be
            appointed or consented to, or any public officer shall take

                                      -29-
<PAGE>

charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then, in any such case, the
Company may remove the Trustee with respect to all Securities and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, unless the
Trustee's duty to resign is stayed as provided herein, any Securityholder who
has been a bona fide holder of a Security or Securities for at least six months
may, on behalf of that holder and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor trustee. Such court may thereupon after such notice,
if any, as it may deem proper and prescribe, remove the Trustee and appoint a
successor trustee.

      (c)    The holders of a majority in aggregate principal amount of the
      Securities of any series at the time Outstanding may at any time remove
      the Trustee with respect to such series by so notifying the Trustee and
      the Company and may appoint a successor Trustee for such series with the
      consent of the Company.

      (d)    Any resignation or removal of the Trustee and appointment of a
      successor trustee with respect to the Securities of a series pursuant to
      any of the provisions of this Section shall become effective upon
      acceptance of appointment by the successor trustee as provided in Section
      7.11.

      (e)    Any successor trustee appointed pursuant to this Section may be
      appointed with respect to the Securities of one or more series or all of
      such series, and at any time there shall be only one Trustee with respect
      to the Securities of any particular series.

SECTION 7.11  Acceptance of Appointment By Successor.

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

      (b)    In case of the appointment hereunder of a successor trustee with
      respect to the Securities of one or more (but not all) series, the
      Company, the retiring Trustee and each successor trustee with respect to
      the Securities of one or more series shall execute and deliver an
      indenture supplemental hereto wherein each successor trustee shall accept
      such appointment and which (1) shall contain such provisions as shall be
      necessary or desirable to transfer and confirm to, and to vest in, each
      successor trustee all the rights, powers, trusts and duties of the
      retiring Trustee with respect to the Securities of that or those series to
      which the appointment of such successor trustee relates, (2) 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

                                      -30-
<PAGE>

respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust, that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee and that no Trustee shall be responsible for any act or
failure to act on the part of any other Trustee hereunder; and upon the
execution and delivery of such supplemental indenture the resignation or removal
of the retiring Trustee shall become effective to the extent provided therein,
such retiring Trustee shall with respect to the Securities of that or those
series to which the appointment of such successor trustee relates have no
further responsibility for the exercise of rights and powers or for the
performance of the duties and obligations vested in the Trustee under this
Indenture, and each such successor trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor trustee relates; but, on request of
the Company or any successor trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor trustee, to the extent contemplated by
such supplemental indenture, the property and money held by such retiring
Trustee hereunder with respect to the Securities of that or those series to
which the appointment of such successor trustee relates.

      (c)    Upon request of any such successor trustee, the Company shall
      execute any and all instruments for more fully and certainly vesting in
      and confirming to such successor trustee all such rights, powers and
      trusts referred to in paragraph (a) or (b) of this Section, as the case
      may be.

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

      (e)    Upon acceptance of appointment by a successor trustee as provided
      in this Section, the Company shall transmit notice of the succession of
      such trustee hereunder by mail, first class postage prepaid, to the
      Securityholders, as their names and addresses appear upon the Security
      Register. If the Company fails to transmit such notice within ten days
      after acceptance of appointment by the successor trustee, the successor
      trustee shall cause such notice to be transmitted at the expense of the
      Company.

SECTION 7.12  Merger, Conversion, Consolidation or Succession to Business.

Any corporation into which the Trustee may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided that such corporation shall be
qualified under the provisions of Section 7.08 and eligible under the provisions
of Section 7.09, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such

                                      -31-
<PAGE>

authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.

SECTION 7.13  Preferential Collection of Claims Against the Company.

      The Trustee shall comply with Section 311(a) of the Trust Indenture

Act, excluding any creditor relationship described in Section 311(b) of the
Trust Indenture Act. A Trustee who has resigned or been removed shall be subject
to Section 311(a) of the Trust Indenture Act to the extent included therein.

                                 ARTICLE VIII

                        CONCERNING THE SECURITYHOLDERS

SECTION 8.01  Evidence of Action by Securityholders.

Whenever in this Indenture it is provided that the holders of a majority or
specified percentage in aggregate principal amount of the Securities of a
particular series may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action the holders of such
majority or specified percentage of that series have joined therein may be
evidenced by any instrument or any number of instruments of similar tenor
executed by such holders of Securities of that series in Person or by agent or
proxy appointed in writing.

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

SECTION 8.02  Proof of Execution by Securityholders.

     Subject to the provisions of Section 7.01, proof of the execution of

any instrument by a Securityholder (such proof will not require notarization) or
his agent or proxy and proof of the holding by any Person of any of the
Securities shall be sufficient if made in the following manner:

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<PAGE>

      (a)    The fact and date of the execution by any such Person of any
      instrument may be proved in any reasonable manner acceptable to the
      Trustee.

      (b)    The ownership of Securities shall be proved by the Security
      Register of such Securities or by a certificate of the Security Registrar
      thereof.

      (c)    The Trustee may require such additional proof of any matter
      referred to in this Section as it shall deem necessary.

SECTION 8.03  Who May be Deemed Owners.

Prior to the due presentment for registration of transfer of any Security, the
Company, the Trustee, any paying agent and any Security Registrar may deem and
treat the Person in whose name such Security shall be registered upon the books
of the Company as the absolute owner of such Security (whether or not such
Security shall be overdue and notwithstanding any notice of ownership or writing
thereon made by anyone other than the Security Registrar) for the purpose of
receiving payment of or on account of the principal of, premium, if any, and
(subject to Section 2.03) interest on such Security and for all other purposes;
and neither the Company nor the Trustee nor any paying agent nor any Security
Registrar shall be affected by any notice to the contrary.

SECTION 8.04  Certain Securities Owned by Company Disregarded.

In determining whether the holders of the requisite aggregate principal amount
of Securities of a particular series have concurred in any direction, consent of
waiver under this Indenture, the Securities of that series that are owned by the
Company or any other obligor on the Securities of that series or by any Person
directly or indirectly controlling or controlled by or under common control with
the Company or any other obligor on the Securities of that series shall be
disregarded and deemed not to be Outstanding for the purpose of any such
determination, except that for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, consent or waiver, only
Securities of such series that the Trustee actually knows are so owned shall be
so disregarded. The Securities so owned that have been pledged in good faith may
be regarded as Outstanding for the purposes of this Section, if the pledgee
shall establish to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not a Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company or any such other obligor. In case of a dispute as to
such right, any decision by the Trustee taken upon the advice of counsel shall
be full protection to the Trustee.

SECTION 8.05  Actions Binding on Future Securityholders.

At any time prior to (but not after) the evidencing to the Trustee, as provided
in Section 8.01, of the taking of any action by the holders of the majority or
percentage in aggregate principal amount of the Securities of a particular
series specified in this Indenture in connection with such action, any holder of
a Security of that series that is shown by the evidence to be included in the
Securities the holders of which have consented to such action may, by filing
written notice with the Trustee, and upon proof of holding as provided in
Section 8.02, revoke such action so far as concerns such Security. Except as
aforesaid any such action taken by the

                                      -33-
<PAGE>

holder of any Security shall be conclusive and binding upon such holder and upon
all future holders and owners of such Security, and of any Security issued in
exchange therefor, on registration of transfer thereof or in place thereof,
irrespective of whether or not any notation in regard thereto is made upon such
Security. Any action taken by the holders of the majority or percentage in
aggregate principal amount of the Securities of a particular series specified in
this Indenture in connection with such action shall be conclusively binding upon
the Company, the Trustee and the holders of all the Securities of that series.

                                  ARTICLE IX

                            SUPPLEMENTAL INDENTURES

SECTION 9.01  Supplemental Indentures Without the Consent of
              Securityholders.

In addition to any supplemental indenture otherwise authorized by this
Indenture, the Company and the Trustee may from time to time and at any time
enter into an indenture or indentures supplemental hereto (which shall conform
to the provisions of the Trust Indenture Act as then in effect), without the
consent of the Securityholders, for one or more of the following purposes:

      (a)    to cure any ambiguity, defect, or inconsistency herein, in the
      Securities of any series;

      (b)    to comply with Article Ten;

      (c)    to provide for uncertificated Securities in addition to or in place
      of certificated Securities;

      (d)    to add to the covenants of the Company for the benefit 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 solely for the benefit of such
      series) or to surrender any right or power herein conferred upon the
      Company;

      (e)    to add to, delete from, or revise the conditions, limitations, and
      restrictions on the authorized amount, terms, or purposes of issue,
      authentication, and delivery of Securities, as herein set forth;

      (f)    to make any change that does not adversely affect the rights of any
      Securityholder in any material respect; or

      (g)    to provide for the issuance of and establish the form and terms and
      conditions of the Securities of any series as provided in Section 2.01, 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.

The Trustee is hereby authorized to join with the Company in the execution of
any such supplemental 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 any such

                                      -34-
<PAGE>

supplemental indenture that affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.

Any supplemental indenture authorized by the provisions of this Section may be
executed by the Company and the Trustee without the consent of the holders of
any of the Securities at the time Outstanding, notwithstanding any of the
provisions of Section 9.02.

SECTION 9.02  Supplemental Indentures With Consent of Securityholders.

