Document:

EXHIBIT (4)-1

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                            HEALTHSOUTH CORPORATION,
                                   as Issuer,

                                       and

                        THE BANK OF NEW YORK, as Trustee

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

                                    INDENTURE

                         Dated as of September 25, 2000

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

              10-3/4% Senior Subordinated Notes due 2008, Series A

              10-3/4% Senior Subordinated Notes due 2008, Series B

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<PAGE>

                              CROSS-REFERENCE TABLE

<TABLE>
<CAPTION>
  TIA                                                                                  Indenture
Section                                                                                 Section
-------                                                                                --------
<S>                                                                                    <C>
310(a)(1).......................................................................       7.10
   (a)(2).......................................................................       7.10
   (a)(3).......................................................................       N.A.
   (a)(4).......................................................................       N.A
   (a)(5).......................................................................       7.10
   (b)..........................................................................       7.08; 7.10; 11.02
   (c)..........................................................................       N.A.
311(a)..........................................................................       7.11
   (b)..........................................................................       7.11
   (c)..........................................................................       N.A.
312(a)..........................................................................       2.05
   (b)..........................................................................       11.03
   (c)..........................................................................       11.03
313(a)..........................................................................       7.06
   (b)(1).......................................................................       7.06
   (b)(2).......................................................................       7.06
   (c)..........................................................................       7.06; 11.02
   (d)..........................................................................       7.06
314(a)..........................................................................       4.02; 4.08; 11.02
   (b)..........................................................................       N.A.
   (c)(1).......................................................................       11.04; 11.05
   (c)(2).......................................................................       11.04; 11.05
   (c)(3).......................................................................       N.A.
   (d)..........................................................................       N.A.
   (e)..........................................................................       11.05
   (f)..........................................................................       N.A.
315(a)..........................................................................       7.01; 7.02
   (b)..........................................................................       7.05; 11.02
   (c)..........................................................................       7.01
   (d)..........................................................................       6.05; 7.01; 7.02
   (e)..........................................................................       6.11
316(a) (last sentence)..........................................................       2.09
   (a)(1)(A)....................................................................       6.05
   (a)(1)(B)....................................................................       6.04
   (a)(2).......................................................................       8.02
   (b)..........................................................................       6.07
   (c)..........................................................................       8.04
317(a)(1).......................................................................       6.08
   (a)(2).......................................................................       6.09
   (b)..........................................................................       2.04
318(a)..........................................................................       11.01
</TABLE>

                            N.A. means Not Applicable

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NOTE: This  Cross-Reference  Table shall not, for any purpose, be deemed to be a
part of this Indenture.

<PAGE>

                                TABLE OF CONTENTS
                                -----------------

<TABLE>
<CAPTION>
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                                                                                                             ----

                                    ARTICLE 1

                                   DEFINITIONS

<S>               <C>                                                                                        <C>
Section 1.01.     Definitions.................................................................................1
Section 1.02.     Other Definitions..........................................................................14
Section 1.03.     Incorporation by Reference of Trust Indenture Act..........................................14
Section 1.04.     Rules of Construction......................................................................15

                                    ARTICLE 2

                                    THE NOTES

Section 2.01.     Dating; Incorporation of Form in Indenture.................................................15
Section 2.02.     Execution and Authentication; Appointment of Authenticating Agent..........................15
Section 2.03.     Registrar and Paying Agent.................................................................16
Section 2.04.     Paying Agent To Hold Money in Trust........................................................17
Section 2.05.     Holder Lists...............................................................................17
Section 2.06.     Transfer and Exchange......................................................................17
Section 2.07.     Replacement Notes..........................................................................18
Section 2.08.     Outstanding Notes..........................................................................18
Section 2.09.     Treasury Notes.............................................................................19
Section 2.10.     Temporary Notes............................................................................19
Section 2.11.     Cancellation...............................................................................19
Section 2.12.     Defaulted Interest.........................................................................19
Section 2.13.     Deposit of Moneys; Payments................................................................20
Section 2.14.     "CUSIP" Number.............................................................................20
Section 2.15.     Book-Entry Provisions for Global Notes.....................................................20
Section 2.16.     Registration of Transfers and Exchanges....................................................21
Section 2.17.     Restrictive Legends........................................................................23

                                    ARTICLE 3

                                   REDEMPTION

Section 3.01.     Notices to Trustee.........................................................................24
Section 3.02.     Selection of Notes To Be Redeemed..........................................................25
Section 3.03.     Notice of Redemption.......................................................................25
Section 3.04.     Effect of Notice of Redemption.............................................................26
Section 3.05.     Deposit of Redemption Price................................................................26
Section 3.06.     Notes Redeemed in Part.....................................................................27
</TABLE>

                                      -i-

<PAGE>

<TABLE>
<CAPTION>
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                                                                                                             ----

                                    ARTICLE 4

                                    COVENANTS

<S>               <C>                                                                                       <C>
Section 4.01.     Payment of Notes...........................................................................27
Section 4.02.     Reports....................................................................................27
Section 4.03.     Waiver of Stay, Extension or Usury Laws....................................................27
Section 4.04.     Compliance Certificate; Notice of Default; Tax Information.................................28
Section 4.05.     Payment of Taxes and Other Claims..........................................................28
Section 4.06.     Corporate Existence........................................................................28
Section 4.07.     Maintenance of Office or Agency............................................................29
Section 4.08.     Compliance with Laws.......................................................................29
Section 4.09.     Maintenance of Properties and Insurance....................................................29
Section 4.10.     Limitation on Restricted Payments..........................................................30
Section 4.11.     Limitation on Additional Indebtedness and Subsidiary Preferred Stock.......................30
Section 4.12.     Limitation on Asset Sales..................................................................31
Section 4.13.     Limitation on Transactions with Affiliates.................................................34
Section 4.14.     Limitation on Liens........................................................................34
Section 4.15.     Purchase of Notes upon a Change of Control.................................................34
Section 4.16.     Limitation on Restrictions on Distributions from Subsidiaries..............................36
Section 4.17.     Limitations on Certain Other Subordinated Indebtedness.....................................36

                                    ARTICLE 5

                                SURVIVING ENTITY

Section 5.01.     Limitations on Mergers and Consolidations..................................................37
Section 5.02.     Successor Substituted......................................................................37

                                    ARTICLE 6

                              DEFAULTS AND REMEDIES

Section 6.01.     Events of Default..........................................................................38
Section 6.02.     Acceleration...............................................................................39
Section 6.03.     Other Remedies.............................................................................40
Section 6.04.     Waiver of Existing Defaults and Events of Default..........................................40
Section 6.05.     Control by Majority........................................................................40
Section 6.06.     Limitation on Suits........................................................................41
Section 6.07.     Rights of Holders To Receive Payment.......................................................41
Section 6.08.     Collection Suit by Trustee.................................................................41
Section 6.09.     Trustee May File Proofs of Claim...........................................................42
Section 6.10.     Priorities.................................................................................42
Section 6.11.     Undertaking for Costs......................................................................42
</TABLE>

                                      -ii-

<PAGE>

<TABLE>
<CAPTION>
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                                                                                                             ----

                                    ARTICLE 7

                                     TRUSTEE

<S>               <C>                                                                                       <C>
Section 7.01.     Duties of Trustee..........................................................................43
Section 7.02.     Rights of Trustee..........................................................................44
Section 7.03.     Individual Rights of Trustee...............................................................45
Section 7.04.     Trustee's Disclaimer.......................................................................45
Section 7.05.     Notice of Defaults.........................................................................45
Section 7.06.     Reports by Trustee to Holders..............................................................46
Section 7.07.     Compensation and Indemnity.................................................................46
Section 7.08.     Replacement of Trustee.....................................................................47
Section 7.09.     Successor Trustee by Consolidation, Merger or Conversion...................................47
Section 7.10.     Eligibility; Disqualification..............................................................48
Section 7.11.     Preferential Collection of Claims Against Company..........................................48

                                    ARTICLE 8

               MODIFICATIONS, AMENDMENTS, SUPPLEMENTS AND WAIVERS

Section 8.01.     Without Consent of Holders.................................................................48
Section 8.02.     With Consent of Holders....................................................................49
Section 8.03.     Compliance with TIA........................................................................50
Section 8.04.     Revocation and Effect of Consents..........................................................50
Section 8.05.     Notation on or Exchange of Notes...........................................................50
Section 8.06.     Trustee To Sign Amendments, etc............................................................51

                                    ARTICLE 9

                       DISCHARGE OF INDENTURE; DEFEASANCE

Section 9.01.     Satisfaction and Discharge of Indenture....................................................51
Section 9.02.     Legal Defeasance...........................................................................52
Section 9.03.     Covenant Defeasance........................................................................52
Section 9.04.     Conditions to Legal Defeasance or Covenant Defeasance......................................53
Section 9.05.     Application of Trust Money.................................................................54
Section 9.06.     Repayment to the Company...................................................................54
Section 9.07.     Reinstatement..............................................................................54

                                   ARTICLE 10

                                  SUBORDINATION

Section 10.01.    Agreement To Subordinate...................................................................55
Section 10.02.    Liquidation; Dissolution; Bankruptcy.......................................................55
Section 10.03.    Company Not To Make Payments with Respect to
                     Notes in Certain Circumstances..........................................................55
Section 10.04.    Acceleration of Notes......................................................................56
Section 10.05.    When Distribution Must Be Paid Over........................................................56
</TABLE>

                                     -iii-

<PAGE>

<TABLE>
<CAPTION>
                                                                                                             Page
                                                                                                             ----
<S>               <C>                                                                                       <C>
Section 10.06.    Notice by Company..........................................................................57
Section 10.07.    Subrogation................................................................................57
Section 10.08.    Relative Rights............................................................................57
Section 10.09.    Subordination May Not Be Impaired by the Company...........................................57
Section 10.10.    Distribution or Notice to Representative...................................................57
Section 10.11.    Rights of Trustee and Paying Agent.........................................................58
Section 10.12.    Officers' Certificate......................................................................58
Section 10.13.    Obligation of Company Unconditional........................................................58
Section 10.14.    Article 10 Not To Prevent Events of Default................................................59

                                   ARTICLE 11

                                  MISCELLANEOUS

Section 11.01.    TIA Controls...............................................................................59
Section 11.02.    Notices....................................................................................59
Section 11.03.    Communications by Holders with Other Holders...............................................60
Section 11.04.    Certificate and Opinion as to Conditions Precedent.........................................60
Section 11.05.    Statements Required in Certificate and Opinion.............................................60
Section 11.06.    Rules by Trustee and Agents................................................................61
Section 11.07.    Business Days; Legal Holidays..............................................................61
Section 11.08.    Governing Law..............................................................................61
Section 11.09.    Waiver of Trial by Jury....................................................................61
Section 11.10.    Submission to Jurisdiction.................................................................61
Section 11.11.    No Adverse Interpretation of Other Agreements..............................................61
Section 11.12.    No Recourse Against Others.................................................................61
Section 11.13.    Successors.................................................................................62
Section 11.14.    Multiple Counterparts......................................................................62
Section 11.15.    Table of Contents, Headings, etc...........................................................62
Section 11.16.    Separability...............................................................................62
Section 11.17.    Translation................................................................................62

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

EXHIBITS
--------

Exhibit A         Form of Initial Notes.....................................................................A-1

Exhibit B         Form of Exchange Notes....................................................................B-1

Exhibit C         Form of Certificate To Be Delivered upon Exchange or Registration of
                    Transfer of Securities..................................................................C-1

Exhibit D         Form of Certificate To Be Delivered in Connection with Regulation S Transfers.............D-1
</TABLE>

                                      -iv-

<PAGE>

                  INDENTURE, dated as of September 25, 2000, between HEALTHSOUTH
CORPORATION,  a corporation incorporated in Delaware (the "Company"), as Issuer,
and The Bank of New  York,  a New York  banking  corporation,  as  Trustee  (the
"Trustee").

                  The Company has duly  authorized  the  creation of an issue of
Series A 10-3/4% Senior  Subordinated Notes due 2008 and Series B 10-3/4% Senior
Subordinated  Notes due 2008 and,  to provide  therefor,  the  Company  has duly
authorized the execution and delivery of this Indenture. All things necessary to
make the Notes, when duly issued and executed by the Company,  and authenticated
and delivered hereunder,  the valid obligations of the Company, and to make this
Indenture a valid and binding agreement of the Company, have been done.

                  Each  party  agrees as  follows  for the  benefit of the other
parties and for the equal and ratable benefit of the Holders:

                                    ARTICLE 1

                                   DEFINITIONS

Section 1.01.     Definitions.
                  -----------

                  "Acquired  Indebtedness"  means (i) with respect to any Person
that becomes a Subsidiary of the Company after the Issue Date,  Indebtedness  of
such Person and its  Subsidiaries  existing  at the time such  Person  becomes a
Subsidiary  of the  Company  and (ii) with  respect to the Company or any of its
Subsidiaries, any Indebtedness assumed by the Company or any of its Subsidiaries
in connection with the acquisition of an asset from another Person.

                  "Additional Interest" has the meaning provided to such term in
the Registration Rights Agreement.

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

                  "Agent"  means  any  Registrar,  Paying  Agent,  co-Registrar,
authenticating agent or agent for service of notices and demands.

                  "Asset Sale" for any Person means the sale, lease,  conveyance
or other disposition (including, without limitation, by merger or consolidation,
and whether by operation of law or  otherwise)  of any of that  Person's  assets
(including,  without limitation,  the sale or other disposition of Capital Stock
of any Subsidiary of such Person, whether by such Person or by such Subsidiary),
whether owned on the Issue Date or subsequently  acquired, in one transaction or
a series of related  transactions,  in which such Person and/or its Subsidiaries
sell, lease, convey or otherwise dispose of: (i) all or substantially all of the
Capital Stock of any of such Person's Subsidiaries; (ii) assets which constitute
all or  substantially  all of any division or line of business of such Person or
any of its Subsidiaries;  or (iii) any other assets of such Person or any of its
Subsidiaries,  other than in the ordinary course of business, provided, that the
Fair Market Value thereof shall be at least 1% of Consolidated

<PAGE>

Tangible  Assets;  provided,  however,  that the following  shall not constitute
Asset Sales:  (a)  transactions  between the Company and any of its Wholly Owned
Subsidiaries  or among such Wholly Owned  Subsidiaries;  (b) any transaction not
prohibited by Section 4.10 hereof or that  constitutes  a Permitted  Investment;
(c) any transfer of assets (including  Capital Stock) that is governed by and in
accordance  with Article 5 hereof or the creation of any Lien not  prohibited by
Section 4.14 hereof; or (d) sales of damaged,  worn-out or obsolete equipment or
assets that, in the Company's reasonable judgment,  are no longer either used or
useful in the business of the Company or its Subsidiaries.

                  "Attributable Indebtedness" when used with respect to any Sale
and Leaseback  Transaction  means, as at the time of determination,  the present
value  (discounted  at a rate  equivalent  to the interest  rate implicit in the
lease,  compounded on a semiannual basis) of the total obligations of the lessee
for rental payments,  after excluding all amounts required to be paid on account
of  maintenance  and repairs,  insurance,  taxes,  utilities  and other  similar
expenses  payable by the lessee  pursuant to the terms of the lease,  during the
remaining term of the lease included in any such Sale and Leaseback  Transaction
or until the earliest date on which the lessee may terminate  such lease without
penalty or upon  payment of a penalty (in which case the rental  payments  shall
include such penalty); provided, that the Attributable Indebtedness with respect
to a Sale and Leaseback  Transaction shall be no less than the fair market value
of the property subject to such Sale and Leaseback Transaction.

                  "Bank  Debt"  means all  obligations  of the  Company  and its
Subsidiaries, now or hereafter existing under (i) the Credit Agreements, whether
for principal, interest,  reimbursement of amounts drawn under letters of credit
issued  pursuant  thereto,   guarantees  in  respect  thereof,  fees,  expenses,
premiums,  indemnities or otherwise,  and (ii) any Indebtedness  incurred by the
Company  to extend,  refund or  refinance,  in whole or in part,  the Bank Debt,
including any interest and premium on any such Indebtedness.

                  "Board of Directors"  means,  with respect to any Person,  the
board  of  directors  or  similar  governing  body of such  Person  or any  duly
authorized committee thereof.

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

                  "Capital Stock" of any Person means any and all shares, rights
to  purchase,  warrants  or  options  (whether  or not  currently  exercisable),
participation  or other  equivalents of or interest in (however  designated) the
equity  (including  without   limitation  common  stock,   preferred  stock  and
partnership,  joint  venture and limited  liability  company  interests) of such
Person (excluding any debt securities that are convertible into, or exchangeable
for, such equity).

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

                  "Certificated  Notes" means one or more certificated  Notes in
registered form.

                  "Change  of  Control"  means  the  occurrence  of  any  of the
following:  (i) all or substantially  all of the Company's assets are sold as an
entirety  to any  Person  or  related  group of  Persons;  (ii)  there  shall be
consummated any  consolidation or merger of the Company (A) in which the Company
is not the continuing or surviving  corporation  (other than a consolidation  or
merger with a Wholly Owned  Subsidiary of the Company in

                                      -2-

<PAGE>

which all shares of the Company's Common Equity outstanding immediately prior to
the   effectiveness   thereof  are  changed  into  or  exchanged  for  the  same
consideration)  or (B) pursuant to which the  Company's  Common  Equity would be
converted  into cash,  securities or other  property,  in each case other than a
consolidation  or merger of the  Company in which the  holders of the  Company's
Common Equity immediately prior to the consolidation or merger have, directly or
indirectly,  at least a majority  of the total  voting  power of all  classes of
Capital  Stock  entitled to vote  generally  in the election of directors of the
continuing or surviving  corporation  immediately  after such  consolidation  or
merger in substantially  the same proportion as their ownership of the Company's
Common Equity  immediately  before such  transaction;  (iii) any Person,  or any
Persons acting together which would constitute a "group" for purposes of Section
13(d)  of  the  Exchange  Act,  together  with  any  affiliates  thereof,  shall
beneficially  own (as defined in Rule 13d-3 under the Exchange Act) at least 50%
of the  total  voting  power of all  classes  of  Capital  Stock of the  Company
entitled to vote generally in the election of directors of the Company;  (iv) at
any  time  during  any  consecutive  two-year  period,  individuals  who  at the
beginning  of such  period  constituted  the Board of  Directors  of the Company
(together  with any new directors  whose  election by such Board of Directors or
whose nomination for election by the stockholders of the Company was approved by
a vote of  66-2/3%  of the  directors  then  still in  office  who  were  either
directors at the beginning of such period or whose  election or  nomination  for
election  was  previously  so  approved)  cease for any reason to  constitute  a
majority of the Board of  Directors  of the Company  then in office;  or (v) the
Company  is  liquidated  or  dissolved  or  adopts  a  plan  of  liquidation  or
dissolution.

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

                  "Common  Equity" of any Person means all Capital Stock of such
Person that is  generally  entitled to (i) vote in the  election of directors of
such  Person or (ii) if such  Person  is not a  corporation,  vote or  otherwise
participate in the selection of the governing body, partners, managers or others
that will control the management and policies of such Person.

                  "Company" means the party named as such in the first paragraph
of this  Indenture  until a successor  replaces such party pursuant to Article 5
hereof and thereafter means such successor.

                  "Consolidated  Amortization  Expense"  of any  Person  for any
period means the  amortization  expense of such Person and its  Subsidiaries for
such  period (to the extent  included in the  computation  of  Consolidated  Net
Income of such Person),  determined on a consolidated  basis in accordance  with
GAAP.

                  "Consolidated  Depreciation  Expense" of any Person  means the
depreciation expense of such Person and its Subsidiaries for such period (to the
extent included in the  computation of Consolidated  Net Income of such Person),
determined on a consolidated basis in accordance with GAAP.

                  "Consolidated EBITDA" of any Person means, with respect to any
determination  date,  Consolidated Net Income,  plus (i) Consolidated Income Tax
Expense,  plus (ii) Consolidated  Depreciation  Expense, plus (iii) Consolidated
Amortization  Expense,  plus (iv) Consolidated  Interest  Expense,  plus (v) all
other  unusual   non-cash  items  or   non-recurring   non-cash  items  reducing
Consolidated  Net Income of such Person and its  Subsidiaries,  determined  on a
consolidated  basis  in  accordance  with  GAAP,  and less  all  non-cash  items
increasing  Consolidated  Net  Income  of  such  Person  and  its  Subsidiaries,
determined on a  consolidated  basis in accordance  with GAAP, in each case, for
such Person's prior four full fiscal quarters for which  financial  results have
been reported immediately preceding the determination date.

                                      -3-

<PAGE>

                  "Consolidated  Income Tax Expense"  means,  for any Person for
any period,  the  provision for taxes based on income and profits of such Person
and its  Subsidiaries to the extent such provision for income taxes was deducted
in computing Consolidated Net Income of such Person for such period,  determined
on a consolidated basis in accordance with GAAP.

                  "Consolidated  Interest  Expense" of any Person for any period
means,  without  duplication,  (i) the  Interest  Expense of such Person and its
Subsidiaries for such period,  determined on a consolidated  basis in accordance
with GAAP, plus (ii) (to the extent not otherwise included within the definition
of Interest  Expense as imputed  interest)  one-third  of the rental  expense on
Attributable  Indebtedness  of such  Person  for  such  period  determined  on a
consolidated basis, plus (iii) the dividend  requirements of such Person and its
Subsidiaries  with respect to  Disqualified  Stock and with respect to all other
Preferred  Stock of Subsidiaries of such Person (in each case whether in cash or
otherwise  (except  dividends  payable  solely in shares of Capital Stock (other
than Disqualified  Stock) of such Person or such Subsidiary))  paid,  accrued or
accumulated  during such period times a fraction  the  numerator of which is one
and the  denominator  of which is one  minus  the  then  effective  consolidated
Federal, state and local tax rate of such Person, expressed as a decimal.

                  "Consolidated  Net Income" of any Person for any period  means
the net income (or loss) of such  Person and its  Subsidiaries  for such  period
determined on a consolidated basis in accordance with GAAP;  provided that there
shall be  excluded  from  such net  income  (to the  extent  otherwise  included
therein), without duplication:

           (i)    the  net  income  (or  loss)  of  any  Person  (other  than  a
           Subsidiary of the referent Person) in which any Person other than the
           referent Person has an ownership interest,  except to the extent that
           any such income has actually been received by the referent  Person or
           any of its Wholly  Owned  Subsidiaries  in the form of  dividends  or
           similar distributions during such period;

           (ii)   except to the extent includable in the consolidated net income
           of the referent Person pursuant to the foregoing  clause (i), the net
           income (or loss) of any Person  that  accrued  prior to the date that
           (a) such Person  becomes a Subsidiary  of the  referent  Person or is
           merged into or  consolidated  with the referent  Person or any of its
           Subsidiaries  or (b) the assets of such  Person are  acquired  by the
           referent Person or any of its Subsidiaries;

           (iii)  the net income of any Subsidiary of the referent Person (other
           than a Wholly Owned Subsidiary) to the extent that the declaration or
           payment of dividends or similar  distributions  by such Subsidiary of
           that income is not permitted by operation of the terms of its charter
           or any agreement,  instrument, judgment, decree, order, statute, rule
           or governmental  regulation applicable to that Subsidiary during such
           period;

           (iv)   any gain (or loss),  together with any related  provisions for
           taxes on any such gain,  realized  during such period by the referent
           Person or any of its  Subsidiaries  upon (a) the  acquisition  of any
           securities,  or  the  extinguishment  of  any  Indebtedness,  of  the
           referent  Person or any of its  Subsidiaries or (b) any Asset Sale by
           the referent Person or any of its Subsidiaries;

           (v)    any extraordinary  gain or extraordinary  loss,  together with
           any related  provision  for taxes or tax benefit  resulting  from any
           such  extraordinary  gain  or  extraordinary  loss,  realized  by the
           referent Person or any of its Subsidiaries during such period; and

           (vi)   in the case of a successor  to such  Person by  consolidation,
           merger or transfer of its assets, any earnings of the successor prior
           to such merger, consolidation or transfer of assets.

                                      -4-

<PAGE>

                  "Consolidated  Net  Worth" of any  Person as of any date means
the  stockholders'  equity  (including any preferred stock that is classified as
equity  under  GAAP,  other  than  Disqualified  Stock) of such  Person  and its
Subsidiaries  (excluding any equity adjustment for foreign currency  translation
for any period  subsequent  to the Issue Date) on a  consolidated  basis at such
date, as determined in accordance  with GAAP,  less all write-ups  subsequent to
the Issue Date in the book value of any asset owned by such Person or any of its
Subsidiaries.

                  "Consolidated  Tangible  Assets"  of any Person as of any date
means the total assets of such Person and its Subsidiaries (excluding any assets
that would be classified as  "intangible  assets" under GAAP) on a  consolidated
basis at such date, as determined  in accordance  with GAAP,  less all write-ups
subsequent to the Issue Date in the book value of any asset owned by such Person
or any of its Subsidiaries.

                  "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 of execution of this Indenture is located
at 101 Barclay  Street,  Floor 21 West,  New York,  New York  10286,  Attention:
Corporate  Trust  Administration,  or such  other  address  as the  Trustee  may
designate  from time to time by notice to the  Holders and the  Company,  or the
principal corporate trust office of any successor Trustee (or such other address
as a successor  Trustee may designate from time to time by notice to the Holders
and the Company).

                  "Credit Agreements" means (i) the Credit Agreement dated as of
June 23,  1998 by and among the  Company,  as  borrower,  Nationsbank,  National
Association,  as Administrative Agent and Arranger, J.P. Morgan Securities Inc.,
Deutsche Bank AG and Scotiabanc,  Inc., as Syndication  Agents and Co-Arrangers,
and the other lenders party thereto from time to time, together with the related
documents thereto,  including,  without limitation,  any security documents,  if
any, and all  exhibits and  schedules  thereto and any  agreement or  agreements
relating to any  extension,  refunding,  refinancing,  successor or  replacement
facility,  whether or not with the same lender, and whether or not the principal
amount or amount of letters of credit  outstanding  thereunder  or the  interest
rate  payable in respect  thereof  shall be thereby  increased,  in each case as
amended and in effect from time to time and (ii) the New Credit Agreement.

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

                  "Depositary"  means,  with  respect to the Notes issued in the
form of one or more Global Notes, The Depository Trust Company or another Person
designated as Depositary by the Company,  which Person must be a clearing agency
registered under the Exchange Act.

                  "Designated  Senior  Indebtedness"  means  (i) the Bank  Debt,
without  regard  to the  amounts  outstanding  thereunder,  and (ii) any  Senior
Indebtedness  which, at the time of  determination,  has an aggregate  principal
amount outstanding of at least $20,000,000 and is specifically designated in the
instrument   evidencing   such  Senior   Indebtedness   as  "Designated   Senior
Indebtedness" by the Company.

                  "Disqualified  Stock"  means any Capital  Stock  that,  by its
terms (or by the terms of any security into which it is convertible or for which
it is  exchangeable),  or  upon  the  happening  of  any  event,  matures  or is
mandatorily  redeemable,  pursuant to a sinking fund obligation or otherwise, or
is  redeemable at the option of the holder  thereof,  in whole or in part, on or
prior to the Stated Maturity date of the Notes.

                  "EBITDA  Coverage  Ratio" with respect to any period means the
ratio of (i) Consolidated  EBITDA of the Company to (ii) the aggregate amount of
Consolidated Interest Expense of the Company for such period; provided, however,
that if any calculation of the Company's  EBITDA Coverage Ratio requires the use
of

                                      -5-

<PAGE>

any quarter  prior to the Issue Date,  such  calculation  shall be made on a pro
forma basis,  giving  effect to the issuance of the Notes and the use of the net
proceeds  therefrom  as if  the  same  had  occurred  at  the  beginning  of the
four-quarter period used to make such calculation;  and provided further that if
any such calculation  requires the use of any quarter prior to the date that any
Asset Sale was consummated,  or that any Indebtedness was incurred,  or that any
acquisition of a hospital or other  healthcare  facility or any assets purchased
outside the ordinary  course of business was effected,  by the Company or any of
its Subsidiaries,  such calculation  shall be made on a pro forma basis,  giving
effect to each such Asset Sale,  incurrence of Indebtedness  or acquisition,  as
the  case  may be,  and the use of any  proceeds  therefrom,  as if the same had
occurred  at  the  beginning  of the  four-quarter  period  used  to  make  such
calculation.

                  "Eligible Investments" of any Person means Investments of such
Person in:

           (i)    direct  obligations of, or obligations the payment of which is
           guaranteed  by, the United  States of America or an  interest  in any
           trust or fund that invests  solely in such  obligations or repurchase
           agreements, properly secured, with respect to such obligations;

           (ii)   direct  obligations  of agencies or  instrumentalities  of the
           United States of America having a rating of A or higher by Standard &
           Poor's  Corporation  or A2 or higher by  Moody's  Investors  Service,
           Inc.;

           (iii)   a certificate of deposit issued by, or other interest-bearing
           deposits  with, a bank having its principal  place of business in the
           United States of America and having  equity  capital of not less than
           $250,000,000;

           (iv)    a  certificate  of  deposit  by,  or  other  interest-bearing
           deposits with, any other bank organized  under the laws of the United
           States of America or any state thereof, provided that such deposit is
           either (a) insured by the Federal  Deposit  Insurance  Corporation or
           (b) properly  secured by such bank by pledging direct  obligations of
           the United  States of America  having a market value of not less than
           the face amount of such deposits;

           (v)     prime  commercial  paper  maturing  within  270  days  of the
           acquisition thereof and, at the time of acquisition,  having a rating
           of A-1 or higher by Standard & Poor's  Corporation,  or P-1 or higher
           by Moody's Investors Service, Inc.; or

           (vi)   eligible  banker's  acceptances,   repurchase  agreements  and
           tax-exempt  municipal  bonds having a maturity of less than one year,
           in each case having a rating, or that is the full recourse obligation
           of a person  whose  senior  debt is rated A or higher by  Standard  &
           Poor's Corporation or A2 or higher by Moody's Investors Service, Inc.

                  "Equity Offering" means a primary offering of Capital Stock of
the Company (other than  Disqualified  Stock or Preferred  Stock)  pursuant to a
registration  statement  filed  with  the  Commission  in  accordance  with  the
Securities Act and declared effective by the staff of the Commission.

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

                  "Exchange   Notes"   means  the   Series  B   10-3/4%   Senior
Subordinated  Notes due 2008 (the terms of which are  identical  to the  Initial
Notes except that, unless any Exchange Notes shall be issued as Private Exchange
Notes (as defined in the  Registration  Rights  Agreement),  the Exchange  Notes
shall be  registered  under  the  Securities  Act,  and shall  not  contain  the
restrictive  legend on the face of the form of the Initial Notes),  to be

                                      -6-

<PAGE>

issued in exchange for the Initial  Notes  pursuant to the  registered  Exchange
Offer and a Private Exchange (as defined in the Registration Rights Agreement).

                  "Exchange  Offer" means the  registration by the Company under
the  Securities  Act  pursuant to a  registration  statement of the offer by the
Company to each Holder of the Initial  Notes to exchange  all the Initial  Notes
held by such Holder for the  Exchange  Notes in an  aggregate  principal  amount
equal to the  aggregate  principal  amount  of the  Initial  Notes  held by such
Holder,  all in accordance  with the terms and  conditions  of the  Registration
Rights Agreement.

                  "Existing  Indebtedness"  means all of the Indebtedness of the
Company and its Subsidiaries that is outstanding on the Issue Date.

                  "Fair  Market  Value"  of any  asset or items  means  the fair
market value of such asset or items as  determined in good faith by the Board of
Directors and evidenced by a resolution of the Board of Directors.

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

                  "guarantee"  means,  as  applied  to  any  obligation,  (a)  a
guarantee (other than by endorsement or negotiable instruments for collection in
the ordinary course of business), direct or indirect, in any manner, of any part
of all of such obligation and (b) an agreement,  direct or indirect,  contingent
or otherwise,  the practical effect of which is to assure in any way the payment
or performance (or payment of damages in the event of non-performance) of all or
any part of such  obligation,  including,  without  limiting the foregoing,  the
payment of amounts drawn down under letters of credit.

                  "Hedging  Obligations"  of any Person means the obligations of
such Person  pursuant to any  interest  rate swap  agreement,  foreign  currency
exchange agreement,  interest rate collar agreement,  option or futures contract
or other similar agreement or arrangement  relating to interest rates or foreign
exchange rates.

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

                  "Indebtedness"  of any  Person  at  any  date  means,  without
duplication:  (i) all indebtedness of such Person for borrowed money (whether or
not the  recourse  of the lender is to the whole of the assets of such Person or
only to a portion  thereof);  (ii) all  obligations of such Person  evidenced by
bonds, debentures, notes or other similar instruments;  (iii) all obligations of
such  Person in respect of letters of credit or other  similar  instruments  (or
reimbursement  obligations with respect  thereto);  (iv) all obligations of such
Person  with  respect  to  Hedging  Obligations  (other  than those that fix the
interest  rate  on  variable  rate  indebtedness  otherwise  permitted  by  this
Indenture or that protect the Company and/or its Subsidiaries against changes in
foreign exchange rates);  (v) all obligations of such Person to pay the deferred
and unpaid  purchase  price of property or services,  except trade  payables and
accrued  expenses  incurred  in  the  ordinary  course  of  business;  (vi)  all
Capitalized Lease  Obligations of such Person;  (vii) all Indebtedness of others
secured by a Lien on any asset of such Person,  whether or not such Indebtedness
is assumed by such Person;  (viii) all Indebtedness of others guaranteed by such
Person to the extent of such guarantee; (ix) all Attributable Indebtedness;  and
(x) all  Disqualified  Stock of such Person and its  Subsidiaries  and all other
Preferred  Stock of Subsidiaries of such Person valued at the greater of (a) the
voluntary or involuntary  liquidation  preference of such Disqualified  Stock

                                      -7-

<PAGE>

or such  Preferred  Stock,  as the case  may be,  and (b) the  aggregate  amount
payable upon purchase,  redemption,  defeasance or payment of such  Disqualified
Stock or such Preferred Stock, as the case may be. The amount of Indebtedness of
any  Person at any date  shall be the  outstanding  balance  at such date of all
unconditional obligations plus past due interest as described above, the maximum
liability of such Person for any such  contingent  obligations at such date and,
in the case of clause (vii), the amount of the Indebtedness secured.

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

                  "Initial Notes" means the Series A 10-3/4% Senior Subordinated
Notes due 2008 of the  Company  issued on the Issue Date and  authenticated  and
delivered  under this  Indenture  pursuant to Section 2.02 of this Indenture and
any other  notes  (other than  Exchange  Notes)  issued  after the Issue Date in
accordance with clause (iii) of the fourth paragraph of Section 2.02.

                  "Initial  Purchasers" refers to UBS Warburg LLC, Deutsche Bank
Securities Inc., Chase Securities Inc. and First Union Securities, Inc.

                  "Interest  Expense"  of any Person  for any  period  means the
aggregate  amount of  interest  which,  in  accordance  with GAAP,  would be set
opposite  the  caption  "interest  expense"  or any like  caption  on an  income
statement for such Person (including, without limitation or duplication, imputed
interest included in Capitalized Lease Obligations,  all commissions,  discounts
and other fees and charges  owed with  respect to letters of credit and bankers'
acceptance  financing,  the  net  costs  associated  with  Hedging  Obligations,
amortization  of  financing  fees and  expenses,  the  interest  portion  of any
deferred  payment  obligation,  amortization  of discount and all other non-cash
interest  expense  other  than  interest  amortized  to cost of sales)  plus the
aggregate amount, if any, by which such interest expense was reduced as a result
of the amortization of deferred debt restructuring credits for such period.

                  "Interest  Payment  Date"  means  the  Stated  Maturity  of an
installment  of interest on the Notes as specified in the forms of Note attached
hereto as Exhibits A and B.

                  "Investments" of any Person means: (i) all investments by such
Person  in  any  other  Person  in  the  form  of  loans,  advances  or  capital
contributions (excluding commission, travel and similar advances to officers and
employees  made in the ordinary  course of  business);  (ii) all  guarantees  of
Indebtedness or other obligations of any other Person by such Person;  (iii) all
purchases  (or  other   acquisitions  for   consideration)  by  such  Person  of
Indebtedness,  Capital Stock or other  securities of any other Person;  and (iv)
all other items that would be  classified  as  investments  (including,  without
limitation,  purchases of assets  outside the ordinary  course of business) on a
balance sheet of such Person prepared in accordance with GAAP.

                  "Issue Date" means  September  25, 2000,  the date the Initial
Notes are initially issued.

                  "Joint  Venture" means any Person at least a majority of whose
revenues result from healthcare related business of facilities.

                  "Lien" means,  with respect to any asset, any mortgage,  lien,
pledge,  charge,  security interest or other similar  encumbrance of any kind in
respect of such asset,  whether or not filed,  recorded or  otherwise  perfected
under  applicable law (including,  without  limitation,  any conditional sale or
other title retention agreement,  and any financing lease in the nature thereof,
any  agreement to sell,  and any filing of, or agreement to give,  any financing
statement  (other than notice filings not perfecting a security  interest) under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).

                                      -8-

<PAGE>

                  "Net  Proceeds"  with respect to any Asset Sale means (i) cash
(in U.S.  dollars  or freely  convertible  into U.S.  dollars)  received  by the
Company or any of its  Subsidiaries  from such Asset  Sale  (including,  without
limitation,  cash received as consideration  for the assumption or incurrence of
liabilities  incurred in connection with or in anticipation of such Asset Sale),
after (a) provision for all income or other taxes  measured by or resulting from
such  Asset  Sale or the  transfer  of the  proceeds  of such  Asset Sale to the
Company or any of its  Subsidiaries,  (b) payment of all  commissions  and other
fees and expenses related to such Asset Sale and (c) deduction of an appropriate
amount to be provided by the Company or any of its Subsidiaries as a reserve, in
accordance with GAAP, against any liabilities associated with the assets sold or
otherwise  disposed of in such Asset Sale and  retained by the Company or any of
its Subsidiaries after such Asset Sale (including,  without limitation,  pension
and  other  post-employment  benefit  liabilities  and  liabilities  related  to
environmental  matters) or against any  indemnification  obligations  associated
with the sale or other  disposition of the assets sold or otherwise  disposed of
in such Asset Sale and (ii) all non-cash  consideration  received by the Company
or any of its  Subsidiaries  from  such  Asset  Sales  upon the  liquidation  or
conversion of such consideration into cash.

                  "New Credit  Agreement" means the  $400,000,000  senior credit
facility  proposed to be entered into by the Company,  together with the related
documents thereto,  including,  without limitation,  any security documents,  if
any, and all  exhibits and  schedules  thereto and any  agreement or  agreements
relating to any  extension,  refunding,  refinancing,  successor or  replacement
facility,  whether or not with the same lender, and whether or not the principal
amount or amount of letters of credit  outstanding  thereunder  or the  interest
rate  payable in respect  thereof  shall be thereby  increased,  in each case as
amended and in effect from time to time.

                  "Notes" means the Initial  Notes,  the Exchange  Notes and any
other notes issued after the Issue Date in  accordance  with clause (iii) of the
fourth  paragraph of Section 2.02  treated as a single class of  securities,  as
amended or  supplemented  from time to time in accordance with the terms hereof,
that are issued pursuant to this Indenture.

                  "Officer" means,  with respect to any Person,  the Chairman of
the Board,  the Chief  Executive  Officer,  the Chief Financial  Officer,  Chief
Accounting  Officer,  Treasurer,   President,  any  Vice  President,  secretary,
assistant secretary, director or other authorized signatory of such Person.

                  "Officers'  Certificate"  means a  certificate  signed  by the
Chairman  of the Board,  any Vice  Chairman  of the Board,  the Chief  Executive
Officer, the President or any Vice President and by the Treasurer, any Assistant
Treasurer,  the  Secretary  or any  Assistant  Secretary of the Company in their
official  (and  not  individual)  capacities;   provided,  however,  that  every
Officers'  Certificate with respect to the compliance with a condition precedent
to the taking of any action under this  Indenture  shall include (i) a statement
that the officers  making or giving such  Officers'  Certificate  have read such
condition and any  definitions or other  provisions  contained in this Indenture
relating  thereto  and (ii) a statement  as to  whether,  in the opinion of such
officers, such condition has been complied with.

