Document:

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                                                                    EXHIBIT 10.5

                          ADVANCED MEDICAL OPTICS, INC.

                      EXECUTIVE DEFERRED COMPENSATION PLAN

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                          ADVANCED MEDICAL OPTICS, INC.

                      EXECUTIVE DEFERRED COMPENSATION PLAN

                                TABLE OF CONTENTS

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ARTICLE I. INTRODUCTION......................................................................1

        1.1    Purpose.......................................................................1
        1.2    Effective Date and Term.......................................................1
        1.3    Distribution..................................................................1
        1.4    Applicability of ERISA........................................................1

ARTICLE II. DEFINITIONS......................................................................1

        2.1    AMO 401(k) Plan...............................................................1
        2.2    Annual Deferral...............................................................1
        2.3    Base Salary...................................................................1
        2.4    Beneficiary...................................................................2
        2.5    Board; Board of Directors.....................................................2
        2.6    Bonuses.......................................................................2
        2.7    Code..........................................................................2
        2.8    Committee.....................................................................2
        2.9    Company.......................................................................2
        2.10   Credited Service..............................................................2
        2.11   Deferral Account..............................................................2
        2.12   Deferral Election.............................................................2
        2.13   Deferral Election Form........................................................2
        2.14   Deferral Period...............................................................2
        2.15   Disability....................................................................2
        2.16   Effective Date................................................................3
        2.17   Eligible Employee.............................................................3
        2.18   ERISA.........................................................................3
        2.19   Financial Hardship............................................................3
        2.20   Fund Rate.....................................................................3
        2.21   In-Service Distribution.......................................................3
        2.22   Investment Election Form......................................................3
        2.23   Participant...................................................................3
        2.24   Participation Agreement.......................................................3
        2.25   Plan   .......................................................................4
        2.26   Plan Year.....................................................................4
        2.27   Retirement Date...............................................................4
        2.28   Termination; Termination of Employment........................................4
        2.29   Transferring Employee.........................................................4
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                          ADVANCED MEDICAL OPTICS, INC.

                      EXECUTIVE DEFERRED COMPENSATION PLAN

                                TABLE OF CONTENTS

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        2.30   Unscheduled Withdrawal........................................................4

ARTICLE III. ELIGIBILITY AND PARTICIPATION...................................................4

        3.1    Participation - Eligibility and Initial Period................................4
        3.2    Participation - Subsequent Entry into Plan....................................5

ARTICLE IV. DEFERRAL ELECTIONS...............................................................5

        4.1    Deferral Election.............................................................5
        4.2    Maximum Deferral Election.....................................................6
        4.3    Minimum Deferral Election.....................................................6
        4.4    Termination of Deferral.......................................................6

ARTICLE V. DEFERRAL ACCOUNTS.................................................................7

        5.1    Deferral Accounts.............................................................7
        5.2    Investment Earnings on Deferral Accounts......................................8
        5.3    Participant Investment Elections..............................................8
        5.4    Fund Media....................................................................9
        5.5    Statement of Accounts.........................................................9

ARTICLE VI. RETIREMENT BENEFITS..............................................................9

        6.1    Entitlement to Deferral Accounts..............................................9
        6.2    Form of Retirement Benefits...................................................9
        6.3    Time of Commencement..........................................................9
        6.4    Change in Payout Timing.......................................................9

ARTICLE VII. TERMINATION BENEFITS............................................................9

        7.1    Entitlement to Deferral Accounts..............................................9
        7.2    Form of Termination Benefits.................................................10

ARTICLE VIII. DEATH BENEFITS................................................................10

        8.1    Death of Employee Prior to Retirement Date...................................10
        8.2    Death of Employee on or After Retirement Date................................10
        8.3    Death After Termination of Employment........................................10
        8.4    Investments After Death......................................................11
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                          ADVANCED MEDICAL OPTICS, INC.