      With the consent (evidenced as provided in Section 8.01) of the holders

of not less than a majority in aggregate principal amount of the Securities of
each series affected by such supplemental indenture or indentures at the time
Outstanding, the Company, when authorized by Board Resolutions, and the Trustee
may from time to time and at any time enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act as then in effect) for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of any supplemental indenture or of modifying in any manner not covered by
Section 9.01 the rights of the holders of the Securities of such series under
this Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the holders of each Security then Outstanding and
affected thereby, (i) extend the fixed maturity of any Securities of any series,
or reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any premium payable upon the redemption
thereof or (ii) reduce the aforesaid percentage of Securities, the holders of
which are required to consent to any such supplemental indenture.

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

SECTION 9.03  Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture pursuant to the provisions of
this Article or of Section 10.01, this Indenture shall, with respect to such
series, be and be deemed to be modified and amended in accordance therewith and
the respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Company and the holders of Securities
of the series affected thereby shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and amendments,
and all the terms and conditions of any such supplemental indenture shall be and
be deemed to be part of the terms and conditions of this Indenture for any and
all purposes.

SECTION 9.04  Securities Affected by Supplemental Indentures.

Securities of any series, affected by a supplemental indenture, authenticated
and delivered after the execution of such supplemental indenture pursuant to the
provisions of this Article or of Section 10.01, may bear a notation in form
approved by the Company, provided such form meets the requirements of any
exchange upon which such series may be listed, as to any matter provided for in
such supplemental indenture. If the Company shall so determine, new Securities
of that series so modified as to conform, in the opinion of the Board of
Directors of the Company, to any modification of this Indenture contained in any
such supplemental indenture

                                      -35-
<PAGE>

may be prepared by the Company, authenticated by the Trustee and delivered in
exchange for the Securities of that series then Outstanding.

SECTION 9.05  Execution of Supplemental Indentures.

Upon the request of the Company, accompanied by its Board Resolutions
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Securityholders required
to consent thereto as aforesaid, the Trustee shall join with the Company in the
execution of such supplemental indenture unless such 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 supplemental indenture. The Trustee, subject to the
provisions of Section 7.01, may receive an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant to this Article is
authorized or permitted by, and conforms to, the terms of this Article and that
it is proper for the Trustee under the provisions of this Article to join in the
execution thereof; provided, however, that such Opinion of Counsel need not be
provided in connection with the execution of a supplemental indenture that
establishes the terms of a series of Securities pursuant to Section 2.01 hereof.

Promptly after the execution by the Company and the Trustee of any supplemental
indenture pursuant to the provisions of this Section, the Trustee shall transmit
by mail, first class postage prepaid, a notice, setting forth in general terms
the substance of such supplemental indenture, to the Securityholders of all
series affected thereby as their names and addresses appear upon the Security
Register. Any failure of the Trustee to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture.

                                   ARTICLE X

                               SUCCESSOR ENTITY

SECTION 10.01  Company May Consolidate, Etc.

Nothing contained in this Indenture or in any of the Securities shall prevent
any consolidation or merger of the Company with or into any other Person
(whether or not affiliated with the Company) or successive consolidations or
mergers in which the Company or its successor or successors shall be a party or
parties, or shall prevent any sale, conveyance, transfer or other disposition of
the property of the Company or its successor or successors as an entirety, or
substantially as an entirety, to any other corporation (whether or not
affiliated with the Company or its successor or successors) authorized to
acquire and operate the same; provided, however, the Company hereby covenants
and agrees that, upon any such consolidation or merger (in each case, if the
Company is not the survivor of such transaction), sale, conveyance, transfer or
other disposition, the due and punctual payment of the principal of (premium, if
any) and interest on all of the Securities of all series in accordance with the
terms of each series, according to their tenor and the due and punctual
performance and observance of all the covenants and conditions of this Indenture
with respect to each series or established with respect to such series pursuant
to Section 2.01 to be kept or performed by the Company shall be expressly
assumed, by

                                      -36-
<PAGE>

supplemental indenture (which shall conform to the provisions of the Trust
Indenture Act, as then in effect) satisfactory in form to the Trustee executed
and delivered to the Trustee by the entity formed by such consolidation, or into
which the Company shall have been merged, or by the entity which shall have
acquired such property.

SECTION 10.02  Successor Entity Substituted.

      (a)    In case of any such consolidation, merger, sale, conveyance,
      transfer or other disposition and upon the assumption by the successor
      entity by supplemental indenture, executed and delivered to the Trustee
      and satisfactory in form to the Trustee, of the due and punctual payment
      of the principal of, premium, if any, and interest on all of the
      Securities of all series Outstanding and the due and punctual performance
      of all of the covenants and conditions of this Indenture or established
      with respect to each series of the Securities pursuant to Section 2.01 to
      be performed by the Company with respect to each series, such successor
      entity shall succeed to and be substituted for the Company with the same
      effect as if it had been named as the Company herein, and thereupon the
      predecessor corporation shall be relieved of all obligations and covenants
      under this Indenture and the Securities.

      (b)    In case of any such consolidation, merger, sale, conveyance,
      transfer or other disposition such changes in phraseology and form (but
      not in substance) may be made in the Securities thereafter to be issued as
      may be appropriate.

      (c)    Nothing contained in this Article shall require any action by the
      Company in the case of a consolidation or merger of any Person into the
      Company where the Company is the survivor of such transaction, or the
      acquisition by the Company, by purchase or otherwise, of all or any part
      of the property of any other Person (whether or not affiliated with the
      Company).

SECTION 10.03  Evidence of Consolidation, Etc. to Trustee.

      The Trustee, subject to the provisions of Section 7.01, may receive an

Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, conveyance, transfer or other disposition, and any such assumption, comply
with the provisions of this Article.

                                  ARTICLE XI

                          SATISFACTION AND DISCHARGE

SECTION 11.01  Satisfaction and Discharge of Indenture.

If at any time: (a) the Company shall have delivered to the Trustee for
cancellation all Securities of a series theretofore authenticated (other than
any Securities that shall have been destroyed, lost or stolen and that shall
have been replaced or paid as provided in Section 2.07) and Securities for whose
payment money or Governmental Obligations have theretofore been deposited in
trust or segregated and held in trust by the Company (and thereupon repaid to
the Company or discharged from such trust, as provided in Section 11.05); or (b)
all such Securities of a particular series not theretofore delivered to the
Trustee for cancellation shall have become due and payable, or are by their
terms to become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the

                                      -37-
<PAGE>

giving of notice of redemption, and the Company shall deposit or cause to be
deposited with the Trustee as trust funds the entire amount in moneys or
Governmental Obligations sufficient or a combination thereof, sufficient in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay at
maturity or upon redemption all Securities of that series not theretofore
delivered to the Trustee for cancellation, including principal (and premium, if
any) and interest due or to become due to such date of maturity or date fixed
for redemption, as the case may be, and if the Company shall also pay or cause
to be paid all other sums payable hereunder with respect to such series by the
Company then this Indenture shall thereupon cease to be of further effect with
respect to such series except for the provisions of Sections 2.03, 2.05, 2.07,
4.01, 4.02, 4.03 and 7.10, that shall survive until the date of maturity or
redemption date, as the case may be, and Sections 7.06 and 11.05, that shall
survive to such date and thereafter, and the Trustee, on demand of the Company
and at the cost and expense of the Company shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture with respect to
such series.

SECTION 11.02  Discharge of Obligations.

If at any time all such Securities of a particular series not heretofore
delivered to the Trustee for cancellation or that have not become due and
payable as described in Section 11.01 shall have been paid by the Company by
depositing irrevocably with the Trustee as trust funds moneys or an amount of
Governmental Obligations sufficient to pay at maturity or upon redemption all
such Securities of that series not theretofore delivered to the Trustee for
cancellation, including principal (and premium, if any) and interest due or to
become due to such date of maturity or date fixed for redemption, as the case
may be, and if the Company shall also pay or cause to be paid all other sums
payable hereunder by the Company with respect to such series, then after the
date such moneys or Governmental Obligations, as the case may be, are deposited
with the Trustee the obligations of the Company under this Indenture with
respect to such series shall cease to be of further effect except for the
provisions of Sections 2.03, 2.05, 2.07, 4,01, 4.02, 4,03, 7.06, 7.10 and 11.05
hereof that shall survive until such Securities shall mature and be paid.
Thereafter, Sections 7.06 and 11.05 shall survive.

SECTION 11.03  Deposited Moneys to be Held in Trust.

      All moneys or Governmental Obligations deposited with the Trustee
pursuant to Sections 11.01 or 11.02 shall be held in trust and shall be

available for payment as due, either directly or through any paying agent
(including the Company acting as its own paying agent), to the holders of the
particular series of Securities for the payment or redemption of which such
moneys or Governmental Obligations have been deposited with the Trustee.

SECTION 11.04  Payment of Moneys Held by Paying Agents.

In connection with the satisfaction and discharge of this Indenture all moneys
or Governmental Obligations then held by any paying agent under the provisions
of this Indenture shall, upon demand of the Company, be paid to the Trustee and
thereupon such paying agent shall be released from all further liability with
respect to such moneys or Governmental Obligations.

                                      -38-
<PAGE>

SECTION 11.05  Repayment to Company.

Any moneys or Governmental Obligations deposited with any paying agent or the
Trustee, or then held by the Company, in trust for payment of principal of or
premium or interest on the Securities of a particular series that are not
applied but remain unclaimed by the holders of such Securities for at least two
years after the date upon which the principal of (and premium, if any) or
interest on such Securities shall have respectively become due and payable,
shall be repaid to the Company on May 31 of each year or (if then held by the
Company) shall be discharged from such trust; and thereupon the paying agent and
the Trustee shall be released from all further liability with respect to such
moneys or Governmental Obligations, and the holder of any of the Securities
entitled to receive such payment shall thereafter, as an unsecured general
creditor, look only to the Company for the payment thereof.