                  "Opinion  of  Counsel"  means a  written  opinion  from  legal
counsel  (such  counsel  may be an  employee of or counsel to the Company or the
Trustee) that complies with the requirements of this Indenture.

                  "Permitted  Investments"  means:  (i)  capital  contributions,
advances or loans to the Company by any  Subsidiary  or by the Company or any of
its  Subsidiaries  to a Subsidiary  of the  Company;  (ii) the  acquisition  and
holding by the Company and each of its Subsidiaries of receivables  owing to the
Company and such  Subsidiary,  if created or acquired in the ordinary  course of
business and payable or  dischargeable in accordance with customary trade terms;
(iii) the  acquisition  and holding by the Company and its  Subsidiaries of cash
and Eligible  Investments;  (iv)  Investments in any Person as a result of which
such other  Person  becomes a  Subsidiary  of the  Company or is merged  into or
consolidated  with or transfers  all or  substantially  all of its assets to the

                                      -9-

<PAGE>

Company or any of its  Subsidiaries;  and (v) the making of an Investment by the
Company,  directly  or  through a Wholly  Owned  Subsidiary,  in a Wholly  Owned
Subsidiary formed solely for the purpose of insuring the healthcare business and
facilities  owned or operated by the Company or a Subsidiary  and any  physician
employed by or on the staff of any such  business or  facility  (the  "Insurance
Subsidiary"),  provided that the amount  invested in such  Insurance  Subsidiary
does not exceed $15,000,000.

                  "Permitted  Liens" means: (i) Liens for taxes,  assessments or
governmental charges or claims that either (a) are not yet delinquent or (b) are
being contested in good faith by appropriate  proceedings;  (ii) statutory Liens
of   landlords   and   carriers',   warehousemen's,    mechanics',   suppliers',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business and with respect to amounts that either (a) are not yet  delinquent  or
(b) are being contested in good faith by appropriate proceedings and as to which
appropriate reserves or other provisions have been made in accordance with GAAP;
(iii)  Liens  (other than any Lien  imposed by the  Employee  Retirement  Income
Security  Act of 1974,  as amended)  incurred or  deposits  due in the  ordinary
course of  business  in  connection  with  workers'  compensation,  unemployment
insurance and other types of social  security;  (iv) Liens  incurred or deposits
made to secure the performance of tenders, bids, leases,  statutory obligations,
surety and appeal  bonds,  progress  payments,  government  contracts  and other
obligations of like nature (exclusive of obligations for the payment of borrowed
money),  in  each  case,  incurred  in the  ordinary  course  of  business;  (v)
attachment  or  judgment  Liens  not  giving  rise to a  Default  or an Event of
Default; (vi) easements,  rights-of-way,  restrictions and other similar charges
or encumbrances not interfering with the ordinary conduct of the business of the
Company or any of its Subsidiaries;  (vii) leases or subleases granted to others
not interfering  with the ordinary conduct of the business of the Company or any
of its  Subsidiaries;  (viii) Liens with  respect to any Acquired  Indebtedness,
provided  that such Liens only extend to assets that were  subject to such Liens
prior to the acquisition of such assets by the Company or its Subsidiaries  and,
with respect to  Indebtedness  other than Senior  Indebtedness,  not incurred in
anticipation or  contemplation of such  acquisition;  (ix) Liens securing Senior
Indebtedness or Refinancing  Indebtedness,  provided, in the case of Refinancing
Indebtedness,   that  such  Liens  only  extend  to  the  assets   securing  the
Indebtedness  being  refinanced and such refinanced  Indebtedness was previously
secured by such assets;  (x) purchase  money  mortgages  (including  Capitalized
Lease Obligations); (xi) Liens existing on the Issue Date; (xii) Liens on assets
of any  Subsidiary  of the Company  securing  Indebtedness  of such  Subsidiary,
provided that such Indebtedness is permitted to be incurred by the terms of this
Indenture; (xiii) bankers' liens with respect to the right of set-off arising in
the ordinary course of business  against amounts  maintained in bank accounts or
certificates of deposit in the name of the Company or any Subsidiary;  (xiv) the
interest of any issuer of a letter of credit in any cash or Eligible  Investment
deposited  with or for the benefit of such issuer as collateral  for such letter
of credit,  provided that the Indebtedness so  collateralized is permitted to be
incurred by the terms of this Indenture;  (xv) any Lien consisting of a right of
first  refusal or option to purchase  the  Company's  ownership  interest in any
Subsidiary  or to  purchase  assets  of the  Company  or any  Subsidiary  of the
Company,  which right of first refusal or option is entered into in the ordinary
course of business;  and (xvi) the Lien  granted to the Trustee  pursuant to the
trust created pursuant to Article 9 hereof and any substantially equivalent Lien
granted  to  the  respective  trustees  under  the  indentures  for  other  debt
securities of the Company.

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

                  "Preferred Stock" means with respect to any Person all Capital
Stock of such Person which has a preference in liquidation or a preference  with
respect to the payment of dividends  or  distributions  of  operating  profit or
cash.

                  "Qualified  Institutional  Buyer"  or  "QIB"  shall  have  the
meaning specified in Rule 144A.

                                      -10-

<PAGE>

                  "Record  Date" for interest  payable on any  Interest  Payment
Date  (except a date for  payment  of  default  interest)  means the March 15 or
September 15 (whether or not a Business  Day),  as the case may be,  immediately
preceding such Interest Payment Date.

                  "Redemption  Date"  when used with  respect  to any Note to be
redeemed means the date fixed for such redemption pursuant to this Indenture.

                  "Redemption  Price"  when used with  respect to any Note to be
redeemed means the price fixed for such redemption pursuant to this Indenture.

                  "Refinancing  Indebtedness" means Indebtedness that is applied
to  refund,   refinance  or  extend  any  Existing   Indebtedness   (other  than
Indebtedness under the New Credit Agreement), provided that: (i) the Refinancing
Indebtedness is the obligation of the same Person (or if the Indebtedness  being
refinanced  is an obligation of one or more  Subsidiaries  of the Company,  such
Refinancing  Indebtedness  may be  incurred  by  the  Company  or  one  or  more
Subsidiaries of the Company) and is subordinated to the Notes, if at all, to the
same extent as the Indebtedness being refunded, refinanced or extended; (ii) the
Refinancing Indebtedness is scheduled to mature no earlier than the Indebtedness
being refunded, refinanced or extended; (iii) the Refinancing Indebtedness has a
Weighted Average Life to Maturity at the time such  Refinancing  Indebtedness is
incurred that is equal to or greater than the Weighted  Average Life to Maturity
of the portion of the Indebtedness being refunded,  refinanced or extended; (iv)
the Refinancing  Indebtedness  is secured only to the extent,  if at all, and by
the assets  that the  Indebtedness  being  refunded,  refinanced  or extended is
secured;  and (v) such  Refinancing  Indebtedness  is in an aggregate  principal
amount  that is  equal to or less  than  the  aggregate  principal  amount  then
outstanding  under the  Indebtedness  being  refunded,  refinanced  or  extended
(except for issuance costs and increases in Attributable Indebtedness due solely
to  increases  in the present  value  calculations  resulting  from  renewals or
extensions of the terms of the underlying leases in effect on the Issue Date).

                  "Registration  Rights Agreement" means the Registration Rights
Agreement  dated as of  September  25,  2000 among the  Company  and the Initial
Purchasers.

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

                  "Representative" means the indenture trustee or other trustee,
agent or representative for an issue of Senior Indebtedness.

                  "Restricted Payment" means with respect to any Person: (i) the
declaration  of any dividend or the making of any other payment or  distribution
of cash,  securities  or other  property  or assets in respect of such  Person's
Capital  Stock  (except that a dividend  payable  solely in Capital Stock (other
than  Disqualified  Stock) of such  Person  shall not  constitute  a  Restricted
Payment); (ii) any payment on account of the purchase, redemption, retirement or
other  acquisition  for value of such  Person's or such  Person's  Subsidiaries'
Capital  Stock or any other  payment or  distribution  made in respect  thereof,
either  directly or  indirectly;  (iii) any payment on account of the  purchase,
redemption,  retirement, defeasance or other acquisition for value, prior to any
scheduled  principal  payment,  sinking  fund  payment  or Stated  Maturity,  of
Subordinated  Indebtedness  of  the  Company  or  its  Subsidiaries;   (iv)  the
incurrence,  creation or  assumption  of any  guarantee of  Indebtedness  of any
Affiliate  (other than a Subsidiary  of the  Company);  or (v) the making of any
Investment in any Person (other than Permitted Investments);  provided, however,
that with respect to the Company and its Subsidiaries, Restricted Payments shall
not include any payment described in clause (i), (ii) or (iii) above made (1) to
the  Company or any of its Wholly  Owned  Subsidiaries  by any of the  Company's
Subsidiaries  or (2) by the Company to any of its Wholly Owned  Subsidiaries  or
(3) by any Subsidiary  provided that the Company or another Subsidiary  receives
its proportionate share thereof.

                                      -11-

<PAGE>

                  "Restricted  Security" means any Note (or beneficial  interest
therein) other than an Exchange Note (or  beneficial  interest  therein),  until
such  time  as:  (i)  such  Note  (or  beneficial  interest  therein)  has  been
transferred pursuant to an effective registration statement under the Securities
Act;  (ii) such Note is a 144A Global  Note and two years have passed  since the
Issue  Date;  (iii)  such Note is a  Regulation  S Global  Note and 40 days have
passed since the Issue Date; or (iv) the Private  Placement  legend therefor has
otherwise been removed  pursuant to Section  2.16(e) hereof or, in the case of a
beneficial  interest  in a  Global  Note,  such  beneficial  interest  has  been
exchanged  for an  interest  in a Global  Note not  bearing a Private  Placement
Legend.

                  "Rule 144A" means Rule 144A  promulgated  under the Securities
Act.

                  "Sale and Leaseback  Transaction"  means,  with respect to any
Person,  an  arrangement  with any bank,  insurance  company or other  lender or
investor  or to which such  lender or  investor  is a party,  providing  for the
leasing by such Person or any of its  Subsidiaries  of any  property or asset of
such  Person  or any of its  Subsidiaries  which  has been or is  being  sold or
transferred  by such Person or such  Subsidiary to such lender or investor or to
any  Person to whom  funds  have been or are to be  advanced  by such  lender or
investor on the security of such property or asset.

                  "Secretary's  Certificate"  means a certificate  signed by the
Secretary or any Assistant  Secretary of the Company in his or her official (and
not individual) capacity.

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

                  "Senior  Indebtedness"  means the principal of and premium, if
any,  and  interest  and  other  amounts  due  on  or  in  connection  with  any
Indebtedness  of the Company  existing on the Issue Date or any  Indebtedness of
the Company thereafter created,  incurred or assumed and permitted under Section
4.11 hereof, unless, in the case of any particular Indebtedness,  the instrument
creating or  evidencing  the same or  pursuant to which the same is  outstanding
expressly  provides  that  such  Indebtedness  shall  not be  senior in right of
payment to the Notes.

                  "Senior  Subordinated  Indebtedness"  means  the Notes and any
other indebtedness,  guarantee or obligation of the Company that (in the case of
such other Indebtedness) specifically provides that such indebtedness, guarantee
or obligation is to rank pari passu with other Senior Subordinated  Indebtedness
of the  Company  and is not  subordinated  by  its  terms  to any  indebtedness,
guarantee or obligation of the Company which is not Senior Indebtedness.

                  "Significant  Subsidiary"  means a  Subsidiary  of the Company
which at the time of  determination  either (i) had tangible assets which, as of
the Company's most recent quarterly  consolidated balance sheet,  constituted at
least 5% of  Consolidated  Tangible Assets as of such date, or (ii) had revenues
for the  12-month  period  ending  on the  date  of the  Company's  most  recent
quarterly  consolidated statement of income which constituted at least 5% of the
Company's total consolidated revenues for such period.

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

                  "Subordinated   Indebtedness"   of  any   Person   means   any
Indebtedness  of such  Person  that is  subordinated  in right of payment to the
Notes.

                                      -12-

<PAGE>

                  "Subsidiary"  of any Person means (i) any corporation of which
Common Equity having  ordinary voting power to elect a majority of the directors
of such  corporation  is owned by such  Person  directly  or through one or more
other  Subsidiaries  of such Person and (ii) any entity other than a corporation
in which such Person,  directly or  indirectly,  owns at least 50% of the Common
Equity  of  such  entity  and has the  authority  to  manage  such  entity  on a
day-to-day basis.

                  "Trust  Indenture Act" or "TIA" means the Trust  Indenture Act
of 1939 (15 U.S.  Code Sections  77aaa-77bbbb)  as in effect on the date of this
Indenture (except as provided in Section 8.03 hereof).

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

                  "Trustee"  means  the  party  named as such in this  Indenture
until a successor  replaces it pursuant to this Indenture and  thereafter  means
the successor.

                  "U.S.  Government  Obligations"  means (a) securities that are
direct  obligations of the United States of America for the payment of which its
full faith and credit are pledged or (b)  obligations of a Person  controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally  guaranteed as a full faith and
credit  obligation by the United States of America,  which,  in either case, are
not callable or redeemable at the option of the issuer  thereof,  and shall also
include a depository  receipt issued by a bank (as defined in Section 3(a)(2) of
the  Securities  Act) as  custodian  with  respect  to any such U.S.  Government
Obligation  or a specific  payment of  principal of or interest on any such U.S.
Government  Obligation  held by such  custodian for the account of the holder of
such  depository  receipt;  provided  that  (except  as  required  by law)  such
custodian is not authorized to make any deduction from the amount payable to the
holder of such  depository  receipt from any amount received by the custodian in
respect of the U.S. Government  Obligation or a specific payment of principal or
interest on any such U.S.  Government  Obligation held by such custodian for the
account of the holder of such depository receipt.

                  "Weighted Average Life to Maturity" means, when applied to any
Indebtedness  or portion  thereof at any date,  the number of years  obtained by
dividing  (i) the then  outstanding  principal  amount of such  Indebtedness  or
portion  thereof (if applicable)  into (ii) the sum of the products  obtained by
multiplying  (a) the amount of each then  remaining  installment,  sinking fund,
serial  maturity or other required  payment of principal,  including  payment at
final maturity,  in respect thereof,  by (b) the number of years  (calculated to
the nearest  one-twelfth)  that will elapse  between such date and the making of
such payment.

                  "Wholly Owned Subsidiary" of any Person means (i) a Subsidiary
of which 100% of the Common Equity (except for director's  qualifying  shares or
certain  minority  interests  owned by other  Persons  solely  due to local  law
requirements that there be more than one stockholder,  but which interest is not
in excess of what is required for such purpose) is owned directly by such Person
or through one or more other Wholly Owned  Subsidiaries  of such Person and (ii)
any  entity  other  than  a  corporation  in  which  such  Person,  directly  or
indirectly, owns all of the Common Equity of such entity.

                                      -13-

<PAGE>

Section 1.02.     Other Definitions.
                  -----------------

                  The  definitions  of the  following  terms may be found in the
sections indicated as follows:

<TABLE>
<CAPTION>
                                   Term                                             Defined in Section
                                   ----                                             ------------------

<S>                                                                                       <C>
"Affiliate Transaction".................................................                  4.13
"Agent Members".........................................................                  2.15
"Asset Sale Offer"......................................................                  4.12
"Asset Sale Payment Amount".............................................                  4.12
"Asset Sale Purchase Price".............................................                  4.12
"Bankruptcy Law"........................................................                  6.01
"Business Day"..........................................................                 11.07
"Change of Control Offer"...............................................                  4.15
"Change of Control Payment Date"........................................                  4.15
"Change of Control Purchase Price"......................................                  4.15
"Covenant Defeasance"...................................................                  9.03
"Custodian".............................................................                  6.01
"Event of Default"......................................................                  6.01
"Excess Proceeds".......................................................                  4.12
"Excess Proceeds Payment Date"..........................................                  4.12
"Global Notes"..........................................................                  2.01
"Legal Defeasance"......................................................                  9.02
"Legal Holiday".........................................................                 11.07
"Net Proceeds Deficiency"...............................................                  4.12
"Non-payment Default"...................................................                 10.03
"Other Debt"............................................................                  4.12
"Paying Agent"..........................................................                  2.03
"Payment Blockage Notice"...............................................                 10.03
"Payment Blockage Period"...............................................                 10.03
"Payment Default".......................................................                 10.03
"Private Placement Legend"..............................................                  2.17
"Registrar".............................................................                  2.03
"Regulation S Global Note"..............................................                  2.01
"Resale Restriction Termination Date"...................................                  2.16
"Rule 144A Global Note".................................................                  2.01
"Successor".............................................................                  5.01
</TABLE>

Section 1.03.     Incorporation by Reference of Trust Indenture Act.
                  -------------------------------------------------

                  Whenever this Indenture  refers to a provision of the TIA, the
portion of such provision  required to be incorporated  herein in order for this
Indenture to be qualified under the TIA is incorporated by reference in and made
a part  of  this  Indenture.  Unless  otherwise  specified,  terms  used in this
Indenture  that are  defined  by the TIA,  defined  in the TIA by  reference  to
another statute or defined by Commission rule have the meanings therein assigned
to them.

                                      -14-

<PAGE>

Section 1.04.     Rules of Construction.
                  ---------------------

                  Unless the context otherwise requires:

                  (1) a term has the  meaning  assigned  to it  herein,  whether
           defined expressly or by reference;

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

                  (3) "or" is not exclusive;

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

                  (5) words used herein implying any gender shall apply to every
           gender.

                                    ARTICLE 2

                                    THE NOTES

Section 2.01.     Dating; Incorporation of Form in Indenture.
                  ------------------------------------------

                  The   Initial   Notes  and  the   Trustee's   certificate   of
authentication shall be substantially in the form of Exhibit A, and the Exchange
Notes and the Trustee's  certificate of authentication shall be substantially in
the form of  Exhibit B, each of which is  incorporated  in and made part of this
Indenture with such appropriate  insertions,  substitutions and other variations
as are required or permitted by this  Indenture.  The Notes may have  notations,
legends or  endorsements  required by law, stock exchange rule or usage all in a
form  approved  by the  Company.  Each  Note  shall  be  dated  the  date of its
authentication.

                  The Notes shall be issued initially in the form of two or more
permanent  global  notes (the  "Global  Notes").  Notes  offered and sold (i) in
reliance  on Rule  144A  shall be  issued  initially  in the form of one or more
permanent Global Notes in registered form (the "Rule 144A Global Note") and (ii)
in offshore  transactions in reliance on Regulation S shall be issued  initially
in the form of one or more  permanent  Global  Notes  in  registered  form  (the
"Regulation  S Global  Note"),  and in each  case  shall be  deposited  with the
Trustee,  as  custodian  for the  Depositary,  duly  executed by the Company and
authenticated by the Trustee as hereinafter  provided.  The aggregate  principal
amount of any Global Note may from time to time be  increased  or  decreased  by
adjustments made on the records of the Trustee, as custodian for the Depositary,
as hereinafter provided.

Section 2.02.     Execution and  Authentication;  Appointment of  Authenticating
                  Agent.

                  The Notes shall be executed on behalf of the Company by one or
more Officers of the Company. Such signature may be either manual or facsimile.

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

                  A Note shall not be valid until the Trustee manually signs the
certificate of  authentication  on the Note.  Such signature shall be conclusive
evidence that the Note has been authenticated under this Indenture.

                                      -15-

<PAGE>

                  The Trustee shall  authenticate (i) Initial Notes for original
issue  on the  Issue  Date  in the  aggregate  principal  amount  not to  exceed
$350,000,000,  (ii) pursuant to the Exchange Offer,  Exchange Notes from time to
time for issue only in exchange for a like principal amount of Initial Notes and
(iii)  subject to  compliance  with Section  4.11 hereof,  one or more series of
Notes for original issue after the Issue Date (such Notes to be substantially in
the form of Exhibit A or B hereto,  as the case may be) in an  unlimited  amount
(and if in the form of Exhibit A hereto the same  principal  amount of  Exchange
Notes in exchange therefor upon consummation of a registered exchange offer), in
each  case  upon  written  orders  of the  Company  in the form of an  Officers'
Certificate,  which  Officers'  Certificate  shall,  in the case of any issuance
pursuant to clause (iii) above, certify that such issuance is in compliance with
Section 4.11 hereof. In addition,  each such Officers' Certificate shall specify
the amount of Notes to be  authenticated,  the date on which the Notes are to be
authenticated,  whether  the Notes are to be Initial  Notes,  Exchange  Notes or
Notes  issued under clause  (iii) of the  preceding  sentence and the  aggregate
principal amount of Notes outstanding on the date of authentication.  Such Notes
shall  initially  be in the form of one or more  Global  Notes,  which (i) shall
represent,  and  shall  be  denominated  in an  amount  equal  to the  aggregate
principal  amount of, the Notes to be issued,  (ii) shall be  registered  in the
name of the  Depositary  for such  Global  Security  or Notes or its nominee and
(iii) shall be  delivered  by the Trustee to the  Depositary  or pursuant to the
Depository's instruction.

                  The  Notes  shall  be  issuable  only  in  definitive,   fully
registered form without coupons and only in minimum  denominations of $1,000 and
integral multiples thereof.

                  The Trustee,  with the approval of the Company, may appoint an
authenticating  agent  to  authenticate  Notes.  Any such  appointment  shall be
evidenced by an  instrument  signed by an authorized  officer of the Trustee,  a
copy of which shall be  furnished to the Company.  An  authenticating  agent may
authenticate  Notes  whenever  the  Trustee may do so.  Each  reference  in this
Indenture  to  authentication  by the Trustee  includes  authentication  by such
agent,  and shall comply with this Indenture.  An  authenticating  agent has the
same right as an Agent to deal with the Company or an Affiliate.

Section 2.03.     Registrar and Paying Agent.
                  --------------------------

                  The Company shall  maintain an office or agency in the Borough
of  Manhattan,  The  City of New  York  where  (a)  Notes  may be  presented  or
surrendered  for  registration  of transfer or for exchange  ("Registrar"),  (b)
Notes may be  presented  or  surrendered  for payment  ("Paying  Agent") and (c)
notices and demands in respect of Notes and this  Indenture  may be served.  The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The  Registrar  shall  provide the Company a current copy of such  register from
time to time upon  request  of the  Company.  The  Company  may have one or more
co-Registrars and one or more additional  Paying Agents.  The Company may change
any Paying Agent,  Registrar or co-Registrar  without notice to any Holder.  The
Company may not act as Paying Agent, but may act as Registrar or co-Registrar.

                  The Company shall enter into an appropriate  agency  agreement
with any  Registrar or Paying Agent not a party to this  Indenture,  which shall
incorporate  the  provisions  of the TIA.  The  agreement  shall  implement  the
provisions of this Indenture that relate to such Agent. The Company shall notify
the Trustee in writing of the name and address of any such Agent. If the Company
fails to maintain a Registrar or Paying  Agent,  or agent for service of notices
and demands, or fails to give the foregoing notice, the Company shall notify the
Trustee and the  Trustee  shall to the extent that it is capable act as such for
so long as such failure continues.

                  The Company  initially  appoints the Trustee as Registrar  and
Paying Agent in the Borough of Manhattan, The City of New York.

                                      -16-

<PAGE>

Section 2.04.     Paying Agent To Hold Money in Trust.
                  -----------------------------------

                  Before  10:00 A.M.  New York City time on each payment date of
the  principal of and/or  interest on any Notes,  the Company shall deposit with
the Paying Agent a sum sufficient to pay such principal and interest so becoming
due. The Company at any time may require a Paying Agent to pay all money held by
it to the Trustee  together  with a complete  accounting  of such sums,  and the
Trustee may at any time  during the  continuance  of any Event of Default  under
Section 6.01(a) or (b) hereof,  upon written request to a Paying Agent,  require
such Paying Agent to  forthwith  pay to the Trustee all sums so held in trust by
such Paying Agent together with a complete  accounting of such sums.  Upon doing
so,  the Paying  Agent  shall have no  further  liability  for the money.  Funds
deposited  with the Paying  Agent may be invested as agreed from time to time by
the Company and the Paying Agent.  All payments made hereunder  shall be in U.S.
legal tender.

Section 2.05.     Holder Lists.
                  ------------

                  The  Trustee  shall  preserve  in  as  current  a  form  as is
reasonably  practicable  the most recent list  available  to it of the names and
addresses of Holders.  If the Trustee is not the  Registrar,  the Company  shall
furnish to the Trustee at least five Business Days before each Interest  Payment
Date and the Stated  Maturity  Date and at such other  times as the  Trustee may
reasonably  request in  writing,  a list in such form and as of such date as the
Trustee may require of the names and addresses of Holders.

Section 2.06.     Transfer and Exchange.
                  ---------------------

                  Subject to the  provisions  of Section  2.15 and 2.16  hereof,
when a Note is  presented  to the  Registrar  with a  request  to  register  the
transfer thereof,  the Registrar shall register the transfer as requested if the
requirements  of this  Indenture  are met and,  when Notes are  presented to the
Registrar with a written request to exchange them for an equal principal  amount
of Notes,  the  Registrar  shall make the exchange as  requested;  provided that
every Note presented or surrendered for  registration of transfer or exchange be
duly endorsed,  or be  accompanied  by a written  instrument of transfer in form
satisfactory  to the  Company  and the  Registrar  duly  executed  by the Holder
thereof or his attorney  duly  authorized  in writing.  To permit  transfers and
exchanges,  upon surrender of any Note for  registration of transfer or exchange
at the office or agency maintained  pursuant to Section 2.03 hereof, the Company
shall  execute and the Trustee shall  authenticate  one or more new Notes at the
Registrar's  request.  Any exchange or transfer shall be without charge,  except
that the Company may require  payment by the Holder of a sum sufficient to cover
any tax or other  governmental  charge  that may be  imposed  in  relation  to a
transfer or exchange  other than any exchange  pursuant to Section  2.10,  3.06,
4.12, 4.15 or 8.05 hereof.

                  The  Registrar  shall not be required to register the transfer
of or exchange any Note (A) selected for redemption in whole or in part pursuant
to Article 3, except the unredeemed  portion of any Note being redeemed in part,
(B) for a period  beginning 15 days before the mailing of a notice of redemption
of Notes and ending on the date of such mailing or (C) between a Record Date and
the next succeeding Interest Payment Date.

                  None of the Company or the Trustee or the  Registrar  shall be
liable for any delay by the Depositary in identifying  the beneficial  owners of
the Notes, and each such person may conclusively rely on, and shall be protected
in relying on, instructions from the Depositary for all purposes (including with
respect to the registration and delivery,  and the respective principal amounts,
of any Notes to be issued).

                  Prior to the due  presentation for registration of transfer of
any Note,  the Company,  the Trustee,  the Paying  Agent,  the  Registrar or any
co-Registrar may deem and treat the Person in whose name a Note is registered as
the  absolute  owner of such  Note  for the  purpose  of  receiving  payment  of
principal of and interest, if

                                      -17-

<PAGE>

any,  on such Note and for all other  purposes  whatsoever,  whether or not such
Note is overdue,  and none of the Company,  the Trustee,  the Paying Agent,  the
Registrar or any  co-Registrar  shall be affected by notice to the contrary.  So
long as the  Depositary  or its  nominee  is the  Holder of a Global  Note,  the
Depositary  or such  nominee,  as the case may be, will be  considered  the sole
owner or Holder of the Notes  represented  by such Global Note for all  purposes
hereunder and under the Notes.  Any Holder of a Global Note and each Person with
an interest in such Global Note,  shall,  by  acceptance  of such Global Note or
such interest agree that  transfers of the  beneficial  interests in such Global
Note may be effected  only through a book entry system  maintained by the Holder
of such Global Note (or its agent) and that  ownership of a beneficial  interest
in such Global Note shall be required to be reflected in a book entry.

                  Any Note issued upon any transfer or exchange pursuant to this
Section  2.06  will  evidence  the same  debt and will be  entitled  to the same
benefits and, unless  otherwise  provided for in this Indenture,  subject to the
same  restrictions,  under this Indenture as the Note or Notes  surrendered upon
such transfer or exchange.

Section 2.07.     Replacement Notes.
                  -----------------

                  If a mutilated  Note is  surrendered  to the Trustee or if the
Holder of a Note  claims  that a Note has been  lost,  destroyed  or  wrongfully
taken, the Company shall issue and the Trustee shall  authenticate a replacement
Note if the Trustee's  requirements  for  replacement are met. An indemnity bond
may be required by the Company or the Trustee that is sufficient in the judgment
of the Company and the Trustee to protect the Company,  the Trustee or any Agent
from any loss which any of them may suffer if a Note is replaced and evidence to
their  satisfaction  of apparent loss,  destruction or theft of such Note may be
required by the Company,  the Trustee or any Agent.  The Company and the Trustee
may charge for their reasonable  out-of-pocket  expenses  (including  reasonable
attorneys'  fees and  expenses  and any  applicable  taxes) in  replacing a Note
pursuant to this Section 2.07. In the event any such mutilated,  lost, destroyed
or  wrongfully  taken  Note has  become  due and  payable,  the  Company  in its
discretion  may pay such  Note  instead  of  issuing  a new Note in  replacement
thereof.  If after the delivery of such new Note,  a bona fide  purchaser of the
original  Note in lieu of which such new Note was issued  presents  for  payment
such  original  Note,  the Company and the Trustee  shall be entitled to recover
such new  Note  from  the  person  to whom it was  delivered  or any  transferee
thereof, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage,  cost
or expense incurred by the Company or the Trustee in connection therewith.

                  Every  replacement  Note is an  additional  obligation  of the
Company.

Section 2.08.     Outstanding Notes.
                  -----------------

                  Notes  outstanding at any time are all Notes  authenticated by
the  Trustee  except  for  those  canceled  by  it,  those  delivered  to it for
cancellation and those described in this Section 2.08 as not outstanding.

                  A Note replaced  pursuant to Section 2.07 hereof (other than a
mutilated Note surrendered for replacement)  ceases to be outstanding unless and
until the Trustee  receives proof  satisfactory to it that such replaced Note is
held by a protected purchaser.

                  If a Paying  Agent  holds on a  Redemption  Date or at  Stated
Maturity U.S. legal tender sufficient to pay the principal of, premium,  if any,
and accrued  interest on Notes (or portions  thereof) payable on that date, then
on and after that date, such Notes (or portions thereof) cease to be outstanding
and interest on them ceases to accrue.

                                      -18-

<PAGE>

Section 2.09.     Treasury Notes.
                  --------------

                  In determining  whether the Holders of the required  principal
amount of Notes have  concurred  in any  direction,  waiver,  consent or notice,
Notes  owned by the  Company or any of its  Affiliates  shall be  considered  as
though they are not  outstanding,  except that for the  purposes of  determining
whether the Trustee shall be protected in relying on any such direction,  waiver
or consent,  only Notes which a Trust Officer of the Trustee  actually knows are
so owned  shall be so  considered.  The Company  shall  notify the  Trustee,  in
writing,  when it or any of its  Affiliates  repurchases  or otherwise  acquires
Notes and of the  aggregate  principal  amount of such Notes so  repurchased  or
otherwise acquired.

Section 2.10.     Temporary Notes.
                  ---------------

                  Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall  authenticate  temporary  Notes.  Temporary  Notes
shall be substantially in the form, and shall carry all rights and restrictions,
of  definitive  Notes  but  may  have  variations  that  the  Company  considers
appropriate for temporary Notes.  Without  unreasonable delay, the Company shall
prepare and the Trustee  shall  authenticate  definitive  Notes in exchange  for
temporary  Notes upon surrender of such temporary  Notes at the office or agency
maintained pursuant to Section 2.03 hereof.

Section 2.11.     Cancellation.
                  ------------

                  The Company at any time may  deliver  Notes to the Trustee for
cancellation.  The  Registrar  and the Paying Agent shall forward to the Trustee
any Notes  surrendered  to them for transfer,  exchange or payment.  The Trustee
shall  cancel  all  Notes  surrendered  for  transfer,   exchange,   payment  or
cancellation and, unless the Company instructs the Trustee in writing to deliver
the Notes to the Company,  shall  dispose of such Notes in  accordance  with its
normal practice.  Subject to Section 2.07 hereof,  the Company may not issue new
Notes to replace Notes in respect of which it has previously paid all principal,
premium,  if any, and interest accrued thereon,  or delivered to the Trustee for
cancellation.  The Trustee  shall  provide the Company  with a list of all Notes
that have  been  canceled  from  time to time as  requested  in  writing  by the
Company.  If the Company shall acquire any of the Notes,  such acquisition shall
not operate as a redemption or satisfaction of the  Indebtedness  represented by
such  Notes  unless  and  until  the same are  surrendered  to the  Trustee  for
cancellation pursuant to this Section 2.07.

Section 2.12.     Defaulted Interest.
                  ------------------

                  If the Company  defaults in a payment of principal or interest
on the  Notes,  it shall  pay  interest  on  overdue  principal  and on  overdue
installments of interest  (without regard to any applicable  grace periods) from
time to time on demand at the rate per annum  borne by the Notes,  to the extent
lawful.

                  If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted  interest,  plus (to the extent  lawful) any interest
payable  on the  defaulted  interest,  to  the  Persons  who  are  Holders  on a
subsequent  special  Record  Date,  which date shall be the  fifteenth  day next
preceding the date fixed by the Company for the payment of defaulted interest or
the next succeeding Business Day if such date is not a Business Day. At least 15
days before the  subsequent  special Record Date, the Company shall mail to each
Holder, as of a recent date selected by the Company, with a copy to the Trustee,
a notice that states the  subsequent  special  Record Date, the payment date and
the  amount of  defaulted  interest,  and  interest  payable  on such  defaulted
interest, if any, to be paid.

                                      -19-

<PAGE>

                  Notwithstanding  the  foregoing,  any  interest  which is paid
prior to the expiration of the 30-day period set forth in Section 6.01(a) hereof
shall be paid to Holders as of the Record Date for the Interest Payment Date for
which interest has not been paid.

Section 2.13.     Deposit of Moneys; Payments.
                  ---------------------------

                  Prior to 10:00  A.M.,  New York  City  time,  on the  relevant
Interest Payment Date, Stated Maturity date,  Redemption Date, Change of Control
Purchase Date and Excess Proceeds Payment Date, the Company shall have deposited
with the Paying Agent in immediately  available  funds money  sufficient to make
all cash  payments due on such  Interest  Payment Date,  Stated  Maturity  date,
Redemption  Date,  Change of Control  Purchase Date and Excess Proceeds  Payment
Date,  as the case may be (or if any such date is not a Business  Day, the first
preceding  Business  Day).  The  principal and interest on Global Notes shall be
payable  to the  Depositary  or its  nominee,  as the case  may be,  as the sole
registered  owner and the sole holder of the Global Notes  represented  thereby.
The principal and interest on  Certificated  Notes,  if any, shall be payable at
the office of the Paying  Agents.  The Paying  Agents  shall pay the Company any
excess cash  remaining on deposit after all payments have been made with respect
to a given Interest Payment Date, Stated Maturity date,  Redemption Date, Change
of Control  Purchase Date or Excess  Proceeds  Payment Date, as the case may be.
All payments made hereunder shall be in U.S. legal tender.

Section 2.14.     "CUSIP" Number.
                   -------------

                  The Company in issuing the Notes may use "CUSIP" number(s) and
the  Trustee  shall use the  "CUSIP"  numbers(s)  in  notices of  redemption  or
exchange as a convenience to Holders;  provided that neither the Company nor the
Trustee shall have any  responsibility for any defect in the "CUSIP" number that
appears on any Note, check, advice or payment or redemption notice, and any such
notice  may  state  that no  representation  is made  as to the  correctness  or
accuracy of the  "CUSIP"  number(s)  printed in the notice or on the Notes,  and
that reliance may be placed only on the other identification  numbers printed on
the Notes and any such  redemption  or  exchange  shall not be  affected  by any
defect in or omission of such  number(s).  The Company shall promptly notify the
Trustee of any changes in "CUSIP" numbers.

Section 2.15.     Book-Entry Provisions for Global Notes.
                  --------------------------------------

                  (a)      The Global Notes initially shall (i) be registered in
the name of the Depositary or the nominee of such Depositary,  (ii) be delivered
to the Trustee as custodian  for such  Depositary  and (iii) bear legends as set
forth in Section 2.17 hereof.

                  Members  of,  or  participants  in,  the  Depositary   ("Agent
Members")  shall have no rights under this  Indenture with respect to any Global
Note held on their behalf by the  Depositary  or under the Global Note,  and the
Depositary  may be  treated by the  Company,  the  Trustee  and any agent of the
Company or the Trustee as the absolute owner of the Global Note for all purposes
whatsoever.  Notwithstanding  the  foregoing,  nothing  herein shall prevent the
Company,  the  Trustee or any agent of the  Company or the  Trustee  from giving
effect to any written certification,  proxy or other authorization  furnished by
the Depositary or impair,  as between the Depositary and its Agent Members,  the
operation  of  customary  practices  governing  the  exercise of the rights of a
Holder.

                  (b)      Interests  of  beneficial  owners in the Global Notes
may only be exchanged for Certificated  Notes if (i) the Depositary (x) notifies
the Company  that it is unwilling  or unable to continue as  Depositary  for any
Global Note and the Company  fails to appoint a successor  depositary  within 60
days or

                                      -20-

<PAGE>

(y) has ceased to be a clearing  company  registered  under the  Exchange Act or
(ii) at the request of a Holder,  if there shall have occurred and be continuing
an Event of Default with respect to the Notes.

                  (c)      In connection with the transfer of Global Notes as an
entirety to beneficial  owners pursuant to paragraph (b), the Global Notes shall
be deemed to be  surrendered  to the Trustee for  cancellation,  and the Company
shall execute,  and the Trustee shall, upon receipt of an  authentication  order
from the  Company  in the form of an  Officers'  Certificate,  authenticate  and
deliver,  to each  beneficial  owner  identified by the Depositary in writing in
exchange for its  beneficial  interest in the Global Notes,  an equal  aggregate
principal amount of Certificated Notes of authorized denominations.

                  (d)      Any   Certificated  Note  constituting  a  Restricted
Security  delivered  in exchange  for an  interest in a Global Note  pursuant to
paragraphs  (b) and (c),  except as  otherwise  provided by Section 2.16 hereof,
shall bear the Private Placement Legend.

                  (e)      The  Holder of any Global Note may grant  proxies and
otherwise  authorize  any Person,  including  Agent Members and Persons that may
hold  interests  through  Agent  Members,  to take any action  which a Holder is
entitled to take under this Indenture or the Notes.