                      EXECUTIVE DEFERRED COMPENSATION PLAN

                                TABLE OF CONTENTS

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ARTICLE IX. DISABILITY......................................................................11

        9.1    Continuation of Participation................................................11
        9.2    Availability of Financial Hardship Withdrawals...............................11

ARTICLE X. IN-SERVICE DISTRIBUTIONS.........................................................11

        10.1   Election to Take In-Service Distributions....................................11
        10.2   Maximum In-Service Distribution..............................................11
        10.3   Timing of In-Service Distribution............................................12

ARTICLE XI. UNSCHEDULED AND FINANCIAL HARDSHIP WITHDRAWALS..................................12

        11.1   Unscheduled Withdrawals......................................................12
        11.2   Financial Hardship Withdrawal................................................12
        11.3   Penalty for Unscheduled Withdrawals..........................................12

ARTICLE XII. ADDITIONAL BENEFIT PAYMENT RULES...............................................12

        12.1   Small Benefit Payments.......................................................12
        12.2   Constructive Receipt.........................................................13
        12.3   Postponement of Payment......................................................13
        12.4   Commencement Date and Investment Crediting for Benefit Payments..............13

ARTICLE XIII. ADMINISTRATION OF THE PLAN....................................................13

        13.1   Administration by Committee..................................................13
        13.2   Committee Authority; Rules and Regulations...................................13
        13.3   Appointment of Agents........................................................14
        13.4   Application for Benefits.....................................................14
        13.5   Action on Application........................................................14
        13.6   Appeal of Committee Decision.................................................14

ARTICLE XIV. CHANGE IN CONTROL..............................................................15

        14.1   Effect of a Change in Control................................................15
        14.2   Change in Control............................................................15
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                          ADVANCED MEDICAL OPTICS, INC.

                      EXECUTIVE DEFERRED COMPENSATION PLAN

                                TABLE OF CONTENTS

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ARTICLE XV. ESTABLISHMENT OF TRUST AND INSURANCE CONTRACTS..................................17

        15.1   Establishment of Trust.......................................................17
        15.2   Funding of Trust.............................................................17
        15.3   Investment in Insurance Contracts............................................17
        15.4   Investment in Fund Media.....................................................18

ARTICLE XVI. MISCELLANEOUS PROVISIONS.......................................................18

        16.1   Designation of Beneficiary...................................................18
        16.2   Payments During Incapacity...................................................18
        16.3   Prohibition Against Assignment...............................................19
        16.4   Binding Effect...............................................................19
        16.5   No Transfer of Interest......................................................19
        16.6   Amendment or Termination of the Plan.........................................19
        16.7   No Right to Employment.......................................................19
        16.8   Notices......................................................................20
        16.9   Governing Law................................................................20
        16.10  Titles and Headings; Gender of Terms.........................................20
        16.11  Severability.................................................................21
        16.12  Tax Effect of Plan...........................................................22

APPENDIX A -- Fund Media...................................................................A-1
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                          ADVANCED MEDICAL OPTICS, INC.

                      EXECUTIVE DEFERRED COMPENSATION PLAN

                                   ARTICLE I.
                                  INTRODUCTION

        1.1 Purpose. The Advanced Medical Optics, Inc. Executive Deferred
Compensation Plan is hereby established by the Board of Directors of Advanced
Medical Optics, Inc., a Delaware corporation ("AMO"), to provide deferred
compensation benefits to selected executive and management employees of the
Company as more fully provided herein. The benefits provided under this Plan are
intended to be in addition to other employee benefit programs offered by the
Company, including but not limited to tax-qualified employee benefit plans.

        1.2 Effective Date and Term. This Plan was adopted by the Board of
Directors of AMO (the "Board") and shall be effective as of the Distribution
Date (as defined below), and shall continue in effect until terminated by the
Board.