                                  ARTICLE XII

               IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
                                 AND DIRECTORS

SECTION 12.01  No Recourse.

No recourse under or upon any obligation, covenant or agreement of this
Indenture, or of any Security, or for any claim based thereon or otherwise in
respect thereof, shall be had against any incorporator, stockholder, officer or
director, past, present or future as such, of the Company or of any predecessor
or successor corporation, either directly or through the Company or any such
predecessor or successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that this Indenture and the obligations
issued hereunder are solely corporate obligations, and that no such personal
liability whatever shall attach to, or is or shall be incurred by, the
incorporators, stockholders, officers or directors as such, of the Company or of
any predecessor or successor corporation, or any of them, because of the
creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Securities or implied therefrom; and that any and all such personal
liability of every name and nature, either at common law or in equity or by
constitution or statute, of, and any and all such rights and claims against,
every such incorporator, stockholder, officer or director as such, because of
the creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Securities or implied therefrom, are hereby expressly waived and released as
a condition of, and as a consideration for, the execution of this Indenture and
the issuance of such Securities.

                                 ARTICLE XIII

                           MISCELLANEOUS PROVISIONS

SECTION 13.01  Effect on Successors and Assigns.

                                      -39-
<PAGE>

All the covenants, stipulations, promises and agreements in this Indenture
contained by or on behalf of the Company shall bind its successors and assigns,
whether so expressed or not.

SECTION 13.02  Actions by Successor.

Any act or proceeding by any provision of this Indenture authorized or required
to be done or performed by any board, committee or officer of the Company shall
and may be done and performed with like force and effect by the corresponding
board, committee or officer of any corporation that shall at the time be the
lawful successor of the Company.

SECTION 13.03  Surrender of Company Powers.

The Company by instrument in writing executed by authority of its Board of
Directors and delivered to the Trustee may surrender any of the powers reserved
to the Company, and thereupon such power so surrendered shall terminate both as
to the Company and as to any successor corporation.

SECTION 13.04  Notices.

Except as otherwise expressly provided herein any notice or demand that by any
provision of this Indenture is required or permitted to be given or served by
the Trustee or by the holders of Securities to or on the Company may be given or
served by being deposited first class postage prepaid in a post-office letterbox
addressed (until another address is filed in writing by the Company with the
Trustee), as follows: [______________]. Any notice, election, request or demand
by the Company or any Securityholder to or upon the Trustee shall be deemed to
have been sufficiently given or made, for all purposes, if given or made in
writing at the Corporate Trust Office of the Trustee.

SECTION 13.05  Governing Law.

This Indenture and each Security shall be deemed to be a contract made under the
internal laws of the State of New York, and for all purposes shall be construed
in accordance with the laws of said State.

SECTION 13.06  Treatment of Securities as Debt.

It is intended that the Securities will be treated as indebtedness and not as
equity for federal income tax purposes. The provisions of this Indenture shall
be interpreted to further this intention.

SECTION 13.07  Compliance Certificates and Opinions.

      (a) Upon any application or demand by the Company to the Trustee to take
      any action under any of the provisions of this Indenture, the Company,
      shall furnish to the Trustee an Officers' Certificate stating that all
      conditions precedent provided for in this Indenture relating to the
      proposed action have been complied with and an Opinion of Counsel stating
      that in the opinion of such counsel all such conditions precedent have
      been complied with, except that in the case of any such application or
      demand as to which the furnishing of such documents is

                                      -40-
<PAGE>

specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.

      (b)    Each certificate or opinion provided for in this Indenture and
      delivered to the Trustee with respect to compliance with a condition or
      covenant in this Indenture shall include (1) a statement that the Person
      making such certificate or opinion has read such covenant or condition;
      (2) a brief statement as to the nature and scope of the examination or
      investigation upon which the statements or opinions contained in such
      certificate or opinion are based; (3) a statement that, in the opinion of
      such Person, he has made such examination or investigation as is necessary
      to enable him to express an informed opinion as to whether or not such
      covenant or condition has been complied with; and (4) a statement as to
      whether or not, in the opinion of such Person, such condition or covenant
      has been complied with.

SECTION 13.08  Payments on Business Days.

      Except as provided pursuant to Section 2.01 pursuant to a Board

Resolution, and as set forth in an Officers' Certificate, or established in one
or more indentures supplemental to this Indenture, in any case where the date of
maturity of interest or principal of any Security or the date of redemption of
any Security shall not be a Business Day, then payment of interest or principal
(and premium, if any) may be made on the next succeeding Business Day with the
same force and effect as if made on the nominal date of maturity or redemption,
and no interest shall accrue for the period after such nominal date.

SECTION 13.09  Conflict with Trust Indenture Act.

If and to the extent that any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by Sections 310 to 317, inclusive, of the
Trust Indenture Act, such imposed duties shall control.

SECTION 13.10  Counterparts.

This Indenture may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one
and the same instrument.

SECTION 13.11  Separability.

In case any one or more of the provisions contained in this Indenture or in the
Securities of any series shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Indenture or of such Securities,
but this Indenture and such Securities shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein or therein.

SECTION 13.12  Assignment.

The Company will have the right at all times to assign any of its rights or
obligations under this Indenture to a direct or indirect wholly- owned
Subsidiary of the Company, provided that, in the event of any such assignment,
the Company, will remain liable for all such obligations. Subject to the
foregoing, the Indenture is binding upon and inures to the benefit of

                                      -41-
<PAGE>

the parties thereto and their respective successors and assigns. This Indenture
may not otherwise be assigned by the parties thereto.

                                  ARTICLE XIV

                          SUBORDINATION OF SECURITIES

SECTION 14.01  Subordination Terms.

The payment by the Company of the principal of, premium, if any, and interest on
any series of Securities issued hereunder shall be subordinated to the extent
set forth in an indenture supplemental hereto relating to such Securities.

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

                              CURAGEN CORPORATION

                              By:_____________________________Name: Title:
                              [                ],
                              as Trustee

                              By:_____________________________Name: Title:<PAGE>

                                                                     EXHIBIT 4.1

________________________________________________________________________________

                                 THE GAP, INC.

                                      and

                          GPS (GREAT BRITAIN) LIMITED

                                      and

                               GAP (ESO) LIMITED

                                      and

                         GAP (UK DISTRIBUTION) LIMITED

                                      and

                     MOURANT & CO CAPITAL TRUSTEES LIMITED
________________________________________________________________________________

                                   TRUST DEED
                                  constituting
                 THE GAP, INC. UK EMPLOYEE STOCK PURCHASE PLAN
                                      and
                                   THE RULES
                                    thereof
________________________________________________________________________________

                   Adopted by the Board on September 6, 2000
       Approved Under Schedule 8 Finance Act 2000 by the Board of Inland
                                Revenue on [   ]
                            under Reference A1078/SY
<PAGE>

This deed is made on                     day of                   2000

BETWEEN

(1)  THE GAP, INC. whose principal office is at One Harrison Street, San
     Francisco, California 94105, USA ("the Company")

     and

(2)  GPS (GREAT BRITAIN) LIMITED whose registered office is at 200 Aldersgate
     Street, London EC1A 4JJ, England;

     and

(3)  GAP (ESO) LIMITED whose registered office is at 200 Aldersgate Street,
     London EC1A 4JJ, England;

     and

(4)  GAP (UK DISTRIBUTION) LIMITED whose registered office is at 200 Aldersgate
     Street, London EC1A 4JJ, England (together with the Company referred to as
     the "Participating Companies");

     and

(5)  MOURANT & CO CAPITAL TRUSTEES LIMITED whose registered office is at 35 New
     Bridge Street, London EC4V 6BW and referred to as the Trustees.

1.   PURPOSE

     The purpose of this Deed is to establish a trust for the employee share
     ownership plan known as The Gap, Inc. UK Employee Stock Purchase Plan ("the
     Plan") which satisfies Schedule 8 Finance Act 2000.

2.   STATUS

     The Plan consists of this Deed and the attached rules and Appendices.  The
     definitions in the rules apply to this Deed.  The Company shall from time
     to time determine which of parts A to D of the Rules shall have effect.
     Where the Company determines that part B shall have effect it shall also
     specify whether there is to be an Accumulation Period of up to 12 months,
     which shall apply equally to all Qualifying Employees in the Plan.

3.   DECLARATION OF TRUST

3.1  The Participating Companies and the Trustees have agreed that all the
     Shares and other assets which are issued to or transferred to the Trustees
     are to be held on the trusts declared by this Deed, and subject to the
     terms of the Rules.  When Shares or assets are transferred to the Trustees
     by the Company with the intention of being held as part of the Plan they
     shall be held upon the trusts and provisions of this Deed and the Rules.

                                      -2-
<PAGE>

3.2  The Trustees shall hold the Trust Fund upon the following trusts namely:

     (a)  as to Shares which have not been awarded to Participants ("Unawarded
          Shares") upon trust during the Trust Period to allocate those Shares
          in accordance with the terms of this Deed and the Rules,

     (b)  as to whole Shares or fractional Shares which have been awarded to a
          Participant ("Plan Shares") upon trust for the benefit of that
          Participant on the terms and conditions set out in the Rules,

     (c)  as to Partnership Share Money upon trust to purchase Shares for the
          benefit of the contributing Qualifying Employee in accordance with the
          Rules, and

     (d)  as to other assets ("Surplus Assets") upon trust to use them to
          purchase further Shares to be held on the trusts declared in (a)
          above, at such time during the Trust Period and on such terms as the
          Trustees in their absolute discretion think fit.