Section 2.16.     Registration of Transfers and Exchanges.
                  ---------------------------------------

                  (a)      Transfer  and Exchange of  Certificated  Notes.  When
Certificated  Notes  are  presented  to the  Registrar  or  co-Registrar  with a
request:

                           (i) to  register  the  transfer  of the  Certificated
                  Notes; or

                           (ii) to exchange such Certificated Notes for an equal
                  principal  amount of  Certificated  Notes of other  authorized
                  denominations,

the Registrar or  co-Registrar  shall register the transfer or make the exchange
as  requested  if the  requirements  under this  Indenture  as set forth in this
Section  2.16  for  such  transactions  are  met;  provided,  however,  that the
Certificated  Notes  presented or surrendered  for  registration  of transfer or
exchange:

                  (I)  shall  be  duly  endorsed  or  accompanied  by a  written
         instrument  of  transfer  in  form  satisfactory  to the  Registrar  or
         co-Registrar,  duly executed by the Holder thereof or his attorney duly
         authorized in writing; and

                  (II) in the case of  Certificated  Notes the offer and sale of
         which  have  not  been  registered  under  the  Securities  Act and are
         presented  for transfer or exchange  prior to (x) the date which is two
         years after the later of the date of  original  issue and the last date
         on which the Company or any  Affiliate  of the Company was the owner of
         such Note, or any predecessor  thereto and (y) such later date, if any,
         as may be  required by any  subsequent  change in  applicable  law (the
         "Resale  Restriction  Termination Date"), such Certificated Notes shall
         be accompanied, in the sole discretion of the Company, by the following
         additional information and documents, as applicable:

                           (A) if such  Certificated  Note is being delivered to
                  the Registrar or co-Registrar by a Holder for  registration in
                  the name of such Holder,  without transfer, a certification to
                  that effect  (substantially  in the form of Exhibit C hereto);
                  or

                                      -21-

<PAGE>

                           (B) if such Certificated Note is being transferred to
                  a Qualified  Institutional Buyer in accordance with Rule 144A,
                  a certification to that effect  (substantially  in the form of
                  Exhibit C hereto); or

                           (C) if such Certificated Note is being transferred in
                  reliance on Regulation S, delivery of a certification  to that
                  effect  (substantially  in the form of Exhibit C hereto) and a
                  transferor    certificate    for    Regulation   S   transfers
                  (substantially in the form of Exhibit E hereto); or

                           (D) if such Certificated Note is being transferred in
                  reliance on Rule 144 under the Securities  Act,  delivery of a
                  certification  to that  effect  (substantially  in the form of
                  Exhibit C  hereto)  and,  at the  option  of the  Company,  an
                  Opinion of Counsel  reasonably  satisfactory to the Company to
                  the  effect  that  such  transfer  is in  compliance  with the
                  Securities Act; or

                           (E) if such Certificated Note is being transferred in
                  reliance   on   another   exemption   from  the   registration
                  requirements of the Securities  Act, a  certification  to that
                  effect (substantially in the form of Exhibit C hereto) and, at
                  the option of the  Company,  an Opinion of Counsel  reasonably
                  satisfactory  to the Company to the effect that such  transfer
                  is in compliance with the Securities Act.

                  (b) Transfer and  Exchange of Global  Notes.  The transfer and
exchange  of Global  Notes or  beneficial  interests  therein  shall be effected
through  the  Depositary  in  accordance  with  this  Indenture  (including  the
restrictions  on transfer set forth herein) and the procedures of the Depositary
therefor. Upon receipt by the Registrar or co-Registrar of written instructions,
or  such  other  instruction  as is  customary  for  the  Depositary,  from  the
Depositary  or its  nominee,  requesting  the  registration  of  transfer  of an
interest in a Rule 144A Global Note or Regulation S Global Note, as the case may
be,  together  with, in the case of a transfer from a Rule 144A Global Note to a
Regulation S Global Note,  certificates  in the form of Exhibits C and D and, in
the case of a transfer  from a  Regulation  S Global  Note to a Rule 144A Global
Note,  a  certificate  in the form of Exhibit C,  together  with the  applicable
Global Notes (or, if the  applicable  type of Global Note  required to represent
the interest as requested to be  transferred is not then  outstanding,  only the
Global Note  representing  the interest  being  transferred),  the  Registrar or
Co-Registrar  shall  cancel such Global  Notes (or Global  Note) and the Company
shall issue and the Trustee shall,  upon receipt of an  authentication  order in
the form of an Officers'  Certificate  in  accordance  with Section 2.02 hereof,
authenticate  new Global Notes of the types so canceled (or the type so canceled
and  applicable  type  required to  represent  the  interest as  requested to be
transferred)  reflecting the  applicable  increase and decrease of the principal
amount of Notes represented by such types of Global Notes, giving effect to such
transfer.  If the  applicable  type of Global  Note  required to  represent  the
interest as requested to be transferred  is not  outstanding at the time of such
request,   the  Company  shall  issue  and  the  Trustee  shall,   upon  written
instructions   from  the  Company  in  accordance   with  Section  2.02  hereof,
authenticate  a new Global Note of such type in  principal  amount  equal to the
principal amount of the interest requested to be transferred.

                  (c) Other  Transfers.  Any  transfer of  Restricted  Notes not
described above (other than a transfer of a beneficial interest in a Global Note
that does not involve an exchange of such interest for a Certificated  Note or a
beneficial interest in another Global Note, which must be effected in accordance
with applicable law and the rules and procedures of the  Depositary,  but is not
subject to any  procedure  required by this  Indenture)  shall be made only upon
receipt by the Registrar of such Opinions of Counsel,  certificates and/or other
information  reasonably  required by and  satisfactory  to it in order to ensure
compliance with the Securities Act.

                                      -22-

<PAGE>

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

                  (e) Private Placement Legend.  Upon the transfer,  exchange or
replacement of Notes not bearing the Private Placement Legend,  the Registrar or
co-Registrar  shall deliver Notes that do not bear the Private Placement Legend.
Upon the  transfer,  exchange  or  replacement  of  Notes  bearing  the  Private
Placement  Legend,  the Registrar or co-Registrar  shall deliver only Notes that
bear the Private  Placement Legend unless,  and the Trustee is hereby authorized
to  deliver  Notes  without  the  Private  Placement  Legend  if (i) the  Resale
Restriction Termination Date shall have occurred, (ii) there is delivered to the
Trustee an Opinion of Counsel  reasonably  satisfactory  to the  Company and the
Trustee to the effect that neither such legend nor the related  restrictions  on
transfer are required in order to maintain compliance with the provisions of the
Securities  Act or (iii)  such  Note  has been  sold  pursuant  to an  effective
registration statement under the Securities Act.

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

                  The  Trustee  shall  have no  obligation  or duty to  monitor,
determine or inquire as to compliance with any  restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Note (including any transfers  between or among Agent Members or
beneficial owners of interest in any Global Note) other than to require delivery
of such  certificates  and other  documentation  or  evidence  as are  expressly
required by, and to do so if and when  expressly  required by the terms of, this
Indenture,  and to examine the same to determine  substantial  compliance  as to
form with the express requirements hereof.

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

Section 2.17.     Restrictive Legends.
                  -------------------

                  Each Note that  constitutes a Restricted  Security  shall bear
the following legend (the "Private  Placement Legend") on the face thereof until
September  25, 2002,  unless  otherwise  agreed to by the Company and the Holder
thereof:

                  THE NOTE (OR ITS PREDECESSORS) EVIDENCED HEREBY WAS ORIGINALLY
         ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
         UNITED  STATES  SECURITIES  ACT OF  1933,  AS  AMENDED,  AND  THE  NOTE
         EVIDENCED HEREBY MAY NOT BE OFFERED,  SOLD OR OTHERWISE  TRANSFERRED IN
         THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE  EXEMPTION THEREFROM.
         EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
         SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5
         OF THE  SECURITIES  ACT  PROVIDED  BY RULE 144A  THEREUNDER  OR ANOTHER
         EXEMPTION  UNDER THE  SECURITIES  ACT. THE HOLDER OF THE NOTE EVIDENCED
         HEREBY  AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH NOTE MAY BE
         RESOLD,  PLEDGED OR OTHERWISE  TRANSFERRED  ONLY (i)(a) TO A PERSON WHO
         THE

                                      -23-

<PAGE>

         SELLER  REASONABLY  BELIEVES  IS A  QUALIFIED  INSTITUTIONAL  BUYER (AS
         DEFINED IN RULE 144A UNDER THE SECURITIES ACT),  PURCHASING FOR ITS OWN
         ACCOUNT IN A TRANSACTION  MEETING THE  REQUIREMENTS  OF RULE 144A UNDER
         THE SECURITIES  ACT, (b) IN A TRANSACTION  MEETING THE  REQUIREMENTS OF
         RULE 144 OF THE  SECURITIES  ACT,  (c) OUTSIDE  THE UNITED  STATES TO A
         FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF
         REGULATION S UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER
         EXEMPTION FROM THE  REGISTRATION  REQUIREMENTS  OF THE SECURITIES  ACT,
         PROVIDED  THAT IN THE CASE OF A TRANSFER  PURSUANT  TO THIS  CLAUSE (d)
         SUCH  TRANSFER  IS  SUBJECT  TO THE  RECEIPT  BY THE  TRUSTEE  (AND THE
         COMPANY, IF IT SO REQUESTS) OF A CERTIFICATION OF THE TRANSFEROR AND AN
         OPINION OF COUNSEL TO THE EFFECT THAT SUCH  TRANSFER  IS IN  COMPLIANCE
         WITH THE  SECURITIES  ACT, (ii) TO THE COMPANY OR (iii)  PURSUANT TO AN
         EFFECTIVE  REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH
         CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
         THE  UNITED  STATES  OR  ANY  OTHER  APPLICABLE  JURISDICTION  AND  THE
         INDENTURE  GOVERNING  THE  NOTES  AND (B) THE  HOLDER  WILL,  AND  EACH
         SUBSEQUENT  HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER  FROM IT OF THE
         NOTE  EVIDENCED  HEREBY  OF THE  RESALE  RESTRICTIONS  SET FORTH IN (A)
         ABOVE.

                  Each Global Note shall also bear the following legend:

                  THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
         HEREINAFTER  REFERRED TO AND IS  REGISTERED IN THE NAME OF A DEPOSITARY
         OR A NOMINEE OF A DEPOSITARY  OR A SUCCESSOR  DEPOSITARY.  THIS NOTE IS
         NOT  EXCHANGEABLE  FOR NOTES  REGISTERED  IN THE NAME OF A PERSON OTHER
         THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED  CIRCUMSTANCES
         DESCRIBED IN THE INDENTURE,  AND NO TRANSFER OF THIS NOTE (OTHER THAN A
         TRANSFER OF THIS NOTE AS A WHOLE BY THE  DEPOSITARY TO A NOMINEE OF THE
         DEPOSITARY  OR BY A NOMINEE  OF THE  DEPOSITARY  TO THE  DEPOSITARY  OR
         ANOTHER  NOMINEE OF THE  DEPOSITARY)  MAY BE  REGISTERED  EXCEPT IN THE
         LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

                  TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN
         WHOLE,  BUT NOT IN PART, AND TRANSFERS OF INTERESTS IN THIS GLOBAL NOTE
         SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE  RESTRICTIONS
         SET FORTH IN SECTION 2.16 OF THE INDENTURE.

                                    ARTICLE 3

                                   REDEMPTION

Section 3.01.     Notices to Trustee.
                  ------------------

                  If the Company  elects to redeem Notes pursuant to paragraph 6
of the Notes, at least 60 days prior to the Redemption Date or during such other
period as the  Trustee  may agree to, the  Company  shall  notify the Trustee in
writing of the Redemption Date, the principal amount of Notes to be redeemed and
the

                                      -24-

<PAGE>

Redemption  Price, and deliver to the Trustee an Officers'  Certificate  stating
that such redemption will comply with the conditions contained herein and in the
Notes, as appropriate.

Section 3.02.     Selection of Notes To Be Redeemed.
                  ---------------------------------

                  (a) In the  event  that  less  than all of the Notes are to be
redeemed at any time, selection of the Notes to be redeemed shall be made by the
Trustee on a pro rata basis,  by lot or by such method as the Trustee shall deem
fair and equitable;  provided,  however,  that no Notes of a principal amount of
$1,000 or less shall be redeemed in part; provided,  further,  that if a partial
redemption  is made with the proceeds of any Equity  Offering,  selection of the
Notes or portions  thereof for redemption shall be made by the Trustee only on a
pro rata basis or on as nearly a pro rata basis as is  practicable  (subject  to
the procedures of the Depositary),  unless such method is otherwise  prohibited.
The Trustee shall make the selection from the  outstanding  Notes not previously
called for redemption.  The Trustee shall promptly notify the Company in writing
of the Notes selected for redemption  and, in the case of any Notes selected for
partial  redemption,  the principal  amount of the Notes to be redeemed.  In the
event of a partial  redemption by lot, the Trustee  shall select the  particular
Notes  to be  redeemed  not  less  than 30 nor  more  than 60 days  prior to the
relevant  Redemption Date from the Outstanding  Notes not previously  called for
redemption.  The Company  may redeem  Notes in  denominations  of $1,000 only in
whole.  The Trustee may select for redemption  portions  (equal to $1,000 or any
integral  multiple of $1,000) of the principal of Notes that have  denominations
larger than $1,000.  A new Note in a principal  amount  equal to the  unredeemed
portion  thereof will be issued in the name of the Holder  thereof upon delivery
of the original Note to the Paying Agent and  cancellation of the original Note.
On and after the  Redemption  Date,  interest  will  cease to accrue on Notes or
portions thereof called for redemption as long as the Company has made a deposit
with the Paying Agent in U.S.  legal tender in  satisfaction  of the  applicable
Redemption Price pursuant to this Indenture.

                  (b) For all  purposes  of this  Indenture,  unless the context
otherwise requires, all provisions relating to redemption of Notes shall relate,
in the case of any Note  redeemed or to be redeemed only in part, to the portion
of the principal amount of that Note which has been or is to be redeemed.

Section 3.03.     Notice of Redemption.
                  --------------------

                  Notice of  redemption  shall be mailed by first  class mail at
least 30 but not more than 60 calendar days before the  Redemption  Date to each
Holder of Notes to be redeemed at the registered  address of such Holder. If any
Note is to be redeemed in part only,  the notice of  redemption  that relates to
such  Note  shall  state the  portion  of the  principal  amount  thereof  to be
redeemed.  If the Company  elects to have the Trustee give notice of redemption,
the Trustee  shall give  notice in the name of the Company and at the  Company's
expense;  provided,  however,  that the  Company  shall  furnish the Trustee all
information required to be contained in the notice.

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

                  (1) the Redemption Date;

                  (2) the Redemption  Price and the amount of accrued  interest,
         if any, to be paid;

                  (3) whether or not the Company is  redeeming  all  outstanding
         Notes and if any Note is being  redeemed  in part,  the  portion of the
         principal  amount (equal to $1,000 in principal  amount or any integral
         multiple  thereof) of such Note to be redeemed  and that,  on and after
         the Redemption Date, upon

                                      -25-

<PAGE>

         surrender of such Note,  a new Note or Notes in principal  amount equal
         to the unredeemed portion thereof will be issued;

                  (4) the name,  address  and  telephone  number  of the  Paying
         Agent;

                  (5) that Notes called for  redemption  must be  surrendered to
         the Paying Agent at the address specified in such notice to collect the
         Redemption Price plus accrued interest, if any;

                  (6) that, unless the Company defaults in making the redemption
         payment,  interest on Notes called for  redemption  ceases to accrue on
         and  after  the  Redemption  Date and the only  remaining  right of the
         Holders is to  receive  payment of the  Redemption  Price plus  accrued
         interest  to the  Redemption  Date upon  surrender  of the Notes to the
         Paying Agent;

                  (7) the  subparagraph of the Notes pursuant to which the Notes
         called for redemption are being redeemed;

                  (8) if  fewer  than  all the  Notes  are to be  redeemed,  the
         identification  of the  particular  Notes (or  portion  thereof)  to be
         redeemed,  as well as the  aggregate  principal  amount  of Notes to be
         redeemed and the aggregate  principal amount of Notes to be outstanding
         after such partial redemption; and

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

Section 3.04.     Effect of Notice of Redemption.
                  ------------------------------

                  Once the notice of redemption described in Section 3.03 hereof
is mailed,  Notes called for redemption become due and payable on the Redemption
Date and at the Redemption Price,  including any premium,  plus accrued interest
to the Redemption  Date, if any. Upon surrender to the Paying Agent,  such Notes
shall be paid at the  Redemption  Price,  including  any  premium,  plus accrued
interest to the Redemption Date, if any; provided that if the Redemption Date is
after a Record Date and on or prior to the Interest  Payment  Date,  the accrued
interest shall be payable to the Holder of the redeemed Notes  registered on the
relevant Record Date.

Section 3.05.     Deposit of Redemption Price.
                  ---------------------------

                  On or prior to 10:00 a.m., New York City time, on the relevant
Redemption  Date,  the Company  shall have  deposited  with the Paying  Agent in
immediately  available funds U.S. legal tender  sufficient to pay the Redemption
Price of and accrued interest, if any, on all Notes to be redeemed on that date.
The Paying Agent shall return to the Company any money deposited with the Paying
Agent by the  Company in excess of the amount  necessary  to pay the  Redemption
Price of and accrued interest, if any, on all Notes to be redeemed.

                  On and  after  any  Redemption  Date,  if  U.S.  legal  tender
sufficient to pay the Redemption Price of and accrued interest, if any, on Notes
called for  redemption  shall have been made  available in  accordance  with the
preceding  paragraph,  the Notes  called  for  redemption  will  cease to accrue
interest  and the only  right of the  Holders  of such  Notes will be to receive
payment of the Redemption  Price of and,  subject to the proviso in Section 3.04
hereof,  accrued and unpaid  interest on such Notes to the  Redemption  Date, if
any.  If any Note  called for  redemption  shall not be so paid,  interest  will
continue to accrue and be paid,  from the Redemption  Date until such redemption
payment is made,  on the unpaid  principal of the Note and any interest not paid
on such unpaid  principal,  in each case, at the rate and in the manner provided
for in Section 2.12 hereof.

                                      -26-

<PAGE>

Section 3.06.     Notes Redeemed in Part.
                  ----------------------

                  Upon surrender of a Note that is redeemed in part, the Company
shall execute and the Trustee shall authenticate, at the expense of the Company,
for a Holder a new Note equal in principal  amount to the unredeemed  portion of
the Note surrendered;  provided that each new Note will be in a principal amount
of $1,000 or an integral multiple of $1,000.

                                    ARTICLE 4

                                    COVENANTS

Section 4.01.     Payment of Notes.
                  ----------------

                  The Company shall pay the principal of and interest (including
all Additional Interest as provided in the Registration Rights Agreement) on the
Notes on the dates and in the manner  provided in the Notes and this  Indenture.
An installment of principal or interest shall be considered  paid on the date it
is due if the Trustee or Paying Agent holds, for the benefit of the Holders,  on
that date money  designated for and  sufficient to pay such  installment in full
and is not  prohibited  from paying  such money to the  Holders  pursuant to the
terms of this Indenture.

                  The  Company  shall pay  interest  on  overdue  principal  and
interest on overdue  interest,  to the extent  lawful as provided for in Section
2.12 hereof.

Section 4.02.     Reports.
                  -------

                  Whether or not  required by the rules and  regulations  of the
Commission,  so long as any Notes are  outstanding,  the Company shall file with
the Commission,  to the extent such filings are accepted by the Commission,  and
shall  furnish  (within  15 days after such  filing) to the  Trustee  and to the
Holders all quarterly and annual  reports and other  information,  documents and
reports  that would be  required  to be filed with the  Commission  pursuant  to
Section 13 of the Exchange  Act if the Company were  required to file under such
section.  In  addition,  the Company  shall make such  information  available to
prospective purchasers of the Notes,  securities analysts and broker-dealers who
request it in writing.  Delivery of such reports,  information  and documents to
the Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable  from  information  contained  therein,   including  the  Company's
compliance  with any of its  covenants  hereunder  (as to which the  Trustee  is
entitled to rely exclusively on Officers' Certificates).

Section 4.03.     Waiver of Stay, Extension or Usury Laws.
                  ---------------------------------------

                  The Company  covenants  (to the extent that it may lawfully do
so)  that it will  not at any time  insist  upon,  or  plead  (as a  defense  or
otherwise)  or in any manner  whatsoever  claim or take the benefit or advantage
of, any stay or extension law or any usury law or other law which would prohibit
or forgive the  Company  from  paying all or any  portion of the  principal  of,
premium, if any, and/or interest on the Notes as contemplated  herein,  wherever
enacted,  now or at any time  hereafter  in  force,  or  which  may  affect  the
covenants or the performance of this Indenture; and the Company hereby expressly
waives all benefit or advantage of any such law, and covenants  that it will not
hinder,  delay or impede  the  execution  of any  power  herein  granted  to the
Trustee,  but will suffer and permit the execution of every such power as though
no such law had been enacted.

                                      -27-

<PAGE>

Section 4.04.     Compliance Certificate; Notice of Default; Tax Information.
                  ----------------------------------------------------------

                  (a) The Company shall  deliver to the Trustee,  within 90 days
after the end of the  Company's  fiscal  year  commencing  with the fiscal  year
ending December 31, 2000, an Officers'  Certificate (one of the signers of which
shall  be the  principal  executive  officer,  principal  financial  officer  or
principal  accounting officer of the Company) stating that to the best of his or
her  knowledge  no  Default  or Event  of  Default  has  occurred,  listing  all
Restricted  Payments for such year,  and if a Default or Event of Default  shall
have occurred,  describing all of such Defaults or Events of Default of which he
or she may have  knowledge  and what action the Company is taking or proposes to
take with  respect  thereto.  The  Officers'  Certificate  shall also notify the
Trustee  should  the  Company  elect to change  the manner in which it fixes its
fiscal year end.

                  (b) The annual  financial  statements  delivered  pursuant  to
Section 4.02 shall be accompanied  by a written report  addressed to the Trustee
of the Company's  independent  accountants  (who shall be a firm of  established
national reputation) that in conducting their audit of such financial statements
nothing  has come to their  attention  that would  lead them to  believe  that a
Default or Event of Default has occurred  under this  Indenture  insofar as they
relate to accounting matters or, if any such violation has occurred,  specifying
the  nature and  period of  existence  thereof,  it being  understood  that such
accountants  shall not be liable  directly or  indirectly  to any Person for any
failure to obtain knowledge of any such violation.

                  (c) If (i) any Default or Event of Default has occurred and is
continuing  or (ii) any  Holder  seeks to  exercise  any remedy  hereunder  with
respect to a claimed  default  under this  Indenture  or the Notes,  the Company
shall deliver to the Trustee,  at its address set forth in Section 11.02 hereof,
by  registered  or  certified  mail or by  telegram  or  facsimile  transmission
followed by hard copy by registered or certified  mail an Officers'  Certificate
specifying such Default or Event of Default,  notice or other action, the status
thereof  and what  action  the  Company  is taking or  proposes  to take,  which
Officers' Certificate shall be so delivered within five (5) Business Days of its
becoming aware of such occurrence.

Section 4.05.     Payment of Taxes and Other Claims.
                  ---------------------------------

                  The  Company  shall  pay or  discharge  or cause to be paid or
discharged,  before the same shall become  delinquent,  (i) all material  taxes,
assessments  and  governmental  charges  (including  withholding  taxes  and any
penalties,  interest and additions to taxes) levied or imposed upon it or any of
its  Subsidiaries  or properties of it or any of its  Subsidiaries  and (ii) all
lawful claims for labor,  materials and supplies  that, if unpaid,  might by law
become a Lien  upon the  property  of it or any of its  Subsidiaries;  provided,
however,  that the Company shall not be required to pay or discharge or cause to
be paid or discharged  any such tax,  assessment,  charge or claim whose amount,
applicability  or  validity  is being  contested  in good  faith by  appropriate
proceedings  properly  instituted  and  diligently  conducted for which adequate
reserves, to the extent required under GAAP, have been taken.

Section 4.06.     Corporate Existence.
                  -------------------

                  Subject to Article 5 hereof,  the Company shall do or cause to
be done all things  necessary  to preserve and keep in full force and effect (i)
its corporate  existence,  and the corporate,  partnership or limited  liability
company or other existence of each Subsidiary, in accordance with the respective
organizational  documents (as the same may be amended from time to time) of each
Subsidiary  and the  material  rights  (charter  and  statutory),  licenses  and
franchises  of the  Company  and its  Subsidiaries  except  where the failure to
preserve  and keep in full  force  and  effect  any such  rights,  licenses  and
franchises shall not have a material adverse effect on the financial  condition,
business, operations or prospects of the Company and its Subsidiaries taken as a
whole;  and provided that the Company shall not be required to preserve any such
right, license or franchise, or

                                      -28-

<PAGE>

the corporate,  limited liability company, partnership or other existence of any
of the  Subsidiaries,  if the Board of Directors of the Company shall  determine
that the  preservation  thereof  is no longer  desirable  in the  conduct of the
business of the Company and its Subsidiaries, taken as a whole.

Section 4.07.     Maintenance of Office or Agency.
                  -------------------------------

                  The Company shall  maintain an office or agency in the Borough
of  Manhattan,  The  City  of New  York,  where  Notes  may be  surrendered  for
registration of transfer or exchange or for  presentation  for payment and where
notices  and  demands  to or upon the  Company  in respect of the Notes and this
Indenture  may be served.  The Company shall give prompt  written  notice to the
Trustee of the  location,  and any  change in the  location,  of such  office or
agency.  If at any time the  Company  shall fail to maintain  any such  required
office or agency or shall fail to furnish the Trustee with the address  thereof,
such presentations, surrenders, notices and demands may be made or served at the
address of the Trustee as set forth in Section 11.02 hereof.

                  The Company may also from time to time  designate  one or more
other offices or agencies  where the Notes may be presented or  surrendered  for
any or all such  purposes and may from time to time  rescind such  designations.
The Company shall give prompt written notice to the Trustee of such  designation
or  rescission  and of any change in the  location  of any such other  office or
agency.

                  The Company hereby  initially  designates the Corporate  Trust
Office of the  Trustee set forth in Section  11.02  hereof as such office of the
Company in the Borough of Manhattan, The City of New York.

Section 4.08.     Compliance with Laws.
                  --------------------

                  The  Company  shall  comply,  and  shall  cause  each  of  its
Subsidiaries to comply, with all applicable statutes, rules, regulations, orders
and  restrictions  of the  United  States of  America  and all  other  sovereign
nations,  all  states  and  municipalities  thereof,  and  of  any  governmental
department,   commission,   board,  regulatory  authority,  bureau,  agency  and
instrumentality of the foregoing,  in respect of the conduct of their respective
businesses  and the ownership of their  respective  properties,  except for such
noncompliances  as would not in the aggregate have a material  adverse effect on
the  financial  condition  or  results  of  operations  of the  Company  and its
Subsidiaries taken as a whole.

Section 4.09.     Maintenance of Properties and Insurance.
                  ---------------------------------------

                  (a) The Company shall cause all material  properties  owned by
or leased by it or any of its Subsidiaries  used or useful to the conduct of the
Company's  business or the business of any of its  Subsidiaries to be maintained
and kept in normal  condition,  repair and working  order and supplied  with all
necessary equipment and shall cause to be made all necessary repairs,  renewals,
replacements,  betterments and improvements  thereof, all as in its judgment may
be necessary,  so that the business  carried on in  connection  therewith may be
properly and  advantageously  conducted at all times;  provided,  however,  that
nothing  in  this  Section  4.09  shall  prevent  the  Company  or  any  of  its
Subsidiaries from discontinuing the use, operation or maintenance of any of such
properties,  or disposing of any of them, if such discontinuance or disposal is,
in the  judgment  of the Board of  Directors  of the  Company or of the Board of
Directors of the Subsidiary of the Company  concerned,  desirable in the conduct
of the business of the Company or any Subsidiary of the Company.

                  (b)  The  Company   shall   maintain,   and  shall  cause  the
Subsidiaries to maintain, insurance with responsible carriers against such risks
and in such amounts, and with such deductibles, retentions, self-insured amounts
and co-insurance provisions,  as, in the reasonable judgment of the Company, may
be necessary.

                                      -29-

<PAGE>

Section 4.10.     Limitation on Restricted Payments.
                  ---------------------------------

                  The  Company  shall  not,  and  shall  not  permit  any of its
Subsidiaries,  directly or indirectly,  to make any Restricted Payment if at the
time of such  Restricted  Payment:  (i) a Default or Event of Default shall have
occurred and be continuing or shall occur as a consequence  thereof;  (ii) after
giving effect to the proposed Restricted Payment,  the amount of such Restricted
Payment,  when added to the  aggregate  amount of all  Restricted  Payments made
after the Issue Date, exceeds the sum of: (a) 50% of the Company's  Consolidated
Net Income accrued  during the period (taken as a single  period)  commencing on
July 1, 1997 to and including the fiscal quarter ended  immediately prior to the
date of such Restricted  Payment (or, if such aggregate  Consolidated Net Income
shall be a deficit,  minus  100% of such  aggregate  deficit);  (b) the net cash
proceeds from the issuance and sale of the  Company's  Capital Stock (other than
to a Subsidiary of the Company) that is not Disqualified Stock during the period
(taken as a single period)  commencing with the Issue Date; and (c) $50,000,000;
or  (iii)  the  Company  would  not be able to  incur  an  additional  $1.00  of
Indebtedness pursuant to Section 4.11 hereof.

                  Notwithstanding  the  foregoing,  the Company may: (w) pay any
dividend  within 60 days after the date of  declaration  thereof if the  payment
thereof  would have complied  with the  limitations  of this Section 4.10 on the
date of  declaration;  (x) retire shares of the  Company's  Capital Stock or the
Company's or a Subsidiary of the Company's Indebtedness out of the proceeds of a
substantially  concurrent  sale (other than to a  Subsidiary  of the Company) of
shares of the Company's Capital Stock (other than Disqualified  Stock); (y) make
Investments in Joint  Ventures,  when added to the aggregate  amount of all such
other  Investments  made  pursuant to this clause (y) after the Issue Date,  not
exceeding  at any  time 5% of  Consolidated  Tangible  Assets  (with  each  such
Investment  being  valued as of the date made and without  regard to  subsequent
changes in value); and (z) make Investments,  when added to the aggregate amount
of all such other  Investments  made pursuant to this clause (z) after the Issue
Date, not exceeding at any time 2.5% of Consolidated  Tangible Assets (with each
such  Investment  being  valued  as of the  date  made  and  without  regard  to
subsequent changes in value);  provided,  however,  that each Restricted Payment
described  in clauses (w) and (x) above shall be taken into account for purposes
of computing the aggregate amount of all Restricted  Payments pursuant to clause
(ii) of the immediately preceding paragraph.

Section 4.11.     Limitation on Additional Indebtedness and Subsidiary Preferred
                  Stock.

                  (a) After the Issue Date, (i) the Company shall not, and shall
not permit any of its  Subsidiaries to, directly or indirectly,  create,  incur,
issue,  assume,  guarantee,  extend the Stated Maturity of, or otherwise  become
liable with respect to  (collectively,  "incur"),  any Indebtedness  (including,
without limitation, Acquired Indebtedness) and (ii) the Company shall not permit
any of its  Subsidiaries  to issue  (except to the  Company or any of its Wholly
Owned  Subsidiaries)  or create any Preferred  Stock or permit any Person (other
than the Company or a Wholly  Owned  Subsidiary)  to own or hold any interest in
any Preferred Stock of any such Subsidiary;  provided, however, that the Company
may incur  Indebtedness  and the Company may permit its Subsidiaries to issue or
create  Preferred  Stock if, after giving effect thereto,  the Company's  EBITDA
Coverage  Ratio on the date thereof would be at least 2.5 to 1,  determined on a
pro forma basis as if the  incurrence  of such  additional  Indebtedness  or the
issuance of such Preferred Stock (declared to have an aggregate principal amount
equal to the aggregate  liquidation  value of such Preferred Stock), as the case
may be, and the application of the net proceeds  therefrom,  had occurred at the
beginning of the  four-quarter  period used to calculate  the  Company's  EBITDA
Coverage Ratio.

                  (b)  Notwithstanding  the foregoing,  and  irrespective of the
EBITDA Coverage Ratio, in addition to Existing Indebtedness: (i) the Company may
incur  Indebtedness  pursuant  to the Notes  issued  on the  Issue  Date and the
Exchange  Notes  issued in exchange  for such Notes;  (ii) the Company may incur
Indebtedness under the New Credit Agreement in an aggregate  principal amount at
any time not to exceed $400,000,000;

                                      -30-

<PAGE>

(iii) the Company and its Subsidiaries may incur Refinancing Indebtedness;  (iv)
the Company may incur any  Indebtedness  to any Subsidiary or any Subsidiary may
incur any Indebtedness to the Company or to any Subsidiary;  (v) the Company and
its Subsidiaries may incur any Indebtedness evidenced by letters of credit which
are used in the ordinary course of business of the Company and its  Subsidiaries
to secure workers' compensation and other insurance coverages;  (vi) the Company
and its Subsidiaries may incur  Capitalized  Lease  Obligations and Attributable
Indebtedness,  in each case  excluding  Existing  Indebtedness,  in an aggregate
principal  amount at any one time  outstanding not to exceed 10% of Consolidated
Tangible   Assets;   and  (vii)  the  Subsidiaries  of  the  Company  may  incur
Indebtedness,  excluding Existing Indebtedness, in an aggregate principal amount
at any time outstanding not to exceed $250,000,000,  in addition to Indebtedness
permitted to be incurred by Subsidiaries pursuant to the foregoing clauses (iii)
- (vi).

                  (c) Notwithstanding the foregoing,  the Company may permit any
Subsidiary which is a partnership formed to operate a single healthcare facility
to issue or create  Preferred  Stock,  provided that the aggregate amount of all
such  Preferred  Stock  outstanding  after  giving  effect to such  issuance  or
creation shall not exceed 1% of  Consolidated  Tangible Assets as of the date of
such issuance or creation.

Section 4.12.     Limitation on Asset Sales.
                  -------------------------

                  (a) The  Company  shall  not,  and shall not permit any of its
Subsidiaries  to,  consummate  any Asset  Sale  unless  (i) the  Company or such
Subsidiary receives  consideration at the time of such Asset Sale at least equal
to the Fair  Market  Value of the  assets  included  in such  Asset  Sale,  (ii)
immediately  before and  immediately  after giving effect to such Asset Sale, no
Default or Event of Default shall have  occurred and be continuing  and (iii) at
least  75% of the  consideration  received  by the  Company  or such  Subsidiary
therefor is in the form of cash paid at the closing thereof, provided,  however,
that this clause  (iii) shall not apply if,  after  giving  effect to such Asset
Sale, the aggregate  principal  amount of all notes or similar debt  obligations
and Fair Market Value of all equity securities  received by the Company from all
Asset  Sales  since the  Issue  Date  (other  than such  notes or  similar  debt
obligations and such equity securities  converted into or otherwise  disposed of
for cash and applied in accordance  with the second  succeeding  sentence) would
not  exceed  2.5%  of  Consolidated   Tangible   Assets.   The  amount  (without
duplication) of any (x) Indebtedness  (other than Subordinated  Indebtedness) of
the Company or such  Subsidiary  that is expressly  assumed by the transferee in
such Asset Sale and with respect to which the Company or such Subsidiary, as the
case may be, is unconditionally  released by the holder of such Indebtedness and
(y) any notes,  securities or similar  obligations or items of property received
from such transferee that are  immediately  converted,  sold or exchanged by the
Company  or such  Subsidiary  for cash (to the  extent of the cash  actually  so
received),  shall be deemed to be cash for purposes of this Section  4.12. If at
any time any non-cash  consideration received by the Company or such Subsidiary,
as the case may be, in connection  with any Asset Sale is converted into or sold
or otherwise  disposed of for cash (other than interest received with respect to
any  such  non-cash  consideration),   then  the  date  of  such  conversion  or
disposition  shall be deemed to constitute  the date of an Asset Sale  hereunder
and the Net Proceeds  thereof shall be applied in  accordance  with this Section
4.12. A transfer of assets by the Company to a Wholly Owned  Subsidiary  or by a
Wholly Owned  Subsidiary  to the Company or to another  Wholly Owned  Subsidiary
will  not  be  deemed  to be an  Asset  Sale,  and a  transfer  of  assets  that
constitutes a Restricted Payment and that is permitted under Section 4.10 hereof
will not be deemed to be an Asset Sale.

                  (b) If the Company or any Subsidiary engages in an Asset Sale,
the Company or such  Subsidiary  shall,  no later than 360 days after such Asset
Sale,  (i)  apply  all or any of the Net  Proceeds  therefrom  to  repay  Senior
Indebtedness in accordance with the applicable  provisions thereof,  (ii) invest
all or any part of the Net  Proceeds  therefrom  in the lines of business of the
Company or any of its Subsidiaries immediately prior to such investment or (iii)
any  combination of clauses (i) and (ii) above.  The amount of such Net Proceeds
not  applied or  invested as  provided  in this  paragraph  (b) will  constitute
"Excess Proceeds."

                                      -31-

<PAGE>

                  (c) When the  aggregate  amount of Excess  Proceeds  equals or
exceeds  $5,000,000,  the Company shall be required to make an offer to purchase
(an "Asset Sale Offer") from all Holders, an aggregate principal amount of Notes
equal to the amount of such Excess Proceeds as follows:

                  (i) The Company  shall make an Asset Sale Offer to all Holders
         in  accordance  with the  procedures  set forth in this Section 4.12 to
         purchase  the  maximum  principal  amount  (expressed  as a multiple of
         $1,000) of Notes that may be  purchased  out of the amount  (the "Asset
         Sale Payment Amount") of such Excess Proceeds.

                  (ii) The offer price for the Notes shall be payable in cash in
         an amount equal to 100% of the principal  amount of the Notes  tendered
         pursuant to such Asset Sale Offer, plus accrued and unpaid interest and
         Additional  Interest,  if any,  to the date such  Asset  Sale  Offer is
         consummated (the "Asset Sale Purchase  Price"),  in accordance with the
         procedures  set forth in this  Section  4.12.  To the  extent  that the
         aggregate  Asset Sale Purchase Price of Notes  tendered  pursuant to an
         Asset Sale Offer is less than the Asset Sale  Payment  Amount  relating
         thereto (such shortfall constituting a "Net Proceeds Deficiency"),  the
         Company may use such Net Proceeds Deficiency, or a portion thereof, for
         general corporate purposes.

                  (iii) If the  aggregate  Asset  Sale  Purchase  Price of Notes
         validly tendered and not withdrawn by holders thereof exceeds the Asset
         Sale Payment  Amount,  Notes to be purchased shall be selected on a pro
         rata basis.

                  (iv) Upon  completion  of such Asset Sale Offer in  accordance
         with the  foregoing  provisions,  the  amount of Excess  Proceeds  with
         respect  to which  such Asset Sale Offer was made shall be deemed to be
         zero.

                  In the event that any other  Indebtedness of the Company which
ranks pari passu with the Notes ("Other Debt")  requires an offer to purchase to
be made to repurchase  such Other Debt upon the  consummation  of an Asset Sale,
the Company may apply the Excess  Proceeds to both  purchase such Other Debt and
to make an Asset Sale Offer,  provided,  that the  purchase  price of such Other
Debt does not exceed 100% of the aggregate  principal  amount or accreted  value
thereof plus interest thereon. With respect to any Excess Proceeds,  the Company
shall  make the Asset  Sale  Offer in  respect  thereof  at the same time as the
analogous  offer to purchase is made pursuant to any Other Debt and the purchase
date in  respect  thereof  shall be the  same as the  purchase  date in  respect
thereof pursuant to any Other Debt.

                  With respect to any Asset Sale Offer effected pursuant to this
Section 4.12, to the extent the  aggregate  principal  amount of Notes and Other
Debt,  if any,  tendered  pursuant  to such Asset Sale Offer and the  concurrent
offer to purchase  with respect to such Other Debt exceeds the Excess  Proceeds,
such Notes and Other  Debt,  if any,  shall be  purchased  pro rata based on the
aggregate  principal  amount of such Notes and such Other Debt  tendered by each
holder thereof.