        1.3 Distribution. Allergan, Inc., a Delaware corporation ("Allergan"),
is expected to distribute the shares of Common Stock, par value $0.01 per share,
of AMO to the stockholders of Allergan. In connection with such distribution
(the "Distribution", and the date of the Distribution, the "Distribution Date"),
the liabilities attributable to the accounts of the Transferring Employees (as
defined below) in the Allergan, Inc. Executive Deferred Compensation Plan (the
"Allergan EDCP") will be transferred from the Allergan EDCP to the Plan,
effective as of the Distribution Date.

        1.4 Applicability of ERISA. This Plan is intended to be a "top-hat" plan
-- that is, an unfunded plan maintained primarily for the purpose of providing
deferred compensation to a select group of management or highly compensated
employees within the meaning of ERISA.

                                   ARTICLE II.
                                   DEFINITIONS

        As used herein, the following definitions shall apply unless context
clearly indicates to the contrary. Notwithstanding the foregoing, for purposes
of the Plan, the defined terms used herein with reference to the Allergan EDCP
shall have the meanings set forth in the Allergan EDCP, as in effect immediately
prior to the Effective Date.

        2.1 AMO 401(k) Plan. "AMO 401(k) Plan" means the Advanced Medical Optics
401(k) Plan, as amended from time to time.

        2.2 Annual Deferral. "Annual Deferral" means the amount of Base Salary
and/or Bonuses which the Participant elects to defer in each Deferral Period
pursuant to Section 3.1 of the Plan.

        2.3 Base Salary. "Base Salary" means the Participant's annual basic rate
of pay from the Company (excluding Bonuses, commissions, and other non-regular
forms of compensation)

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before reductions for deferrals under this Plan, the AMO 401(k) Plan, or
"cafeteria plan" under Section 125 of the Code.

        2.4 Beneficiary. "Beneficiary" means the person or persons or entity
designated as such in accordance with Article XVI of the Plan.

        2.5 Board; Board of Directors. "Board" and "Board of Directors" each
mean the Board of Directors of AMO. The Organization and Compensation Committee
of the Board, or any successor thereto, shall exercise any and all rights,
duties and obligations that are retained by or assigned to the Board under the
Plan.

        2.6 Bonuses. "Bonuses" means non-salary amounts earned by the
Participant that are designated as bonuses or commissions. Bonuses shall be
treated as earned in the Deferral Period designated by the Committee even though
they may be paid in the subsequent Deferral Period in accordance with Company
policy or practice.

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

        2.8 Committee. "Committee" means the committee authorized to administer
this Plan as set forth in Section 13.1 hereof.

        2.9 Company. "Company" means Advanced Medical Optics, Inc., a Delaware
corporation, and each Affiliated Company (as defined in the AMO 401(k) Plan)
designated by the Board of Directors.

        2.10 Credited Service. "Credited Service" means the amount of service of
a Participant determined by the Committee based on the human resources records
maintained by the Company. In the case of any Eligible Employee who was employed
by the "Company" (as defined in the Allergan EDCP) at any time prior to the
Effective Date, for the period prior to the Effective Date, such Eligible
Employee shall be credited with Credited Service under the Plan equal to the
period (if any) of "Credited Service" (as defined in the Allergan EDCP) credited
to such Eligible Employee under the Allergan EDCP.

        2.11 Deferral Account. "Deferral Account" means the account established
for a Participant pursuant to Section 5.1 of the Plan.

        2.12 Deferral Election. "Deferral Election" means the election made by
the Participant pursuant to the terms of Section 4.1 of the Plan.

        2.13 Deferral Election Form. "Deferral Election Form" means the written
agreement to defer Salary or Bonuses made by the Participant. Such written
agreement shall be in a format designated by the Committee.

        2.14 Deferral Period. "Deferral Period" means the Plan Year.

        2.15 Disability. "Disability" means any injury, illness or condition
that constitutes a disability that qualifies for payment under the Company's
Long-Term Disability Plan.

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        2.16 Effective Date. "Effective Date" means the Distribution Date.