3.3  The income of Unawarded Shares and Surplus Assets shall be accumulated by
     the trustees and added to, and held upon the trusts applying to, Surplus
     Assets.

3.4  The income of Plan Shares and Partnership Share Money shall be dealt with
     in accordance with the Rules.

3.5  The perpetuity period in respect of the trusts and powers declared by this
     Deed and the Rules shall be the period of 80 years from the date of this
     Deed.

4.   NUMBER OF TRUSTEES

     Unless a corporate Trustee is appointed, there shall always be at least 2
     Trustees. Where there is no corporate Trustee, and the number of trustees
     falls below 2, the continuing Trustee has the power to act only to achieve
     the appointment of a new Trustee.

5.   INFORMATION

5.1  The Trustees shall be entitled to rely without further enquiry on any
     information or directions supplied by the Participating Companies in
     respect of the eligibility of any person to become or remain a Participant
     in the Plan.

5.2  Except as otherwise provided, the Trustees may in their discretion agree
     with the Company or any of the Participating Companies matters relating to
     the operation and administration of the Trust as they may consider
     advisable in the interest of the Trust and so that no person claiming an
     interest under this trust shall be entitled to question the legality or
     correctness of any arrangement or agreement made between the Company and
     any of the Participating Companies and the Trustees in relation to such
     operation or administration.

5.3  The decision of the Committee in any dispute affecting Participants or
     Participating Companies shall by final and conclusive.

                                      -3-
<PAGE>

5.4  The Trustees may employ on such terms as the Company may agree, and
     determine, the remuneration of any agent or agents to transact all or any
     business of whatsoever nature required to be done in the proper
     administration of the Trust.

6.   RESIDENCE OF TRUSTEES

     Every Trustee shall be resident in the United Kingdom.  The Company shall
     immediately remove any Trustee who ceases to be so resident and, if
     necessary, appoint a replacement.

7.   CHANGE OF TRUSTEES

     The Company has the power to appoint or remove any Trustee for any reason.
     The change of Trustee, whether it is the appointment or removal shall be
     effected by resolution of the board of directors of the Company and shall
     take effect from the date that written notice of such removal is delivered
     to the Trustee.  Any Trustee may resign on no less than three month's
     notice given in writing to the Company, provided that there will be at
     least two Trustees or a corporate Trustee immediately after the retirement.

8.   INVESTMENT AND DEALING WITH TRUST ASSETS

8.1  Save as otherwise provided for by the Plan, the Trustees shall not sell or
     otherwise dispose of Plan Shares.

8.2  The Trustees shall obey any directions given by a Participant in accordance
     with the Rules in relation to his Plan Shares and any rights and income
     relating to those Shares.  In the absence of any such direction, or
     provision by the Plan, the Trustees shall take no action.

8.3  The Participating Companies shall, as soon as practicable after deduction
     from Salary, pass the Partnership Share Money to the Trustees who will put
     the money into an account with:

     (a)  an institution authorised under the Banking Act 1987;

     (b)  a building society; or

     (c)  a relevant European institution,

     until it is either used to acquire Partnership Shares on the Acquisition
     Date, or, in accordance with the Plan, returned to the individual from
     whose Salary the Partnership Share Money has been deducted.

     The Trustees shall pass on any interest arising on this invested money to
     the individual from whose Salary the Partnership Share money has been
     deducted.  The Trustees are, however, not obliged to keep monies in an
     interest bearing account.

8.4  The Trustees may either retain or sell Unawarded Shares at their absolute
     discretion. The proceeds of any sale of Unawarded Shares shall form part of
     Surplus Assets.

8.5  The Trustees shall have all the powers of investment of a beneficial owner
     in relation to Surplus Assets.

                                      -4-
<PAGE>

8.6  The Trustees shall not be under any liability to the Participating
     Companies or to current or former Qualifying Employees by reason of a
     failure to diversify investments, which results from the retention of Plan
     or Unawarded Shares.

8.7  The Trustees may delegate its powers, duties or discretions under this Deed
     or under the rules of the Plan to any persons and on any terms.  No
     delegation made under this clause shall divest the Trustees of their
     responsibilities under this Deed or under the Schedule.  The Trustees have
     absolute discretion as necessary or appropriate to administer the Plan.

     The Trustees may allow any Shares to be registered in the name of an
     appointed nominee provided that such Shares shall be registered in a
     designated account.  Such registration shall not divest the Trustees of
     their responsibilities under this Deed or the Schedule.

     The Trustees may at any time, and shall if the Company so directs, revoke
     any delegation made under this clause or require any Plan assets held by
     another person to be returned to the Trustees, or both.

9.   LOANS TO TRUSTEES

     The Trustees shall have the power to borrow money for the purpose of:

     (a)  acquiring Shares as specifically provided for in the Plan; and

     (b)  paying any other expenses properly incurred by the Trustees in
          administering the Plan.

10.  TRUSTEES' OBLIGATIONS UNDER THE PLAN

     Notice of Award of Free and Matching Shares

10.1 As soon as practicable after Free and Matching Shares have been awarded to
     a Participant, the Trustees shall give the Participant a notice stating:

     (a)  the number and description of those Shares;

     (b)  their Initial Market Value on the date of Award; and

     (c)  the Holding Period applicable to them.

     Notice of Award of Partnership Shares

10.2 As soon as practicable after any Partnership Shares have been acquired for
     a Participant, the Trustees shall give the Participant a notice stating:

     (a)  the number and description of those Shares;

     (b)  the amount of money applied by the Trustees in acquiring those shares
          on behalf of the Participant; and

     (c) the Market Value at the Acquisition Date.

                                      -5-
<PAGE>

     Notice of acquisition of Dividend Shares

10.3 As soon as practicable after Dividend Shares have been acquired on behalf
     of a Participant, the Trustees shall give the Participant a notice stating:

     (a)  the number and description of those shares;

     (b)  their Market Value on the Acquisition Date;

     (c)  the Holding Period applicable to them; and

     (d)  any amount not reinvested and carried forward for acquisition of
          further Dividend Shares.

     Notice of any foreign tax deducted before dividend paid

10.4 Where any foreign cash dividend is received in respect of Plan Shares held
     on behalf of a Participant, the Trustees shall give the Participant notice
     of the amount of any foreign tax deducted from the dividend before it was
     paid.

     Restrictions during the Holding Period

10.5 During the Holding Period the Trustees shall not dispose of any Matching or
     Dividend Shares (whether by transfer to the employee or otherwise) except
     as allowed by the following paragraphs of the Schedule:

     (a)  paragraph 32 (power of Trustees to accept general offers etc.);

     (b)  paragraph 72 (power of Trustees to raise funds to subscribe for rights
          issue);

     (c)  paragraph 73 (meeting PAYE obligations); and

     (d)  paragraph 121(5) (termination of plan: early removal of shares with
          participant's consent).

     PAYE Liability etc.

10.6 The Trustees may dispose of a Participant's Shares or accept a sum from the
     Participant in order to meet any PAYE liability in the circumstances
     provided in paragraph 95 of the Schedule (PAYE: shares ceasing to be
     subject to the Plan).

     Where the Trustees receive a sum of money which constitutes a Capital
     Receipt in respect of which a Participant is chargeable to income tax under
     Schedule E, the Trustees shall pay to the employer a sum equal to that on
     which income tax is so payable.

     The Trustees shall maintain the records necessary to enable them to carry
     out their PAYE obligations, and the PAYE obligations of the employer
     company so far as they relate to the Plan.

                                      -6-
<PAGE>

     Where the Participant becomes liable to income tax under Schedule E, Case V
     of Schedule D, or Schedule F, the Trustees shall inform the Participant of
     any facts which are relevant to determining that liability.

     Money's worth received by Trustees

10.7 The Trustees shall pay over to the Participant as soon as is practicable,
     any money or money's worth received by them in respect of or by reference
     to any shares, other than new shares within paragraph 115 of the Schedule
     (company reconstructions).

     This is subject to:

     (a)  the provisions of Part VII of the Schedule (dividend reinvestment);

     (b)  the Trustees obligations under paragraphs 95 and 96 of the   Schedule
          (PAYE: obligations to make payments to employer etc); and

     (c)  the Trustees' PAYE obligations.

     General offers etc.

10.8 If any offer, compromise, arrangement or scheme is made which affects the
     Free Shares or Matching Shares the Trustees shall notify Participants.
     Each Participant may direct how the Trustees shall act in relation to that
     Participant's Plan Shares.  In the absence of any direction, the Trustees
     shall take no action.

11.  POWER OF TRUSTEES TO RAISE FUNDS TO SUBSCRIBE FOR A RIGHTS ISSUE

     If instructed by Participants in respect of their Plan Shares the Trustees
     may dispose of some of the rights under a rights issue arising from those
     Shares to obtain enough funds to exercise the remaining rights.

     The rights referred to are the rights to buy additional shares or rights in
     the same company.

12.  POWER TO AGREE MARKET VALUE OF SHARES

     Where the Market Value of Shares falls to be determined for the purposes of
     the Schedule, the Trustees may agree with the Inland Revenue that it shall
     be determined by reference to such date or dates, or to an average of the
     values on a number of dates, as specified in the agreement.