                  (d) If the  Company is  required  to make an Asset Sale Offer,
the Company  shall,  within 30 days  following the date  specified in clause (c)
above,  notify the Trustee  thereof and give  written  notice of such Asset Sale
Offer to each Holder by first-class  mail,  postage  prepaid,  at the address of
such Holder appearing in the register maintained by the Registrar, stating:

                  (1) that an Asset Sale Offer is being  made  pursuant  to this
         Section 4.12;

                                      -32-

<PAGE>

                  (2) that such Holders have the right to require the Company to
         apply the Excess  Proceeds to repurchase  the Notes at a purchase price
         in cash equal to 100% of the principal  amount thereof plus accrued and
         unpaid interest, if any, to the purchase date which shall be no earlier
         than 30 days and not later  than 60 days  from the date such  notice is
         mailed (the "Excess Proceeds Payment Date");

                  (3) that any Note not  tendered or accepted  for payment  will
         continue to accrue interest;

                  (4) that any Notes accepted for payment  pursuant to the Asset
         Sale Offer shall  cease to accrue  interest  after the Excess  Proceeds
         Payment Date;

                  (5) that  Holders  accepting  the  offer to have  their  Notes
         purchased  pursuant  to the  Asset  Sale  Offer  will  be  required  to
         surrender the Notes,  with the form entitled "Option of Holder to Elect
         Purchase" on the reverse of the Note completed,  to the Paying Agent at
         the address  specified  in the notice prior to the close of business on
         the Business Day preceding the Excess Proceeds Payment Date;

                  (6) that Holders will be entitled to withdraw their acceptance
         of the Asset Sale Offer if the Paying  Agent  receives,  not later than
         the close of business on the third  Business Day  preceding  the Excess
         Proceeds  Payment Date, a telegram,  facsimile  transmission  or letter
         setting forth the name of the Holder, the principal amount of the Notes
         delivered for purchase and a statement  that such Holder is withdrawing
         his or her election to have such Notes purchased;

                  (7)  that  if  the   aggregate   principal   amount  of  Notes
         surrendered by Holders exceeds the amount of Excess  Proceeds,  Company
         shall  select the Notes to be purchased on a pro rata basis so that the
         aggregate  amount of Notes so  purchased  equals  the  amount of Excess
         Proceeds  (with such  adjustments  as may be deemed  appropriate by the
         Company  so that only  Notes in  denominations  of  $1,000 or  integral
         multiples thereof shall be purchased);

                  (8) that Holders whose Notes are being  purchased only in part
         will be issued new Notes equal in principal  amount to the  unpurchased
         portion of the Notes surrendered; provided that each Note purchased and
         each such new Note issued shall be in an original  principal  amount in
         denominations of $1,000 or integral multiples thereof;

                  (9) the calculations  used in determining the amount of Excess
         Proceeds to be applied to the purchase of such Notes;

                  (10) any other  procedures that a Holder must follow to accept
         an Asset Sale Offer or effect withdrawal of such acceptance; and

                  (11)   the name and address of the Paying Agent.

                  On the Excess Proceeds Payment Date, the Company shall, to the
extent  lawful,  (1)  accept  for  payment,  on a pro rata  basis to the  extent
necessary,  Notes or portions thereof tendered pursuant to the Asset Sale Offer,
(2) deposit with the Paying Agent US legal tender sufficient to pay the purchase
price plus accrued and unpaid interest,  if any, on the Notes to be purchased or
portions  thereof,  (3) deliver or cause to be delivered to the Trustee Notes so
accepted  together  with an  Officers'  Certificate  stating  that such Notes or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 4.12.  The Paying Agent shall promptly mail to each Holder
so accepted payment in an amount equal to the purchase price for such Notes, and
the Company shall execute and issue, and the Trustee shall promptly authenticate
and make  available  for delivery to such Holder,  a new Note equal in principal
amount to any unpurchased  portion of the Notes

                                      -33-

<PAGE>

surrendered;  provided  that each Note  purchased  and each such new Note issued
shall be in an original  principal amount in denominations of $1,000 or integral
multiples thereof.

                  (e) The Company  shall  comply with the  requirements  of Rule
14e-1  under  the  Exchange  Act  and  other  securities  laws  and  regulations
thereunder to the extent such laws and  regulations are applicable in connection
with the repurchase of Notes pursuant to an Asset Sale Offer. To the extent that
the provisions of any securities laws or regulations  conflict with this Section
4.12,  the  Company  shall  comply  with  the  applicable  securities  laws  and
regulations and shall not be deemed to have breached its obligations  under this
Section 4.12 by virtue thereof.

Section 4.13.     Limitation on Transactions with Affiliates.
                  ------------------------------------------

                  Neither  the  Company  nor  any  of  its  Subsidiaries  shall,
directly or indirectly, in one transaction or a series of transactions, make any
loan, advance,  guarantee or capital  contribution to, or for the benefit of, or
sell,  lease,  transfer or otherwise  dispose of any of its properties or assets
to, or for the benefit of, or purchase or lease any property or assets from,  or
enter into or amend any contract,  agreement or  understanding  with, or for the
benefit  of, any  Affiliate  of the  Company or any of its  Subsidiaries  or any
Person  (or any  Affiliate  of such  Person)  holding  10% or more of the Common
Equity of the Company or any of its Subsidiaries, other than transactions in the
ordinary course between the Company and its  Subsidiaries or among  Subsidiaries
of the  Company  (an  "Affiliate  Transaction"),  unless:  (i) the terms of such
Affiliate   Transactions  are  fair  and  reasonable  to  the  Company  or  such
Subsidiary, as the case may be, and are at least as favorable as the terms which
could be obtained by the  Company or such  Subsidiary,  as the case may be, in a
comparable  transaction  made  on an  arm's-length  basis  between  unaffiliated
parties; (ii) with respect to any such Affiliate Transaction involving aggregate
payments in excess of $5,000,000,  the Company delivers an Officers' Certificate
to the Trustee certifying that such Affiliate  Transaction  complies with clause
(i) above and a Secretary's  Certificate  which sets forth and  authenticates  a
resolution  that has been  adopted by a vote of a majority of the  disinterested
members of the Board of Directors  approving  such  Affiliate  Transaction;  and
(iii)  with  respect  to any  such  Affiliate  Transaction  involving  aggregate
payments  in excess of  $25,000,000,  the  Company  delivers  to the Trustee the
certificates  specified  in clause  (ii) above and an opinion of an  independent
investment banking firm of national standing in the United States,  stating that
such Affiliate Transaction is fair from a financial point of view to the Company
or such Subsidiary,  as the case may be; provided,  however,  that the foregoing
clauses  (ii) and (iii) shall not apply to  transactions  between the Company or
any of its Subsidiaries and MedCenterDirect.com, Inc. or any entity to which the
Company  transfers  all or  substantially  all of the rights to its  HEALTHSOUTH
Clinical Automation Program.

Section 4.14.     Limitation on Liens.
                  -------------------

                  The  Company  shall  not  create  or  suffer to exist any Lien
(including  any Lien created to secure the Company's  obligation to repay Senior
Subordinated Indebtedness other than any amounts owing in respect of the Notes),
other than Permitted  Liens,  on any of its assets unless all payments due under
this  Indenture and the Notes are secured on an equal and ratable basis with the
obligation so secured until such time as such obligation is no longer secured by
a Lien.

Section 4.15.     Purchase of Notes upon a Change of Control.
                  ------------------------------------------

                  (a) Upon the  occurrence  of a Change of Control,  the Company
shall be obligated to make an offer to purchase (the "Change of Control  Offer")
the outstanding  Notes of each Holder in whole or in part in integral  multiples
of $1,000,  at a purchase price (the "Change of Control Purchase Price") in cash
in an amount

                                      -34-

<PAGE>

equal to 101% of the principal amount thereof, plus accrued interest, if any, to
the date of purchase (the "Change of Control  Purchase  Date"),  pursuant to the
procedures set forth below.

                  (b)  Within  30 days  following  any  Change of  Control,  the
Company shall notify the Trustee  thereof and give written notice of such Change
of Control to each Holder by first-class mail,  postage prepaid,  at the address
of such Holder appearing in the register  maintained by the Registrar,  stating,
among other things:

                  (1) that the Change of Control Offer is being made pursuant to
         this Section 4.15;

                  (2) that such Holders have the right to require the Company to
         repurchase  such Notes at the Change of Control  Purchase  Price on the
         Change of Control  Purchase Date which shall be no earlier than 30 days
         and not later than 60 days from the date such notice is mailed;

                  (3) that any Note not  tendered or accepted  for payment  will
         continue to accrue interest;

                  (4) that,  unless the  Company  defaults in its payment of the
         Change  of  Control  Purchase  Price,  any Note  accepted  for  payment
         pursuant to the Change of Control Offer shall cease to accrue  interest
         after the Change of Control Purchase Date;

                  (5) that  Holders  accepting  the  offer to have  their  Notes
         purchased  pursuant  to a Change of Control  Offer will be  required to
         surrender the Notes,  with the form entitled "Option of Holder to Elect
         Purchase" on the reverse of the Note completed,  to the Paying Agent at
         the address  specified  in the notice prior to the close of business on
         the Business Day preceding the Change of Control Purchase Date;

                  (6) that Holders will be entitled to withdraw their acceptance
         of the Change of Control Offer if the Paying Agent receives,  not later
         than the close of  business on the third  Business  Day  preceding  the
         Change of Control Purchase Date, a telegram,  facsimile transmission or
         letter  setting forth the name of the Holder,  the principal  amount of
         the Notes  delivered  for purchase and a statement  that such Holder is
         withdrawing his or her election to have such Notes purchased;

                  (7) any other  procedures  that a Holder must follow to accept
         an Change of Control Offer or effect withdrawal of such acceptance; and

                  (8)      the name and address of the Paying Agent.

                  On the Change of Control  Payment Date, the Company shall,  to
the extent  lawful,  (1) accept for payment Notes or portions  thereof  tendered
pursuant to the Change of Control Offer,  (2) deposit with the Paying Agent U.S.
legal  tender  sufficient  to pay the  purchase  price of all Notes or  portions
thereof so  tendered  and (3)  deliver or cause to be  delivered  to the Trustee
Notes so accepted together with an Officers' Certificate stating that such Notes
or portions  thereof were  accepted for payment by the Company  pursuant to this
Section  4.15.  The Paying Agent shall  promptly mail to each Holder so accepted
payment in an amount equal to the purchase price for such Notes, and the Company
shall execute and issue, and the Trustee shall promptly authenticate and mail to
such Holder, a new Note equal in principal amount to any unpurchased  portion of
the Notes  surrendered;  provided  that each such new Note shall be issued in an
original amount in denominations of $1,000 and integral multiples thereof.

                                      -35-

<PAGE>

                  (c) The Company  shall  comply with the  requirements  of Rule
14e-1  under  the  Exchange  Act  and  other  securities  laws  and  regulations
thereunder to the extent such laws and  regulations are applicable in connection
with the  repurchase  of Notes  pursuant  to a Change of Control  Offer.  To the
extent that the provisions of any securities  laws or regulations  conflict with
this Section 4.15, the Company shall comply with the applicable  securities laws
and regulations  and shall not be deemed to have breached its obligations  under
this Section 4.15 by virtue thereof.

Section 4.16.     Limitation on Restrictions on Distributions from Subsidiaries.
                  --------------------------------------------------------------

                  The  Company  shall  not,  and  shall  not  permit  any of its
Subsidiaries  to,  create  or  otherwise  cause or  suffer  to  exist or  become
effective any consensual  encumbrance or restriction (other than encumbrances or
restrictions imposed by law or by judicial or regulatory action or by provisions
in leases or other  agreements that restrict the  assignability  thereof) on the
ability of any  Subsidiary of the Company to (i) pay dividends or make any other
distributions on its Capital Stock or any other interest or participation in, or
measured by, its profits, owned by the Company or any of its other Subsidiaries,
or pay interest on or principal of any  Indebtedness  owed to the Company or any
of its other Subsidiaries,  (ii) make loans or advances to the Company or any of
its other  Subsidiaries or (iii) transfer any of its properties or assets to the
Company or any of its other  Subsidiaries,  in each case except for encumbrances
or  restrictions  existing  under or by reason of (a)  applicable  law,  (b) the
Credit  Agreements,  (c) Existing  Indebtedness,  (d) any restrictions under any
agreement evidencing any Acquired Indebtedness that was permitted to be incurred
pursuant  to this  Indenture  and  which was not  incurred  in  anticipation  or
contemplation of the related  acquisition,  provided that such  restrictions and
encumbrances  only apply to assets that were  subject to such  restrictions  and
encumbrances  prior to the  acquisition  of such  assets by the  Company  or its
Subsidiaries,  (e)  restrictions  or  encumbrances  replacing those permitted by
clause (b), (c) or (d) above which,  taken as a whole,  are not materially  more
restrictive,  (f) this Indenture,  (g) any restrictions and encumbrances arising
in  connection  with  Refinancing  Indebtedness;  provided,  however,  that  any
restrictions or encumbrances of the type described in this clause (g) that arise
under such Refinancing  Indebtedness are not, taken as a whole,  materially more
restrictive   than  those  under  the  agreement   creating  or  evidencing  the
Indebtedness being refunded or refinanced,  (h) any restrictions with respect to
a  Subsidiary  of the Company  imposed  pursuant to an  agreement  that has been
entered into for the sale or other  disposition of all or  substantially  all of
the Capital Stock or assets of such  Subsidiary,  (i) any agreement  restricting
the  sale  or  other  disposition  of  property  securing  Indebtedness  if such
agreement does not expressly restrict the ability of a Subsidiary of the Company
to pay  dividends or make loans or advances and (j)  customary  restrictions  in
purchase money debt or leases relating to the property covered thereby.

Section 4.17.     Limitations on Certain Other Subordinated Indebtedness.
                  ------------------------------------------------------

                  The Company shall not create, incur, assume or suffer to exist
any  Indebtedness  that  is  subordinate  in  right  of  payment  to any  Senior
Indebtedness  unless  such  Indebtedness  by  its  terms  or  the  terms  of the
instrument  creating or evidencing such  Indebtedness is subordinate in right of
payment to, or ranks pari passu with, the Notes.

                                      -36-

<PAGE>

                                    ARTICLE 5

                                SURVIVING ENTITY

Section 5.01.     Limitations on Mergers and Consolidations.
                  -----------------------------------------

                  The Company  shall not  consolidate  or merge with or into, or
sell,  lease,  convey or otherwise  dispose of all or  substantially  all of its
assets, or assign any of its obligations  under the Notes or this Indenture,  to
any Person unless:  (i) the Person formed by or surviving such  consolidation or
merger (if other than the Company), or to which such sale, lease,  conveyance or
other disposition or assignment shall be made  (collectively,  the "Successor"),
is a corporation  organized and existing  under the laws of the United States or
any State  thereof or the District of  Columbia,  and the  Successor  assumes by
supplemental  indenture  in a  form  satisfactory  to  the  Trustee  all  of the
obligations of the Company under the Notes and this Indenture;  (ii) immediately
after giving effect to such consolidation,  merger,  sale, lease,  conveyance or
other  disposition or assignment and the use of any net proceeds  therefrom on a
pro forma  basis,  no  Default or Event of Default  shall have  occurred  and be
continuing; (iii) immediately after giving effect to such consolidation, merger,
sale,  lease,  conveyance or other  disposition or assignment and the use of any
net proceeds  therefrom on a pro forma basis,  the Consolidated Net Worth of the
Company or the  Successor,  as the case may be,  would be at least  equal to the
Consolidated  Net Worth of the Company  immediately  prior to such  transaction;
(iv) immediately after giving effect to such consolidation, merger, sale, lease,
conveyance or other  disposition  or assignment  and the use of any net proceeds
therefrom on a pro forma basis,  the EBITDA Coverage Ratio of the Company or the
Successor,  as the case may be, would be such that the Company or the Successor,
as the case may be,  would be  entitled  to incur at least  $1.00 of  additional
Indebtedness  under the EBITDA  Coverage Ratio test in Section 4.11 hereof;  and
(v) the Company shall have delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel,  each  stating  that such  consolidation,  merger,  sale,
lease,   conveyance  or  other  disposition  or  assignment  complies  with  the
provisions of this Indenture.

Section 5.02.     Successor Substituted.
                  ---------------------

                  Upon any consolidation,  merger, conveyance or any transfer of
all or substantially all of the assets of the Company in accordance with Section
5.01 hereof, the surviving entity formed by such consolidation or into which the
Company or any such Subsidiary is merged or to which such transfer is made shall
succeed to, and be  substituted  for, and may exercise every right and power of,
the Company or such  Subsidiary,  as the case may be, under this  Indenture with
the same  effect as if such  surviving  entity had been named as the  Company or
such  Subsidiary,  as the case may be herein,  and  thereafter  the  predecessor
entity shall be relieved of all  obligations  and covenants under this Indenture
and the Notes.

                                      -37-

<PAGE>

                                    ARTICLE 6

                              DEFAULTS AND REMEDIES

Section 6.01.     Events of Default.
                  -----------------

                  An "Event of Default" occurs if:

                  (a) there is a failure by the  Company to pay  interest on any
         of the Notes when it becomes due and payable and the continuance of any
         such  failure  for 30 days  (whether  or not  prohibited  by Article 10
         hereof);

                  (b) there is a failure by the Company to pay the  principal of
         (or  premium,  if any,  on) the Notes when it becomes due and  payable,
         whether at its Stated Maturity,  upon redemption,  upon acceleration or
         otherwise (whether or not prohibited by Article 10 hereof);

                  (c)  there is a failure  by the  Company  to  comply  with its
         obligations or covenants  described under Section 4.12, Section 4.15 or
         Article 5 hereof (whether or not prohibited by Article 10 hereof);

                  (d)  there is a failure  by the  Company  to  comply  with any
         covenant in this Indenture (except the covenants referred to in clauses
         (a),  (b) and (c) above) and  continuance  of such  failure for 30 days
         after  notice of such  failure  has been  given to the  Company  by the
         Trustee or to the  Company  and the  Trustee by the Holders of at least
         25% in principal amount of the Notes then outstanding;

                  (e)  there  is any  acceleration  of the  Stated  Maturity  of
         Indebtedness  of the  Company  or any of its  Significant  Subsidiaries
         having an  outstanding  principal  amount of at least  $25,000,000 or a
         failure to pay such Indebtedness at its Stated Maturity,  provided that
         such  acceleration  or failure to pay is not cured within 10 days after
         such acceleration or failure to pay;

                  (f) there is a final  judgment or final  judgments that exceed
         $25,000,000  for the payment of money that has been  entered by a court
         or courts of  competent  jurisdiction  against the  Company  and/or any
         Significant  Subsidiary  of the Company and such  judgment or judgments
         have not been discharged within 30 days after all rights to appeal have
         been exhausted;

                  (g)  the  Company  or  any  of  its  Significant  Subsidiaries
         pursuant to or within the meaning of any Bankruptcy Law:

                           (A)  commences a voluntary case,

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

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

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

                           (E) takes any corporate action to authorize or effect
                  any of the foregoing; and

                                      -38-

<PAGE>

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

                           (A) is for relief  against  the Company or any of its
                  Significant Subsidiaries in an involuntary case,

                           (B) appoints a Custodian of the Company or any of its
                  Significant  Subsidiaries or for all or  substantially  all of
                  the Property of the Company or such Significant Subsidiary, or

                           (C) orders the  liquidation  of the Company or any of
                  its Significant Subsidiaries,

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

                  The term  "Bankruptcy  Law" means Title 11,  U.S.  Code or any
similar  Federal,  state or  foreign  law for the  relief of  debtors.  The term
"Custodian"  means  any  receiver,  trustee,  assignee,  liquidator  or  similar
official under any Bankruptcy Law.

Section 6.02.     Acceleration.
                  ------------

                  If an  Event  of  Default  (other  than an  Event  of  Default
specified in Section  6.01(g) or 6.01(h)  hereof  relating to the Company) shall
have occurred and be continuing  under this Indenture,  the Trustee,  by written
notice to the  Company,  or the Holders of at least 25% in  aggregate  principal
amount of the Notes then  outstanding  by written  notice to the Company and the
Trustee,  may declare all amounts  owing under the Notes to be due and  payable.
Upon effectiveness of such acceleration, the aggregate principal of, premium, if
any,  and interest on the  outstanding  Notes shall  immediately  become due and
payable.  At any time after such  acceleration  but before a judgment  or decree
based on such  acceleration  is obtained  by the  Trustee,  or any  Holder,  the
Holders of a majority in aggregate  principal  amount of outstanding  Notes,  by
written  notice to the  Company  and the  Trustee,  may  rescind  and annul such
acceleration if:

                  (a) the Company has paid or  deposited  with the Trustee a sum
         sufficient to pay:

                           (1) all overdue interest on the Notes;

                           (2) all unpaid  principal of and premium,  if any, on
                  any of the  outstanding  Notes that has  become due  otherwise
                  than by such  declaration of acceleration and interest thereon
                  at the rate borne by the Notes;

                           (3) to the extent  that  payment of such  interest is
                  lawful,  interest upon overdue interest and overdue  principal
                  at the rate borne by the Notes;

                           (4) all sums paid or advanced  by the  Trustee  under
                  this  Indenture  and the  reasonable  compensation,  expenses,
                  disbursements  and  advances  of the  Trustee,  its agents and
                  counsel;

                  (b) all  Events of  Default,  other  than the  non-payment  of
         amounts of principal of, premium, if any, or interest on the Notes that
         has become due solely by such  declaration of  acceleration,  have been
         cured or waived; and

                                      -39-

<PAGE>

                  (c) in the event of the cure or waiver of an Event of  Default
         with respect to the Company of the type described in Section 6.01(g) or
         (h) hereof,  the Trustee shall have  received an Officers'  Certificate
         and an Opinion of Counsel  that such Event of Default has been cured or
         waived.

                  No such  rescission  shall  affect any  subsequent  Default or
impair any right consequent thereto.

                  In case an Event of Default with respect to the Company of the
type  described  in Section  6.01(g) or (h) hereof shall  occur,  the  aggregate
principal  of,  premium,  if any,  and interest on the  outstanding  Notes shall
immediately  become due and payable  without any declaration or other act on the
part of the Trustee or the Holders.

Section 6.03.     Other Remedies.
                  --------------

                  If an Event of Default occurs and is  continuing,  the Trustee
may pursue any available remedy by proceeding at law or in equity to collect the
payment of  principal  of, or premium,  if any,  and interest on the Notes or to
enforce the  performance of any provision of the Notes or this Indenture and may
take any  necessary  action  requested  of it as Trustee to settle,  compromise,
adjust or otherwise conclude any proceedings to which it is a party.

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

Section 6.04.     Waiver of Existing Defaults and Events of Default.
                  -------------------------------------------------

                  Subject to Sections  2.09,  6.02,  6.07 and 8.02  hereof,  the
Holders of a majority in principal amount of the Notes then outstanding have the
right to waive existing  Defaults  under or in compliance  with any provision of
this  Indenture or the Notes  except a continuing  Default in the payment of the
principal  of, or  interest  or premium,  if any,  on any Note as  specified  in
clauses  (a) and (b) of Section  6.01  hereof or in  respect of a covenant  or a
provision which cannot be modified or amended without the consent of all Holders
as provided for in Section 8.02 hereof. The Company shall deliver to the Trustee
an Officers'  Certificate stating that the requisite  percentage of Holders have
consented to such waiver and attach copies of such consents. In case of any such
waiver,  the  Company,  the Trustee  and the Holders  shall be restored to their
former  positions and rights hereunder and under the Notes,  respectively.  This
paragraph of this Section 6.04 shall be in lieu of ss.  316(a)(1)(B)  of the TIA
and such ss.  316(a)(1)(B)  of the TIA is hereby  expressly  excluded  from this
Indenture and the Notes, as permitted by the TIA.

                  Upon any such waiver, such Default shall cease to exist and be
deemed to have been  cured and not to have  occurred,  and any Event of  Default
arising  therefrom  shall be deemed to have been cured and not to have  occurred
for every  purpose of this  Indenture,  but no such waiver  shall  extend to any
subsequent or other  Default or Event of Default or impair any right  consequent
thereto.

Section 6.05.     Control by Majority.
                  -------------------

                  Subject to Section 2.09  hereof,  the Holders of a majority in
principal  amount of the then  outstanding  Notes shall have the right to direct
the time,  method and place of conducting  any  proceeding  for  exercising  any
remedy  available to the Trustee or exercising  any trust or power  conferred on
the Trustee by this

                                      -40-

<PAGE>

Indenture.  The  Trustee,  however,  may  refuse to follow  any  direction  that
conflicts  with law or this  Indenture  or that the  Trustee  determines  in its
reasonable  judgment may be unduly  prejudicial  to the rights of another Holder
not  taking  part in such  direction,  and the  Trustee  shall have the right to
decline to follow any such  direction if the Trustee,  being advised by counsel,
determines  that the  action so  directed  may not  lawfully  be taken or if the
Trustee in good faith shall, by a Trust Officer,  determine that the proceedings
so directed may involve it in personal liability;  provided that the Trustee may
take any other action  deemed  proper by the Trustee  which is not  inconsistent
with such  direction.  In the event the Trustee  takes any action or follows any
direction  pursuant  to  this  Indenture,  the  Trustee  shall  be  entitled  to
indemnification  satisfactory to it in its sole  discretion  against any loss or
expense caused by taking such action or following such  direction.  This Section
6.05  shall be in lieu of  Section  316(a)(1)(A)  of the TIA,  and such  Section
316(a)(1)(A) of the TIA is hereby expressly excluded from this Indenture and the
Notes, as permitted by the TIA.

Section 6.06.     Limitation on Suits.
                  -------------------

                  Subject to  Section  6.07  hereof,  no Holder has any right to
institute any proceeding with respect to this Indenture or any remedy  hereunder
unless:

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

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

                  (3) such  Holder or  Holders  offer to the  Trustee  indemnity
         reasonably  satisfactory to the Trustee against any loss,  liability or
         expense which may be incurred in compliance with such request;

                  (4) the Trustee fails to institute such  proceeding  within 60
         calendar  days after receipt of such notice and the offer of indemnity;
         and

                  (5) the Trustee has not received directions  inconsistent with
         such  written  request  during such  60-day  period by the Holders of a
         majority in aggregate principal amount of then outstanding Notes.

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

Section 6.07.     Rights of Holders To Receive Payment.
                  ------------------------------------

                  Notwithstanding  any other  provision of this  Indenture,  the
right of any Holder to receive  payment of principal of, or premium,  if any, or
accrued  interest on any Note held by such Holder on or after the respective due
dates  expressed in such Note, or to bring suit for the  enforcement of any such
payment  on or after  such  respective  dates,  is  absolute  and  unconditional
(subject to the terms of this  Indenture)  and shall not be impaired or affected
without the consent of such Holder.

Section 6.08.     Collection Suit by Trustee.
                  --------------------------

                  If an Event of Default occurs and is  continuing,  the Trustee
may recover  judgment in its own name and as trustee of an express trust against
the Company  for the whole  amount of unpaid  principal,  premium,  if any,  and
accrued interest remaining unpaid,  together with, to the extent that payment of
such interest is lawful,  interest on overdue  principal and interest on overdue
installments  of  interest,  in each case at the rate set forth in Section  4.01
hereof,  and such further  amounts as shall be sufficient to cover the costs and
expenses  of  collection,

                                      -41-

<PAGE>

including the reasonable compensation,  expenses,  disbursements and advances of
the Trustee, its agents and counsel.

Section 6.09.     Trustee May File Proofs of Claim.
                  --------------------------------

                  The Trustee may file such proofs of claim and other  papers or
documents  as may be  necessary  or advisable in order to have the claims of the
Trustee  (including  any  claim  for  the  reasonable  compensation,   expenses,
disbursements  and  advances of the  Trustee,  its agents and  counsel)  and the
Holders  allowed in any  judicial  proceedings  relative  to the Company (or any
other  obligor  upon the Notes),  its  creditors  or its  property  and shall be
entitled  and  empowered  to collect and  receive  any monies or other  property
payable  or  deliverable  on any such  claims and to  distribute  the same after
deduction  of its charges and  expenses to the extent that any such  charges and
expenses  are  not  paid  out of the  estate  in any  such  proceedings  and any
custodian in any such judicial proceeding is hereby authorized by each Holder to
make such  payments  to the  Trustee,  and in the event that the  Trustee  shall
consent to the making of such  payments  directly to the Holders,  to pay to the
Trustee  any  amount  due  to it  for  the  reasonable  compensation,  expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof.

                  Nothing  herein  contained  shall be deemed to  authorize  the
Trustee  to  authorize  or consent to or accept or adopt on behalf of any Holder
any plan or reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder  thereof,  or to authorize the Trustee to vote
in respect of the claim of any Holder in any such proceedings.

Section 6.10.     Priorities.
                  ----------

                  If the Trustee  collects any money pursuant to this Article 6,
it shall pay out the money in the following order:

                  FIRST:  to the  Trustee for  amounts  due under  Section  7.07
         hereof;

                  SECOND:  if the  Holders  are  forced to proceed  against  the
         Company directly  without the Trustee,  to Holders for their collection
         costs; and

                  THIRD:  to Holders for amounts due and unpaid on the Notes for
         principal,  premium, if any, and interest as to each, ratably,  without
         preference  or priority of any kind,  according  to the amounts due and
         payable on the Notes.

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

Section 6.11.     Undertaking for Costs.
                  ---------------------

                  In any suit for the  enforcement  of any right or remedy under
this  Indenture  or in any suit  against  the  Trustee  for any action  taken or
omitted by it as Trustee,  a court in its  discretion  may require the filing by
any party  litigant in the suit of an  undertaking to pay the costs of the suit,
and  the  court  in  its  discretion  may  assess  reasonable  costs,  including
reasonable  attorneys' fees,  against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses  made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder  pursuant to Section 6.07 hereof or a suit by Holders of more than 10% in
principal amount of the Notes then outstanding.

                                      -42-

<PAGE>

                                    ARTICLE 7

                                     TRUSTEE

Section 7.01.     Duties of Trustee.
                  -----------------

                  (a) If an Event of Default  actually  known to a Trust Officer
of the Trustee has occurred and is  continuing,  the Trustee shall exercise such
rights and powers vested in it by this Indenture and use the same degree of care
and  skill in their  exercise  as a  prudent  Person  would  exercise  under the
circumstances in the conduct of such Person's own affairs.

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

                           (1) The Trustee  need  perform  only those duties and
                  obligations that are specifically set forth in this Indenture.

                           (2) In the  absence  of bad  faith on its  part,  the
                  Trustee  may  conclusively  rely,  as  to  the  truth  of  the
                  statements  and  the  correctness  of the  opinions  expressed
                  therein,  upon  certificates  or  opinions  furnished  to  the
                  Trustee and conforming to the  requirements  of this Indenture
                  but, in the case of any such certificates or opinions which by
                  any provision hereof are specifically required to be furnished
                  to the Trustee,  the Trustee  shall be under a duty to examine
                  the  same to  determine  whether  or not they  conform  to the
                  requirements of this Indenture.

                  (c) Notwithstanding anything to the contrary herein contained,
         the Trustee may not be relieved  from  liability  for its own negligent
         action,   its  own  negligent  failure  to  act,  or  its  own  willful
         misconduct, except that:

                           (A) This  paragraph  does not  limit  the  effect  of
                  paragraph (b) of this Section 7.01.

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

                           (C) The Trustee  shall not be liable with  respect to
                  any  action  it  takes  or  omits  to take in  good  faith  in
                  accordance  with  a  direction  received  by  it  pursuant  to
                  Sections 6.02, 6.04 and 6.05 hereof.

                  (d) No provision of this  Indenture  shall require the Trustee
to expend or risk its own funds or otherwise  incur any  financial  liability in
the  performance  of any of its duties  hereunder or to take or omit to take any
action  under this  Indenture  or take any action at the request or direction of
Holders if it shall have reasonable grounds for believing that repayment of such
funds is not assured to it or it does not receive from such Holders an indemnity
reasonably satisfactory to it against such risk, liability, loss, fee or expense
which might be incurred by it in compliance with such request or direction.

                  (e) Whether or not  expressly so provided,  the  provisions of
the TIA and  paragraphs  (a), (b), (c) and (d) of this Section 7.01 shall govern
every provision of this Indenture that in any way relates to the Trustee.

                                      -43-

<PAGE>

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

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

Section 7.02.     Rights of Trustee.
                  -----------------

                  Subject to Section 7.01 hereof:

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

                  (2) Before the  Trustee  acts or  refrains  from  acting  with
         respect to any matters  contemplated  by this Indenture or the Notes it
         may require an Officers' Certificate or an Opinion of Counsel, or both,
         which shall conform to the  provisions  of Section  11.05  hereof.  The
         Trustee shall be fully protected and shall not be liable for any action
         it takes or omits to take in good faith in reliance  on such  Officers'
         Certificate or Opinion of Counsel.

                  (3) The Trustee may act through agents, attorneys,  custodians
         or  nominees  and  shall  not be  responsible  for  the  misconduct  or
         negligence of any agent, attorney,  custodian or nominee appointed with
         due care by it hereunder.

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

                  (5) Before the  Trustee  acts or  refrains  from  acting  with
         respect to any matters contemplated by this Indenture or the Notes, the
         Trustee may consult  with counsel of its  selection,  and the advice or
         opinion of such counsel, accountant,  appraiser or other expert adviser
         whether  retained or  employed  by the Company or the Trustee  shall be
         full and  complete  authorization  and  protection  from  liability  in
         respect of any action  taken,  omitted or suffered by it  hereunder  in
         good faith and in reliance thereon.

                  (6) The Trustee  shall not be bound to make any  investigation
         into the  facts  or  matters  stated  in any  resolution,  certificate,
         statement,  instrument,  opinion,  report, notice, request,  direction,
         consent,  order,  bond,  debenture or other paper or document,  but the
         Trustee,   in  its  discretion,   may  make  such  further  inquiry  or
         investigation  into such facts or matters as it may see fit, and if the
         Trustee shall  determine in good faith to make such further  inquiry or
         investigation,  it shall be entitled to examine the books,  records and
         premises of the Company, personally or by agent or attorney at the sole
         cost  of the  Company  and  shall  incur  no  liability  or  additional
         liability of any kind by reason of such inquiry or investigation.

                  (7) In no event shall the Trustee be liable for the  selection
         of investments or for investment losses incurred  thereon.  The Trustee
         shall have no  liability  in respect of losses  incurred as a result of
         the liquidation of any such investment  prior to its Stated Maturity or
         the failure of the party  directing  such  investment to provide timely
         written investment  direction.  The Trustee shall have no

                                      -44-

<PAGE>

         obligation  to invest or reinvest  any amounts  held  hereunder  in the
         absence of specific written investment direction.

                  (8)  The  rights,   privileges,   immunities  and  protections
         afforded to the Trustee pursuant to this Indenture (including,  without
         limitation,  the right to be indemnified) shall also be afforded to the
         Trustee in each of its  capacities  hereunder  and each  Paying  Agent,
         Registrar, Co-Registrar,  Custodian, transfer agent or tender agent and
         each agent or other Person employed to act hereunder.

                  (9) The  Trustee  shall not be  deemed  to have  notice of any
         Default or Event of Default  unless a Trust  Officer of the Trustee has
         actual knowledge thereof or unless written notice of any event which is
         in fact such a default is  received  by the  Trustee  at the  Corporate
         Trust Office of the Trustee,  and such notice  references the Notes and
         this Indenture.

                  (10) The  Trustee  may  request  that the  Company  deliver an
         Officers'  Certificate  setting forth the names of  individuals  and/or
         titles of officers  authorized at such time to take  specified  actions
         pursuant to this Indenture,  which Officers'  Certificate may be signed
         by any person  authorized to sign an Officers'  Certificate,  including
         any  person   specified  as  so  authorized  in  any  such  certificate
         previously delivered and not superseded.

Section 7.03.     Individual Rights of Trustee.
                  ----------------------------

                  The Trustee in its individual or any other capacity may become
the owner or  pledgee  of Notes and may make  loans to,  accept  deposits  from,
perform  services for or  otherwise  deal with the  Company,  or any  Affiliates
thereof,  with the same rights it would have if it were not  Trustee.  Any Agent
may do the same with like  rights.  The  Trustee,  however,  shall be subject to
Sections 7.10 and 7.11 hereof.

Section 7.04.     Trustee's Disclaimer.
                  --------------------

                  The  Trustee  shall  not  be  responsible  for  and  makes  no
representation  as to the validity or adequacy of this Indenture or the Notes or
any recitals  therein,  it shall not be accountable for the Company's use of the
proceeds from the sale of Notes or any money paid to the Company pursuant to the
terms of this Indenture and it shall not be responsible for any statement in the
Notes other than its certificate of authentication.

Section 7.05.     Notice of Defaults.
                  -------------------

                  If a Default or an Event of Default  occurs and is  continuing
and is known to a Trust  Officer of the Trustee,  the Trustee shall mail to each
Holder  notice of the  uncured  Default or Event of Default  within 5 days after
obtaining  knowledge  thereof.  Except in the case of a  Default  or an Event of
Default in payment of principal of,  premium,  if any, or interest on, any Note,
including an  accelerated  payment and the failure to make payment on the Change
of Control  Payment Date  pursuant to a Change of Control Offer or on the Excess
Proceeds Payment Date pursuant to an Asset Sale Offer, and except in the case of
a failure to comply with Article 5 hereof the Trustee may withhold the notice if
and so long as a committee of its Trust Officers in good faith  determines  that
withholding the notice is in the best interest of the Holders. This Section 7.05
shall be in lieu of the proviso to Section  315(b) of the TIA,  and such proviso
of Section  315(b) of the TIA is hereby  expressly  excluded from this Indenture
and the Notes, as permitted by the TIA.

                                      -45-

<PAGE>

Section 7.06.     Reports by Trustee to Holders.
                  -----------------------------

                  If required by TIA Section 313(a), within 60 days after May 15
of any year,  commencing on May 15, 2001,  the Trustee shall transmit by mail to
each  Holder  a brief  report  dated as of such  May 15 that  complies  with TIA
Section 313(a). The Trustee also shall comply with the reporting requirements of
TIA Sections 313(b), (c) and (d).

                  A copy of each  such  report  at the time of such  mailing  to
Holders  shall be mailed to the Company  and, if the Notes are listed on a stock
exchange,  filed with the  Commission and each stock exchange on which the Notes
are listed as provided by TIA Section 313(d).  The Company shall promptly notify
the Trustee when the Notes are listed on any stock  exchange  and any  delisting
thereof.

Section 7.07.     Compensation and Indemnity.
                  --------------------------

                  The Company  shall pay to the  Trustee  from time to time such
compensation  as may from time to time be agreed in writing  between the Company
and the Trustee for its  services  hereunder  (which  compensation  shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust). Except as otherwise provided herein, the Company shall reimburse
the Trustee upon request for all reasonable disbursements, expenses and advances
incurred  or made by it in  connection  with its duties  under  this  Indenture,
including  the  reasonable  compensation,  disbursements  and  expenses  of  the
Trustee's  agents,  counsel,  custodians  and  nominees,  except  for  any  such
disbursement or expense as may be attributable to the Trustee's negligence,  bad
faith or willful misconduct.

                  The  Company  shall  indemnify  each  of the  Trustee  and its
officers,  directors,  employees and agents and any predecessor  Trustee and its
officers,  directors,  employees  and agents for,  and hold it or them  harmless
against,  any and all loss,  damage,  claim,  liability or  reasonable  expense,
including taxes (other than franchise taxes and taxes based on the income of the
Trustee) incurred by it or them in connection with the acceptance or performance
of its duties under this Indenture and any other  documents and  transactions in
connection  therewith  including the reasonable  costs and expenses of defending
itself against any claim (whether asserted by the Company,  or any Holder or any
other Person) or liability in connection with the exercise or performance of any
of its or their  powers  or duties  hereunder  (including,  without  limitation,
settlement costs,  provided any settlement with respect to which indemnification
is sought shall have been consented to by the Company). The Trustee shall notify
the Company in writing  promptly of any claim  asserted  against the Trustee for
which it may seek  indemnity.  However,  the failure by the Trustee to so notify
the Company shall not relieve the Company of its obligations hereunder except to
the extent the Company is  prejudiced  thereby.  This Section 7.07 shall survive
the termination of this Indenture and the earlier  resignation or removal of the
Trustee.

                  Notwithstanding the foregoing,  the Company need not reimburse
the Trustee for any expense or indemnify it against any loss,  damage,  claim or
liability  incurred by the Trustee through its negligence,  bad faith or willful
misconduct.  To secure the payment  obligations  of the Company in this  Section
7.07,  the Trustee shall have a lien prior to the Notes on all money or property
held or collected by the Trustee  except such money or property held in trust to
pay principal of and interest on particular Notes.

                  When the Trustee incurs expenses or renders  services after an
Event of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses
(including  the  reasonable  charges  and  expenses  of  its  counsel)  and  the
compensation   for  the  services  are  intended  to   constitute   expenses  of
administration under any Federal or state bankruptcy, insolvency or similar law.

                                      -46-

<PAGE>

                  The  obligation  of the Company  under this Section 7.07 shall
survive  the  resignation  or removal of the Trustee  and the  satisfaction  and
discharge of this Indenture.