        2.17 Eligible Employee. "Eligible Employee" means an employee of the
Company who is a U.S. or Puerto Rico local or a U.S.--based or Puerto
Rico--based expatriate that is either exempt grade 8E and above or is employed
in another executive or management position as approved by the Committee. An
employee shall be treated as an Eligible Employee only upon selection and
notification in writing of such status by the Committee and only if (a) he or
she is not classified or paid as an independent contractor (regardless of his or
her classification for federal tax or other legal purposes) by the Company and
(b) he or she does not perform services for the Company pursuant to an agreement
between the Company and any other person including a leasing organization. An
employee shall cease to be an Eligible Employee if he or she is reclassified
below exempt grade 8E or as an independent contractor or a leased employee by
the Company, except that, upon reclassification below exempt grade 8E, any
Deferral Election which has been made (and deferrals having commenced) may be
completed.

        2.18 ERISA. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

        2.19 Financial Hardship. "Financial Hardship" means an unexpected and
significant need for cash (which cannot be met reasonably and contemporaneously
from other sources) arising from an illness, casualty loss, sudden financial
reversal, or other such unforeseeable occurrence as determined by the Committee
in its sole discretion. Cash needs arising from foreseeable events or
discretionary expenditures such as the purchase of a residence or education
expenses for children shall not, alone, be considered a Financial Hardship.

        2.20 Fund Rate. "Fund Rate" means, with respect to any portion of a
Deferral Account for which the Fund Rate is applicable, the rate of return based
on the income, gains, losses and expenses of the insurance funds or other
investment vehicles (collectively called "Fund Media") selected by the
Participant in accordance with Section 5.4.

        2.21 In-Service Distribution. "In-Service Distribution" means a
distribution elected by the Participant pursuant to Article X of the Plan.

        2.22 Investment Election Form. "Investment Election Form" means the form
prescribed by the Committee for the Participant to elect to have all or a
portion of his or her Deferral Account credited with a rate of return at the
Fund Rate in accordance with Section 5.3 hereof, including the selection of Fund
Media.

        2.23 Participant. "Participant" means any Eligible Employee who
commences participation in this Plan as provided under Section 3.1 hereof.

        2.24 Participation Agreement. "Participation Agreement" means the
written agreement or form that an Eligible Employee must complete and submit in
order to commence participation in the Plan. Such written agreement shall be in
a format designated by the Committee.

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        2.25 Plan. "Plan" means this Advanced Medical Optics, Inc. Executive
Deferred Compensation Plan effective as of the Effective Date hereof and as it
may be amended from time to time.

        2.26 Plan Year. "Plan Year" means the calendar year; provided, however,
that the first Plan Year of the Plan shall commence on the Effective Date and
end on December 31, 2002.

        2.27 Retirement Date. "Retirement Date" means (a) the later of the
Participant's fifty-fifth (55th) birthday or completion of at least five (5)
years of Credited Service; or (b) the later of the last day of the calendar
month in which the Participant's sixty-fifth (65th) birthday occurs or
completion of at least one (1) year of Credited Service.

        2.28 Termination; Termination of Employment. "Termination" or
"Termination of Employment" means the termination of a Participant's employment
with the Company for any reason whatsoever, whether voluntary or involuntary.

        2.29 Transferring Employee. "Transferring Employee" means an "Eligible
Employee" (as defined in the Allergan EDCP) who (a) transferred employment to
the Company before or as of the Effective Date in accordance with the terms of
the Employee Matters Agreement effective as of the Distribution Date, between
Allergan and AMO, and (b) is an Eligible Employee (as defined in Section 2.17)
as of the Effective Date.

        2.30 Unscheduled Withdrawal. "Unscheduled Withdrawal" means a
distribution requested by the Participant and approved by the Committee pursuant
to Article XI of the Plan.

                                  ARTICLE III.
                          ELIGIBILITY AND PARTICIPATION

        3.1 Participation - Eligibility and Initial Period.

               (a) Participation in this Plan is open only to Eligible Employees
        (as defined in Section 2.17) of the Company.