13.  PERSONAL INTEREST OF TRUSTEES

     Trustees, and directors, officers or employees of a corporate Trustee,
     shall not be liable to account for any benefit accruing to them by virtue
     of their:

     (a)  participation in the Plan as a Qualifying Employee;

                                      -7-
<PAGE>

     (b)  ownership, in a beneficial or fiduciary capacity, of any shares or
          other securities in any Participating Company; or

     (c)  being a director or employee of any Participating Company, being a
          creditor, or being in any other contractual relationship with any such
          Company.

14.  TRUSTEES' MEETINGS

     The Trustees shall hold meetings as often as is necessary for the
     administration of the Plan.  There shall be at least two Trustees present
     at a meeting except where the sole Trustee is a corporate Trustee and the
     Trustees shall give due notice to all the Trustees of such a meeting.
     Decisions made at such a meeting by a majority of the Trustees present
     shall be binding on all the Trustees.   A written resolution signed by all
     the Trustees shall have the same effect as a resolution passed at a
     meeting.

15.  SUBSIDIARY COMPANIES

     Any Subsidiary in addition to those Subsidiaries which are already parties
     to this Deed may with the agreement of the Company become a party to this
     Deed and the Plan by executing a deed of adherence agreeing to be bound by
     this Deed and the Rules.

     Any company which ceases to be a Subsidiary shall cease to be a
     Participating Company.

16.  EXPENSES OF PLAN

     The Participating Companies shall meet the costs of the preparation and
     administration of this Plan.

17.  TRUSTEES' LIABILITY AND INDEMNITY

17.1 The Participating Companies shall jointly and severally indemnify each of
     the Trustees against any expenses and liabilities which are incurred
     through acting as a Trustee of the Plan and which cannot be recovered from
     the Trust Fund.  This does not apply to expenses and liabilities which are
     incurred through fraud, wilful wrongdoing or negligence or are covered by
     insurance under clause 17.3.

17.2 No Trustee shall be personally liable for any breach of trust (other than
     through fraud, wilful wrongdoing or negligence) over and above the extent
     to which the Trustee is indemnified by the Participating Companies in
     accordance with clause 17.1 above.

17.3 A non-remunerated Trustee may insure the Plan against any loss caused by
     him or any of his employees, officers, agents or delegates.  A non-
     remunerated Trustee may also insure himself and any of these persons
     against liability for breach of trust not involving fraud or wilful
     wrongdoing or negligence of the Trustee or the person concerned.

17.4 A Trustee who carries on a profession or business may charge for services
     rendered on a basis agreed with the Company.  A firm or company in which a
     Trustee is interested or by which he is employed may also charge for
     services rendered on this basis.

                                      -8-
<PAGE>

18.  COVENANT BY THE PARTICIPATING COMPANIES

     The Participating Companies hereby jointly and severally covenant with the
     Trustees that they shall pay to the Trustees all sums which they are
     required to pay under the Rules and shall at all times comply with the
     Rules.

19.  ACCEPTANCE OF GIFTS

     The Trustees may accept gifts of Shares and other assets which shall be
     held upon the trusts declared by clause 3.1 or 3.4 as the case may be.

20.  TRUSTEES' LIEN

     The Trustees' lien over the Trust Fund in respect of liabilities incurred
     by them in the performance of their duties (including the repayment of
     borrowed money and tax liabilities) shall be enforceable subject to the
     following restrictions:

     (a)  the Trustees shall not be entitled to resort to Partnership Share
          Money for the satisfaction of any of their liabilities; and

     (b)  the Trustees shall not be entitled to resort to Plan Shares for the
          satisfaction of their liabilities except to the extent that this is
          permitted by the Plan.

21.  AMENDMENTS TO THE PLAN

     The Committee may, with the Trustees' written consent, from time to time
     amend the Plan provided that:

     (a)  no amendment which would adversely prejudice to a material extent the
          rights attaching to any Plan Shares awarded to or acquired by
          Participants may be made nor may any alteration be made giving to
          Participating Companies a beneficial interest in Plan Shares, and

     (b)  if the Plan is approved by the Inland Revenue at the time of an
          amendment or addition, any amendment or addition to a "key feature"
          (as defined in paragraph 118(3)(a) of the Schedule) of the Plan shall
          not have effect unless and until the written approval of the Inland
          Revenue has been obtained in accordance with paragraph 4 of the
          Schedule.

22.  TERMINATION OF THE PLAN

22.1  The Plan shall terminate:

     (a)  in accordance with a Plan Termination Notice issued by the Company to
          the Trustees under paragraph 120 of the Schedule, or

     (b)  if earlier, on the expiry of the Trust Period.

22.2 The Company shall immediately upon executing a Plan Termination Notice
     provide a copy of the notice to the Trustees, the Inland Revenue and each
     individual who has Plan

                                      -9-
<PAGE>

     Shares or who has entered into a Partnership Share Agreement which was in
     force immediately before the Plan Termination Notice was issued.

22.3 Upon the issue of a Plan Termination Notice or upon the expiry of the
     Trust Period, paragraph 121 of the Schedule shall have effect.

22.4 Any Shares or other assets which remain undisposed of after the
     requirements of paragraph 121 of the Schedule have been complied with shall
     be held by the Trustees upon trust to pay or apply them to or for the
     benefit of the Participating Companies as at the termination date in such
     proportion, having regard to their respective contributions, as the
     Trustees shall in their absolute discretion think appropriate.

23.  SHARES FROM QUALIFYING SHARE OWNERSHIP TRUSTS

     Where Shares are transferred to the Trustees in accordance with
     paragraph 76 of the Schedule, they shall award such Shares only as Free and
     Matching Shares, and in priority to other available Shares.

24.  NOTICES

     Each notice, request or other communication to be given or made under the
     Plan shall be in writing and delivered or sent to the relevant party at its
     address as notified to the other party

25.  PROPER LAW

     This Deed and the trusts of this Deed shall be governed by and constructed
     in accordance with the laws of England and Wales.

IN WITNESS whereof this deed has been signed by the duly authorised
representatives of the Participating Companies and the Trustees the day and year
first before written.

     Executed as a deed     )
     on behalf of           )
     The Gap, Inc.          )
     By                     )
                              ________________________ Authorised Signatory

                              ________________________ Authorised Signatory

                                      -10-
<PAGE>

     Executed as a deed     )
     on behalf of           )
     GPS (Great Britain)    )
     Limited                )
     By                     )

                              ________________________ Director

                              ________________________ Director or
                                                       Secretary

     Executed as a deed    )
     on behalf of          )
     Gap (ESO) Limited     )
     By                    )

                              ________________________ Director

                              ________________________ Director or
                                                       Secretary

     Executed as a deed    )
     on behalf of          )
     Gap (UK Distribution) )
     Limited               )
     By                    )

                              ________________________ Director

                              ________________________ Director or
                                                       Secretary

                                      -11-
<PAGE>

     The common seal of    )
     Mourant & Co Capital  )
     Trustees Limited      )
     was hereunto affixed  )
     in the presence of:   )

                             _________________________ Director

                            __________________________ Authorised
                                                       Signatory

                                      -12-
<PAGE>

                           RULES OF THE GAP, INC. UK
                         EMPLOYEE STOCK PURCHASE PLAN

1.   DEFINITIONS

2.   PURPOSE OF THE PLAN

3.   ELIGIBILITY OF INDIVIDUALS

4.   PARTICIPATION ON SAME TERMS

5.   PARTNERSHIP SHARES (PART A)

6.   MATCHING SHARES (PART B)

7.   DIVIDEND SHARES (PART C)

8.   COMPANY RECONSTRUCTIONS

9.   RIGHTS ISSUES

10.  LEAVERS

11.  NUMBER OF SHARES

                                      -13-
<PAGE>

1.   DEFINITIONS

1.1  The following words and expressions have the following meanings:

"Accumulation Period"   in relation to Partnership Shares, the period during
                        which the Trustees accumulate a Qualifying Employee's
                        Partnership Share Money before acquiring Partnership
                        Shares or repaying it to the employee

"Acquisition Date"      (a) in relation to Partnership Shares, where there is an
                        Accumulation Period, the meaning given by paragraph
                        42(3) of the Schedule; and

                        (b) in relation to Dividend Shares, the meaning given by
                        paragraph 56(3) of the Schedule

"Associated Company"    the same meaning as in section 416 of ICTA 1988

"Award Date"            in relation to Matching Shares, the date on which such
                        Shares are awarded

"Award"                 (a) in relation to Matching Shares, the appropriation of
                        Matching Shares in accordance with the Plan; and

                        (b) in relation to Partnership Shares, the acquisition
                        of Partnership Shares on behalf of Qualifying Employees
                        in accordance with the Plan

"Capital Receipt"       the same meaning as in paragraph 79 of the Schedule

"Close Company"         the same meaning as in section 414 of ICTA 1988

"the Committee"         shall mean the committee appointed by the company's
                        Chief Executive Officer to administer the Plan

"the Company"           The Gap, Inc.