Section 7.08.     Replacement of Trustee.
                  ----------------------

                  The Trustee may resign by so notifying the Company in writing.
The Holders of a majority in principal amount of the then outstanding  Notes may
remove the Trustee by notifying  the removed  Trustee and the Company in writing
and may appoint a successor  Trustee with the  Company's  written  consent.  The
Company may remove the Trustee at its election if:

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

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

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

                  (4) the Trustee otherwise becomes incapable of acting.

                  If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee  for any  reason,  the Company  shall  promptly  appoint a
successor Trustee.

                  No   resignation  or  removal  of  the  Trustee  shall  become
effective  until the acceptance of appointment  by the successor  Trustee.  If a
successor Trustee does not take office within 30 days after the retiring Trustee
resigns or is removed,  the  retiring  Trustee,  the Company or the Holders of a
majority in principal amount of the outstanding  Notes may petition any court of
competent  jurisdiction  at the expense of the Company for the  appointment of a
successor Trustee.

                  If the Trustee  fails to comply with Section 7.10 hereof,  any
Holder may petition any court of competent  jurisdiction  for the removal of the
Trustee and the  appointment  of a successor  Trustee if the Trustee fails after
written request thereof by such Holder to comply with such Section 7.10.

                  A successor Trustee shall deliver a written  acceptance of its
appointment to the retiring  Trustee and to the Company.  Immediately  following
such delivery,  the resignation or removal of the retiring  Trustee shall become
effective and the retiring  Trustee  shall,  subject to its rights under Section
7.07  hereof,  transfer  all  property  held by it as Trustee  to the  successor
Trustee, and the successor Trustee, after any and all amounts then due and owing
the Trustee hereunder have been paid in full, shall have all the rights,  powers
and duties of the Trustee under this Indenture.  A successor  Trustee shall mail
notice of its  succession  to each Holder.  Notwithstanding  replacement  of the
Trustee pursuant to this Section 7.08, the Company's  obligations  under Section
7.07 hereof shall continue for the benefit of the retiring Trustee.

Section 7.09.     Successor Trustee by Consolidation, Merger or Conversion.
                  --------------------------------------------------------

                  If the Trustee  consolidates with, merges or converts into, or
transfers all or  substantially  all of its corporate  trust assets to,  another
corporation,  subject to Section 7.10 hereof, the successor  corporation without
any  further  act  shall be the  successor  Trustee.  In case at the  time  such
successor or successors by merger,  conversion or  consolidation  to the Trustee
shall  succeed to the trusts  created by this  Indenture  any of the Notes shall
have been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of

                                      -47-

<PAGE>

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

Section 7.10.     Eligibility; Disqualification.
                  -----------------------------

                  This  Indenture  shall  always  have a Trustee  which shall be
eligible to act as Trustee  under TIA  Sections  310(a)(1)  and  310(a)(2).  The
Trustee shall have a combined capital and surplus of at least $50,000,000 as set
forth in its most recent  published  annual report of condition.  If the Trustee
has or shall  acquire  any  "conflicting  interest"  within  the  meaning of TIA
Section 310(b),  the Trustee and the Company shall comply with the provisions of
TIA Section  310(b);  provided,  however,  that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or  participation  in other securities of
the Company are outstanding if the  requirements for such exclusion set forth in
TIA Section  310(b)(1)  are met.  If at any time the  Trustee  shall cease to be
eligible in accordance  with the  provisions  of this Section 7.10,  the Trustee
shall  resign  immediately  in the  manner  and  with  the  effect  hereinbefore
specified in this Article 7.

Section 7.11.     Preferential Collection of Claims Against Company.
                  -------------------------------------------------

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

                                    ARTICLE 8

               MODIFICATIONS, AMENDMENTS, SUPPLEMENTS AND WAIVERS

Section 8.01.     Without Consent of Holders.
                  --------------------------

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

                  (1) to cure any  ambiguity,  or to correct or  supplement  any
         provision in this  Indenture or the Notes or make any other  provisions
         with respect to matters or questions  arising  under this  Indenture or
         the Notes;  provided  that,  in each case,  such  provisions  shall not
         adversely affect the interest of the Holders;

                  (2) to provide for  uncertificated  Notes in addition to or in
         place of certificated Notes;

                  (3) to provide for the  assumption by a successor  corporation
         of the Company's obligations under this Indenture;

                  (4) to add guarantees with respect to the Notes;

                  (5) to secure the Notes;

                                      -48-

<PAGE>

                  (6) to add to the  covenants  of the  Company or the Events of
         Default for the benefit of Holders;

                  (7) to surrender any right or power  conferred on the Company;
         or

                  (8) to make any other  change that does not  adversely  affect
         the  rights  of any  Holder or to comply  with any  requirement  of the
         Commission in connection with the qualification of this Indenture under
         the Trust Indenture Act.

Section 8.02.     With Consent of Holders.
                  -----------------------

                  Subject to Section  6.07  hereof,  the Company and the Trustee
may modify,  amend or  supplement  this  Indenture or the Notes with the written
consent of the Holders of a majority in principal amount of the then outstanding
Notes (including consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the Notes). Subject to Sections 6.04 and 6.07 hereof,
the Holders of a majority in principal amount of the then outstanding  Notes may
waive  compliance  by the Company with any  provision  of this  Indenture or the
Notes. However,  without the consent of each Holder affected (including consents
obtained in  connection  with a tender offer or exchange  offer for, or purchase
of, the Notes),  a modification,  amendment,  supplement or waiver,  including a
waiver pursuant to Section 6.04 hereof, may not:

                  (1) change the Stated  Maturity  of the  principal  of, or any
         installment of interest on, such Note or alter the optional  redemption
         provisions thereof;

                  (2) reduce the  principal  amount of, or  premium,  if any, or
         interest on, such Note or extend the time of payments under the Notes;

                  (3) modify the subordination provisions in this Indenture in a
         manner  adverse  to  the  Holder  (including  any  modification  of the
         definition of Senior Indebtedness);

                  (4) change the place or currency of payment of  principal  of,
         or premium, if any, or interest on, such Note;

                  (5) alter the provisions with respect to the obligation of the
         Company to make a Change of Control  Offer in  accordance  with Section
         4.15 hereof or to make an Asset Sale Offer in  accordance  with Section
         4.12 hereof;

                  (6) impair the right to institute suit for the  enforcement of
         any payment on or with respect to such Note; or

                  (7) reduce the  percentage in principal  amount of outstanding
         Notes,  the consent of whose  Holders is required for  modification  or
         amendment of this  Indenture or for waiver of  compliance  with certain
         provisions  of this  Indenture  or for  waiver of certain  Defaults  or
         Events of Default.

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

                                      -49-

<PAGE>

                  Upon  the  request  of the  Company,  accompanied  by a  Board
Resolution  authorizing the execution of any such  supplemental  indenture,  and
upon the  receipt by the  Trustee of  evidence  reasonably  satisfactory  to the
Trustee of the  consent  of the  Holders as  aforesaid  and upon  receipt by the
Trustee of the  documents  described in Section 8.06 hereof,  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,  in which  case the  Trustee  may in its own
discretion,  but  shall  not be  obligated  to,  enter  into  such  supplemental
indenture.

                  It shall not be necessary for the consent of the Holders under
this Section  8.02 to approve the  particular  form of any  proposed  amendment,
supplement or waiver,  but it shall be  sufficient if such consent  approves the
substance thereof.

Section 8.03.     Compliance with TIA.
                  -------------------

                  Every  amendment  to or  supplement  of this  Indenture or the
Notes shall comply with the TIA as then in effect.

Section 8.04.     Revocation and Effect of Consents.
                  ---------------------------------

                  Until an amendment,  waiver or supplement becomes effective, a
consent  to it by a Holder  is a  continuing  consent  by the  Holder  and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following  paragraph,  any such Holder or subsequent Holder
may  revoke  the  consent  as to such  Holder's  Note or portion of such Note by
notice to the  Trustee  or the  Company  received  before  the date on which the
Trustee  receives an Officers'  Certificate  certifying  that the Holders of the
requisite  principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver.

                  The Company may,  but shall not be obligated  to, fix a Record
Date for the  purpose of  determining  the  Holders  entitled  to consent to any
amendment, supplement or waiver. If a Record Date is fixed, then notwithstanding
the last sentence of the immediately preceding paragraph, those Persons who were
Holders at such Record Date (or their duly designated  proxies),  and only those
Persons,  shall be entitled to revoke any consent  previously given,  whether or
not such Persons  shall  continue to be Holders  after such Record Date. No such
consent  shall be valid or  effective  for more than 90 days after  such  Record
Date.

                  After an amendment, supplement or waiver becomes effective, it
shall bind every  Holder,  unless it makes a change  described in any of clauses
(1) through (7) of Section 8.02 hereof, in which case, the amendment, supplement
or waiver  shall  bind only each  Holder of a Note who has  consented  to it and
every  subsequent  Holder of a Note or portion of a Note that evidences the same
debt as the consenting  Holder's  Note;  provided that any such waiver shall not
impair or affect the right of any Holder to receive  payment of principal of and
interest on a Note, on or after the respective due dates expressed in such Note,
or to  bring  suit for the  enforcement  of any such  payment  on or after  such
respective dates without the consent of such Holder.

Section 8.05.     Notation on or Exchange of Notes.
                  --------------------------------

                  If an amendment,  supplement, or waiver changes the terms of a
Note,  the Trustee may request the Holder to deliver it to the Trustee.  In such
case,  the  Trustee  shall place an  appropriate  notation on the Note about the
changed terms and return it to the Holder. Alternatively,  if the Company or the
Trustee so  determine,  in exchange for the Note the Company shall issue and the
Trustee shall  authenticate a new Note that reflects the

                                      -50-

<PAGE>

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

Section 8.06.     Trustee To Sign Amendments, etc.
                  -------------------------------

                  The Trustee  shall be entitled to receive,  and shall be fully
protected in relying  upon, an Officers'  Certificate  and an Opinion of Counsel
stating that the execution of any  amendment,  supplement  or waiver  authorized
pursuant to this Article 8 is authorized or permitted by this Indenture and that
such amendment,  supplement or waiver  constitutes the legal,  valid and binding
obligation of the Company,  enforceable in accordance with its terms (subject to
customary  exceptions).  The Trustee may, but shall not be obligated to, execute
any such amendment, supplement or waiver which affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise.

                                    ARTICLE 9

                       DISCHARGE OF INDENTURE; DEFEASANCE

Section 9.01.     Satisfaction and Discharge of Indenture.
                  ---------------------------------------

                  This  Indenture  shall be discharged  and shall cease to be of
further  effect  (except  those  obligations  referred  to  in  the  penultimate
paragraph of this Section 9.01) and the Trustee, on written demand of and at the
expense  of  the  Company,   shall  execute  proper  instruments   acknowledging
satisfaction and discharge of this Indenture, when either:

                  (a) all Notes  theretofore  authenticated and delivered (other
         than (i) Notes which have been destroyed, lost or stolen and which have
         been replaced or paid as provided in Section 2.07 hereof and (ii) Notes
         for whose  payment  money has  theretofore  been  deposited in trust or
         segregated  and held in trust by the Company and  thereafter  repaid to
         the Company or discharged  from such trust) have been  delivered to the
         Trustee for cancellation; or

                  (b) (i) either (A)  pursuant to Article 3 hereof,  the Company
         shall  have  given  notice  to the  Trustee  and  mailed  a  notice  of
         redemption  to each Holder of the  redemption of all of the Notes under
         arrangements  satisfactory to the Trustee for the giving of such notice
         or  (B)  all  Notes  not  theretofore  delivered  to  the  Trustee  for
         cancellation  have  become  due  and  payable;  (ii)  the  Company  has
         irrevocably  deposited  or caused to be  deposited  with the Trustee in
         trust for the purpose an amount in U.S. legal tender  sufficient to pay
         and discharge  the entire  Indebtedness  on such Notes not  theretofore
         delivered  to the  Trustee  for  cancellation,  for the  principal  of,
         premium,  if any,  and interest to the date of such  deposit;  (iii) no
         Default or Event of Default with respect to this Indenture or the Notes
         shall have  occurred and be  continuing  on the date of such deposit or
         shall  occur as a result  of such  deposit  and such  deposit  will not
         result in a breach or violation of, or constitute a default under,  any
         other  material  instrument to which the Company is a party or by which
         it is bound  (other than a Default or Event of Default  resulting  from
         the incurrence of Indebtedness,  all or a portion of which will be used
         to  defease  the Notes  concurrently  with such  incurrence);  (iv) the
         Company has paid or caused to be paid all other sums payable  hereunder
         by the  Company;  and (v) the  Company  has  delivered  to the  Trustee
         (A)  irrevocable  instructions  to apply  the  deposited  money  toward
         payment  of the  Notes  at the  Stated  Maturity  thereof,  and  (B) an
         Officers'  Certificate  and an Opinion of Counsel each stating that all
         conditions  precedent  herein provided for relating to the satisfaction
         and discharge of this  Indenture  have

                                      -51-

<PAGE>

         been complied with and that such  satisfaction  and discharge  does not
         result in a default  under any material  agreement or  instrument  then
         known to such counsel which binds or affects the Company.

                  Notwithstanding   the  foregoing   paragraph,   the  Company's
obligations  in Article 2 and Sections  4.01,  4.07,  7.07 and 8.06 hereof shall
survive until the Notes are no longer outstanding pursuant to the last paragraph
of Section 2.08 hereof.  After the Notes are no longer  outstanding  pursuant to
Section 2.08 hereof, the Company's obligations under Section 7.07 and 8.06 shall
survive.

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

Section 9.02.     Legal Defeasance.
                  ----------------

                  (a) The Company  may, at its option by a Board  Resolution  of
the Board of Directors of the Company,  at any time,  elect to have this Section
9.02 be applied to all outstanding Notes upon compliance with the conditions set
forth in Section 9.04 hereof.

                  (b) Upon the Company's  exercise under paragraph (a) hereof of
the option  applicable to this paragraph (b), the Company shall,  subject to the
satisfaction  of the conditions  set forth in Section 9.04 hereof,  be deemed to
have been discharged from its obligations with respect to all outstanding  Notes
on the date the  conditions set forth below are satisfied  (hereinafter,  "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and  discharged the entire  Indebtedness  represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the  purposes of Section  9.05 hereof and the other  Sections of this  Indenture
referred to in clauses (i) and (ii) below,  and to have  satisfied all its other
obligations  under such Notes and this Indenture (and the Trustee,  on demand of
and  at  the  expense  of  the  Company,   shall  execute   proper   instruments
acknowledging  the same),  and Holders and any amounts  deposited  under Section
9.04 hereof shall cease to be subject to any  obligations  to, or the rights of,
any holder of Senior Indebtedness under Article 10 or otherwise,  except for the
following  provisions,   which  shall  survive  until  otherwise  terminated  or
discharged hereunder: (i) the rights of Holders of outstanding Notes to receive,
solely from the trust fund  described  in Section  9.05 hereof and as more fully
set forth in such Section,  payments in respect of the principal of, premium, if
any,  and  interest  on such  Notes  when such  payments  are due on the  Stated
Maturity  thereof (or,  upon  redemption,  if  applicable),  (ii) the  Company's
obligations  with respect to such Notes under Article 2 and Section 4.07 hereof,
(iii) the rights, powers, trusts, duties and immunities of the Trustee hereunder
and the Company's  obligations in connection  therewith and (iv) this Article 9.
Subject to  compliance  with this Article 9, the Company may exercise its option
under this Section 9.02  notwithstanding  the prior exercise of its option under
Section 9.03 below with respect to the Notes.

Section 9.03.     Covenant Defeasance.
                  -------------------

                  (a) The Company  may, at its option by a Board  Resolution  of
the Board of Directors of the Company,  at any time,  elect to have this Section
9.03 be applied to all outstanding Notes upon compliance with the conditions set
forth in Section 9.04 hereof.

                  (b) Upon the Company's  exercise under paragraph (a) hereof of
the option  applicable to this paragraph (b), the Company shall,  subject to the
satisfaction  of the  conditions  set forth in Section 9.04 hereof,  be released
from its  obligations  under the covenants  contained in Sections 4.05, 4.08 and
4.09  through  4.17,  inclusive,  and  Article  5  hereof  with  respect  to the
outstanding  Notes on and after  the date the  conditions  set  forth  below are
satisfied (hereinafter,  "Covenant Defeasance"),  and the Notes shall thereafter
be deemed not

                                      -52-

<PAGE>

"outstanding" for the purposes of any direction,  waiver, consent or declaration
or act of Holders (and the  consequences of any thereof) in connection with such
covenants,  but shall continue to be deemed "outstanding" for all other purposes
hereunder and Holders and any amounts  deposited under Section 9.04 hereof shall
cease to be  subject  to any  obligations  to, or the  rights  of, any holder of
Senior  Indebtedness  under  Article 10 or  otherwise.  For this  purpose,  such
Covenant  Defeasance  means that,  with respect to the  outstanding  Notes,  the
Company  may omit to comply with and shall have no  liability  in respect of any
term,  condition or limitation set forth in any such covenant,  whether directly
or indirectly,  by reason of any reference elsewhere herein to any such covenant
or by reason of any reference in any such covenant to any other provision herein
or in any other  document  and such  omission to comply  shall not  constitute a
Default or an Event or Default under  Section  6.01(c) or 6.01(d)  hereof,  but,
except as specified above, the remainder of this Indenture, and such Notes shall
be unaffected thereby. In addition,  upon the Company's exercise under paragraph
(a)  hereof of the  option  applicable  to this  paragraph  (b),  subject to the
satisfaction  of the  conditions  set forth in  Section  9.04  hereof,  Sections
6.01(c), 6.01(d), 6.01(e) and 6.01(f) shall not constitute Events of Default.

Section 9.04.     Conditions to Legal Defeasance or Covenant Defeasance.
                  -----------------------------------------------------

                  The following  shall be the  conditions to the  application of
either Section 9.02 or 9.03 hereof to the outstanding Notes:

                  In order to  exercise  either  Legal  Defeasance  or  Covenant
Defeasance:

                  (a) the  Company  must  irrevocably  deposit  or  cause  to be
         deposited  with the  Trustee,  as trust  funds in  trust,  specifically
         pledged as security  for, and  dedicated  solely to, the benefit of the
         Holders,  cash in U.S. dollars, or U.S. Government  Obligations,  or in
         the case of Covenant Defeasance,  corporate  obligations rated at least
         "A" by  Standard  & Poor's  Ratings  Group or at least  "A" by  Moody's
         Investors Service,  Inc. or a combination  thereof,  in such amounts as
         will be sufficient,  in the opinion of a nationally  recognized firm of
         independent public accountants,  to pay and discharge the principal of,
         premium,  if any, and interest on the  outstanding  Notes on the Stated
         Maturity thereof (or upon redemption, if applicable) of such principal,
         premium, if any, or installment of interest;

                  (b) no Default or Event of Default  with  respect to the Notes
         shall have  occurred and be  continuing on the date of such deposit or,
         insofar as an event of  bankruptcy  under clauses (g) or (h) of Section
         6.01 hereof is  concerned,  at any time during the period ending on the
         91st day after the date of such deposit;

                  (c) such Legal  Defeasance  or Covenant  Defeasance  shall not
         result in a breach or violation of, or constitute a default under, this
         Indenture or any material  agreement or instrument to which the Company
         is a party or by which it is bound;

                  (d) in the case of Legal  Defeasance,  the Company  shall have
         delivered to the Trustee an Opinion of Counsel stating that the Company
         has received from, or there has been published by, the Internal Revenue
         Service a ruling,  or since the Issue Date,  there has been a change in
         applicable  federal  income tax law, in either case to the effect that,
         and based thereon such opinion  shall confirm that,  the Holders of the
         outstanding  Notes of such series will not  recognize  income,  gain or
         loss for federal income tax purposes as a result of such defeasance and
         will be subject to federal income tax on the same amounts,  in the same
         manner  and at the  same  times  as  would  have  been the case if such
         defeasance had not occurred; and

                                      -53-

<PAGE>

                  (e) in the case of Covenant Defeasance, the Company shall have
         delivered  to the  Trustee an Opinion of Counsel to the effect that the
         Holders of outstanding  Notes of such series will not recognize income,
         gain or loss for  federal  income  tax  purposes  as a  result  of such
         defeasance  and  will be  subject  to  federal  income  tax on the same
         amounts,  in the same  manner  and at the same times as would have been
         the case if such defeasance had not occurred; and

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

Section 9.05.     Application of Trust Money.
                  --------------------------

                  All money and U.S. Government  Obligations  deposited with the
Trustee  pursuant to Section  9.01 or 9.04 hereof in respect of the  outstanding
Notes shall be held in trust and applied by the Trustee,  in accordance with the
provisions of such Notes and this Indenture,  to the payment, either directly or
through any Paying  Agent as the Trustee may  determine,  to the Holders of such
Notes,  of all sums due and to become  due  thereon  in  respect  of  principal,
premium,  if any, and accrued  interest,  but such money need not be  segregated
from other funds except to the extent required by law.

                  Anything in this  Article 9 to the  contrary  notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon a written
request of the Company in the form of an Officers' Certificate any money or U.S.
Government  Obligations  held by it as provided  in Section  9.01 or 9.04 hereof
which,  in the opinion of a  nationally-recognized  firm of  independent  public
accountants  expressed  in a  written  certification  thereof  delivered  to the
Trustee,  are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

Section 9.06.     Repayment to the Company.
                  ------------------------

                  Subject to Sections 9.01,  9.,02,  9.03,  9.04, 9.05 and 9.07,
the Trustee and the Paying Agent shall  promptly pay to the Company upon request
any excess U.S. legal tender or U.S. Government  Obligations held by them at any
time and thereupon  shall be relieved  from all  liability  with respect to such
money.  The Trustee and the Paying  Agent shall pay to the Company  upon request
any  money  held by them for the  payment  of  principal,  premium,  if any,  or
interest that remains unclaimed for two years; provided that the Trustee or such
Paying Agent,  before being required to make any payment,  may at the expense of
the Company cause to be published once in a newspaper of general  circulation in
the City of New York or mail to each Holder  entitled to such money  notice that
such money  remains  unclaimed,  and that after a date  specified  therein which
shall be at least 30 days  from the date of such  publication  or  mailing,  any
unclaimed  balance of such money then  remaining  will be repaid to the Company.
After  payment to the Company,  Holders  entitled to such money must look to the
Company for payment as general  creditors  unless an applicable  law  designates
another Person.

Section 9.07.     Reinstatement.
                  -------------

                  If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 9.01, 9.02 or 9.03 hereof
by reason of any legal  proceeding  or by reason of any order or judgment of any
court or governmental authority enjoining,  restraining or otherwise prohibiting
such application,  the Company's  obligations under this Indenture and the Notes
shall be revived and  reinstated  as though no deposit had occurred  pursuant to
this  Article 9 until such time as the Trustee or Paying  Agent is  permitted to
apply all such money and U.S. Government  Obligations in accordance with Section
9.01  hereof;  provided,  however,  that if the  Company has made any payment of
principal of, premium, if any, or accrued

                                      -54-

<PAGE>

interest on any Notes because of the  reinstatement  of their  obligations,  the
Company  shall be  subrogated  to the  rights of the  Holders  of such  Notes to
receive such payment from the money and U.S. Government  Obligations held by the
Trustee or Paying Agent.

                                   ARTICLE 10

                                  SUBORDINATION

Section 10.01.    Agreement To Subordinate.
                  ------------------------

                  The  Company  agrees,  and each  Holder  by  accepting  a Note
agrees,  that  the  Indebtedness  evidenced  by the  Notes  and the  payment  of
principal of, and premium, if any, and interest (including  Additional Interest)
thereof are  subordinated  in right of payment,  to the extent and in the manner
provided in this  Article  10, to the prior  payment in full in cash when due of
the principal of, and premium if any, and accrued and unpaid interest on and all
other  amounts  owing in respect of all Senior  Indebtedness  of the Company and
that the subordination is for the benefit of the holders of Senior  Indebtedness
of the Company.

                  Money and U.S.  Government  Obligations held in trust pursuant
to Article 9 are not subject to the subordination provisions of this Article 10.

Section 10.02.    Liquidation; Dissolution; Bankruptcy.
                  ------------------------------------

                  Upon any payment or  distribution  to creditors of the Company
of the  assets of the  Company  of any kind or  character  in a total or partial
liquidation or  dissolution  of the Company or in a bankruptcy,  reorganization,
insolvency,  receivership or similar proceeding relating to the Company, whether
voluntary or involuntary  (including any assignment for the benefit of creditors
and proceedings  for marshaling of assets and  liabilities of the Company),  the
holders of all Senior  Indebtedness  of the  Company  then  outstanding  will be
entitled to payment in full in cash  before the Holders are  entitled to receive
any  payment  (other  than  payments  made from a trust  previously  established
pursuant to provisions  described  under Article 9 hereof) on or with respect to
the Notes and, until all Senior  Indebtedness  receives payment in full in cash,
any  distribution to which the Holders would be entitled will be made to holders
of Senior Indebtedness.

Section 10.03.    Company Not To Make Payments with Respect to
                  Notes in Certain Circumstances.
                  --------------------------------------------

                  Upon the  occurrence  of any  default  in the  payment  of any
principal of or interest on or other amounts due on any Senior  Indebtedness  of
the  Company in excess of  $5,000,000  beyond  any  applicable  grace  period (a
"Payment  Default"),  no payment of any kind or  character  shall be made by the
Company (or by any other  Person on its behalf) with respect to the Notes unless
and until (i) such Payment Default shall have been cured or waived in accordance
with the instruments  governing such Senior Indebtedness or shall have ceased to
exist, (ii) such Senior  Indebtedness shall have been discharged or paid in full
in cash in accordance with the instruments governing such Senior Indebtedness or
(iii) the  benefits  of this  sentence  have been  waived by the holders of such
Senior Indebtedness or their representative, immediately after which the Company
must resume making any and all required payments,  including missed payments, in
respect of its obligations under the Notes.

                  Upon (1) the occurrence and continuance of an event of default
(other than a Payment Default) relating to Designated Senior Indebtedness of the
Company, as such event of default is defined therein or in the

                                      -55-

<PAGE>

instrument or agreement under which it is  outstanding,  which event of default,
pursuant to the  instruments  governing  such  Designated  Senior  Indebtedness,
entitles the holders (or a specified  portion of the holders) of such Designated
Senior  Indebtedness or their designated  representative  to accelerate  (either
immediately  or with the  passage  of time or the  giving of notice or both) the
Stated  Maturity of such  Designated  Senior  Indebtedness  (whether or not such
acceleration  has  actually  occurred)  (a  "Non-payment  Default")  and (2) the
receipt by the Trustee and the Company from the trustee or other  representative
of holders of such Designated Senior  Indebtedness of written notice (a "Payment
Blockage Notice") of such occurrence,  no payment is permitted to be made by the
Company  (or by any other  Person on its  behalf)  in respect of the Notes for a
period (a "Payment  Blockage  Period")  commencing on the date of receipt by the
Trustee  of such  notice and ending on the  earliest  to occur of the  following
events  (subject to any blockage of payments that may then be in effect due to a
Payment Default on Senior Indebtedness): (v) the acceleration of the maturity of
any  Indebtedness  (other than Senior  Indebtedness) by virtue of the event that
resulted in such Payment Blockage Period; (w) such Non-payment  Default has been
cured or  waived  or has  ceased  to  exist;  (x) a  179-consecutive-day  period
commencing  on the date such  written  notice is  received  by the  Trustee  has
elapsed;  (y) such Payment Blockage Period has been terminated by written notice
to the  Trustee  from the  trustee  or other  representative  of holders of such
Designated Senior Indebtedness, whether or not such Non-payment Default has been
cured  or  waived  or has  ceased  to  exist;  and (z)  such  Designated  Senior
Indebtedness  has been  discharged  or paid in full in cash,  immediately  after
which,  in the case of clause (v), (w), (x), (y) or (z), the Company must resume
making any and all required payments,  including missed payments,  in respect of
its obligations  under the Notes.  Notwithstanding  the foregoing,  (a) not more
than  one  Payment  Blockage  Period  may  be  commenced  in any  period  of 365
consecutive  days and (b) no  default or event of  default  with  respect to the
Designated Senior  Indebtedness of the Company that was the subject of a Payment
Blockage Notice which existed or was continuing on the date of the giving of any
Payment  Blockage  Notice  shall be or serve as the  basis  for the  giving of a
subsequent  Payment  Blockage  Notice  whether  or not  within a  period  of 365
consecutive  days unless such default or event of default  shall have been cured
or waived for a period of at least 90 consecutive days after such date.

                  Regardless of anything to the contrary  herein,  nothing shall
prevent (a) any payment by the Trustee to the Holders of amounts  deposited with
it pursuant  to Article 9 or (b) any payment by the Trustee or the Paying  Agent
as permitted by Section 10.11 hereof.

Section 10.04.    Acceleration of Notes.
                  ---------------------

                  If payment of the Notes is accelerated  because of an Event of
Default, the Company shall promptly notify holders of Senior Indebtedness of the
Company of the acceleration.

Section 10.05.    When Distribution Must Be Paid Over.
                  -----------------------------------

                  In the event that,  notwithstanding the foregoing, any payment
or  distribution  of  assets  of the  Company,  whether  in  cash,  property  or
securities,  shall be received by the Trustee or the Holders at a time when such
payment or distribution is prohibited by the foregoing provisions,  such payment
or distribution shall be segregated from other funds or assets and held in trust
for the benefit of the holders of Senior  Indebtedness  of the Company and shall
be paid or delivered by the Trustee or such Holders,  as the case may be, to the
holders of the Senior Indebtedness of the Company remaining unpaid or unprovided
for or their  representative or  representatives,  or to the trustee or trustees
under any indenture  pursuant to which any  instruments  evidencing  any of such
Senior  Indebtedness of the Company may have been issued,  ratably  according to
the aggregate amounts remaining unpaid on account of the Senior  Indebtedness of
the Company held or represented  by each, for  application to the payment of all
Senior  Indebtedness of the Company remaining unpaid, to the extent necessary to
pay  or to  provide  for  the  payment  in  full  in  cash  of all  such  Senior
Indebtedness  after giving effect to any concurrent  payment or  distribution to
the holders of such Senior Indebtedness.

                                      -56-

<PAGE>

                  Notwithstanding the foregoing,  Holders may receive and retain
payment from the money or the proceeds held in any  defeasance  trust  described
under  Article  9,  and no such  receipt  or  retention  will  be  contractually
subordinated  in right of payment to any Senior  Indebtedness  or subject to the
restrictions described in this Article 10.

Section 10.06.    Notice by Company.
                  -----------------

                  The Company shall  promptly  notify the Trustee and the Paying
Agent in writing of any facts known to the Company that would cause a payment of
principal  of or  interest on Notes to violate  this  Article 10, but failure to
give such notice shall not affect the  subordination  of the Notes to the Senior
Indebtedness of the Company provided in this Article 10.

Section 10.07.    Subrogation.
                  -----------

                  After all Senior  Indebtedness  of the Company is paid in full
and until the Notes are paid in full,  Holders shall be subrogated to the rights
of  holders of Senior  Indebtedness  of the  Company  to  receive  distributions
applicable   to  Senior   Indebtedness   of  the  Company  to  the  extent  that
distributions  otherwise payable to the Holders have been applied to the payment
of Senior Indebtedness of the Company. A distribution made under this Article 10
to holders of Senior Indebtedness of the Company which otherwise would have been
made to Holders is not, as between the  Company  and  Holders,  a payment by the
Company on Senior Indebtedness.

Section 10.08.    Relative Rights.
                  ---------------

                  This  Article 10 defines  the  relative  rights of Holders and
holders of Senior Indebtedness. Nothing in this Indenture shall:

                  (1) impair, as between the Company and Holders, the obligation
         of the Company,  which is absolute and unconditional,  to pay principal
         of, premium, if any, and interest on the Notes in accordance with their
         terms;

                  (2) affect the relative rights of Holders and creditors of the
         Company other than holders of Senior Indebtedness of the Company; or

                  (3)  prevent the  Trustee or any Holder  from  exercising  its
         available  remedies upon a Default or Event of Default,  subject to the
         rights of  holders  of Senior  Indebtedness  of the  Company to receive
         distributions otherwise payable to Holders.

Section 10.09.    Subordination May Not Be Impaired by the Company.
                  ------------------------------------------------

                  No right of any holder of Senior  Indebtedness  of the Company
to enforce the subordination of the indebtedness evidenced by the Notes shall be
impaired by any act or failure to act by the Company or by its failure to comply
with this Indenture.

Section 10.10.    Distribution or Notice to Representative.
                  ----------------------------------------

                  Whenever  a  distribution  is to be made or a notice  given to
holders of Senior Indebtedness of the Company,  the distribution may be made and
the notice given to their Representatives.

                                      -57-

<PAGE>

Section 10.11.    Rights of Trustee and Paying Agent.
                  ----------------------------------

                  The Trustee or Paying Agent may  continue to make  payments on
the Notes until it receives  written  notice of facts that would cause a payment
of  principal  of or interest on the Notes to violate  this Article 10. Only the
Company, a Representative or a holder of an issue of Senior  Indebtedness of the
Company that has no Representative may give the notice.

                  The  Trustee  shall be entitled  to  conclusively  rely on the
delivery  to it of a written  notice by a person  representing  himself  to be a
holder of Senior  Indebtedness of the Company (or a Representative  on behalf of
such holder) to establish  that such notice has been given by a holder of Senior
Indebtedness of the Company or a Representative on behalf of any such holder.

                  The Trustee in its  individual or any other  capacity may hold
Senior Indebtedness of the Company with the same rights it would have if it were
not Trustee. Any Agent may do the same with like rights.

                  The Trustee shall not be deemed to owe any  fiduciary  duty to
the holders of Senior Indebtedness of the Company and shall not be liable to any
such  holder if it shall  mistakenly  pay over or  distribute  to Holders or the
Company  or any other  person  money or assets  to which any  holders  of Senior
Indebtedness  of the Company  shall be entitled by virtue of this  Article 10 or
otherwise.

Section 10.12.    Officers' Certificate.
                  ---------------------

                  If there occurs an event referred to in Section 10.02 or 10.03
hereof, the Company shall promptly give to the Trustee an Officers'  Certificate
(on which the Trustee may conclusively  rely)  identifying all holders of Senior
Indebtedness of the Company or their Representatives and the principal amount of
Senior Indebtedness of the Company then outstanding held by each such holder and
stating the reasons why such  Officers'  Certificate  is being  delivered to the
Trustee.

Section 10.13.    Obligation of Company Unconditional.
                  -----------------------------------

                  Nothing  contained  in this  Article 10 or  elsewhere  in this
Indenture or in any Note is intended to or shall impair, as between the Company,
its creditors  other than holders of Senior  Indebtedness of the Company and the
Holders, the obligation of the Company, which is absolute and unconditional,  to
pay to the Holders the principal of, premium,  if any, and interest on the Notes
as and when the same shall  become  due and  payable  in  accordance  with their
terms,  or is intended to or shall affect the relative rights of the Holders and
creditors of the Company  other than the holders of the Senior  Indebtedness  of
the Company,  nor shall  anything  herein or therein  prevent the Trustee or the
Holder  of  any  Note  from  exercising  all  remedies  otherwise  permitted  by
applicable law upon default under this Indenture, subject to the rights, if any,
under this  Article 10 of the holders of Senior  Indebtedness  of the Company in
respect  of cash,  property  or  securities  of the  Company  received  upon the
exercise  of any such  remedy.  Upon any  distribution  of assets of the Company
referred  to in this  Article  10, the  Trustee,  subject to the  provisions  of
Sections 7.01 and 7.02 hereof, and the Holders shall be entitled to conclusively
rely upon any order or decree by any court of  competent  jurisdiction  in which
such  dissolution,  winding up,  liquidation or  reorganization  proceedings are
pending,  or a certificate of the  liquidating  trustee or agent or other person
making any  distribution  to the  Trustee  or the  Holders,  for the  purpose of
ascertaining  the persons  entitled to  participate  in such  distribution,  the
holders of the Senior  Indebtedness of the Company and other indebtedness of the
Company,  the amount thereof or payable  thereon,  the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
Nothing  contained in this  Article 10 or elsewhere in this  Indenture or in any
Note is intended to or shall affect the  obligation  of the Company to make,  or
prevent the Company from making,  at any time except  during the pendency of any
dissolution,  winding up,

                                      -58-

<PAGE>

liquidation or reorganization  proceeding,  and except during the continuance of
any default specified in Section 10.03 hereof (not cured or waived), payments at
any time of the principal or of interest on the Notes.

Section 10.14.    Article 10 Not To Prevent Events of Default.
                  -------------------------------------------

                  The failure to make a payment of  principal  of,  premium,  if
any,  or interest on the Notes by reason of any  provision  of this  Article Ten
shall not be construed as preventing the occurrence of an Event of Default under
Section 6.01 hereof.

                                   ARTICLE 11

                                  MISCELLANEOUS

Section 11.01.    TIA Controls.
                  ------------

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

Section 11.02.    Notices.
                  -------

                  Any  notices or other  communications  required  or  permitted
hereunder shall be in writing,  and shall be sufficiently  given if made by hand
delivery, by telecopier or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:

                  If to the Company:

                           HEALTHSOUTH Corporation
                           One HealthSouth Parkway
                           Birmingham, Alabama  35243
                           Telephone No.:  (205) 969-4977
                           Facsimile No.:  (205) 969-4730
                           Attention:  William W. Horton

                  If to the Trustee:

                           The Bank of New York
                           101 Barclay Street, Floor 21 West
                           New York, New York  10286
                           Telephone No.:  (212) 815-5287
                           Facsimile No.:  (212) 815-5915
                           Attention:  Corporate Trust Trustee Administration

                  The Company or the Trustee by written notice to the others may
designate   additional  or  different   addresses  for  subsequent   notices  or
communications. Any notice or communication to the Company or the Trustee, shall
be deemed to have been given or made when actually received.

                                      -59-

<PAGE>

                  Any notice or communication mailed to a Holder shall be mailed
by first-class mail, postage prepaid,  at the address shown on the register kept
by the Registrar.

                  Failure to mail a notice or  communication  to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.  If
a notice or communication to a Holder is mailed in the manner provided above, it
shall be deemed duly given, whether or not the addressee receives it.

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

Section 11.03.    Communications by Holders with Other Holders.
                  --------------------------------------------

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

Section 11.04.    Certificate and Opinion as to Conditions Precedent.
                  --------------------------------------------------

                  Upon any request or  application by the Company to the Trustee
to take any action  under  this  Indenture,  the  Company  shall  furnish to the
Trustee:

                  (1)  an  Officers'   Certificate   (which  shall  include  the
         statements  set forth in Section  11.05  hereof)  stating  that, in the
         opinion of the signers, all conditions precedent,  if any, provided for
         in this  Indenture  relating to the proposed  action have been complied
         with; and

                  (2) an Opinion of Counsel  (which shall include the statements
         set forth in Section 11.05 hereof) stating that, in the opinion of such
         counsel,  all such conditions  precedent,  if any, provided for in this
         Indenture relating to the proposed action have been complied with.

Section 11.05.    Statements Required in Certificate and Opinion.
                  ----------------------------------------------

                  Each certificate and opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

                  (1) a statement  that the person  making such  certificate  or
         opinion  has  read  such  covenant  or  condition  and the  definitions
         relating thereto;

                  (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,  it or he
         has made such examination or  investigation as is reasonably  necessary
         to enable such  person to express an informed  opinion as to whether or
         not such covenant or condition has been complied with; and

                  (4) a  statement  as to whether or not, in the opinion of such
         person,  such covenant or condition has been complied  with;  provided,
         however,  that with  respect to matters of fact,  an Opinion of Counsel
         may  rely  on  an  Officers'  Certificate  or  certificates  of  public
         officials.

                                      -60-

<PAGE>

Section 11.06.    Rules by Trustee and Agents.
                  ---------------------------

                  The  Trustee  may make  reasonable  rules for  action by or at
meetings of Holders.  The Registrar and Paying Agent may make  reasonable  rules
for their functions.