               (b) Each Transferring Employee who is a "Participant" (as defined
        in the Allergan EDCP) immediately prior to the Effective Date shall
        become a Participant in the Plan as of the Effective Date.

               (c) Each Eligible Employee other than a Participant in the Plan
        pursuant to Section 3.1(b) shall be eligible to participate in the Plan
        as of the Effective Date.

               (d) Other than Participants in the Plan pursuant to Section
        3.1(b), each Eligible Employee of the Company, as of the Effective Date
        hereof, may become a Participant for the Deferral Period commencing on
        the Effective Date if he or she submits a properly completed
        Participation Agreement, Deferral Election Form and Investment Election
        Form to the Committee prior to the Effective Date. Any employee of the
        Company who becomes, subsequent to the Effective Date hereof, an
        Eligible Employee, e.g., newly hired or promoted employees in an
        eligible category, may become a Participant for the Deferral Period
        commencing on or after he or she becomes an Eligible

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        Employee if he or she submits a properly completed Participation
        Agreement, Deferral Election Form and Investment Election Form prior to
        such Deferral Period.

        3.2 Participation - Subsequent Entry into Plan.

               (a) An Eligible Employee (other than a Participant in the Plan
        pursuant to Section 3.1(b)) who does not elect to become a Participant
        at the time of initial eligibility as set forth in Section 3.1(d) shall
        remain eligible to become a Participant subsequently as long as he or
        she continues his or her status as an Eligible Employee. In such event,
        the Eligible Employee may become a Participant if he or she submits a
        properly completed Participation Agreement, Deferral Election Form and
        Investment Election Form prior to January 1 of the Deferral Period for
        which it is effective.

               (b) A Participant in the Plan pursuant to Section 3.1(b) whose
        participation in the Plan is terminated pursuant to the last sentence of
        Section 4.1(a) shall remain eligible to become a Participant
        subsequently as long as he or she continues his or her status as an
        Eligible Employee. In such event, the Eligible Employee may become a
        Participant if he or she submits a properly completed Participation
        Agreement, Deferral Election Form and Investment Election Form prior to
        January 1 of the Deferral Period for which it is effective.

                                   ARTICLE IV.
                               DEFERRAL ELECTIONS

        4.1 Deferral Election.

               (a) The Committee shall prescribe procedures to implement
        automatic Deferral Elections for the Participants described in Section
        3.1(b), pursuant to which such a Participant shall be deemed to have
        elected to defer amounts in such portions as were elected by such
        Participant under the Allergan EDCP, as such election was in effect
        immediately prior to the Effective Date. An automatic election under
        this Section 4.1(a) shall be effective as of the first pay period
        following the Effective Date and shall remain in effect until superseded
        by a subsequent Deferral Election Form properly completed and submitted
        by such Participant. Such a subsequent Deferral Election Form shall
        apply to pay periods commencing after the date it is submitted. Amounts
        deferred under this Section 4.1(a) and all other amounts credited to
        such Participant's Deferral Account shall be invested in accordance with
        the Participant's most recent allocation under the Allergan EDCP (to the
        extent such investment allocation options are available under this Plan,
        otherwise in such manner as the Committee shall determine in its sole
        discretion) until superseded by a subsequent Investment Election Form
        properly completed and submitted by such Participant in accordance with
        Section 5.3. Notwithstanding the foregoing, unless such Participant
        submits a properly completed Participation Agreement, Deferral Election
        Form and Investment Election Form within thirty (30) days of the
        Effective Date, the Committee may, in its sole discretion, terminate the
        automatic election under this Section 4.1(a) and make a distribution in
        accordance with the provisions of Section 4.4.

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               (b) For each Deferral Period after initial participation
        commences, a Participant may make a Deferral Election on a voluntary
        basis by properly completing and submitting a Deferral Election Form and
        Investment Election Form prior to the first day (January 1) of the
        Deferral Period for which the Deferral Election is effective. A
        Participant shall not be obligated to make a Deferral Election in each
        Deferral Period, and (subject to the requirements set forth in Sections
        4.2 and 4.3 below) a Participant may change the amount of each future
        Deferral Election. Once a Deferral Period commences for which a Deferral
        Election is made, such Deferral Election shall continue for the entire
        Deferral Period except that it shall terminate on Termination of
        Employment or as otherwise provided in Section 4.4 or Article XI.