"Connected Company"     the same meaning as in paragraph 16(4) of the Schedule

"Control"               the same meaning as in section 840 of ICTA 1988

"Dealing Day"           a day on which the Stock Exchange is open for the
                        transaction of business

"the Deed"              The Gap, Inc. UK Employee Stock Purchase Plan Trust

"Dividend Shares"       Shares acquired on behalf of a Participant from
                        reinvestment of dividends under Part C of the Plan and
                        which are subject to the Plan

                                      -14-
<PAGE>

"Group Plan"              the Plan as established by The Gap, Inc., and
                          extending to its Subsidiaries which are Participating
                          Companies

"Holding Period"          (a) in relation to Matching Shares, the period
                          specified by the Company as mentioned in Rule 6.5; and

                          (b) in relation to Dividend Shares, the period of 3
                          years from the Acquisition Date

"ICTA 1988"               the Income and Corporation Taxes Act 1988

"Initial Market Value"    the Market Value of a Share on an Award Date. Where
                          the Share is subject to a restriction or risk of
                          forfeiture, the Market Value shall be determined
                          without reference to that restriction or risk

"Market Value"            in relation to Shares to be awarded under the Plan on
                          any date

                          (a) the closing price of a Share on the New York Stock
                          Exchange Composite Transactions Index; or

                          (b) the Market Value of a Share determined in
                          accordance with the provisions of Part VIII of the
                          Taxation of Chargeable Gains Act 1992 and agreed for
                          the purposes of the Plan with the Inland Revenue
                          Shares Valuation Division on/or before that day

"Matching Shares"         Shares awarded under Part B of the Plan and which are
                          subject to the Plan

"Material Interest"       the same meaning as in paragraph 15 of the Schedule

"NICs"                    National Insurance Contributions

"Participant"             an individual who has received under the Plan an Award
                          of Matching Shares or Partnership Shares, or on whose
                          behalf Dividend Shares have been acquired

"Participating Company"   the Company and such of its Subsidiaries as are
                          parties to the Deed or have executed deeds of
                          adherence to the Plan under clause 15 of the Trust
                          Deed

"Partnership Shares"      Shares awarded under Part A of the Plan and which are
                          subject to the Plan

"Partnership Share        an agreement in the terms set out in the Appendix
Agreement"

                                      -15-
<PAGE>

"Partnership Share Money"    money deducted from a Qualifying Employee's Salary
                             pursuant to a Partnership Share Agreement and held
                             by the Trustees to acquire Partnership Shares or to
                             be returned to such a person

"the Plan"                   The Gap, Inc. UK Employee Stock Purchase Plan

"Plan Shares"                (a) Matching Shares and Partnership Shares awarded
                             to Participants;

                             (b) Dividend Shares acquired on behalf of
                             Participants; and

                             (c) shares in relation to which paragraph 115(5)
                             (company reconstructions: new shares) of the
                             Schedule applies that remain subject to the Plan

"Plan Termination Notice"    a notice issued under paragraph 120 of the Schedule

"Profit Sharing Scheme"      a profit-sharing scheme approved by the Board of
                             Inland Revenue under Schedule 9 of ICTA 1988

"Qualifying Corporate Bond"  the same meaning as in section 117 of the Taxation
                             of Chargeable Gains Act 1992

"Qualifying Employee"        an employee who must be invited to participate in
                             an award in accordance with Rule 3.5 and any
                             employee who the Company has invited in accordance
                             with Rule 3.6

"Redundancy"                 the same meaning as in the Employment Rights Act
                             1996

"Relevant Employment"        employment by the Company or any Associated Company

"Retirement Age"             50

"Salary"                     the same meaning as in paragraph 48 of the Schedule

"the Schedule"               Schedule 8 to the Finance Act 2000

"Shares"                     shares of common stock in the capital of the
                             Company which comply with the conditions set out in
                             paragraph 59 of the Schedule

"the Stock Exchange"         the New York Stock Exchange

"Subsidiary"                 any company which is for the time being under the
                             Control of the Company

"Tax Year"                   a year beginning on 6 April and ending on the
                             following 5 April

                                      -16-
<PAGE>

"the Trustees"               the trustees or trustee of the Plan

"the Trust Fund"             all assets transferred to the Trustees to be held
                             on the terms of the Trust Deed and the assets from
                             time to time representing such assets, including
                             any accumulations of income

"the Trust Period"           the period of 80 years beginning with the date of
                             the Deed

1.2  References to any Act, or Part, Chapter, or section (including ICTA 1988)
     shall include any statutory modification, amendment or re-enactment of that
     Act, for the time being in force.

1.3  Words of the feminine gender shall include the masculine and vice versa and
     words in the singular shall include the plural and vice versa unless, in
     either case, the context otherwise requires or it is otherwise stated.

2.  PURPOSE OF THE PLAN

    The purpose of the Plan is to enable employees of Participating Companies to
    acquire shares in a company which give them a continuing stake in that
    company.

3.  ELIGIBILITY OF INDIVIDUALS

3.1 Subject to rule 3.4, individuals are eligible to participate in an Award
    only if:

    (a)  they are employees of a Participating Company;

    (b)  they are eligible on the date(s) set out in paragraph 13(1) of the
         Schedule; and

    (c)  they do not fail to be eligible under either or both Rules 3.2 or 3.3

3.2 Individuals are not eligible to participate in an Award of Shares if they
    have, or within the preceding twelve months have had, a Material Interest
    in:

    (a)  a Close Company whose Shares may be appropriated or acquired under the
         Plan; or

    (b)  a company which has Control of such a company or is a member of a
         consortium which owns such a company.

3.3 Individuals are not eligible to participate in an Award of Free Shares in
    any Tax Year if in that Tax Year:

    (a)  they have been awarded shares under a Profit-Sharing Scheme established
         by the Company or a Connected Company, or are to be awarded such shares
         at the same time; or

                                      -17-
<PAGE>

     (b)  they have received (or are to receive at the same time) an Award under
          another plan established by the Company or a Connected Company and
          approved under the Schedule, or if they would have received such an
          Award but for their failure to meet a performance target.

3.4  Individuals are not eligible to participate in an Award of Partnership
     Shares or Matching Shares in any Tax Year if in that Tax Year they have
     received (or are to receive at the same time) an Award under another plan
     established by the Company or a Connected Company (as defined in paragraph
     16(4) of the Schedule) and approved under the Schedule, or if they would
     have received such an Award but for their failure to meet a performance
     target.

     Employees who must be invited to participate in Awards

3.5  Individuals shall be eligible to receive an Award of shares under the Plan
     if they meet the requirements in Rule 3.1 and are chargeable to income tax
     in respect of their employment under Case I of Schedule E.

     In this case they shall be invited to participate in any Awards of
     Partnership Shares and Matching Shares, and acquisitions of Dividend
     Shares, as are set out in the Plan.

     Employees who may be invited to participate in Awards

3.6  The Company may also invite any employee who meets the requirements in Rule
     3.1 to participate in any Award of Partnership Shares or Matching Shares,
     and acquisitions of Dividend Shares, as are set out in the Plan.

4.   PARTICIPATION ON SAME TERMS

4.1  Every Qualifying Employee shall be invited to participate in an Award on
     the same terms. All who do participate in an Award shall do so on the same
     terms.

                                      -18-
<PAGE>

                                    PART A

5.   PARTNERSHIP SHARES

5.1  The Company may at any time invite every Qualifying Employee to enter into
     an agreement with the Company (a "Partnership Share Agreement") in the
     terms of the draft in the Appendix to these Rules.

5.2  Partnership Shares shall not be subject to any provision under which they
     may be forfeit.

     Maximum amount of deductions

5.3  The amount of Partnership Share Money deducted from an employee's Salary
     shall not exceed (Pounds)125 in any month or such other amount as may be
     permitted by the Schedule. If the Salary is not paid monthly, the
     (Pounds)125 limit shall be calculated proportionately.

5.4  The amount of Partnership Share Money deducted from an employee's Salary
     over an Accumulation Period shall not exceed 10% of the total of the
     payments of Salary made to such employee over that Accumulation Period or
     if there is no Accumulation Period, 10% of the Salary payment from which
     the deduction is made.

5.5  Any amount deducted in excess of that allowed by Rule 5.3 or 5.4 shall be
     paid over to the employee, subject to both deduction of income tax under
     PAYE and NICs, as soon as practicable.

     Minimum amount of deductions

5.6  The minimum amount to be deducted under the Partnership Share Agreement in
     any month shall be the same in relation to all Partnership Share Agreements
     entered into in response to invitations issued on the same occasion. It
     shall not be greater than (Pounds)10.

     Notice of possible effect of deductions on benefit entitlement

5.7  Every Partnership Share Agreement shall contain a notice under paragraph 38
     of the Schedule.

     Restriction imposed on number of Shares awarded

5.8  The Company may specify the maximum number of Shares to be included in an
     Award of Partnership Shares.

5.9  The Partnership Share Agreement shall contain an undertaking by the Company
     to notify each Qualifying Employee of any restriction on the number of
     Shares to be included in an Award.

5.10 The notification in Rule 5.9 above shall be given if there is an
     Accumulation Period, before the beginning of the Accumulation Period
     relating to the Award.

                                      -19-
<PAGE>

      Plan with Accumulation Period

5.11  If there is an Accumulation Period, the Trustees shall acquire Shares on
      behalf of the Qualifying Employee, on the Acquisition Date, using the
      Partnership Share Money.

5.12  The number of Shares acquired on behalf of each Participant shall be
      determined by reference to the lower of:

      (a)  the Market Value of the Shares at the beginning of the Accumulation
           Period; and

      (b)  the Market Value of the Shares on the Acquisition Date.

5.13  If a transaction occurs during an Accumulation Period which results in a
      new holding of Shares being equated for the purposes of capital gains tax
      with any of the Shares to be acquired under the Partnership Share
      Agreement, the employee may agree that the Partnership Share Agreement
      shall have effect after the time of that transaction as if it were an
      agreement for the purchase of shares comprised in the new holding.