Section 11.07.    Business Days; Legal Holidays.
                  -----------------------------

                  A  "Business  Day" is a day  that is not a  Legal  Holiday.  A
"Legal Holiday" is a Saturday, a Sunday, a federally-recognized holiday or a day
on which  banking  institutions  are not required to be open in the State of New
York. If a payment date is a Legal Holiday at a place of payment, payment may be
made at that place on the next  succeeding day that is not a Legal Holiday,  and
no interest shall accrue for the intervening period.

Section 11.08.    Governing Law.
                  -------------

                  THIS  INDENTURE  AND  THE  NOTES  SHALL  BE  GOVERNED  BY  AND
CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK,  AS APPLIED TO
CONTRACTS  MADE AND PERFORMED  WITHIN THE STATE OF NEW YORK,  WITHOUT  REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.  EACH OF THE PARTIES  HERETO AGREES TO SUBMIT TO
THE  JURISDICTION  OF THE  COURTS  OF THE  STATE  OF NEW YORK IN ANY  ACTION  OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES.

Section 11.09.    Waiver of Trial by Jury.
                  -----------------------

                  The Company  hereby  irrevocably  waives any and all rights to
trial  by  jury in any  legal  proceeding  arising  out of or  relating  to this
Indenture.

Section 11.10.    Submission to Jurisdiction.
                  --------------------------

                  The Company hereby consents to the non-exclusive  jurisdiction
of a state or federal  court  situated in New York City,  New York in connection
with any  dispute  arising  hereunder  or under the Notes.  The  Company  hereby
irrevocably  waives,  to the fullest  extent  permitted by  applicable  law, any
objection  which it may now or hereafter have to the laying of venue of any such
proceeding brought in such a court and any claim that such proceeding brought in
such a court has been brought in an inconvenient forum.

Section 11.11.    No Adverse Interpretation of Other Agreements.
                  ---------------------------------------------

                  This Indenture may not be used to interpret another indenture,
loan,  security or debt agreement of the Company or any Subsidiary  thereof.  No
such indenture,  loan,  security or debt agreement may be used to interpret this
Indenture.

Section 11.12.    No Recourse Against Others.
                  --------------------------

                  No incorporator,  director, officer, employee,  stockholder or
controlling  person,  as such,  of the Company  shall have any liability for any
obligations  of the Company  under the Notes or this  Indenture or for any claim
based on, in respect of or by reason of such  obligations or their creation.  By
accepting a Note,  each Holder shall waive and release all such  liability.  The
waiver  and  release  shall be part of the  consideration  for the  issue of the
Notes.

                                      -61-

<PAGE>

Section 11.13.    Successors.
                  ----------

                  All  agreements  of each of the Company in this  Indenture and
the Notes shall bind their respective successors. All agreements of the Trustee,
any additional  trustee and any Paying Agents in this  Indenture  shall bind its
successor.

Section 11.14.    Multiple Counterparts.
                  ---------------------

                  The parties may sign multiple  counterparts of this Indenture.
Each signed  counterpart  shall be deemed an original,  but all of them together
represent one and the same agreement.

Section 11.15.    Table of Contents, Headings, etc.
                  --------------------------------

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

Section 11.16.    Separability.
                  ------------

                  Each provision of this Indenture shall be considered separable
and if for any reason any provision shall be invalid,  illegal or unenforceable,
the validity,  legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby to the extent allowed by law.

Section 11.17.    Translation.
                  -----------

                  The original and controlling version of this Indenture and any
related  agreements shall be the English language  version.  All translations of
this Indenture or any agreements  related hereto into other  languages  shall be
for the  convenience  of the parties only,  and shall not control the meaning or
application of this Indenture.  All notices and other communications required or
permitted by this  Indenture  or any other  transactional  agreement  must be in
English or accompanied by an English  translation,  and the  interpretation  and
application of such notices and other  communications shall be based solely upon
the English language version thereof.

                                      -62-

<PAGE>

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

                                     Company:
                                     -------

                                     HEALTHSOUTH CORPORATION

                                     By:            /s/ William T. Owens
                                         ---------------------------------------
                                                       William T. Owens
                                                 Executive Vice President and
                                                    Chief Financial Officer

                                     Trustee:
                                     -------

                                     THE BANK OF NEW YORK,
                                       as Trustee

                                     By:          /s/ Robert A. Massimillo
                                         ---------------------------------------
                                                      Robert A. Massimillo
                                                    Assistant Vice President

                                      S-1

<PAGE>
                                                                       EXHIBIT A

                             [FORM OF SERIES A NOTE]

                                                           CUSIP No.:
                             HEALTHSOUTH CORPORATION

                   10-3/4% SENIOR SUBORDINATED NOTE DUE 2008

No.                                                                       $

                  HEALTHSOUTH   CORPORATION,   a  corporation   incorporated  in
Delaware (the "Company,"  which term includes any successor  entity),  for value
received  promises to pay to or  registered  assigns,  the principal sum of $ on
October 1, 2008.

                  Interest  Payment  Dates:  April 1 and  October 1,  commencing
April 1, 2001.

                  Record Dates:  March 15 and September 15.

                  Reference  is  made to the  further  provisions  of this  Note
contained  herein and the Indenture  (as  defined),  which will for all purposes
have the same effect as if set forth at this place.

                                      A-1

<PAGE>

                  IN WITNESS  WHEREOF,  the  Company  has caused this Note to be
signed  manually or by facsimile by its duly authorized  directors,  officers or
other authorized signatories.

                                            HEALTHSOUTH CORPORATION

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

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

CERTIFICATE OF AUTHENTICATION

Date: September 25, 2000

                  This is one of the 10-3/4% Senior  Subordinated Notes due 2008
referred to in the within-mentioned Indenture.

                                            THE BANK OF NEW YORK,
                                              as Trustee

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

                                      A-2

<PAGE>

                              (REVERSE OF SECURITY)

                    10-3/4% SENIOR SUBORDINATED NOTE DUE 2008

                  1.   Interest.    HEALTHSOUTH   CORPORATION,   a   corporation
incorporated  in  Delaware  (the  "Company"),  promises  to pay  interest on the
principal amount of this Note at the rate per annum shown above. Interest on the
Notes will accrue from the most recent date on which  interest  has been paid or
duly  provided  for,  or if no  interest  has  been  paid,  from the date of the
original  issuance of the Notes. The Company will pay interest  semi-annually in
arrears on each Interest Payment Date,  commencing April 1, 2001.  Interest will
be computed on the basis of a 360-day year comprised of twelve 30-day months.

                  The Company  shall pay  interest on overdue  principal  and on
overdue  installments  of  interest  (without  regard  to any  applicable  grace
periods)  to the extent  lawful from time to time on demand at the rate borne by
the Notes.

                  2. Method of Payment.  The Company  shall pay  interest on the
Notes (except defaulted  interest) to the Persons who are the registered Holders
at the close of business on March 15 or September 15  immediately  preceding the
Interest  Payment Date  (whether or not such day is a Business  Day) even if the
Notes are canceled on registration of transfer or registration of exchange after
such Record  Date.  Holders  must  surrender  Notes to a Paying Agent to collect
principal payments.  Payments of principal and premium, if any, will be made (on
presentation  of such  Notes  if in  certificated  form) in U.S.  legal  tender;
provided,  however,  that the Company may pay  principal,  premium,  if any, and
interest by check payable in U.S. legal tender. The Company may deliver any such
interest  payment by check mailed to the address of the Person entitled  thereto
as such address will appear on the security register.

                  3. Paying  Agents and  Registrar.  Initially,  The Bank of New
York,  a  banking  organization  organized  under  the  laws  of New  York  (the
"Trustee"),  will act as Paying Agent and the Trustee will act as Registrar. The
Company may change any Paying Agents,  Registrar or co-Registrar  without notice
to the Holders.  Neither the Company nor any of its  Subsidiaries  or Affiliates
may act as Paying Agent but may act as Registrar or co-Registrar.

                  4. Indenture. The Company issued this Note under an Indenture,
dated as of September 25, 2000 (the  "Indenture"),  by and among the Company and
the Trustee. This Note is one of a duly authorized issue of Initial Notes of the
Company  designated  as its  10-3/4%  Senior  Subordinated  Notes  due 2008 (the
"Notes").  The Notes  include the Initial  Notes and the  Exchange  Notes issued
pursuant to the Indenture.  The Initial Notes and the Exchange Notes are treated
as a single class of securities  under the Indenture.  Capitalized  terms herein
are used as defined in the Indenture unless otherwise defined herein.  The terms
of the Notes  include  those stated in the  Indenture and those made part of the
Indenture by reference to the Trust  Indenture  Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb)  (the  "TIA"),  as  in  effect  on  the  date  of  the  Indenture.
Notwithstanding  anything to the contrary  herein,  the Notes are subject to all
such terms, and Holders of Notes are referred to the Indenture and the TIA for a
statement of them. The Notes are general unsecured obligations of the Company.

                                      A-3

<PAGE>

                  5. Subordination.  The Notes are unsecured  obligations of the
Company and  subordinated  in right of payment,  in the manner and to the extent
set  forth  in the  Indenture,  to the  prior  payment  in  full  of all  Senior
Indebtedness of the Company, whether outstanding on the date of the Indenture or
thereafter  created,  incurred,  assumed  or  guaranteed.  Each  Holder  by  his
acceptance  hereof  agrees to be bound by such  provisions  and  authorizes  and
expressly  directs the  Trustee,  on his  behalf,  to take such action as may be
necessary or  appropriate to effectuate  the  subordination  provided for in the
Indenture and appoints the Trustee his attorney-in-fact for such purposes.

                  6. Redemption.
                     ----------

                  (a) Optional  Redemption upon an Equity Offering.  At any time
prior to October  1, 2003,  the  Company  may redeem up to 35% of the  aggregate
principal  amount of the Notes  outstanding  on the Issue Date with the net cash
proceeds  of one or more Equity  Offerings.  The  Redemption  Price for any such
redemption will be 110.750% of the principal amount of the Notes being redeemed,
plus  accrued  and unpaid  interest  and  Additional  Interest,  if any,  to the
Redemption  Date,  subject  to the right of  Holders  of record on the  relevant
Record Date to receive  interest due on the relevant  Interest  Payment Date. At
least 65% of the  aggregate  principal  amount of the Notes  outstanding  on the
Issue Date must remain  outstanding  immediately after any such redemption,  and
each such redemption must occur within 60 days after the Equity Offering closes.

                  (b) Optional Redemption.  The Company may redeem the Notes, at
its  option,  in whole at any time or in part  from  time to time,  on and after
October 1, 2004 at the following  Redemption Prices (expressed as percentages of
the principal  amount  thereof),  together with accrued and unpaid  interest and
Additional Interest,  if any, thereon to the Redemption Date, if redeemed during
the twelve-month period commencing on October 1 of the year set forth below:

<TABLE>
<CAPTION>
         Year                                                                 Percentage
         ----                                                                 ----------
         <S>                                                                   <C>
         2004..........................................................        105.375%
         2005..........................................................        103.583%
         2006..........................................................        101.792%
         2007 and thereafter...........................................        100.000%
</TABLE>

                  7. Notice of Redemption. Notice of redemption under paragraphs
6(a) and 6(b) of this  Note will be mailed at least 30 days but not more than 60
days before the  Redemption  Date to each Holder of Notes to be redeemed at such
Holder's registered address.

                  Except  as set  forth  in the  Indenture,  if  monies  for the
redemption of the Notes called for redemption shall have been deposited with the
Paying Agent for redemption on such  Redemption  Date, then the Notes called for
redemption  will cease to bear interest from and after such  Redemption Date and
the only right of the  Holders  of such Notes will be to receive  payment of the
Redemption Price plus interest accrued through the Redemption Date, if any.

                  8. Offers to Purchase.  The  Indenture  provides  that,  after
certain Asset Sales (as defined in the  Indenture)  and upon the occurrence of a
Change of  Control  (as  defined  in the  Indenture),  and  subject  to  further
limitations  contained  therein,  the  Company  will  make an offer to  purchase
certain  amounts of the Notes in accordance with the procedures set forth in the
Indenture.

                  9. Registration  Rights.  Pursuant to the Registration  Rights
Agreement  by and between the  Company and the Initial  Purchasers,  the Company
will be obligated to consummate an exchange  offer  pursuant to which the Holder
of this Note shall have the right to exchange this Note for the Company's Series
B 10-3/4% Senior  Subordinated  Notes due 2008 (the "Exchange  Notes"),  at such
time as the Exchange Notes shall have been registered  under the Securities Act,
in like principal amount and having terms identical in all material

                                      A-4

<PAGE>

respects  to the  Initial  Notes.  The  Holders of the  Initial  Notes  shall be
entitled  to receive  certain  Additional  Interest  payments  in the event such
exchange  offer  is not  consummated  and upon  certain  other  conditions,  all
pursuant  to and in  accordance  with  the  terms  of  the  Registration  Rights
Agreement.

                  10.  Denominations;  Transfer;  Exchange.  The  Notes  are  in
definitive,  fully registered form, without coupons, in minimum denominations of
$1,000 and in integral  multiples  thereof. A Holder shall register the transfer
or exchange of Notes in accordance with the Indenture. The Registrar may require
a Holder,  among other things, to furnish appropriate  endorsements and transfer
documents  and to pay certain  transfer  taxes or similar  governmental  charges
payable in  connection  therewith as permitted by the  Indenture.  The Registrar
need not register  the transfer of or exchange of any Notes or portions  thereof
selected for redemption.

                  11.  Persons Deemed  Owners.  The registered  Holder of a Note
shall be treated as the owner of such Note for all purposes.

                  12.  Unclaimed Money. If money for the payment of principal or
interest remains  unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company.  After that,  Holders  entitled to money must
look to the  Company  for  payment as  general  creditors  unless an  "abandoned
property" law designates another person.

                  13. Legal Defeasance and Covenant  Defeasance.  If the Company
at any time deposits with the Trustee U.S. legal tender or other  obligations of
the types set forth in the  Indenture  sufficient  to pay the  principal  of and
interest  on the Notes to Stated  Maturity or  redemption,  if  applicable,  and
complies with the other provisions of the Indenture relating to Legal Defeasance
or Covenant  Defeasance,  the Company will be discharged from certain provisions
of the Indenture and the Notes (including certain  covenants,  but excluding its
obligation to pay the principal of and interest on the Notes).

                  14. Amendments,  Supplements,  and Waivers. Subject to certain
exceptions,  the Indenture or the Notes may be amended or supplemented  with the
written  consent of the Holders of at least a majority in aggregate  outstanding
principal  amounts of the Notes, and any existing Default or Event of Default or
noncompliance  with any provision may be waived with the written  consent of the
Holders  of  a  majority  in  aggregate  principal  amount  of  the  Notes  then
outstanding. Without notice to or consent of any Holder, the parties thereto may
amend or supplement the Indenture or the Notes to, among other things,  cure any
ambiguity,  defect  or  inconsistency  or make any  other  change  that does not
adversely affect in any material respect the rights of any Holder of a Note.

                  15.  Restrictive  Covenants.  The  Indenture  imposes  certain
limitations on the ability of the Company and its  Subsidiaries  to, among other
things,  make  payments  in  respect  of its  Capital  Stock,  incur  additional
Indebtedness,  make certain  investments,  sell assets,  enter into transactions
with  Affiliates,  create  Liens,  merge or  consolidate  with or into any other
Person or sell,  lease,  convey or otherwise dispose of all or substantially all
of its  assets  or  create  dividend  or other  payment  restrictions  affecting
Subsidiaries  of the  Company.  Such  limitations  are  subject  to a number  of
important  qualifications  and exceptions.  The Company must report on an annual
basis to the Trustee on compliance with such limitations.

                  16. Successor.  When a Successor  assumes,  in accordance with
the Indenture,  all the obligations of its  predecessor  under the Notes and the
Indenture,  and immediately  before and thereafter no Default exists and certain
other  conditions are satisfied,  the  predecessor  entity will be released from
those obligations.

                  17. Defaults and Remedies.  Events of Default are set forth in
the  Indenture.  If an Event of Default  (other  than an Event of  Default  with
respect to the  Company  pursuant  to Section  6.01(g) or (h) of the  Indenture)
shall have occurred and be continuing, then the Trustee by written notice to the
Company or the Holders of not less than 25% in aggregate principal amount of the
Notes then outstanding may declare to be

                                      A-5

<PAGE>

immediately  due and payable the entire  principal  amount of all the Notes then
outstanding  plus  accrued  interest  to the  date  of  acceleration;  provided,
however,  that after such  acceleration but before a judgment or decree based on
such  acceleration  is  obtained  by the  Trustee,  the Holders of a majority in
aggregate  principal  amount of the  outstanding  Notes by written notice to the
Company  and the  Trustee  may  rescind  and  annul  such  acceleration  and its
consequences  if all existing  Events of Default,  other than the  nonpayment of
principal,  premium,  if any, or interest that has become due solely  because of
the acceleration, have been cured or waived. No such rescission shall affect any
subsequent Default or impair any right consequent  thereto.  In case an Event of
Default with respect to the Company  specified in Section  6.01(g) or (h) of the
Indenture  occurs,  such principal  amount,  together with premium,  if any, and
interest with respect to all of the Notes, shall be due and payable  immediately
without any  declaration  or other act on the part of the Trustee or the Holders
of the Notes.

                  18.  Trustee  Dealings  with  Company.  The Trustee  under the
Indenture,  in its individual or any other  capacity,  may make loans to, accept
deposits from, and perform services for the Company, and may otherwise deal with
the Company,  its Subsidiaries or their respective  Affiliates as if it were not
the Trustee.

                  19. No Recourse  Against Others.  No  incorporator,  director,
officer,  employee,  stockholder or controlling  person, as such, of the Company
shall have any liability for any  obligations  of the Company under the Notes or
the  Indenture  or for any claim  based on, in  respect  of or by reason of such
obligations or their creation.  By accepting a Note, each Holder shall waive and
release  all  such  liability.  The  waiver  and  release  shall  be part of the
consideration for the issue of the Notes.

                  20.  Authentication.  This Note  shall not be valid  until the
Trustee or Authenticating Agent manually signs the certificate of authentication
on this Note.

                  21.  Multiple  Counterparts.  The  parties  may sign  multiple
counterparts of this Note. Each signed  counterpart  shall be deemed an original
but all of them together represent one and the same Note.

                  22.  Governing  Law.  THIS  NOTE  SHALL  BE  GOVERNED  BY  AND
CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK,  AS APPLIED TO
CONTRACTS  MADE AND PERFORMED  WITHIN THE STATE OF NEW YORK,  WITHOUT  REGARD TO
PRINCIPLES  OF CONFLICTS OF LAW. EACH OF THE PARTIES TO THE INDENTURE HAS AGREED
TO  SUBMIT  TO THE  JURISDICTION  OF THE  COURTS OF THE STATE OF NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE.

                  23. Abbreviations and Defined Terms.  Customary  abbreviations
may be used in the name of a Holder of a Note or an  assignee,  such as: TEN COM
(= tenants in common),  TEN ENT (= tenants by the  entireties),  JT TEN (= joint
tenants  with  right of  survivorship  and not as tenants  in  common),  CUST (=
Cus-todian), and U/G/M/A (= Uniform Gifts to Minors Act).

                  24. CUSIP Numbers.  The Company has caused CUSIP numbers to be
printed on the Notes as a convenience to the Holders.  No representation is made
as to the  accuracy of such  numbers as printed on the Notes and reliance may be
placed only on the other identification numbers printed hereon.

                  25. Indenture.  Each Holder, by accepting a Note, agrees to be
bound by all of the terms and  provisions of the  Indenture,  as the same may be
amended from time to time.

                  The Company  will furnish to any Holder of a Note upon written
request and without  charge a copy of the  Indenture  which has the text of this
Note in larger  type.  Requests  may be made to:  HEALTHSOUTH  Corporation,  One
HealthSouth Parkway,  Birmingham,  Alabama 35243,  Telephone No. (205) 969-4977,
Facsimile No. (205) 969-4730, Attention: William W. Horton.

                                      A-6

<PAGE>

                                 ASSIGNMENT FORM

                  If you the Holder want to assign  this Note,  fill in the form
below and have your signature guaranteed:

I or we assign and transfer this Note to:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
                  (Print or type name, address and zip code and
                  social security or tax ID number of assignee)

and irrevocably appoint                                                        ,
-------------------------------------------------------------------------------
agent to transfer this Note on the books of the Company.  The agent may substit
ute another to act for him.

Date:                     Signed:
      -----------------           ----------------------------------------------
                                 (Sign exactly as your name appears on the other
                                 side of this Note)

Medallion Guarantee:
                     -------------------

                                      A-7

<PAGE>

                      [OPTION OF HOLDER TO ELECT PURCHASE]

                  If you  want to  elect  to have  this  Note  purchased  by the
Company  pursuant to Section  4.12 or Section 4.15 of the  Indenture,  check the
appropriate box:

                                Section 4.12 |_|
                                Section 4.15 |_|

                  If you want to elect to have only part of this Note  purchased
by the Company pursuant to Section 4.12 or Section 4.15 of the Indenture,  state
the amount you elect to have purchased:

$  ------------------------

Date:
      -------------------------     --------------------------------------------
                                    NOTICE:  The  signature  on this  assignment
                                    must  correspond with the name as it appears
                                    upon  the face of the  within  Note in every
                                    particular without alteration or enlargement
                                    or any change  whatsoever  and be guaranteed
                                    by the endorser's bank or broker.

Medallion Guarantee:
                     -------------------

                                      A-8

<PAGE>

                                                                       EXHIBIT B

                             [FORM OF SERIES B NOTE]

                                                            CUSIP No.:

                             HEALTHSOUTH CORPORATION

                    10-3/4% SENIOR SUBORDINATED NOTE DUE 2008

No.                                                                       $

                  HEALTHSOUTH   CORPORATION,   a  corporation   incorporated  in
Delaware (the "Company,"  which term includes any successor  entity),  for value
received  promises to pay to or  registered  assigns,  the principal sum of $ on
October 1, 2008.

                  Interest  Payment  Dates:  April 1 and  October 1,  commencing
April 1, 2001.

                  Record Dates:  March 15 and September 15.

                  Reference  is  made to the  further  provisions  of this  Note
contained  herein and the Indenture  (as  defined),  which will for all purposes
have the same effect as if set forth at this place.

                                      B-1

<PAGE>

                  IN WITNESS  WHEREOF,  the  Company  has caused this Note to be
signed  manually or by facsimile by its duly authorized  directors,  officers or
other authorized signatories.

                                            HEALTHSOUTH CORPORATION

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

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

CERTIFICATE OF AUTHENTICATION

Date: September 25, 2000

                  This is one of the 10-3/4% Senior  Subordinated Notes due 2008
referred to in the within-mentioned Indenture.

                                            THE BANK OF NEW YORK,
                                                 as Trustee

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

                                      B-2

<PAGE>

                              (REVERSE OF SECURITY)

                    10-3/4% SENIOR SUBORDINATED NOTE DUE 2008

                  1.   Interest.    HEALTHSOUTH   CORPORATION,   a   corporation
incorporated  in  Delaware  (the  "Company"),  promises  to pay  interest on the
principal amount of this Note at the rate per annum shown above. Interest on the
Notes will accrue from the most recent date on which  interest  has been paid or
duly  provided  for,  or if no  interest  has  been  paid,  from the date of the
original  issuance of the Notes. The Company will pay interest  semi-annually in
arrears on each Interest Payment Date,  commencing April 1, 2001.  Interest will
be computed on the basis of a 360-day year comprised of twelve 30-day months.

                  The Company  shall pay  interest on overdue  principal  and on
overdue  installments  of  interest  (without  regard  to any  applicable  grace
periods)  to the extent  lawful from time to time on demand at the rate borne by
the Notes.

                  2. Method of Payment.  The Company  shall pay  interest on the
Notes (except defaulted  interest) to the Persons who are the registered Holders
at the close of business on March 15 or September 15  immediately  preceding the
Interest  Payment Date  (whether or not such day is a Business  Day) even if the
Notes are canceled on registration of transfer or registration of exchange after
such Record  Date.  Holders  must  surrender  Notes to a Paying Agent to collect
principal payments.  Payments of principal and premium, if any, will be made (on
presentation  of such  Notes  if in  certificated  form) in U.S.  legal  tender;
provided,  however,  that the Company may pay  principal,  premium,  if any, and
interest by check payable in U.S. legal tender. The Company may deliver any such
interest  payment by check mailed to the address of the Person entitled  thereto
as such address will appear on the security register.

                  3. Paying  Agents and  Registrar.  Initially,  The Bank of New
York,  a  banking  organization  organized  under  the  laws  of New  York  (the
"Trustee"),  will act as Paying Agent and the Trustee will act as Registrar. The
Company may change any Paying Agents,  Registrar or co-Registrar  without notice
to the Holders.  Neither the Company nor any of its  Subsidiaries  or Affiliates
may act as Paying Agent but may act as Registrar or co-Registrar.

                  4. Indenture. The Company issued this Note under an Indenture,
dated as of September 25, 2000 (the  "Indenture"),  by and among the Company and
the Trustee.  This Note is one of a duly  authorized  issue of Exchange Notes of
the Company  designated as its 10-3/4% Senior  Subordinated  Notes due 2008 (the
"Notes").  The Notes  include the Initial  Notes and the  Exchange  Notes issued
pursuant to the Indenture.  The Initial Notes and the Exchange Notes are treated
as a single class of securities  under the Indenture.  Capitalized  terms herein
are used as defined in the Indenture unless otherwise defined herein.  The terms
of the Notes  include  those stated in the  Indenture and those made part of the
Indenture by reference to the Trust  Indenture  Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb)  (the  "TIA"),  as  in  effect  on  the  date  of  the  Indenture.
Notwithstanding  anything to the contrary  herein,  the Notes are subject to all
such terms, and Holders of Notes are referred to the Indenture and the TIA for a
statement of them. The Notes are general unsecured obligations of the Company.

                  5. Subordination.  The Notes are unsecured  obligations of the
Company and  subordinated  in right of payment,  in the manner and to the extent
set  forth  in the  Indenture,  to the  prior  payment  in  full  of all  Senior
Indebtedness of the Company, whether outstanding on the date of the Indenture or
thereafter  created,  incurred,  assumed  or  guaranteed.  Each  Holder  by  his
acceptance  hereof  agrees to be bound by such  provisions  and  authorizes  and
expressly  directs the  Trustee,  on his  behalf,  to take such action as may be
necessary or  appropriate to effectuate  the  subordination  provided for in the
Indenture and appoints the Trustee his attorney-in-fact for such purposes.

                                      B-3

<PAGE>

                  6. Redemption.
                      ----------

                  (a) Optional  Redemption upon an Equity Offering.  At any time
prior to October  1, 2003,  the  Company  may redeem up to 35% of the  aggregate
principal  amount of the Notes  outstanding  on the Issue Date with the net cash
proceeds  of one or more Equity  Offerings.  The  Redemption  Price for any such
redemption will be 110.750% of the principal amount of the Notes being redeemed,
plus  accrued  and unpaid  interest  and  Additional  Interest,  if any,  to the
Redemption  Date,  subject  to the right of  Holders  of record on the  relevant
Record Date to receive  interest due on the relevant  Interest  Payment Date. At
least 65% of the  aggregate  principal  amount of the Notes  outstanding  on the
Issue Date must remain  outstanding  immediately after any such redemption,  and
each such redemption must occur within 60 days after the Equity Offering closes.

                  (b) Optional Redemption.  The Company may redeem the Notes, at
its  option,  in whole at any time or in part  from  time to time,  on and after
October 1, 2004 at the following  Redemption Prices (expressed as percentages of
the principal  amount  thereof),  together with accrued and unpaid  interest and
Additional  Interest,  if any,  thereon to the date of  redemption,  if redeemed
during the  twelve-month  period  commencing  on October 1 of the year set forth
below:

<TABLE>
<CAPTION>
         Year                                                                 Percentage
         ----                                                                 ----------
         <S>                                                                   <C>
         2004..........................................................        105.375%
         2005..........................................................        103.583%
         2006..........................................................        101.792%
         2007 and thereafter...........................................        100.000%
</TABLE>

                  7. Notice of Redemption. Notice of redemption under paragraphs
6(a) and 6(b) of this  Note will be mailed at least 30 days but not more than 60
days before the  Redemption  Date to each Holder of Notes to be redeemed at such
Holder's registered address.

                  Except  as set  forth  in the  Indenture,  if  monies  for the
redemption of the Notes called for redemption shall have been deposited with the
Paying Agent for redemption on such  Redemption  Date, then the Notes called for
redemption  will cease to bear interest from and after such  Redemption Date and
the only right of the  Holders  of such Notes will be to receive  payment of the
Redemption Price plus interest accrued through the Redemption Date, if any.

                  8. Offers to Purchase.  The  Indenture  provides  that,  after
certain Asset Sales (as defined in the  Indenture)  and upon the occurrence of a
Change of  Control  (as  defined  in the  Indenture),  and  subject  to  further
limitations  contained  therein,  the  Company  will  make an offer to  purchase
certain  amounts of the Notes in accordance with the procedures set forth in the
Indenture.

                  9.  Denominations;   Transfer;  Exchange.  The  Notes  are  in
definitive,  fully registered form, without coupons, in minimum denominations of
$1,000 and in integral  multiples  thereof. A Holder shall register the transfer
or exchange of Notes in accordance with the Indenture. The Registrar may require
a Holder,  among other things, to furnish appropriate  endorsements and transfer
documents  and to pay certain  transfer  taxes or similar  governmental  charges
payable in  connection  therewith as permitted by the  Indenture.  The Registrar
need not register  the transfer of or exchange of any Notes or portions  thereof
selected for redemption.

                  10.  Persons Deemed  Owners.  The registered  Holder of a Note
shall be treated as the owner of such Note for all purposes.

                  11.  Unclaimed Money. If money for the payment of principal or
interest remains  unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company. After that,

                                      B-4

<PAGE>

Holders  entitled  to money  must look to the  Company  for  payment  as general
creditors unless an "abandoned property" law designates another person.

                  12. Legal Defeasance and Covenant  Defeasance.  If the Company
at any time deposits with the Trustee U.S. legal tender or other  obligations of
the types set forth in the  Indenture  sufficient  to pay the  principal  of and
interest  on the Notes to Stated  Maturity or  redemption,  if  applicable,  and
complies with the other provisions of the Indenture relating to Legal Defeasance
or Covenant  Defeasance,  the Company will be discharged from certain provisions
of the Indenture and the Notes (including certain  covenants,  but excluding its
obligation to pay the principal of and interest on the Notes).

                  13. Amendments,  Supplements,  and Waivers. Subject to certain
exceptions,  the Indenture or the Notes may be amended or supplemented  with the
written  consent of the Holders of at least a majority in aggregate  outstanding
principal  amounts of the Notes, and any existing Default or Event of Default or
noncompliance  with any provision may be waived with the written  consent of the
Holders  of  a  majority  in  aggregate  principal  amount  of  the  Notes  then
outstanding. Without notice to or consent of any Holder, the parties thereto may
amend or supplement the Indenture or the Notes to, among other things,  cure any
ambiguity,  defect  or  inconsistency  or make any  other  change  that does not
adversely affect in any material respect the rights of any Holder of a Note.

                  14.  Restrictive  Covenants.  The  Indenture  imposes  certain
limitations on the ability of the Company and its  Subsidiaries  to, among other
things,  make  payments  in  respect  of its  Capital  Stock,  incur  additional
Indebtedness,  make certain  investments,  sell assets,  enter into transactions
with  Affiliates,  create  Liens,  merge or  consolidate  with or into any other
Person or sell,  lease,  convey or otherwise dispose of all or substantially all
of its  assets  or  create  dividend  or other  payment  restrictions  affecting
Subsidiaries  of the  Company.  Such  limitations  are  subject  to a number  of
important  qualifications  and exceptions.  The Company must report on an annual
basis to the Trustee on compliance with such limitations.

                  15. Successor.  When a Successor  assumes,  in accordance with
the Indenture,  all the obligations of its  predecessor  under the Notes and the
Indenture,  and immediately  before and thereafter no Default exists and certain
other  conditions are satisfied,  the  predecessor  entity will be released from
those obligations.

                  16. Defaults and Remedies.  Events of Default are set forth in
the  Indenture.  If an Event of Default  (other  than an Event of  Default  with
respect to the  Company  pursuant  to Section  6.01(g) or (h) of the  Indenture)
shall have occurred and be continuing, then the Trustee by written notice to the
Company or the Holders of not less than 25% in aggregate principal amount of the
Notes then  outstanding may declare to be immediately due and payable the entire
principal  amount of all the Notes then outstanding plus accrued interest to the
date of acceleration; provided, however, that after such acceleration but before
a judgment or decree based on such acceleration is obtained by the Trustee,  the
Holders of a majority in aggregate  principal amount of the outstanding Notes by
written  notice to the  Company  and the  Trustee  may by written  notice to the
Company and the Trustee rescind and annul such acceleration and its consequences
if all  existing  Events of Default,  other than the  nonpayment  of  principal,
premium,  if any,  or  interest  that  has  become  due  solely  because  of the
acceleration,  have been cured or waived.  No such  rescission  shall affect any
subsequent Default or impair any right consequent  thereto.  In case an Event of
Default with respect to the Company  specified in Section  6.01(g) or (h) of the
Indenture  occurs,  such principal  amount,  together with premium,  if any, and
interest with respect to all of the Notes, shall be due and payable  immediately
without any  declaration  or other act on the part of the Trustee or the Holders
of the Notes.

                  17.  Trustee  Dealings  with  Company.  The Trustee  under the
Indenture,  in its individual or any other  capacity,  may make loans to, accept
deposits from, and perform services for the Company, and may otherwise deal with
the Company,  its Subsidiaries or their respective  Affiliates as if it were not
the Trustee.

                                      B-5

<PAGE>

                  18. No Recourse  Against Others.  No  incorporator,  director,
officer,  employee,  stockholder or controlling  person, as such, of the Company
shall have any liability for any  obligations  of the Company under the Notes or
the  Indenture  or for any claim  based on, in  respect  of or by reason of such
obligations or their creation.  By accepting a Note, each Holder shall waive and
release  all  such  liability.  The  waiver  and  release  shall  be part of the
consideration for the issue of the Notes.

                  19.  Authentication.  This Note  shall not be valid  until the
Trustee or Authenticating Agent manually signs the certificate of authentication
on this Note.

                  20.  Multiple  Counterparts.  The  parties  may sign  multiple
counterparts of this Note. Each signed  counterpart  shall be deemed an original
but all of them together represent one and the same Note.

                  21.  Governing  Law.  THIS  NOTE  SHALL  BE  GOVERNED  BY  AND
CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK,  AS APPLIED TO
CONTRACTS  MADE AND PERFORMED  WITHIN THE STATE OF NEW YORK,  WITHOUT  REGARD TO
PRINCIPLES  OF CONFLICTS OF LAW. EACH OF THE PARTIES TO THE INDENTURE HAS AGREED
TO  SUBMIT  TO THE  JURISDICTION  OF THE  COURTS OF THE STATE OF NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE.

                  22. Abbreviations and Defined Terms.  Customary  abbreviations
may be used in the name of a Holder of a Note or an  assignee,  such as: TEN COM
(= tenants in common),  TEN ENT (= tenants by the  entireties),  JT TEN (= joint
tenants  with  right of  survivorship  and not as tenants  in  common),  CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

                  23. CUSIP Numbers.  The Company has caused CUSIP numbers to be
printed on the Notes as a convenience to the Holders.  No representation is made
as to the  accuracy of such  numbers as printed on the Notes and reliance may be
placed only on the other identification numbers printed hereon.

                  24. Indenture.  Each Holder, by accepting a Note, agrees to be
bound by all of the terms and  provisions of the  Indenture,  as the same may be
amended from time to time.

                  The Company  will furnish to any Holder of a Note upon written
request and without  charge a copy of the  Indenture  which has the text of this
Note in larger  type.  Requests  may be made to:  HEALTHSOUTH  Corporation,  One
HealthSouth Parkway,  Birmingham,  Alabama 35243,  Telephone No. (205) 969-4977,
Facsimile No. (205) 969-4730, Attention: William W. Horton.

                                      B-6

<PAGE>

                                 ASSIGNMENT FORM

                  If you the Holder want to assign  this Note,  fill in the form
below and have your signature guaranteed:

I or we assign and transfer this Note to:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
                  (Print or type name, address and zip code and
                  social security or tax ID number of assignee)

and irrevocably appoint                                                        ,
                       --------------------------------------------------------
agent  to  transfer  this  Note on the  books  of the  Company.  The  agent  may
substitute another to act for him.

Date:                            Signed:
     ------------------------            ---------------------------------------
                                 (Sign exactly as your name appears on the other
                                  side of this Note)

Medallion Guarantee: ____________________

                                      B-7

<PAGE>

                      [OPTION OF HOLDER TO ELECT PURCHASE]

                  If you  want to  elect  to have  this  Note  purchased  by the
Company  pursuant to Section  4.12 or Section 4.15 of the  Indenture,  check the
appropriate box:

                                Section 4.12 |_|
                                Section 4.15 |_|

                  If you want to elect to have only part of this Note  purchased
by the Company pursuant to Section 4.12 or Section 4.15 of the Indenture,  state
the amount you elect to have purchased:

$  ----------------------

Date:
     --------------------------     --------------------------------------------
                                    NOTICE:  The  signature  on this  assignment
                                    must  correspond with the name as it appears
                                    upon  the face of the  within  Note in every
                                    particular without alteration or enlargement
                                    or any change  whatsoever  and be guaranteed
                                    by the endorser's bank or broker.

Medallion Guarantee: ___________________

                                      B-8

<PAGE>

                                                                       EXHIBIT C

                    CERTIFICATE TO BE DELIVERED UPON EXCHANGE
                    OR REGISTRATION OF TRANSFER OF SECURITIES

               Re:      HEALTHSOUTH Corporation (the "Company")
                        10-3/4% Senior Subordinated Notes due 2008 (the "Notes")
                        --------------------------------------------------------

                  This Certificate relates to $_______ principal amount of Notes
held in the form of* ___ a  beneficial  interest  in a Global  Note or*  _______
Certificated Notes by ______ (the "Transferor").

The Transferor:

                  Has requested by written order that the Registrar  exchange or
register the transfer of a Certificated Note or Certificated Notes.

                  In  connection  with such  request and in respect of each such
Note,  the  Transferor  does hereby certify that the Transferor is familiar with
the Indenture  relating to the above  captioned  Notes and the  restrictions  on
transfers  thereof as provided in Section 2.16 of such  Indenture,  and that the
transfer of the Notes does not require  registration under the Securities Act of
1933, as amended (the "Securities Act"), because*:

                  |_|  Such  Note is being  acquired  for the  Transferor's  own
account, without transfer (in satisfaction of Section 2.16 of the Indenture).

                  |_|  Such   Note  is  being   transferred   to  a   "qualified
institutional  buyer" (as  defined in Rule 144A under the  Securities  Act),  in
reliance on Rule 144A.

                  |_| Such Note is being transferred in reliance on Regulation S
under the Securities Act and a transfer  certificate  for Regulation S transfers
in the form of Exhibit D to the Indenture accompanies this certification.

                  |_| Such Note is being  transferred  in  reliance  on Rule 144
under the Securities Act. An Opinion of Counsel to the effect that such transfer
does  not  require  registration  under  the  Securities  Act  accompanies  this
certification.

                  |_|  Such  Note is being  transferred  in  reliance  on and in
compliance  with  an  exemption  from  the  registration   requirements  of  the
Securities  Act  other  than  Rule  144A or Rule 144 or  Regulation  S under the
Securities  Act. An Opinion of Counsel to the effect that such transfer does not
require registration under the Securities Act accompanies this certification.

                                            ------------------------------------
                                            [INSERT NAME OF TRANSFEROR]

                                            By:
                                                --------------------------------
                                                [Authorized Signatory]

Date:
      ---------------------------
*Check applicable box.