        4.2 Maximum Deferral Election. A Participant may elect in the Deferral
Election Form to defer up to one hundred percent (100%) of Base Salary and/or
one hundred percent (100%) of Bonuses earned during the Deferral Period. In its
sole discretion, the Committee may also provide other Deferral Election options,
including that a Participant may elect to defer a specified dollar amount or a
percentage of Bonuses earned during the Deferral Period but limited to the
extent such Bonuses exceed a specified dollar amount. Also, the Committee may
provide for a Deferral Election under which a Participant elects to defer such
amounts as such Participant otherwise would have deferred as "Before Tax
Deposits" (as defined in the AMO 401(k) Plan) under the AMO 401(k) Plan, but
which may not be deferred under the AMO 401(k) Plan as a result of the
limitations imposed under Section 402(g) of the Code. Such deferral election may
be made as a Participant's sole election, or in addition to another deferral
election. A Deferral Election shall be automatically reduced or adjusted if the
Committee determines that such action is necessary or appropriate to meet
Federal, State or other applicable tax withholding obligations or to pay for
benefits or other obligations arising from the Participant's relationship with
the Company.

        4.3 Minimum Deferral Election.

               (a) In order for a Deferral Election Form to be valid, the
        Participant must elect to defer at least five thousand dollars ($5,000)
        (or such other amount as may be designated by the Committee) in the
        Deferral Period from either Base Salary or Bonuses or a combination of
        Base Salary and Bonuses. Thus, Deferral Elections of Base Salary and
        Bonuses for the same Deferral Period shall be aggregated for the purpose
        of determining whether the Participant has elected at least the minimum
        Deferral Election.

               (b) In determining whether the Participant has made the minimum
        Deferral Election, if the amount is stated in the form of a percentage
        of Base Salary or Bonuses, the adequacy of the deferral shall be based
        on the Base Salary and Bonuses earned by the Participant in the Plan
        Year immediately preceding the Deferral Period. The Committee may, in
        its sole discretion, permit Participants to elect to defer amounts in
        the form of a percentage based on anticipated Base Salary and Bonuses.

        4.4 Termination of Deferral. If it is evident that a Participant has not
or will not actually defer the minimum Deferral Election required by Section 4.3
(whether due to Termination of Employment or otherwise), the Committee may, in
its sole discretion, terminate the Deferral Election and distribute the portion
of the Participant's Deferral Account attributable

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to such Deferral Election in a single lump sum payment with investment earnings
or interest credited to the last day of the month preceding distribution at the
Fund Rate.

                                   ARTICLE V.
                                DEFERRAL ACCOUNTS

        5.1 Deferral Accounts.

               (a) Solely for record keeping purposes, a Deferral Account shall
        be maintained for each Participant. The Deferral Account shall be
        credited with the following:

                      (i) the Annual Deferrals at the time such amounts would
               otherwise have been paid to the Participant;

                      (ii) a "Profit Sharing Restoration Credit" equal to the
               excess of (A) such Participant's "Profit Sharing Contribution"
               (as defined in the AMO 401(k) Plan) for such Plan Year under the
               AMO 401(k) Plan, determined as if the Participant's
               "Compensation" (as defined in the AMO 401(k) Plan) had been
               calculated without deducting Annual Deferrals made under this
               Plan, and as if the "Profit Sharing Contribution" (as defined in
               the AMO 401(k) Plan) had been calculated without regard to the
               limitations imposed by Sections 401(a)(4), 401(a)(17) and 415 of
               the Code, over (B) such Participant's actual "Profit Sharing
               Contribution" (as defined in the AMO 401(k) Plan) for such Plan
               Year under the AMO 401(k) Plan;