      Surplus Partnership Share Money

5.14  Any surplus Partnership Share Money remaining after the acquisition of
      Shares by the Trustees:

      (a)  may, with the agreement of the Participant, be carried forward to the
           next Accumulation Period or the next deduction; and

      (b)  in any other case, shall be paid over to the Participant, subject to
           both deduction of income tax under PAYE and NICs, as soon as
           practicable.

      Withdrawal from Partnership Share Agreement

5.15  An employee may withdraw from a Partnership Share Agreement at any time by
      notice in writing to the Company. Unless a later date is specified in the
      notice, such a notice shall take effect 30 days after the Company receives
      it. Any Partnership Share Money then held on behalf of an employee shall
      be paid over to that employee as soon as practicable. This payment shall
      be subject to income tax under PAYE and NICs.

      Repayment of Partnership Share Money on withdrawal of approval or
      Termination

5.16  If approval of the Plan is withdrawn or a Plan Termination Notice is
      issued in respect of the Plan, any Partnership Share Money held on behalf
      of employees shall be repaid to them as soon as practicable, subject to
      deduction of income tax under PAYE and NICs.

      Scaling down

5.17  If the Company receives applications for Partnership Shares exceeding the
      Award maximum determined in accordance with Rule 5.8 then the following
      steps shall be taken in sequence until the excess is eliminated.

                                      -20-
<PAGE>

     Step 1.  the excess of the monthly deduction chosen by each applicant over
              (Pounds)10 shall be reduced pro rata;

     Step 2.  all monthly deductions shall be reduced to (Pounds)10;

     Step 3.  applications shall be selected by lot, each based on a monthly
              deduction of (Pounds)10.

     Each application shall be deemed to have been modified or withdrawn in
     accordance with the foregoing provisions, and each employee who has applied
     for Partnership Shares shall be notified of the change.

                                      -21-
<PAGE>

                                    PART B

6.   MATCHING SHARES

6.1  The Partnership Share Agreement sets out the basis on which a Participant
     is entitled to Matching Shares in accordance with this Part of the Rules.

     General requirements for Matching Shares

6.2  Matching Shares shall:

     (a)  be Shares of the same class and carrying the same rights as the
          Partnership Shares to which they relate;

     (b)  subject to Rule 6.4, be awarded on the same day as the Partnership
          Shares to which they relate are acquired on behalf of the Participant;
          and

     (c)  be awarded to all Participants on exactly the same basis.

     Ratio of Matching Shares to Partnership Shares

6.3  The Partnership Share Agreement shall specify the ratio of Matching Shares
     to Partnership Shares for the time being offered by the Company and that
     ratio shall not exceed 2:1. The Company may vary the ratio before
     Partnership Shares are acquired. Employees shall be notified of the terms
     of any such variation before the Partnership Shares are awarded under the
     Partnership Share Agreement.

6.4  If the Partnership Shares on that day are not sufficient to produce a whole
     Matching Share, the match shall be made when sufficient Partnership Shares
     have been acquired to allow at least one Matching Share to be appropriated.

     Holding Period for Matching Shares

6.5  The Company shall, in relation to each Award Date, specify a Holding Period
     for Matching Shares throughout which a Participant shall be bound by the
     terms of the Partnership Share Agreement.

6.6  The Holding Period shall, in relation to each Award, be a specified period
     of not less than 3 years nor more than 5 years, beginning with the Award
     Date and shall be the same for all Participants who receive an Award at the
     same time. The Holding Period shall not be increased in respect of Matching
     Shares awarded under the Plan.

6.7  Participants may during the Holding Period direct the Trustees:

     (a)  to accept an offer for any of their Matching Shares if the acceptance
          or agreement shall result in a new holding being equated with those
          original Shares for the purposes of capital gains tax; or

                                      -22-
<PAGE>

     (b)  to accept an offer of a Qualifying Corporate Bond (whether alone or
          with other assets or cash or both) for their Matching Shares if the
          offer forms part of such a general offer as is mentioned in paragraph
          (c); or

     (c)  to accept an offer of cash, with or without other assets, for their
          Matching Shares if the offer forms part of a general offer which is
          made to holders of shares of the same class as their Shares or to the
          holders of shares in the same company, and which is made in the first
          instance on a condition such that if it is satisfied the person making
          the offer shall have control of that company, within the meaning of
          section 416 of ICTA 1988; or

     (d)  to agree to a transaction affecting their Matching Shares or such of
          them as are of a particular class, if the transaction would be entered
          into pursuant to a compromise, arrangement or scheme applicable to or
          affecting;

          (i)  all of the ordinary share capital of the Company or, as the case
               may be, all the shares of the class in question; or

          (ii) all the shares, or all the shares of the class in question, which
               are held by a class of shareholders identified otherwise than by
               reference to their employment or their participation in a plan
               approved under the Schedule.

                                      -23-
<PAGE>

                                    PART C

7.   DIVIDEND SHARES

     Reinvestment of cash dividends

7.1  The Partnership Share Agreement, shall set out the rights and obligations
     of Participants receiving Dividend Shares under the Plan.

7.2  The Company may direct that any cash dividend in respect of Plan Shares
     held on behalf of Participants may be applied in acquiring further Plan
     Shares on their behalf.

7.3  Dividend Shares shall be Shares:

     (a)  of the same class and carrying the same rights as the Shares in
          respect of which the dividend is paid; and

     (b)  which are not subject to any provision for forfeiture.

7.4  The Company may decide to:

     (a)  apply all Participants' dividends, up to the limit specified in Rule
          7.6, to acquire Dividend Shares;

     (b)  to pay all dividends in cash to all Participants; or

     (c)  to offer Participants the choice of either (a) or (b) above.

7.5  The Company may revoke any direction for reinvestment of cash dividends.

7.6  The amount applied by the Trustees in acquiring Dividend Shares shall not
     exceed (Pounds)1,500 per participant in each Tax Year. For the purposes of
     this Rule, the Dividend Shares are those acquired under this Plan and those
     acquired under any other plan approved under the Schedule. In exercising
     their powers in relation to the acquisition of Dividend Shares, the
     Trustees must treat Participants fairly and equally.

7.7  If the amounts received by the Trustees exceed the limit in Rule 7.6, the
     balance shall be paid to the Participant as soon as practicable.

7.8  The Trustees shall apply all the cash dividend to acquire Shares on behalf
     of the Participant on the Acquisition Date. The number of Dividend Shares
     acquired on behalf of each Participant shall be determined by the Market
     Value of the Shares on the Acquisition Date.

     Certain amounts not reinvested to be carried forward

7.9  Subject to Rule 7.7, any amount that is not reinvested:

     (a)  because the amount of the cash dividend is insufficient to acquire a
          Share; or

                                      -24-
<PAGE>

     (b)  because there is an amount remaining after acquiring the Dividend
          Shares;

     may be retained by the Trustees and carried forward to be added to the
     amount of the next cash dividend to be reinvested.

7.10 If, during the period of three years beginning with the date on which the
     dividend was paid:

     (a)  it is not reinvested; or

     (b)  the Participant ceases to be in Relevant Employment; or

     (c)  a Plan Termination Notice is issued;

     the amount shall be repaid to the Participant as soon as practicable. On
     making such a payment, the Participant shall be provided with the
     information specified in paragraph 90 of the Schedule.

     Holding Period for Dividend Shares

7.11 The Holding Period for Dividend Shares shall be a period of 3 years,
     beginning with the Acquisition Date.

7.12 Participants may during the Holding Period direct the Trustees:

     (a)  to accept an offer for any of their Dividend Shares if the acceptance
          or agreement shall result in a new holding being equated with those
          shares for the purposes of capital gains tax; or

     (b)  to accept an offer of a Qualifying Corporate Bond (whether alone or
          with other assets or cash or both) for their Dividend Shares if the
          offer forms part of such a general offer as is mentioned in paragraph
          (c); or

     (c)  to accept an offer of cash, with or without other assets, for their
          Dividend Shares if the offer forms part of a general offer which is
          made to holders of shares of the same class as their Shares or to
          holders of shares in the same company, and which is made in the first
          instance on a condition such that if it is satisfied the person making
          the offer shall have control of that company, within the meaning of
          section 416 of ICTA 1988; or

     (d)  to agree to a transaction affecting their Dividend Shares or such of
          them as are of a particular class, if the transaction would be entered
          into pursuant to a compromise, arrangement or scheme applicable to or
          affecting;

          (i)  all of the ordinary share capital of the company or, as the case
               may be, all the shares of the class in question; or

          (ii) all the shares, or all the shares of the class in question, which
               are held by a class of shareholders identified otherwise than by
               reference to their employment or their participation in a plan
               approved under the Schedule.

                                      -25-
<PAGE>

7.13  Where a Participant is charged to tax in the event of their Dividend
      Shares ceasing to be subject to the Plan, he shall be provided with the
      information specified in paragraph 93(4) of the Schedule.

                                      -26-
<PAGE>

                                    PART D

8.   COMPANY RECONSTRUCTIONS

8.1  The following provisions of this Rule apply if there occurs in relation to
     any of a Participant's Plan Shares (referred to in this Rule as "the
     Original Holding"):

     (a)  a transaction which results in a new holding (referred to in this Rule
          as "the New Holding") being equated with the Original Holding for the
          purposes of capital gains tax; or

     (b)  a transaction which would have that result but for the fact that what
          would be the new holding consists of or includes a Qualifying
          Corporate Bond.