                                      C-1

<PAGE>

                                                                       EXHIBIT D

                            Form of Certificate To Be
                             Delivered in Connection
                           with Regulation S Transfers

                                                           ---------------, ----

Attention:  Corporate Trust Administration

   Re:      HEALTHSOUTH Corporation
            10-3/4% Senior Subordinated Notes due 2008 (the "Notes")
            --------------------------------------------------------

Ladies and Gentlemen:

                  In connection with our proposed sale of $__________  aggregate
principal  amount of the  Notes,  we  confirm  that such sale has been  effected
pursuant to and in  accordance  with  Regulation S under the  Securities  Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:

                  (1) the  offer of the  Notes  was not made to a person  in the
         United States;

                  (2) either (a) at the time the buy offer was  originated,  the
         transferee was outside the United States or we and any person acting on
         our behalf  reasonably  believed  that the  transferee  was outside the
         United States,  or (b) the  transaction  was executed in, on or through
         the facilities of a designated  off-shore securities market and neither
         we nor any person acting on our behalf knows that the  transaction  has
         been prearranged with a buyer in the United States;

                  (3) no directed  selling  efforts have been made in the United
         States in  contravention  of the  requirements  of Rule  903(a) or Rule
         904(a) of Regulation S, as applicable;

                  (4) the  transaction  is not part of a plan or scheme to evade
         the registration requirements of the Securities Act; and

                  (5)  we  have   advised  the   transferee   of  the   transfer
         restrictions applicable to the Notes.

                  You and the Company are  entitled to rely upon this letter and
are  irrevocably  authorized  to  produce  this  letter or a copy  hereof to any
interested party in any  administrative or legal proceedings or official inquiry
with respect to the matters  covered  hereby.  Defined terms used herein without
definition have the respective meanings provided in Regulation S.

                                             Very truly yours,

                                             [Name of Transferor]

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

                                      D-1EXHIBIT (4)-2

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

                          REGISTRATION RIGHTS AGREEMENT

                         Dated as of September 25, 2000

                                  By and Among

                            HEALTHSOUTH CORPORATION,
                                   as Issuer,

                                       and

                                UBS WARBURG LLC,
                         DEUTSCHE BANK SECURITIES INC.,
                              CHASE SECURITIES INC.
                                       and
                          FIRST UNION SECURITIES, INC.,
                              as Initial Purchasers

                   10-3/4% Senior Subordinated Notes due 2008

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

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                            Page
                                                                                                            ----
<S>      <C>                                                                                                <C>
1.       Definitions..........................................................................................1

2.       Exchange Offer.......................................................................................4

3.       Shelf Registration...................................................................................7

4.       Additional Interest..................................................................................8

5.       Registration Procedures.............................................................................10

6.       Registration Expenses...............................................................................18

7.       Indemnification.....................................................................................19

8.       Rules 144 and 144A..................................................................................21

9.       Underwritten Registrations..........................................................................22

10.      Miscellaneous.......................................................................................22

         (a)      No Inconsistent Agreements.................................................................22
         (b)      Adjustments Affecting Registrable Notes....................................................22
         (c)      Amendments and Waivers.....................................................................22
         (d)      Notices ...................................................................................23
         (e)      Successors and Assigns.....................................................................24
         (f)      Counterparts ..............................................................................24
         (g)      Headings ..................................................................................24
         (h)      Governing Law..............................................................................24
         (i)      Severability ..............................................................................24
         (j)      Securities Held by the Issuer or Its Affiliates............................................24
         (k)      Third Party Beneficiaries..................................................................24
         (l)      Attorneys' Fees............................................................................25
         (m)      Entire Agreement...........................................................................25
</TABLE>

                                      -i-
<PAGE>

                          REGISTRATION RIGHTS AGREEMENT

                  This Registration Rights Agreement (this "Agreement") is dated
as of  September  25, 2000,  by and among  HEALTHSOUTH  Corporation,  a Delaware
corporation (the "Issuer"),  on the one hand, and UBS WARBURG LLC, DEUTSCHE BANK
SECURITIES  INC.,  CHASE  SECURITIES  INC.  and  FIRST  UNION  SECURITIES,  INC.
(collectively, the "Initial Purchasers"), on the other hand.

                  This Agreement is entered into in connection with the Purchase
Agreement,  dated as of  September  20,  2000,  among the Issuer and the Initial
Purchasers (the "Purchase  Agreement"),  relating to the $350,000,000  aggregate
principal  amount of the Issuer' s 10-3/4%  Senior  Subordinated  Notes due 2008
(the  "Notes").  The execution and delivery of this  Agreement is a condition to
the Initial  Purchasers'  obligation  to purchase  the Notes under the  Purchase
Agreement.

                  The parties hereby agree as follows:

         Section 1. Definitions

                  As used in this Agreement,  the following terms shall have the
following meanings:

                  "Additional  Interest"  shall  have the  meaning  set forth in
Section 4(a) hereof.

                  "Advice"  shall  have  the  meaning  set  forth  in the  final
paragraph of Section 5 hereof.

                  "Agreement"   shall  have  the   meaning   set  forth  in  the
introductory paragraph hereto.

                  "Applicable  Period"  shall  have  the  meaning  set  forth in
Section 2(b) hereof.

                  "Business Day" shall mean a day that is not a Legal Holiday.

                  "Commission"   shall   mean  the   Securities   and   Exchange
Commission.

                  "day" means a calendar day.

                  "Effectiveness Period" shall have the meaning set forth in the
second paragraph of Section 3(a) hereof.

                  "Event  Date" shall have the meaning set forth in Section 4(b)
hereof.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as  amended,  and  the  rules  and  regulations  of the  Commission  promulgated
thereunder.

                  "Exchange  Notes"  shall have the meaning set forth in Section
2(a) hereof.

                  "Exchange  Offer"  shall have the meaning set forth in Section
2(a) hereof.

<PAGE>

                  "Exchange Offer Registration Statement" shall have the meaning
set forth in Section 2(a) hereof.

                  "Holder"  shall  mean  any  holder  of a  Registrable  Note or
Registrable Notes.

                  "Indemnified  Person"  shall  have the  meaning  set  forth in
Section 7(c) hereof.

                  "Indemnifying  Person"  shall  have the  meaning  set forth in
Section 7(c) hereof.

                  "Indenture"  shall mean the  Indenture,  dated as of September
25, 2000, by and among the Issuer and The Bank of New York, as trustee, pursuant
to which the Notes are being  issued,  as amended or  supplemented  from time to
time in accordance with the terms thereof.

                  "Initial  Purchasers"  shall have the meaning set forth in the
preamble hereof.

                  "Initial Shelf  Registration" shall have the meaning set forth
in Section 3(a) hereof.

                  "Inspectors"  shall have the meaning set forth in Section 5(n)
hereof.

                  "Issue  Date"  shall  mean  September  25,  2000,  the date of
original issuance of the Notes.

                  "Issuer" shall have the meaning set forth in the  introductory
paragraph  hereto and shall also include the Issuer's  permitted  successors and
assigns.

                  "Legal Holiday" shall mean a Saturday,  a Sunday,  a federally
recognized holiday or a day on which banking institutions are not required to be
open in the State of New York.

                  "NASD"  shall  have the  meaning  set  forth in  Section  5(s)
hereof.

                  "Notes"  shall  have  the  meaning  set  forth  in the  second
introductory paragraph hereto.

                  "Participant" shall have the meaning set forth in Section 7(a)
hereof.

                  "Participating Broker-Dealer" shall have the meaning set forth
in Section 2(b) hereof.

                  "Person"  shall  mean  an  individual,  trustee,  corporation,
partnership,  joint stock company,  trust,  unincorporated  association,  union,
business  association,  firm,  government  or  agency or  political  subdivision
thereof or other legal entity.

                  "Private Exchange" shall have the meaning set forth in Section
2(b) hereof.

                  "Private  Exchange  Notes" shall have the meaning set forth in
Section 2(b) hereof.

                  "Prospectus"  shall  mean  the  prospectus   included  in  any
Registration Statement (including, without limitation, any prospectus subject to
completion and a prospectus  that includes

                                       2
<PAGE>

any  information  previously  omitted  from a  prospectus  filed  as  part of an
effective  registration  statement in reliance upon Rule 430A promulgated  under
the Securities  Act), as amended or supplemented  by any prospectus  supplement,
and  all  other   amendments  and  supplements  to  the  Prospectus,   including
post-effective  amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.

                  "Purchase  Agreement"  shall have the meaning set forth in the
introductory paragraphs hereof.

                  "Records"  shall have the  meaning  set forth in Section  5(n)
hereof.

                  "Registrable  Notes"  shall  mean each Note upon its  original
issuance and at all times  subsequent  thereto,  each  Exchange Note as to which
Section  2(c)(iv) hereof is applicable  upon original  issuance and at all times
subsequent thereto and each Private Exchange Note upon original issuance thereof
and at all times subsequent thereto,  until (i) a Registration  Statement (other
than,  with respect to any Exchange Note as to which Section  2(c)(iv) hereof is
applicable,  the Exchange  Offer  Registration  Statement)  covering  such Note,
Exchange  Note or  Private  Exchange  Note has been  declared  effective  by the
Commission  and such Note,  Exchange Note or such Private  Exchange Note, as the
case may be, has been disposed of in accordance with such effective Registration
Statement,  (ii) such Note has been exchanged pursuant to the Exchange Offer for
one or more Exchange  Notes that may be resold without  restriction  under state
and federal securities laws, (iii) such Note,  Exchange Note or Private Exchange
Note, as the case may be, ceases to be outstanding for purposes of the Indenture
or (iv) the date on which any such Note,  Exchange Note or Private Exchange Note
is  distributed  to the public  pursuant to Rule 144 or is saleable  pursuant to
Rule 144(k) under the Securities Act.

                  "Registration  Default"  shall have the  meaning  set forth in
Section 4(a) hereof.

                  "Registration    Statement"   shall   mean   any   appropriate
registration  statement  of the Issuer  covering  any of the  Registrable  Notes
pursuant to the provisions of this Agreement, including, but not limited to, the
Exchange  Offer  Registration  Statement,  filed with the  Commission  under the
Securities  Act, and all  amendments and  supplements  to any such  Registration
Statement,  including  post-effective  amendments,  in each case  including  the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.

                  "Requesting   Participating   Broker-Dealer"  shall  have  the
meaning set forth in Section 2(b) hereof.

                  "Rule  144"  shall  mean  Rule  144   promulgated   under  the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
rule (other than Rule 144A) or regulation  hereafter  adopted by the  Commission
providing  for  offers  and sales of  securities  made in  compliance  therewith
resulting in offers and sales by subsequent  holders that are not  affiliates of
an issuer of such  securities  being  free of the  registration  and  prospectus
delivery requirements of the Securities Act.

                                       3
<PAGE>

                  "Rule  144A"  shall  mean  Rule  144A  promulgated  under  the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
rule (other than Rule 144) or regulation hereafter adopted by the Commission.

                  "Rule  415"  shall  mean  Rule  415   promulgated   under  the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
rule or regulation hereafter adopted by the Commission.

                  "Securities  Act" shall mean the  Securities  Act of 1933,  as
amended, and the rules and regulations of the Commission promulgated thereunder.

                  "Shelf  Filing  Event"  shall  have the  meaning  set forth in
Section 2(c) hereof.

                  "Shelf  Registration"  shall  have the  meaning  set  forth in
Section 3(b) hereof.

                  "Subsequent  Shelf  Registration"  shall have the  meaning set
forth in Section 3(b) hereof.

                  "TIA" shall mean the Trust Indenture Act of 1939, as amended.

                  "Trustee"  shall mean the trustee  under the Indenture and the
trustee (if any) under any indenture  governing  the Exchange  Notes and Private
Exchange Notes.

                  "Underwritten  registration  or  underwritten  offering" shall
mean a registration in which securities of the Issuer are sold to an underwriter
for reoffering to the public.

         Section 2. Exchange Offer

                  (a) The Issuer  shall,  at the Issuer's  cost (as set forth in
Section 6 hereof), (i) file (or confidentially  submit) a Registration Statement
(the "Exchange  Offer  Registration  Statement")  within 60 days after the Issue
Date with the Commission on an appropriate  registration  form with respect to a
registered  offer  (the  "Exchange  Offer")  to  exchange  any  and  all  of the
Registrable Notes for a like aggregate  principal amount of notes (the "Exchange
Notes") that are  identical in all material  respects to the Notes  (except that
the Exchange Notes shall not contain terms with respect to transfer restrictions
or Additional Interest upon a Registration  Default) and (ii) use its reasonable
best efforts to cause the Exchange Offer  Registration  Statement to be declared
effective  under the Securities Act on or prior to 120 days after the Issue Date
and (iii) use its reasonable best efforts to consummate the Exchange Offer on or
prior to 150 days after the Issue Date.  Upon the  Exchange  Offer  Registration
Statement being declared effective by the Commission,  the Issuer will offer the
Exchange Notes in exchange for surrender of the Notes. The Issuer shall keep the
Exchange Offer open for not less than 20 Business Days (or longer if required by
applicable  law)  after  the date  notice  of the  Exchange  Offer is  mailed to
Holders.

                  Each Holder that  participates  in the Exchange  Offer will be
required to  represent  to the Issuer in writing  that (i) such Holder is not an
affiliate  of the Issuer  within the  meaning of the  Securities  Act,  (ii) any
Exchange  Notes to be received by it will be acquired in the ordinary  course of

                                       4
<PAGE>

its business,  (iii) at the time of the  commencement of the Exchange Offer such
Holder will have no arrangement or understanding  with any Person to participate
in the distribution (as such term is used in the Securities Act) of the Exchange
Notes in violation of the provisions of the Securities  Act, (iv) if such Holder
is not a broker-dealer, that it is not engaged in, and does not intend to engage
in, a distribution  of Exchange Notes and (v) if such Holder is a  broker-dealer
that will receive  Exchange Notes for its own account in exchange for Notes that
were acquired as a result of market-making or other trading activities,  it will
deliver a Prospectus in connection with any resale of such Exchange Notes.

                  Upon  consummation  of the Exchange  Offer in accordance  with
this  Section 2, the  provisions  of this  Agreement  shall  continue  to apply,
mutatis  mutandis,  solely with  respect to  Registrable  Notes that are Private
Exchange  Notes,  Exchange Notes as to which Section  2(c)(iv) is applicable and
Exchange Notes held by Participating Broker-Dealers (as defined), and the Issuer
shall have no further  obligation  to  register  Registrable  Notes  (other than
Private  Exchange  Notes and other than in respect of any  Exchange  Notes as to
which  clause  2(c)(iv)  hereof  applies)  pursuant  to  Section  3  hereof.  No
securities other than the Exchange Notes shall be included in the Exchange Offer
Registration Statement.

                  (b) The Issuer and the Initial Purchasers acknowledge that the
staff of the  Commission  has taken the  position  that any  broker-dealer  that
elects to exchange  Notes that were acquired by such  broker-dealer  for its own
account as a result of  market-making  or other trading  activities for Exchange
Notes in the Exchange Offer (a "Participating  Broker-Dealer")  may be deemed to
be an "underwriter"  within the meaning of the Securities Act and must deliver a
Prospectus meeting the requirements of the Securities Act in connection with any
resale of such  Exchange  Notes  (other  than a resale  of an  unsold  allotment
resulting from the original offering of the Notes).

                  The Issuer and the Initial Purchasers also acknowledge that it
is the staff of the  Commission's  position that if the Prospectus  contained in
the  Exchange  Offer  Registration  Statement  includes  a plan of  distribution
containing a statement to the above effect and the means by which  Participating
Broker-Dealers  may resell the Exchange Notes,  without naming the Participating
Broker-Dealers  or specifying the amount of Exchange  Notes owned by them,  such
Prospectus  may be delivered by  Participating  Broker-Dealers  to satisfy their
prospectus  delivery  obligations  under the Securities  Act in connection  with
resales of  Exchange  Notes for their own  accounts,  so long as the  Prospectus
otherwise meets the requirements of the Securities Act.

                  In light of the  foregoing,  if requested  by a  Participating
Broker-Dealer (a "Requesting Participating Broker-Dealer"), the Issuer agrees to
use  its  reasonable  best  efforts  to keep  the  Exchange  Offer  Registration
Statement  continuously  effective for a period of up to 180 days after the date
on which the  Exchange  Registration  Statement is declared  effective,  or such
longer  period if extended  pursuant to the last  paragraph  of Section 5 hereof
(such period, the "Applicable  Period"),  or such earlier date as all Requesting
Participating Broker-Dealers shall have notified the Issuer in writing that such
Requesting Participating  Broker-Dealers have resold all Exchange Notes acquired
in the Exchange  Offer.  The Issuer shall include a plan of distribution in such
Exchange Offer  Registration  Statement that meets the requirements set forth in
the preceding paragraph.

                                       5
<PAGE>

                  If, prior to consummation  of the Exchange  Offer,  any Holder
holds any Notes  acquired by it that have, or that are  reasonably  likely to be
determined  to  have,   the  status  of  an  unsold   allotment  in  an  initial
distribution,  or if any Holder is not entitled to  participate  in the Exchange
Offer, the Issuer upon the request of any such Holder shall, simultaneously with
the delivery of the Exchange Notes in the Exchange  Offer,  issue and deliver to
any such Holder, in exchange (the "Private Exchange") for such Notes held by any
such Holder, a like principal amount of notes (the "Private  Exchange Notes") of
the Issuer that are  identical in all material  respects to the Exchange  Notes.
The Private Exchange Notes shall be issued pursuant to the same indenture as the
Exchange Notes and bear the same CUSIP number as the Exchange Notes.

                  In connection with the Exchange Offer, the Issuer shall:

                  (1)  mail  to  each  Holder  entitled  to  participate  in the
         Exchange  Offer a copy of the  Prospectus  forming part of the Exchange
         Offer  Registration  Statement,  together with an appropriate letter of
         transmittal and related documents;

                  (2) utilize  the  services of a  depositary  for the  Exchange
         Offer  with an address in the  Borough  of  Manhattan,  The City of New
         York;

                  (3) permit  Holders  to  withdraw  tendered  Notes at any time
         prior to the close of business, New York time, on the last Business Day
         on which the Exchange Offer shall remain open; and

                  (4)  otherwise  comply  in  all  material  respects  with  all
         applicable laws, rules and regulations.

                  As soon as  practicable  after the close of the Exchange Offer
and the Private Exchange, if any, the Issuer shall:

                  (1) accept for  exchange  all Notes  validly  tendered and not
         validly  withdrawn  pursuant  to the  Exchange  Offer  and the  Private
         Exchange;

                  (2)  deliver  to the  Trustee  for  cancellation  all Notes so
         accepted for exchange; and

                  (3) cause the Trustee to authenticate  and deliver promptly to
         each Holder of Notes Exchange Notes or Private  Exchange  Notes, as the
         case may be, equal in  principal  amount to the Notes of such Holder so
         accepted for exchange.

                  The  Exchange  Offer  and the  Private  Exchange  shall not be
subject to any  conditions,  other than that (i) the  Exchange  Offer or Private
Exchange,  as the case may be, does not violate applicable law or any applicable
interpretation  of the staff of the  Commission,  (ii) no  action or  proceeding
shall have been  instituted or  threatened  in any court or by any  governmental
agency which might  materially  impair the ability of the Issuer to proceed with
the Exchange Offer or the Private Exchange,  and no material adverse development
shall have  occurred in any existing  action or  proceeding  with respect to the
Issuer and (iii) all  governmental  approvals  shall have been  obtained,

                                       6
<PAGE>

which approvals the Issuer deems necessary for the  consummation of the Exchange
Offer or Private Exchange.

                  The  Exchange  Notes and the Private  Exchange  Notes shall be
issued under (i) the  Indenture  or (ii) an indenture  identical in all material
respects to the Indenture (in either case, with such changes as are necessary to
comply  with any  requirements  of the  Commission  to  effect or  maintain  the
qualification  thereof  under  the TIA) and  which,  in  either  case,  has been
qualified  under the TIA and shall provide that the Exchange  Notes shall not be
subject to the transfer  restrictions  set forth in the  Indenture or Additional
Interest upon a  Registration  Default.  The Indenture or such  indenture  shall
provide that the Exchange Notes,  the Private Exchange Notes and the Notes shall
vote and  consent  together  on all  matters  as one  class and that none of the
Exchange Notes,  the Private  Exchange Notes or the Notes will have the right to
vote or consent as a separate class on any matter.

                  (c) In the event that (i) any changes in law or the applicable
interpretations  of the staff of the  Commission  do not  permit  the  Issuer to
effect the  Exchange  Offer,  (ii) if for any reason the  Exchange  Offer is not
consummated  within  150 days of the Issue  Date,  (iii) any  Holder of  Private
Exchange Notes so requests;  or (iv) in the case of any Holder that participates
in the Exchange Offer,  such Holder does not receive  Exchange Notes on the date
of the exchange that may be sold without  restriction  under federal  securities
laws (other than due solely to the status of such Holder as an  affiliate of the
Issuer within the meaning of the Securities Act) (each such event referred to in
clauses (i) through (iv) of this  sentence,  a "Shelf Filing  Event"),  then the
Issuer shall file a Shelf Registration pursuant to Section 3 hereof.

         Section 3. Shelf Registration

                  If at any time a Shelf Filing Event shall occur, then:

                  (a)  Shelf  Registration.  The  Issuer  shall  file  with  the
Commission a  Registration  Statement for an offering to be made on a continuous
basis pursuant to Rule 415 covering all of the  Registrable  Notes not exchanged
in the Exchange  Offer,  Private  Exchange  Notes and Exchange Notes as to which
Section  2(c)(iv) is applicable (the "Initial Shelf  Registration").  The Issuer
shall use its  reasonable  best efforts to file with the  Commission the Initial
Shelf  Registration  as promptly as  practicable,  but in no event later than 45
days after the Issuer has notice of the Shelf Filing  Event.  The Initial  Shelf
Registration  shall  be on  Form  S-3 or  another  appropriate  form  permitting
registration  of such  Registrable  Notes for resale by Holders in the manner or
manners  designated  by  them  (including,   without  limitation,  one  or  more
underwritten  offerings).  The Issuer shall not permit any securities other than
the  Registrable  Notes to be included in the Initial Shelf  Registration or any
Subsequent Shelf Registration (as defined below).

                  The Issuer shall use its reasonable  best efforts (x) to cause
the Initial Shelf Registration to be declared effective under the Securities Act
on or prior to the later of the 60th day after  the  Shelf  Filing  Event or the
150th day after the Issue Date and (y) to keep the  Initial  Shelf  Registration
continuously  effective  under the  Securities  Act for the period ending on the
date which is two years from the Issue Date,  subject to  extension  pursuant to
the last  paragraph of Section 5 hereof (the  "Effectiveness  Period"),  or such
shorter  period  ending when (i) all  Registrable  Notes  covered by

                                       7
<PAGE>

the  Initial  Shelf  Registration  have been sold in the manner set forth and as
contemplated  in the  Initial  Shelf  Registration  or (ii) a  Subsequent  Shelf
Registration covering all of the Registrable Notes covered by and not sold under
the Initial Shelf  Registration or an earlier  Subsequent Shelf Registration has
been declared  effective under the Securities Act; provided,  however,  that the
Effectiveness  Period in  respect of the  Initial  Shelf  Registration  shall be
extended to the extent  required to permit dealers to comply with the applicable
prospectus  delivery  requirements  of Rule 174 under the  Securities Act and as
otherwise provided herein;  provided,  further,  that the Issuer may suspend the
effectiveness of a Shelf Registration Statement by written notice to the Holders
for a period not to exceed 30 days in any  calendar  year if (i) an event occurs
and is continuing as a result of which the Shelf  Registration  Statement would,
in the Issuer's good faith judgment,  contain an untrue  statement of a material
fact or omit to state a material fact  necessary in order to make the statements
therein not misleading and (ii) (a) the Issuer determines in good faith that the
disclosure  of such event at such time would have a material  adverse  effect on
the business, operations or prospects of the Issuer and its subsidiaries,  taken
as a whole, or (b) the disclosure otherwise relates to a previously  undisclosed
pending material business transaction,  the disclosure of which would impede the
Issuer's ability to consummate such transaction.

                  (b)  Subsequent  Shelf  Registrations.  If the  Initial  Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for any
reason at any time during the  Effectiveness  Period  (other than because of the
sale of all of the securities registered  thereunder),  the Issuer shall use its
reasonable best efforts to obtain the prompt  withdrawal of any order suspending
the effectiveness  thereof,  and in any event shall as soon as practicable after
such cessation amend the Initial Shelf  Registration  or such  Subsequent  Shelf
Registration,  as the case may be, in a manner to obtain the  withdrawal  of the
order  suspending  the  effectiveness  thereof,  or file an  additional  "shelf"
Registration  Statement  pursuant to Rule 415  covering  all of the  Registrable
Notes  covered  by and not sold under the  Initial  Shelf  Registration  or such
earlier Subsequent Shelf Registration (each, a "Subsequent Shelf Registration").
If a Subsequent Shelf Registration is filed, the Issuer shall use its reasonable
best efforts to cause the Subsequent Shelf Registration to be declared effective
under the Securities  Act as soon as  practicable  after such filing and to keep
such  Registration  Statement  continuously  effective for a period equal to the
number of days in the  Effectiveness  Period less the  aggregate  number of days
during  which  the  Initial  Shelf   Registration   and  any  Subsequent   Shelf
Registration was previously  continuously  effective.  As used herein,  the term
"Shelf  Registration"  means the Initial Shelf  Registration  and any Subsequent
Shelf Registration.

                  (c)  Supplements  and  Amendments.  The Issuer shall  promptly
supplement  and  amend  the  Shelf   Registration  if  required  by  the  rules,
regulations or instructions  applicable to the  registration  form used for such
Shelf  Registration,  if  required  by  the  Securities  Act,  or if  reasonably
requested  by the Holders of a majority  in  aggregate  principal  amount of the
Registrable Notes covered by such  Registration  Statement or by any underwriter
of such Registrable Notes.

         Section 4. Additional Interest

                  (a) The  Issuer  and the  Initial  Purchasers  agree  that the
Holders will suffer damages if the Issuer fails to fulfill its obligations under
Section 2 or Section 3 hereof and that it would not be feasible to ascertain the
extent of such damages with precision. Accordingly, in the event that:

                                       8
<PAGE>

         (i)      the Issuer does not file (or  confidentially  submit) with the
         Commission  on or prior to the 60th day  following  the Issue Date,  or
         cause to become  effective on or prior to the 120th day  following  the
         Issue Date, the Exchange Offer Registration Statement,

         (ii)     the  Issuer  is  obligated  to  file  the  Shelf  Registration
         Statement and such Shelf  Registration  Statement is not filed with the
         Commission  on or prior to the 45th day following the date on which the
         Issuer has notice of the Shelf Filing Event or such Shelf  Registration
         Statement  is not  declared  effective  on or prior to the later of the
         60th day  following  the Shelf Filing Event or the 150th day  following
         the Issue Date,

         (iii)    the Issuer fails to consummate  the Exchange Offer on or prior
         to the 150th day following the Issue Date or

         (iv)     the  Shelf  Registration   Statement  or  the  Exchange  Offer
         Registration  Statement is declared  effective but thereafter ceases to
         be  declared   effective  or  usable  in  connection  with  resales  of
         Registrable Notes during the periods  specified  herein,  except if the
         Shelf Registration or the Exchange Offer Registration  Statement ceases
         to be effective or usable as specifically permitted herein or solely as
         a result of (x) the filing of a post-effective  amendment to such Shelf
         Registration   Statement  to  incorporate   annual  audited   financial
         information  with  respect  to the  Issuer  where  such  post-effective
         amendment is not yet  effective  and needs to be declared  effective to
         permit  holders to use the  related  Prospectus  or (y) other  material
         events,  with respect to the Issuer, that would need to be described in
         such Shelf Registration Statement or the related Prospectus and, in the
         case of this clause (y), the Issuer is proceeding  promptly and in good
         faith to amend or supplement  the Shelf  Registration  Statement or the
         Exchange  Offer  Registration   Statement  and  related  Prospectus  to
         describe such events

(each such event referred to in clauses (i) through (iv) above, a  "Registration
Default"), then the Issuer shall pay, as liquidated damages, additional interest
("Additional  Interest")  on the  Registrable  Notes  in cash  on each  Interest
Payment Date (as defined in the  Indenture) in an amount equal to one-quarter of
one  percent  (0.25%)  per  annum  of  the  aggregate  principal  amount  of the
Registrable  Notes,  with  respect to the first  90-day  period  following  such
Registration Default. The amount of such Additional Interest will increase by an
additional one-quarter of one percent (0.25%) to a maximum of one percent (1.0%)
per annum of the aggregate  principal  amount of the Registrable  Notes for each
subsequent  90-day period until such  Registration  Default has been cured. Upon
(1) the filing (or confidential  submission) of the Exchange Offer  Registration
Statement  after the  60-day  period  described  in clause  (i)  above,  (2) the
effectiveness  of the Exchange Offer  Registration  Statement  after the 120-day
period   described  in  clause  (i)  above,  (3)  the  filing  (or  confidential
submission)  of  the  Shelf  Registration  Statement  after  the  45-day  period
described in clause (ii) above, (4) the effectiveness of the Shelf  Registration
Statement  after the 60-day  period or the 150-day  period,  as the case may be,
described in clause (ii) above, (5) the consummation of the Exchange Offer after
the 150-day  period  described  in clause  (iii)  above,  or (6) the cure of any
Registration  Default described in clause (iv) above, the interest rate borne by
the Notes from the date of such filing,  effectiveness or  consummation,  as the
case may be,  will be reduced  to the  original  interest  rate if the Issuer is
otherwise in compliance with this paragraph;  provided,  however, that if, after
any such reduction in

                                       9
<PAGE>

interest rate, a different event  specified above occurs,  the interest rate may
again be increased pursuant to the foregoing provisions.

                  (b) The Issuer  shall  notify the Trustee  within one Business
Day after  each and every  date on which an event  occurs  in  respect  of which
Additional  Interest is required  to be paid (an "Event  Date").  Any amounts of
Additional  Interest due pursuant to Section 4(a) hereof will be payable in cash
semi-annually  on the Interest  Payment Dates specified in the Indenture (to the
holders of record as specified in the Indenture), commencing with the first such
Interest Payment Date occurring after any such Additional  Interest commences to
accrue. The amount of Additional  Interest will be determined by multiplying the
applicable  Additional  Interest rate by the principal amount of the Registrable
Notes,  multiplied  by a fraction,  the numerator of which is the number of days
such Additional  Interest rate was applicable during such period  (determined on
the basis of a 360-day year  comprised of twelve  30-day months and, in the case
of a partial month,  the actual number of days elapsed),  and the denominator of
which is 360.

         Section 5. Registration Procedures

                  In connection  with the filing of any  Registration  Statement
pursuant to Section 2 or 3 hereof, the Issuer shall effect such registrations to
permit  the  sale of the  securities  covered  thereby  in  accordance  with the
intended method or methods of disposition  thereof,  and pursuant thereto and in
connection with any  Registration  Statement  filed by the Issuer  hereunder the
Issuer shall:

                  (a)  Prepare  and file  (or  confidentially  submit)  with the
         Commission,  a  Registration  Statement or  Registration  Statements as
         prescribed  by  Section  2 or 3  hereof,  and use its  reasonable  best
         efforts to cause each such  Registration  Statement to become effective
         and remain effective as provided herein;  provided,  however,  that, if
         (1) such filing is pursuant  to Section 3 hereof,  or (2) a  Prospectus
         contained in the Exchange Offer  Registration  Statement filed pursuant
         to Section 2 hereof is required to be  delivered  under the  Securities
         Act by any Participating Broker-Dealer who seeks to sell Exchange Notes
         during  the  Applicable  Period  relating  thereto,  before  filing any
         Registration  Statement or Prospectus or any  amendments or supplements
         thereto,  the Issuer  shall  furnish  to and afford the  Holders of the
         Registrable Notes covered by such  Registration  Statement or each such
         Participating Broker-Dealer,  as the case may be, their counsel and the
         managing  underwriters,  if any,  a  reasonable  opportunity  to review
         copies of all such documents  (including  copies of any documents to be
         incorporated by reference therein and all exhibits thereto) proposed to
         be  filed  (in each  case at least  five  Business  Days  prior to such
         filing).  The  Issuer  shall  not file any  Registration  Statement  or
         Prospectus or any amendments or supplements thereto if the Holders of a
         majority in aggregate principal amount of the Registrable Notes covered
         by   such   Registration   Statement,   or   any   such   Participating
         Broker-Dealer,  as the  case may be,  their  counsel,  or the  managing
         underwriters, if any, shall reasonably object.

                  (b) Prepare and file with the Commission  such  amendments and
         post-effective  amendments  to each  Shelf  Registration  Statement  or
         Exchange Offer  Registration  Statement,  as the case may be, as may be
         necessary to keep such Registration  Statement  continuously  effective
         for the Effectiveness  Period or the Applicable Period, as the case may
         be; cause the

                                       10
<PAGE>

         related  Prospectus to be  supplemented  by any  Prospectus  supplement
         required by applicable law, and as so supplemented to be filed pursuant
         to Rule 424 (or any similar provisions then in force) promulgated under
         the  Securities  Act; and comply with the  provisions of the Securities
         Act and the Exchange Act applicable to each of them with respect to the
         disposition of all securities covered by such Registration Statement as
         so amended or in such Prospectus as so supplemented and with respect to
         the subsequent  resale of any securities  being sold by a Participating
         Broker-Dealer  covered  by  any  such  Prospectus,  in  each  case,  in
         accordance with the intended  methods of distribution set forth in such
         Registration  Statement or Prospectus,  as so amended. The Issuer shall
         be  deemed  not to have  used its  reasonable  best  efforts  to keep a
         Registration Statement effective during the Effectiveness Period or the
         Applicable  Period,  as the case may be, relating thereto if the Issuer
         voluntarily  takes any action that would  result in selling  Holders of
         the Registrable  Notes covered thereby or Participating  Broker-Dealers
         seeking to sell Exchange Notes not being able to sell such  Registrable
         Notes or such  Exchange  Notes during that period unless such action is
         required by  applicable  law;  provided,  however,  that the Issuer may
         suspend the effectiveness of a Registration Statement by written notice
         to the Holders or the Participating  Broker-Dealers for a period not to
         exceed  30 days in any  calendar  year if (i) an  event  occurs  and is
         continuing as a result of which the  Registration  Statement  would, in
         the  Issuer's  good faith  judgment,  contain an untrue  statement of a
         material  fact or omit to state a material  fact  necessary in order to
         make the  statements  therein  not  misleading  and (ii) (a) the Issuer
         determines in good faith that the disclosure of such event at such time
         would have a material  adverse  effect on the  business,  operations or
         prospects of the Issuer and its subsidiaries,  taken as a whole, or (b)
         the disclosure  otherwise relates to a previously  undisclosed  pending
         material business transaction, the disclosure of which would impede the
         Issuer's ability to consummate such transaction.

                  (c) If (1) a Shelf Registration is filed pursuant to Section 3
         hereof,   or  (2)  a  Prospectus   contained  in  the  Exchange   Offer
         Registration  Statement  filed pursuant to Section 2 hereof is required
         to  be  delivered  under  the  Securities  Act  by  any   Participating
         Broker-Dealer  who seeks to sell Exchange  Notes during the  Applicable
         Period  relating  thereto,  notify the selling  Holders of  Registrable
         Notes, or each such  Participating  Broker-Dealer,  as the case may be,
         their  counsel and the  managing  underwriters,  if any, as promptly as
         possible,  and, if requested by any such Person, confirm such notice in
         writing,  (i)  when  a  Prospectus  or  any  Prospectus  supplement  or
         post-effective  amendment  has  been  filed,  and,  with  respect  to a
         Registration Statement or any post-effective  amendment,  when the same
         has become effective under the Securities Act (including in such notice
         a written  statement that any Holder may, upon request,  obtain, at the
         sole expense of the Issuer,  one  conformed  copy of such  Registration
         Statement or post-effective  amendment including  financial  statements
         and schedules,  documents  incorporated or deemed to be incorporated by
         reference and exhibits),  (ii) of the issuance by the Commission of any
         stop order suspending the effectiveness of a Registration  Statement or
         of any  order  preventing  or  suspending  the  use of any  preliminary
         prospectus or the initiation of any proceedings for that purpose, (iii)
         if at any time when a Prospectus is required by the  Securities  Act to
         be  delivered  in  connection  with sales of the  Registrable  Notes or
         resales  of  Exchange  Notes  by   Participating   Broker-Dealers   the
         representations and warranties of the Issuer contained in any agreement
         (including any

                                       11
<PAGE>

         underwriting agreement) contemplated by Section 5(m) hereof cease to be
         true and correct in all material  respects,  (iv) of the receipt by the
         Issuer  of any  notification  with  respect  to the  suspension  of the
         qualification  or  exemption  from   qualification  of  a  Registration
         Statement or any of the  Registrable  Notes or the Exchange Notes to be
         sold  by any  Participating  Broker-Dealer  for  offer  or  sale in any
         jurisdiction,  or the  initiation or  threatening of any proceeding for
         such purpose,  (v) of the happening of any event,  the existence of any
         condition or any  information  becoming  known to the Issuer that makes
         any statement made in such Registration Statement or related Prospectus
         or any document  incorporated or deemed to be  incorporated  therein by
         reference untrue in any material respect or that requires the making of
         any  changes  in or  amendments  or  supplements  to such  Registration
         Statement,  Prospectus  or  documents  so  that,  in  the  case  of the
         Registration  Statement,  it will not contain any untrue statement of a
         material  fact or omit to state any material fact required to be stated
         therein or necessary to make the statements therein not misleading, and
         that in the case of the  Prospectus,  it will not  contain  any  untrue
         statement  of a  material  fact or  omit to  state  any  material  fact
         necessary  to  make  the  statements  therein,  in  the  light  of  the
         circumstances  under which they were made, not misleading,  and (vi) of
         the  Issuer's  determination  that  a  post-effective  amendment  to  a
         Registration Statement would be appropriate.

                  (d) If (1) a Shelf Registration is filed pursuant to Section 3
         hereof,   or  (2)  a  Prospectus   contained  in  the  Exchange   Offer
         Registration  Statement  filed pursuant to Section 2 hereof is required
         to  be  delivered  under  the  Securities  Act  by  any   Participating
         Broker-Dealer  who seeks to sell Exchange  Notes during the  Applicable
         Period relating thereto, use its reasonable best efforts to prevent the
         issuance of any order  suspending the  effectiveness  of a Registration
         Statement  or of  any  order  preventing  or  suspending  the  use of a
         Prospectus  or  suspending   the   qualification   (or  exemption  from
         qualification) of any of the Registrable Notes or the Exchange Notes to
         be  sold  by  any   Participating   Broker-Dealer,   for  sale  in  any
         jurisdiction,  and, if any such order is issued,  to use its reasonable
         best efforts to obtain the withdrawal of any such order at the earliest
         practicable moment.

                  (e) If (1) a Shelf Registration is filed pursuant to Section 3
         hereof and if requested by the managing underwriter or underwriters (if
         any),  the Holders of a majority in aggregate  principal  amount of the
         Registrable  Notes  being  sold  in  connection  with  an  underwritten
         offering,   or  (2)  a  Prospectus  contained  in  the  Exchange  Offer
         Registration  Statement  filed pursuant to Section 2 hereof is required
         to  be  delivered  under  the  Securities  Act  by  any   Participating
         Broker-Dealer  who seeks to sell Exchange  Notes during the  Applicable
         Period  relating   thereto  and  if  requested  by  any   Participating
         Broker-Dealer,  (i) promptly incorporate in a Prospectus  supplement or
         post-effective  amendment such information as the managing  underwriter
         or   underwriters   (if  any),   such  Holders  or  any   Participating
         Broker-Dealer  (based upon advice of counsel)  determine is  reasonably
         necessary to be included  therein,  (ii) make all  required  filings of
         such Prospectus supplement or such post-effective  amendment as soon as
         practicable  after the Issuer has received  notification of the matters
         to be  incorporated  in such  Prospectus  supplement or  post-effective
         amendment;  provided, however, that the Issuer shall not be required to
         take any action hereunder that would, in the written opinion of counsel
         to the Issuer,  violate  applicable  laws, and

                                       12
<PAGE>

         (iii)  supplement  or make  amendments to such  Registration  Statement
         (based upon advice of counsel).

                  (f) If (1) a Shelf Registration is filed pursuant to Section 3
         hereof,   or  (2)  a  Prospectus   contained  in  the  Exchange   Offer
         Registration  Statement  filed pursuant to Section 2 hereof is required
         to  be  delivered  under  the  Securities  Act  by  any   Participating
         Broker-Dealer  who seeks to sell Exchange  Notes during the  Applicable
         Period relating thereto,  furnish to each selling Holder of Registrable
         Notes and to each such Participating  Broker-Dealer who so requests and
         to counsel and each managing  underwriter,  if any, at the sole expense
         of the Issuer,  one  conformed  copy of the  Registration  Statement or
         Registration  Statements  and each  post-effective  amendment  thereto,
         including financial  statements and schedules,  and, if requested,  all
         documents   incorporated  or  deemed  to  be  incorporated  therein  by
         reference and all exhibits.

                  (g) If (1) a Shelf Registration is filed pursuant to Section 3
         hereof,   or  (2)  a  Prospectus   contained  in  the  Exchange   Offer
         Registration  Statement  filed pursuant to Section 2 hereof is required
         to  be  delivered  under  the  Securities  Act  by  any   Participating
         Broker-Dealer  who seeks to sell Exchange  Notes during the  Applicable
         Period relating thereto,  deliver to each selling Holder of Registrable
         Notes, or each such  Participating  Broker-Dealer,  as the case may be,
         their respective counsel, and the underwriter or underwriters,  if any,
         at the sole expense of the Issuer,  as many copies of the Prospectus or
         Prospectuses  (including each form of preliminary  prospectus) and each
         amendment  or  supplement  thereto and any  documents  incorporated  by
         reference therein as such Persons may reasonably request;  and, subject
         to the last paragraph of this Section 5, the Issuer hereby  consents to
         the use of such Prospectus and each amendment or supplement  thereto by
         each  of  the  selling  Holders  of  Registrable  Notes  or  each  such
         Participating  Broker-Dealer,  as the case may be, and the underwriters
         or  agents,  if any,  and  dealers  (if any),  in  connection  with the
         offering and sale of the  Registrable  Notes covered by, or the sale by
         Participating  Broker-Dealers  of the Exchange  Notes pursuant to, such
         Prospectus and any amendment or supplement thereto.

                  (h) Prior to any public  offering of Registrable  Notes or any
         delivery of a Prospectus  contained in the Exchange Offer  Registration
         Statement by any Participating Broker-Dealer who seeks to sell Exchange
         Notes during the Applicable  Period, use its reasonable best efforts to
         register  or qualify,  and to  cooperate  with the  selling  Holders of
         Registrable Notes or each such Participating Broker-Dealer, as the case
         may be, the managing  underwriter  or  underwriters,  if any, and their
         respective counsel in connection with the registration or qualification
         (or  exemption  from  such  registration  or  qualification)  of,  such
         Registrable  Notes for offer and sale under the  securities or Blue Sky
         laws of such  jurisdictions  within  the United  States as any  selling
         Holder,  Participating  Broker-Dealer,  or the managing  underwriter or
         underwriters reasonably request; provided, however, that where Exchange
         Notes held by  Participating  Broker-Dealers  or Registrable  Notes are
         offered other than through an underwritten  offering, the Issuer agrees
         to cause the Issuer's  counsel to perform Blue Sky  investigations  and
         file registrations and qualifications  required to be filed pursuant to
         this Section 5(h); and keep each such registration or qualification (or
         exemption

                                       13
<PAGE>

         therefrom)  effective during the period such Registration  Statement is
         required to be kept  effective  and do any and all other acts or things
         reasonably  necessary or advisable  to enable the  disposition  in such
         jurisdictions   of   the   Exchange   Notes   held   by   Participating
         Broker-Dealers  or the  Registrable  Notes  covered  by the  applicable
         Registration Statement; provided, however, that the Issuer shall not be
         required to (A) qualify  generally  to do business in any  jurisdiction
         where it is not then so  qualified,  (B) take  any  action  that  would
         subject it to general service of process in any such jurisdiction where
         it is not then so subject or (C)  subject  itself to taxation in excess
         of a nominal  dollar  amount in any such  jurisdiction  where it is not
         then so subject.

                  (i) If a Shelf  Registration  is filed  pursuant  to Section 3
         hereof, cooperate with the selling Holders of Registrable Notes and the
         managing underwriter or underwriters,  if any, to facilitate the timely
         preparation and delivery of certificates representing Registrable Notes
         to be sold, which certificates  shall not bear any restrictive  legends
         and shall be in a form eligible for deposit with The  Depository  Trust
         Company;  and enable such Registrable Notes to be in such denominations
         and   registered  in  such  names  as  the  managing   underwriter   or
         underwriters, if any, or Holders may request at least two Business Days
         prior to any sale of such Registrable Notes.

                  (j) Use its reasonable  best efforts to cause the  Registrable
         Notes covered by the  Registration  Statement to be registered  with or
         approved by such other  governmental  agencies or authorities as may be
         reasonably  necessary  to enable the  seller or sellers  thereof or the
         underwriter or  underwriters,  if any, to consummate the disposition of
         such  Registrable  Notes,  except  as  may  be  required  solely  as  a
         consequence of the nature of such selling Holder's  business,  in which
         case the Issuer will  cooperate  in all  reasonable  respects  with the
         filing  of  such  Registration  Statement  and  the  granting  of  such
         approvals.

                  (k) If (1) a Shelf Registration is filed pursuant to Section 3
         hereof,   or  (2)  a  Prospectus   contained  in  the  Exchange   Offer
         Registration  Statement  filed pursuant to Section 2 hereof is required
         to  be  delivered  under  the  Securities  Act  by  any   Participating
         Broker-Dealer  who seeks to sell Exchange  Notes during the  Applicable
         Period relating thereto,  upon the occurrence of any event contemplated
         by paragraph  5(c)(v) or 5(c)(vi)  hereof,  as promptly as  practicable
         prepare and (subject to Section 5(a) hereof) file with the  Commission,
         at the sole  expense of the  Issuer,  a  supplement  or  post-effective
         amendment to the Registration  Statement or a supplement to the related
         Prospectus or any document  incorporated  or deemed to be  incorporated
         therein by reference,  or file any other required  document so that, as
         thereafter  delivered to the purchasers of the Registrable  Notes being
         sold thereunder or to the purchasers of the Exchange Notes to whom such
         Prospectus will be delivered by a Participating Broker-Dealer, any such
         Prospectus  will not contain an untrue  statement of a material fact or
         omit to  state  a  material  fact  required  to be  stated  therein  or
         necessary  to  make  the  statements  therein,  in  the  light  of  the
         circumstances under which they were made, not misleading.

                  (l)  Prior to the  effective  date of the  first  Registration
         Statement  relating to the Registrable  Notes,  (i) provide the Trustee
         with  certificates  for the  Registrable  Notes in a form

                                       14
<PAGE>

         eligible for deposit with The Depository Trust Company and (ii) provide
         a CUSIP number for the Registrable Notes.

                  (m)  In   connection   with  any   underwritten   offering  of
         Registrable  Notes  pursuant  to a Shelf  Registration,  enter  into an
         underwriting  agreement as is customary  in  underwritten  offerings of
         debt securities similar to the Notes and take all such other actions as
         are reasonably requested by the managing underwriter or underwriters in
         order to expedite or facilitate the  registration or the disposition of
         such  Registrable  Notes  and,  in  such  connection,   (i)  make  such
         representations and warranties to, and covenants with, the underwriters
         with  respect  to the  business  of the  Issuer  and  its  subsidiaries
         (including any acquired business,  properties or entity, if applicable)
         and the  Registration  Statement,  Prospectus  and  documents,  if any,
         incorporated or deemed to be incorporated by reference therein, in each
         case,  as  are   customarily   made  by  issuers  to   underwriters  in
         underwritten  offerings of debt securities similar to the Notes (but in
         no  event   materially  more  extensive  than  those  in  the  Purchase
         Agreement), and confirm the same in writing if and when requested; (ii)
         use its  reasonable  best  efforts to obtain the  written  opinions  of
         counsel to the Issuer and written  updates  thereof in form,  scope and
         substance  reasonably  satisfactory  to  the  managing  underwriter  or
         underwriters,  addressed  to  the  underwriters  covering  the  matters
         customarily covered in opinions requested in underwritten offerings and
         such  other  matters as may be  reasonably  requested  by the  managing
         underwriter or underwriters  (but in no event materially more extensive
         than  those  required  by  the  Purchase  Agreement);   (iii)  use  its
         reasonable  best efforts to obtain "cold  comfort"  letters and updates
         thereof in form,  scope and substance  reasonably  satisfactory  to the
         managing  underwriter or underwriters  from the  independent  certified
         public  accountants  of  the  Issuer  (and,  if  necessary,  any  other
         independent  certified  public  accountants  of any  subsidiary  of the
         Issuer or of any  business  acquired by the Issuer for which  financial
         statements and financial  data are, or are required to be,  included or
         incorporated by reference in the Registration Statement),  addressed to
         each of the  underwriters,  such  letters to be in  customary  form and
         covering  matters of the type  customarily  covered  in "cold  comfort"
         letters in  connection  with  underwritten  offerings  (but in no event
         materially   more   extensive  than  those  required  by  the  Purchase
         Agreement);  and (iv) if an underwriting agreement is entered into, the
         same shall contain  indemnification  provisions  and procedures no less
         favorable  than  those set forth in  Section  7 hereof  (or such  other
         provisions  and  procedures  acceptable  to Holders  of a  majority  in
         aggregate  principal  amount  of  Registrable  Notes  covered  by  such
         Registration  Statement and the managing underwriter or underwriters or
         agents) with respect to all parties to be indemnified  pursuant to said
         Section.   The  above  shall  be  done  at  each  closing   under  such
         underwriting agreement, or as and to the extent required thereunder.

                  (n) If (1) a Shelf Registration is filed pursuant to Section 3
         hereof,   or  (2)  a  Prospectus   contained  in  the  Exchange   Offer
         Registration  Statement  filed pursuant to Section 2 hereof is required
         to  be  delivered  under  the  Securities  Act  by  any   Participating
         Broker-Dealer  who seeks to sell Exchange  Notes during the  Applicable
         Period relating  thereto,  make available for inspection by any selling
         Holder of such Registrable Notes being sold, or each such Participating
         Broker-Dealer, as the case may be, any underwriter participating in any
         such  disposition  of  Registrable  Notes,  if any,  and any  attorney,

                                       15
<PAGE>

         accountant or other agent  retained by any such selling  Holder or each
         such  Participating  Broker-Dealer,  as the case may be, or underwriter
         (collectively,  the "Inspectors"),  at the offices where normally kept,
         during  reasonable  business  hours,  all financial and other  records,
         pertinent  corporate  documents and  instruments  of the Issuer and its
         subsidiaries  (collectively,  the  "Records")  as shall  be  reasonably
         necessary  to enable  them to exercise  any  applicable  due  diligence
         responsibilities,  and cause the  officers,  directors,  employees  and
         agents of the Issuer  and its  subsidiaries  to supply all  information
         reasonably  requested  by any such  Inspector in  connection  with such
         Registration  Statement and  Prospectus.  Each Inspector shall agree in
         writing  that  it  will  not  disclose  any  records  that  the  Issuer
         determines,  in good faith, to be confidential and that it notifies the
         Inspectors  in writing are  confidential  unless (i) the  disclosure of
         such  Records  is  necessary  to avoid or  correct  a  misstatement  or
         omission in such Registration Statement or Prospectus, (ii) the release
         of such Records is ordered pursuant to a subpoena or other order from a
         court of competent  jurisdiction,  (iii) disclosure of such information
         is necessary or advisable in connection with any action, claim, suit or
         proceeding, directly or indirectly,  involving or potentially involving
         such  Inspector  and  arising  out of,  based  upon,  relating  to,  or
         involving this Agreement or the Purchase Agreement, or any transactions
         contemplated  hereby or thereby or arising hereunder or thereunder,  or
         (iv) the information in such Records has been made generally  available
         to the  public  other than by an act or a failure to act by a Holder or
         an Inspector;  provided,  however,  that such Inspector shall take such
         actions as are reasonably  necessary to protect the  confidentiality of
         such  information  (if  practicable)  to  the  extent  such  action  is
         otherwise not  inconsistent  with, an impairment of or in derogation of
         the rights and interests of the Holder or any Inspector.

                  (o) Provide an indenture  trustee for the Registrable Notes or
         the Exchange  Notes, as the case may be, and cause the Indenture or any
         other  indenture  provided for in Section 2(a) hereof,  as the case may
         be, to be qualified  under the TIA not later than the effective date of
         the first Registration  Statement relating to the Registrable Notes; in
         connection  therewith,  cooperate  with  the  trustee  under  any  such
         indenture  and the  Holders of the  Registrable  Notes,  to effect such
         changes to such  indenture as may be required for such  indenture to be
         so qualified in accordance with the terms of the TIA; and execute,  and
         use its reasonable  best efforts to cause such trustee to execute,  all
         documents  as may be  required to effect  such  changes,  and all other
         forms and documents  required to be filed with the Commission to enable
         such indenture to be so qualified in a timely manner.

                  (p) Comply with all  applicable  rules and  regulations of the
         Commission and make generally available to the Issuer's securityholders
         earnings  statements  satisfying the provisions of Section 11(a) of the
         Securities Act and Rule 158 thereunder (or any similar rule promulgated
         under  the  Securities  Act) (i)  commencing  at the end of any  fiscal
         quarter in which  Registrable  Notes are sold to underwriters in a firm
         commitment or best efforts  underwritten  offering and (ii) if not sold
         to underwriters in such an offering, commencing on the first day of the
         first  fiscal  quarter  of the  Issuer  after the  effective  date of a
         Registration Statement.

                  (q) Upon  consummation  of the  Exchange  Offer  or a  Private
         Exchange,  use its  reasonable  best  efforts  to obtain an  opinion of
         counsel to the Issuer, in a form customary for

                                       16
<PAGE>

         underwritten transactions,  addressed to the Trustee for the benefit of
         all Holders of Registrable Notes participating in the Exchange Offer or
         the Private  Exchange,  as the case may be, that the Exchange  Notes or
         Private  Exchange Notes, as the case may be, and the related  indenture
         constitute  legal,  valid  and  binding   obligations  of  the  Issuer,
         enforceable against the Issuer in accordance with its respective terms,
         subject to customary exceptions and qualifications.

                  (r) If the  Exchange  Offer  or a  Private  Exchange  is to be
         consummated,  upon delivery of the Registrable  Notes by Holders to the
         Issuer (or to such other  Person as directed by the Issuer) in exchange
         for the Exchange Notes or the Private  Exchange  Notes, as the case may
         be, mark, or cause to be marked,  on such  Registrable  Notes that such
         Registrable  Notes are being  cancelled  in exchange  for the  Exchange
         Notes or the Private  Exchange  Notes,  as the case may be; in no event
         shall such Registrable Notes be marked as paid or otherwise satisfied.

                  (s) Cooperate with each seller of Registrable Notes covered by
         any Registration Statement and each underwriter,  if any, participating
         in the  disposition  of such  Registrable  Notes and  their  respective
         counsel in  connection  with any  filings  required to be made with the
         National Association of Securities Dealers, Inc. (the "NASD").

                  (t) Use its  reasonable  best  efforts to take all other steps
         necessary or advisable to effect the  registration  of the  Registrable
         Notes covered by a Registration Statement contemplated hereby.

                  The Issuer may require each seller of Registrable  Notes as to
which  any  registration  is  being  effected  to  furnish  to the  Issuer  such
information regarding such seller and the distribution of such Registrable Notes
as the Issuer may, from time to time, reasonably request. The Issuer may exclude
from  such  registration  the  Registrable  Notes of any  seller so long as such
seller  fails to  furnish  such  information  within  a  reasonable  time  after
receiving such request.  Each seller as to which any Shelf Registration is being
effected agrees to furnish promptly to the Issuer all information required to be
disclosed in order to make the information previously furnished to the Issuer by
such seller not materially misleading.

                  If any such  Registration  Statement  refers to any  Holder by
name or  otherwise  as the holder of any  securities  of the  Issuer,  then such
Holder shall have the right to require (i) the insertion therein of language, in
form and substance  reasonably  satisfactory to such Holder,  to the effect that
the  holding  by such  Holder of such  securities  is not to be  construed  as a
recommendation  by such  Holder  of the  investment  quality  of the  securities
covered  thereby  and that such  holding  does not imply that such  Holder  will
assist in meeting any future  financial  requirements of the Issuer,  or (ii) in
the event  that  such  reference  to such  Holder  by name or  otherwise  is not
required by the Securities Act or any similar federal statute then in force, the
deletion of the  reference to such Holder in any  amendment or supplement to the
Registration  Statement  filed or  prepared  subsequent  to the time  that  such
reference ceases to be required.

                                       17
<PAGE>

                  Each  Holder  of  Registrable  Notes  and  each  Participating
Broker-Dealer  agrees by acquisition of such Registrable Notes or Exchange Notes
to be sold by such Participating  Broker-Dealer,  as the case may be, that, upon
actual  receipt of any notice from the Issuer of the  happening  of any event of
the kind described in Section  5(c)(ii),  5(c)(iv),  5(c)(v) or 5(c)(vi) hereof,
such Holder will forthwith  discontinue  disposition of such  Registrable  Notes
covered by such  Registration  Statement or Prospectus  or Exchange  Notes to be
sold by such Holder or  Participating  Broker-Dealer,  as the case may be, until
such  Holder's  or  Participating  Broker-Dealer's  receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof, or until
it is advised  in  writing  (the  "Advice")  by the  Issuer  that the use of the
applicable  Prospectus may be resumed, and has received copies of any amendments
or supplements thereto. In the event that the Issuer shall give any such notice,
each of the Effectiveness  Period and the Applicable Period shall be extended by
the number of days during such periods from and including the date of the giving
of such notice to and including the date when each seller of  Registrable  Notes
covered by such  Registration  Statement  or  Exchange  Notes to be sold by such
Participating  Broker-Dealer,  as the case may be,  shall have  received (x) the
copies of the  supplemented or amended  Prospectus  contemplated by Section 5(k)
hereof or (y) the Advice.

         Section 6. Registration Expenses

                  All  fees  and  expenses  incident  to the  performance  of or
compliance  with this  Agreement  by the  Issuer  shall be borne by the  Issuer,
whether  or  not  the  Exchange  Offer  Registration   Statement  or  any  Shelf
Registration is filed or becomes effective or the Exchange Offer is consummated,
including,  without limitation, (i) all registration and filing fees (including,
without  limitation,  (A) fees with respect to filings  required to be made with
the NASD in connection with an  underwritten  offering and (B) fees and expenses
of  compliance  with  state  securities  or Blue  Sky laws  (including,  without
limitation, reasonable fees and disbursements of counsel in connection with Blue
Sky  qualifications of the Registrable Notes or Exchange Notes and determination
of the  eligibility  of the  Registrable  Notes or Exchange Notes for investment
under the laws of such  jurisdictions (x) where the holders of Registrable Notes
are located,  in the case of the Exchange  Notes,  or (y) as provided in Section
5(h) hereof,  in the case of Registrable Notes or Exchange Notes to be sold by a
Participating  Broker-Dealer  during  the  Applicable  Period)),  (ii)  printing
expenses,  including, without limitation,  expenses of printing certificates for
Registrable  Notes or Exchange  Notes in a form  eligible  for deposit  with The
Depository  Trust  Company  and of  printing  Prospectuses  if the  printing  of
Prospectuses is requested by the managing  underwriter or underwriters,  if any,
by the Holders of a majority in aggregate  principal  amount of the  Registrable
Notes included in any Registration  Statement or in respect of Registrable Notes
or  Exchange  Notes to be sold by any  Participating  Broker-Dealer  during  the
Applicable  Period, as the case may be, (iii) messenger,  telephone and delivery
expenses,  (iv) fees and  disbursements of counsel for the Issuer and reasonable
fees  and  disbursements  of one  special  counsel  for  all of the  sellers  of
Registrable  Notes  (exclusive  of any  counsel  retained  pursuant to Section 7
hereof),  (v)  fees  and  disbursements  of  all  independent  certified  public
accountants  referred  to  in  Section  5(m)(iii)  hereof  (including,   without
limitation,  the  expenses  of any  special  audit  and "cold  comfort"  letters
required by or incident to such  performance),  (vi)  Securities  Act  liability
insurance, if the Issuer desires such insurance,  (vii) fees and expenses of all
other Persons  retained by the Issuer,  (viii)  internal  expenses of the Issuer
(including,  without  limitation,  all  salaries  and  expenses of officers  and
employees of the Issuer performing legal or

                                       18
<PAGE>

accounting  duties),  (ix) the  expense  of any annual  audit,  (x) the fees and
expenses  incurred  in  connection  with the  listing  of the  securities  to be
registered  on any  securities  exchange,  and the  obtaining of a rating of the
securities,  in each  case if  applicable,  and (xi) the  expenses  relating  to
printing,   word  processing  and  distributing  all  Registration   Statements,
underwriting  agreements,  indentures and any other documents necessary in order
to comply with this Agreement.  Notwithstanding the foregoing or anything to the
contrary,  each Holder shall pay all  underwriting  discounts and commissions of
any underwriters  with respect to any Registrable  Notes sold by or on behalf of
it.

         Section 7. Indemnification

                  (a) The Issuer  agrees to  indemnify  and hold  harmless  each
Holder  of  Registrable  Notes  and  each  Participating  Broker-Dealer  selling
Exchange  Notes during the Applicable  Period  relating  thereto,  the officers,
directors,  employees and agents of each such Person,  and each Person,  if any,
who  controls  any such Person  within the  meaning of either  Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a  "Participant"),  from
and against  any and all losses,  claims,  damages and  liabilities  (including,
without  limitation,  the  reasonable  legal  fees and other  expenses  actually
incurred  in  connection  with any  suit,  action  or  proceeding  or any  claim
asserted)  caused  by,  arising  out of or based upon any  untrue  statement  or
alleged  untrue  statement  of a material  fact  contained  in any  Registration
Statement (or any amendment  thereto) or Prospectus (as amended or  supplemented
if the Issuer shall have furnished any amendments or supplements thereto) or any
preliminary prospectus,  or caused by, arising out of or based upon any omission
or alleged  omission  to state  therein a material  fact  required  to be stated
therein  or  necessary  to  make  the  statements  therein,  in the  case of the
Prospectus  in the light of the  circumstances  under which they were made,  not
misleading,  except insofar as such losses,  claims,  damages or liabilities are
caused by any untrue  statement  or  omission  or alleged  untrue  statement  or
omission made in reliance upon and in conformity  with  information  relating to
any  Participant  furnished  to the  Issuer in  writing  by or on behalf of such
Participant expressly for use therein.

                  (b) Each  Participant  agrees,  severally and not jointly,  to
indemnify and hold harmless the Issuer, its directors,  officers,  employees and
agents and each Person who controls the Issuer  within the meaning of Section 15
of the  Securities Act or Section 20 of the Exchange Act to the same extent (but
on a several,  and not joint,  basis) as the foregoing indemnity from the Issuer
to each Participant,  in each case to the extent,  but only to the extent,  that
any loss,  claim,  damage or  liability  is caused by any  untrue  statement  or
omission or alleged  untrue  statement or omission  made in reliance upon and in
conformity with information relating to any Participant  furnished to the Issuer
in  writing  by or on  behalf  of  such  Participant  expressly  for  use in any
Registration  Statement (or any amendment  thereto) or Prospectus (as amended or
supplemented  if the Issuer shall have  furnished any  amendments or supplements
thereto) or any preliminary prospectus.

                  (c)  If  any   suit,   action,   proceeding   (including   any
governmental or regulatory  investigation),  claim or demand shall be brought or
asserted against any Person in respect of which indemnity may be sought pursuant
to  either  of the two  preceding  paragraphs,  such  Person  (the  "Indemnified
Person")  shall promptly  notify the Persons  against whom such indemnity may be
sought (the "Indemnifying  Persons") in writing,  and the Indemnifying  Persons,
upon request of the

                                       19
<PAGE>

Indemnified  Person,  shall  retain  counsel  reasonably   satisfactory  to  the
Indemnified  Person to  represent  the  Indemnified  Person  and any  others the
Indemnifying  Persons may reasonably  designate in such proceeding and shall pay
the  fees  and  expenses  actually  incurred  by such  counsel  related  to such
proceeding;  provided,  however,  that the failure to so notify the Indemnifying
Persons shall not relieve any of them of any  obligation or liability  which any
of the  Indemnifying  Persons may have  hereunder  or  otherwise,  except to the
extent such failure materially  prejudices the Indemnifying Persons. In any such
proceeding,  any  Indemnified  Person  shall  have the right to  retain  its own
counsel,  but the fees and expenses of such  counsel  shall be at the expense of
such Indemnified Person unless (i) the Indemnifying  Persons and the Indemnified
Person shall have mutually agreed to the contrary, (ii) the Indemnifying Persons
shall  have  failed  within  a  reasonable  period  of  time to  retain  counsel
reasonably  satisfactory to the Indemnified Person or (iii) the named parties in
any  such  proceeding   (including  any  impleaded  parties)  include  both  any
Indemnifying  Person and the  Indemnified  Person or any  affiliate  thereof and
representation of both parties by the same counsel would be inappropriate due to
actual or potential  differing  interests  between them. It is understood  that,
unless there  exists a conflict  among  Indemnified  Persons,  the  Indemnifying
Persons  shall not, in connection  with any one such  proceeding or separate but
substantially similar related proceeding in the same jurisdiction arising out of
the same general  allegations,  be liable for the fees and expenses of more than
one  separate  firm (in  addition  to any  local  counsel)  for all  Indemnified
Persons,  and that all such fees and expenses  shall be  reimbursed  promptly as
they are incurred.  Any such separate firm for the Participants and such control
Persons of Participants  shall be designated in writing by Participants who sold
a majority in interest of Registrable  Notes and Exchange Notes sold by all such
Participants  and shall be  reasonably  acceptable  to the  Issuer  and any such
separate  firm for the Issuer,  their  respective  directors,  their  respective
officers and such control  Persons of the Issuer shall be  designated in writing
by  the  Issuer  and  shall  be  reasonably   acceptable  to  the  Holders.  The
Indemnifying  Persons shall not be liable for any  settlement of any  proceeding
effected  without  their  prior  written  consent  (which  consent  shall not be
unreasonably withheld or delayed),  but if settled with such consent or if there
be a final  judgment  for the  plaintiff  for  which the  Indemnified  Person is
entitled to indemnification pursuant to this Agreement, each of the Indemnifying
Persons agrees to indemnify and hold harmless each  Indemnified  Person from and
against any loss or  liability  by reason of such  settlement  or  judgment.  No
Indemnifying Person shall,  without the prior written consent of the Indemnified
Persons (which consent shall not be  unreasonably  withheld or delayed),  effect
any settlement or compromise of any pending or threatened  proceeding in respect
of which  any  Indemnified  Person is or could  have been a party and  indemnity
could  have been  sought  hereunder  by such  Indemnified  Person,  unless  such
settlement (A) includes an  unconditional  written  release of such  Indemnified
Person,  in form  and  substance  reasonably  satisfactory  to such  Indemnified
Person,  from all  liability  on  claims  that are the  subject  matter  of such
proceeding  and (B) does not include any  statement as to an admission of fault,
culpability or failure to act by or on behalf of such Indemnified Person.

                  (d) If the  indemnification  provided  for  in the  first  and
second  paragraphs  of this  Section  7 is for any  reason  unavailable  to,  or
insufficient to hold harmless,  an Indemnified  Person in respect of any losses,
claims,  damages or  liabilities  referred  to therein,  then each  Indemnifying
Person under such paragraphs,  in lieu of indemnifying  such Indemnified  Person
thereunder  and in order to provide for just and equitable  contribution,  shall
contribute to the amount paid or payable by such Indemnified  Person as a result
of  such  losses,  claims,  damages  or  liabilities  in such  proportion  as is

                                       20
<PAGE>

appropriate to reflect the relative fault of the Indemnifying  Person or Persons
on the one hand and the Indemnified Person or Persons on the other in connection
with the  statements  or  omissions  or alleged  statements  or  omissions  that
resulted in such losses,  claims,  damages or liabilities (or actions in respect
thereof) as well as any other relevant  equitable  considerations.  The relative
fault of the parties  shall be  determined  by reference to, among other things,
whether  the  untrue or  alleged  untrue  statement  of a  material  fact or the
omission or alleged  omission to state a material  fact  relates to  information
supplied  by the  Issuer  on the  one  hand or such  Participant  or such  other
Indemnified  Person,  as the case may be, on the other,  the  parties'  relative
intent,  knowledge,  access to information and opportunity to correct or prevent
such statement or omission, and any other equitable  considerations  appropriate
in the circumstances.

                  (e) The parties  agree that it would not be just and equitable
if  contribution  pursuant  to  this  Section  7 were  determined  by  pro  rata
allocation  (even  if the  Participants  were  treated  as one  entity  for such
purpose) or by any other method of allocation  that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount  paid or  payable  by an  Indemnified  Person as a result of the  losses,
claims,  damages  and  liabilities  referred  to in  the  immediately  preceding
paragraph  shall be deemed to  include,  subject  to the  limitations  set forth
above,  any  reasonable  legal  or  other  expenses  actually  incurred  by such
Indemnified Person in connection with investigating or defending any such action
or claim.  Notwithstanding the provisions of this Section 7, in no event shall a
Participant  be  required  to  contribute  any amount in excess of the amount by
which proceeds  received by such Participant from sales of Registrable  Notes or
Exchange  Notes, as the case may be, exceeds the amount of any damages that such
Participant  has  otherwise  been  required to pay or has paid by reason of such
untrue or alleged untrue  statement or omission or alleged  omission.  No Person
guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of
the Securities  Act) shall be entitled to  contribution  from any Person who was
not guilty of such fraudulent misrepresentation.

                  (f) Any losses, claims,  damages,  liabilities or expenses for
which an Indemnified Person is entitled to indemnification or contribution under
this  Section  7 shall be paid by the  Indemnifying  Person  to the  Indemnified
Person as such losses,  claims,  damages,  liabilities or expenses are incurred.
The indemnity and  contribution  agreements  contained in this Section 7 and the
representations  and warranties of the Issuer set forth in this Agreement  shall
remain  operative  and  in  full  force  and  effect,   regardless  of  (i)  any
investigation  made by or on behalf of any Holder or any  person who  controls a
Holder, the Issuer, their respective directors, officers, employees or agents or
any person controlling the Issuer, and (ii) any termination of this Agreement.

                  (g) The indemnity  and  contribution  agreements  contained in
this  Section 7 will be in  addition  to any  liability  which the  Indemnifying
Persons may otherwise have to the Indemnified Persons referred to above.

         Section 8. Rules 144 and 144A

                  The Issuer covenants that it will file the reports required to
be filed by it under the  Securities  Act and the Exchange Act and the rules and
regulations  adopted  by  the  Commission  thereunder  in  a  timely  manner  in
accordance with the requirements of the Securities Act and the

                                       21
<PAGE>

Exchange  Act and,  if at any time  the  Issuer  is not  required  to file  such
reports,  it  will,  upon the  request  of any  Holder  or  beneficial  owner of
Registrable  Notes,  make available such  information  necessary to permit sales
pursuant to Rule 144A under the  Securities  Act. The Issuer  further  covenants
that it will take such  further  action as any Holder of  Registrable  Notes may
reasonably request,  all to the extent required from time to time to enable such
Holder to sell Registrable Notes without  registration  under the Securities Act
within the  limitation  of the  exemptions  provided by (a) Rule 144(k) and Rule
144A under the  Securities  Act, as such Rules may be amended from time to time,
or (b) any  similar  rule or  regulation  hereafter  adopted by the  Commission.
Notwithstanding  the  foregoing,  nothing  in this  Section 8 shall be deemed to
require the Issuer to register  any of its  securities  pursuant to the Exchange
Act.

         Section 9. Underwritten Registrations

                  If  any  of  the  Registrable   Notes  covered  by  any  Shelf
Registration are to be sold in an underwritten  offering,  the investment banker
or investment bankers and manager or managers that will manage the offering will
be selected by the Holders of a majority in aggregate  principal  amount of such
Registrable  Notes included in such offering and shall be reasonably  acceptable
to the Issuer.

                  No  Holder  of  Registrable   Notes  may  participate  in  any
underwritten  registration  hereunder unless such Holder (i) agrees to sell such
Holder's   Registrable   Notes  on  the  basis  provided  in  any   underwriting
arrangements  approved  by  the  Persons  entitled  hereunder  to  approve  such
arrangements  and (ii)  completes  and  executes all  questionnaires,  powers of
attorney,  indemnities,  underwriting  agreements and other  documents  required
under the terms of such underwriting arrangements.

         Section 10. Miscellaneous

                  (a) No Inconsistent Agreements.  The Issuer has not, as of the
date hereof,  and the Issuer shall not, after the date of this Agreement,  enter
into any agreement  with respect to any of its securities  that is  inconsistent
with the rights granted to the Holders of Registrable Notes in this Agreement or
otherwise  conflicts  with the  provisions  hereof.  The  rights  granted to the
Holders  hereunder do not conflict  with and are not  inconsistent  with, in any
material respect, the rights granted to the holders of the Issuer's other issued
and outstanding securities under any such agreements. The Issuer has not entered
and will not enter into any  agreement  with  respect  to any of its  securities
which will grant to any Person  piggy-back  registration  rights with respect to
any Registration Statement.

                  (b) Adjustments  Affecting Registrable Notes. The Issuer shall
not,  directly or  indirectly,  take any action with respect to the  Registrable
Notes as a class  that would  adversely  affect  the  ability of the  Holders of
Registrable Notes to include such Registrable Notes in a registration undertaken
pursuant to this Agreement.

                  (c) Amendments  and Waivers.  The provisions of this Agreement
may not be  amended,  modified  or  supplemented,  and  waivers or  consents  to
departures  from the  provisions  hereof may not be given  except  pursuant to a
written  agreement  duly signed and  delivered by (i) the Issuer and (ii)(1) the
Holders of not less than a majority in  aggregate  principal  amount of the then

                                       22
<PAGE>

outstanding  Registrable  Notes and (2) in  circumstances  that would  adversely
affect  the  Participating  Broker-Dealers,   the  Participating  Broker-Dealers
holding not less than a majority in aggregate  principal  amount of the Exchange
Notes held by all Participating Broker-Dealers;  provided, however, that Section
7 and this Section  10(c) may not be amended,  modified or  supplemented  except
pursuant to a written  agreement  duly signed and  delivered  by each Holder and
each  Participating  Broker-Dealer  (including  any  person  who was a Holder or
Participating  Broker-Dealer of Registrable Notes or Exchange Notes, as the case
may be, disposed of pursuant to any Registration Statement) affected by any such
amendment,  modification or supplement.  Notwithstanding the foregoing, a waiver
or consent to depart from the  provisions  hereof with  respect to a matter that
relates  exclusively  to the  rights  of  Holders  of  Registrable  Notes  whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect,  impair,  limit or compromise the rights of other
Holders of  Registrable  Notes may be given by Holders of at least a majority in
aggregate  principal amount of the Registrable Notes being sold pursuant to such
Registration Statement.

                  (d) Notices. All notices and other communications  (including,
without limitation, any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
or certified first-class mail, next-day air courier or telecopier:

         (i)      if to a Holder of the Registrable  Notes or any  Participating
         Broker-Dealer,   at  the  most  current   address  of  such  Holder  or
         Participating  Broker-Dealer,  as the  case  may be,  set  forth on the
         records of the registrar under the Indenture.

         (ii)     if to the Issuer, at the address as follows:

                           HEALTHSOUTH Corporation
                           One HealthSouth Parkway
                           Birmingham, Alabama 35243
                           Telephone: (205) 969-4977
                           Fax number: (205) 969-4730
                           Attention:  William W. Horton

         (iii)    if to the Initial Purchasers, at the address as follows:

                           UBS Warburg LLC
                           299 Park Avenue
                           New York, New York 10171
                           Telephone: (203) 719-7166
                           Fax number: (203) 719-8620
                           Attention:  Syndicate Department

                  All such  notices and  communications  shall be deemed to have
been duly given: when delivered by hand, if personally delivered;  five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by the recipient's telecopier machine, if

                                       23
<PAGE>

telecopied;  and on the next Business Day, if timely delivered to an air courier
guaranteeing overnight delivery.

                  Copies of all such  notices,  demands or other  communications
shall be concurrently  delivered by the Person giving the same to the Trustee at
the address and in the manner specified in the Indenture.

                  (e) Successors and Assigns.  This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto,  the Holders and the Participating  Broker-Dealers;  provided,  however,
that this  Agreement  shall not inure to the  benefit  of or be  binding  upon a
successor  or assign of a Holder  unless and to the  extent  such  successor  or
assign holds Registrable Notes.

                  (f) Counterparts. This Agreement may be executed in any number
of  counterparts  and by the parties  hereto in separate  counterparts,  each of
which when so executed  shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

                  (g)  Headings.   The  headings  in  this   Agreement  are  for
convenience  of  reference  only and  shall not limit or  otherwise  affect  the
meaning hereof.

                  (H)  GOVERNING  LAW. THIS  AGREEMENT  SHALL BE GOVERNED BY AND
CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK,  AS APPLIED TO
CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.

                  (i)  Severability.   If  any  term,  provision,   covenant  or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants  and  restrictions  set forth  herein  shall  remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an  alternative  means to
achieve the same or substantially  the same result as that  contemplated by such
term, provision,  covenant or restriction.  It is hereby stipulated and declared
to be the  intention of the parties that they would have  executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

                  (j) Securities Held by the Issuer or Its Affiliates.  Whenever
the  consent or approval of Holders of a  specified  percentage  of  Registrable
Notes is required hereunder,  Registrable Notes held by the Issuer or any of its
affiliates (as such term is defined in Rule 405 under the Securities  Act) shall
not be counted in determining  whether such consent or approval was given by the
Holders of such required percentage.

                  (k) Third Party  Beneficiaries.  Holders and beneficial owners
of Registrable Notes and Participating  Broker-Dealers  are intended third party
beneficiaries  of this  Agreement,  and this  Agreement  may be enforced by such
Persons.  No other  Person  is  intended  to be,  or shall  be  construed  as, a
third-party beneficiary of this Agreement.

                                       24
<PAGE>

                  (l) Attorneys' Fees. As between the parties to this Agreement,
in any action or proceeding  brought to enforce any provision of this Agreement,
or where any provision hereof is validly  asserted as a defense,  the successful
party shall be entitled to recover reasonable  attorneys' fees actually incurred
in addition to its costs and expenses and any other available remedy.

                  (m)  Entire  Agreement.  This  Agreement,  together  with  the
Purchase Agreement and the Indenture,  is intended by the parties as a final and
exclusive  statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein and any and all prior
oral  or  written  agreements,   representations,   or  warranties,   contracts,
understandings,  correspondence, conversations and memoranda between the Holders
on the one hand and the  Issuer on the other,  or  between or among any  agents,
representatives,  parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.

                                       25
<PAGE>

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

                                       HEALTHSOUTH CORPORATION

                                       By:       /s/ William T. Owens
                                          --------------------------------------
                                                     William T. Owens
                                                Executive Vice President and
                                                  Chief Financial Officer

                                       S-1

<PAGE>

                                       UBS WARBURG LLC
                                       DEUTSCHE BANK SECURITIES INC.
                                       CHASE SECURITIES INC.
                                       FIRST UNION SECURITIES, INC.

                                       By:  UBS WARBURG LLC

                                       By:       /s/ Michael Y. Leder
                                           -------------------------------------
                                                     Michael Y. Leder
                                                     Managing Director
                                                     Leveraged Finance

                                       By:        /s/ David W. Barth
                                           -------------------------------------
                                                      David W. Barth
                                                         Director
                                                     Leveraged Finance

                                      S-2

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