8.2  If an issue of Shares of any of the following description (in respect of
     which a charge to income tax arises) is made as part of a company
     reconstruction, those Shares shall be treated for the purposes of this Rule
     as not forming part of the New Holding:

     (a)  redeemable shares or securities issued as mentioned in section
          209(2)(c) of ICTA 1988;

     (b)  share capital issued in circumstances such that section 210(1) of ICTA
          1988 applies; or

     (c)  share capital to which section 249 of ICTA 1988 applies.

8.3  In this Rule:

     "Corresponding Shares" in relation to any New Shares, means the Shares in
     respect of which the New Shares are issued or which the New Shares
     otherwise represent; and

     "New Shares" means shares comprised in the New Holding which were issued in
     respect of, or otherwise represent, shares comprised in the Original
     Holding.

8.4  Subject to the following provisions of this Rule, references in this Plan
     to a Participant's Plan Shares shall be respectively construed, after the
     time of the company reconstruction, as being or, as the case may be, as
     including references to any New Shares.

8.5  For the purposes of the Plan:

     (a)  a company reconstruction shall be treated as not involving a disposal
          of Shares comprised in the Original Holding; and

     (b)  the date on which any New Shares are to be treated as having been
          appropriated to or acquired on behalf of the Participant

     shall be that on which Corresponding Shares were so appropriated or
     acquired.

                                      -27-
<PAGE>

8.6   In the context of a New Holding, any reference in this Rule to shares
      includes securities and rights of any description which form part of the
      New Holding for the purposes of Chapter II of Part IV of the Taxation of
      Chargeable Gains Act 1992.

9.    RIGHTS ISSUES

9.1   Any shares or securities allotted under clause 23 of the Trust Deed shall
      be treated as Plan Shares identical to the shares in respect of which the
      rights were conferred. They shall be treated as if they were awarded to or
      acquired on behalf of the Participant under the Plan in the same way and
      at the same time as those shares.

9.2   Rule 9.1 does not apply:

      (a)  to shares and securities allotted as the result of taking up a rights
           issue where the funds to exercise those rights were obtained
           otherwise than by virtue of the Trustees disposing of rights in
           accordance with this Rule; or

      (b)  where the rights to a share issue attributed to Plan Shares are
           different from the rights attributed to other ordinary shares of the
           company.

10.   LEAVERS

10.1  A Participant who ceases to be in Relevant Employment must remove his Plan
      Shares within 90 days of such cessation of employment. If the Trustees do
      not receive sufficient notice from the Participant for the sale or
      transfer of Plan Shares within 90 days, then the Trustee shall have the
      discretion to dispose of those shares to meet any PAYE or NIC liability on
      behalf of the Participant.

11.   NUMBER OF SHARES

11.1  Not more than One Million shares of common stock may be awarded pursuant
      to the Plan.

                                      -28-
<PAGE>

            APPENDIX  The Gap, Inc. UK Employee Stock Purchase Plan
                  ("the Plan"):  Partnership Share Agreement

<TABLE>
<CAPTION>
This agreement is between:
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<S>                                       <C>                                       <C>
Participant ("the Participant")           Company ("the Company")                   Trustees ("the Trustees")
Name:                                     Name:                                     Name : Mourant & Co Capital Trustees
Home Address:                             Registered Address:                       Limited

Payroll Number:                           Registered Number:
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</TABLE>

This agreement sets out the terms on which the Participant agrees to buy shares
and accept Matching Shares under the terms of the Plan and is subject to the
rules of the Plan.  The definitions in the Plan Rules apply to this agreement:

NOTICE TO PARTICIPANT ABOUT POSSIBLE EFFECT ON BENEFITS

Deductions from your pay to buy Partnership Shares under this agreement may
affect your entitlement to, or the level of, some contributory social security
benefits, statutory maternity pay and statutory sick pay. They may also have a
similar effect in respect of some contributory social security benefits paid to
your wife or husband.  With this agreement you should have been given
information on the effect of deductions from your pay to buy Partnership Shares
on entitlement to social security benefits, statutory sick pay and statutory
maternity pay. The effect is particularly significant if your earnings are
brought below the lower earnings limit for National Insurance purposes, and is
explained in the information: it is therefore important that you read it before
choosing to enrol.  If you have not been given a copy, ask your employer for it.
Otherwise a copy may be obtained from any office of the Inland Revenue,
Department of Social Security, or, in Northern Ireland, of the Department for
Social Development. You should take the information you have been given into
account in deciding whether to buy Partnership Shares.

                                                            -------------------
                                                            Insert amount
                                             -----------    between (Pound)10
                                               (Pound)      and (Pound)125 per
                                             -----------    month and not more
                                                            than 10% of my
PARTICIPANT                                                 salary
                                                            -------------------
1.   I agree to allow my employer to deduct the following amount per month from
     my Salary:
2.   I agree that these deductions will be used to buy Partnership Shares in The
     Gap, Inc. for me. I agree that the Trustees will accumulate my deductions
     from [Company to specify beginning and end of Accumulation Period] and buy
     Partnership Shares in The Gap, Inc. for me after the end of the
     Accumulation Period.
3.   I agree to accept Matching Shares in The Gap, Inc. awarded to me under the
     Plan and leave them in the hands of the Trustees, and not to assign, charge
     or otherwise dispose of my beneficial interest in the shares for the whole
     of the Holding Period of 3 years.
4.   I agree that all dividends paid on my shares will be used by the Trustees
     to buy more shares in The Gap, Inc. for me according to the rules of the
     Plan. I agree to accept the Dividend Shares bought for me and leave them in
     the hands of the Trustees, and not to assign, charge or otherwise dispose
     of my beneficial interest in the shares for the whole of the Holding Period
     of 3 years.
5.   I understand that shares may fall in value as well as rise.
6.   I have read this agreement and agree to be bound by it and by the rules of
     the Plan.
7.   I may specify to the Trustees the designation of one or more beneficiaries
     to receive any amounts credited to my account at the time of my death.

COMPANY

8.   The Company agrees to arrange for shares in The Gap, Inc. to be bought for
     me, according to the rules of the Plan.
9.   The Company agrees to provide one Matching Share for every seven
     Partnership Shares purchased.
10.  The Company undertakes to notify me of any restriction on the number of
     Partnership Shares available in the (or each) Award.

TRUSTEES

11.  The Trustees agree to keep my Salary deductions in [name of bank] until
     they are used to buy shares in The Gap, Inc. for me.

Signature: _______________________________      Date:    ___ / ___ /_____

 PLEASE USE BLOCK CAPITALS AND READ THE WHOLE OF THE AGREEMENT BEFORE SIGNING

                                      -29-
<PAGE>

Rights and Obligations

1.   I agree that taking part in the Plan does not affect my rights,
     entitlements and obligations under my contract of employment, and does not
     give me any rights or additional rights to compensation or damages if my
     employment ceases.

2.   I may stop the deductions at any time, or begin them again at the beginning
     of any Accumulation Period, by writing to the Trustees, but I may not make
     up any amounts missed when deductions were stopped.

3.   I agree that the deductions from my salary, or the number of shares that I
     receive may be scaled down if the limit on the number of shares set by the
     Company for this award is exceeded.

4.   I may ask the Trustees for my Partnership Shares at any time, but I may
     have to pay income tax and National Insurance Contributions when they are
     taken out of the Plan.

5.   I agree to allow the Trustees to sell some or all of my shares to pay any
     income tax and National Insurance Contributions in respect of my shares
     ceasing to be subject to the Plan, unless I provide them in advance with
     sufficient funds to pay these amounts.

6.   I agree that any deductions not used to buy shares will at the discretion
     of the Trustees be carried forward and added to the next deduction or
     Accumulation Period.

7.   If there is a rights issue, I agree to allow the Trustees to sell some of
     the rights attached to my shares in the Plan, in order to fund the exercise
     of the rights attached to other shares held by me in the Plan.

8.   I can at any time withdraw from this agreement by writing to the Trustees.
     Any unused deductions will be returned to me after the deduction of any
     necessary income tax or National Insurance Contributions.

9.   I agree that withdrawal from this agreement will not affect the terms on
     which I agreed to buy shares already held for me under the Plan.

Accumulation Period

10.  The Accumulation Period shall come to an end when [specify nature of
     event(s)], but this agreement shall continue until terminated by any party
     giving notice to the others.

11.  I may only restart deductions at the start of a new Accumulation Period.

Matching Shares

12.  The ratio of Matching Shares to Partnership Shares is 1:7 and may be varied
     by the Company giving me notice in advance.

13.  If the ratio varies, the Company will notify me before the Partnership
     Shares are bought for me.

Partnership Share Money held by Trustees

14.  The Trustees are under no obligation to keep the deductions in an interest-
     bearing account, but if they do, they will pay the interest to me.

Dividend Reinvestment

15.  Cash dividends will be used to buy more shares (Dividend Shares) for me.

16.  Any amount over (Pounds)1500 in each tax year will be paid to me.

17.  Any amount below (Pounds)1500 not used to buy shares shall be carried
     forward and added to the next cash dividend to be reinvested.

Holding Period: Dividend and Matching Shares

18.  I understand that my obligations during the Holding Period will end:

     a)   if I cease to be in Relevant Employment;
     b)   if the Company terminates the Plan in accordance with Clause 22 of the
          Deed and I have consented to the transfer of the Shares to me.

19.  I understand that my obligations under the Holding Period are subject to:

     a)   the right of the Trustees to sell my shares to meet PAYE obligations;
     b)   the Trustees accepting at my direction an offer for my shares in
          accordance with the Plan.

                                      -30-

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