                      (iii) if a Participant has contributed the maximum "Before
               Tax Deposits" (as defined in the AMO 401(k) Plan) permitted under
               the terms of the AMO 401(k) Plan for a Plan Year, then the
               Participant's Deferral Account shall be credited with a "Matching
               Contribution Restoration Credit" equal to the excess of (A) such
               Participant's "Matching Contributions" (as defined in the AMO
               401(k) Plan) for such Plan Year under the AMO 401(k) Plan,
               determined based on such Participant's "Matched Deposits" (as
               defined in the AMO 401(k) Plan), and as if the Participant's
               "Compensation" (as defined in the AMO 401(k) Plan) had been
               calculated without deducting Annual Deferrals made under this
               Plan, and as if the "Matching Contributions" (as defined in the
               AMO 401(k) Plan) had been calculated without regard to the
               limitations imposed by Sections 401(a)(4), 401(k), 401(m) and 415
               of the Code, over (B) such Participant's actual "Matching
               Contributions" (as defined in the AMO 401(k) Plan) for such Plan
               Year under the AMO 401(k) Plan; and

                      (iv) Discretionary Credits in such amounts as the
               Committee may deem appropriate (but not to exceed two hundred
               thousand dollars ($200,000) for any Participant in any Plan
               Year), on such terms and subject to such further limits or
               conditions as the Board or Committee may prescribe.

               The amounts (if any) to be credited to a Participant's Deferral
        Account pursuant to paragraphs (ii) and (iii) above shall be credited
        after the end of the Plan Year to which

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        such credits relate and after such Participant's actual "Profit Sharing
        Contribution" and actual "Matching Contributions" (each as defined in
        the AMO 401(k) Plan) for such Plan Year under the AMO 401(k) Plan are
        determined, but not later than the end of the Plan Year following the
        Plan Year to which such credits relate.

               (b) Effective as of the Distribution Date, with respect to
        Transferring Employees, the liabilities attributable to the "Deferral
        Accounts" (as defined in the Allergan EDCP) of such Transferring
        Employees as of the Distribution Date are hereby assumed by AMO, subject
        to Allergan reducing to zero the balances in the Transferring Employees'
        "Deferral Accounts" (as defined in the Allergan EDCP). Effective as of
        the Distribution Date, with respect to a Participant who is a
        Transferring Employee, the amount credited to such Participant's
        "Deferral Account" (as defined in the Allergan EDCP) as of the
        Distribution Date shall be credited to such Participant's Deferral
        Account in the Plan, subject to the actions in the preceding sentence
        and subject to the transfer of assets pursuant to Section 15.2(b).

               (c) To the extent amounts credited to such Participant's
        "Deferral Account" in the Allergan EDCP as of the Distribution Date were
        subject to the "Company Rate" (as defined in the Allergan EDCP), the
        Participant may select the Fund Media (and the applicable proportion) to
        which such amounts will be subject under this Plan in lieu of the
        Company Rate, by submitting a properly completed Investment Election
        Form to the Committee prior to the Effective Date (or in another manner
        acceptable to the Committee). If the Participant does not submit an
        Investment Election Form or otherwise select the Fund Media for such
        amounts as described in the preceding sentence, then the amounts
        credited pursuant to this Section 5.1(c) shall be subject to the
        Travelers Money Market Portfolio listed on Appendix A (or, if the
        Travelers Money Market Portfolio is unavailable for any reason, then
        such Fund Media as the Committee shall determine in its sole
        discretion), until superseded by a subsequent Investment Election Form
        properly completed and submitted by such Participant. Amounts credited
        pursuant to this Section 5.1(c) shall be subject to any distribution
        elections made under the Allergan EDCP, except to the extent modified by
        a subsequent Participation Agreement under this Plan.

        5.2 Investment Earnings on Deferral Accounts. The Deferral Account of a
Participant shall be credited with investment earnings at the Fund Rate as
provided in Section 5.3.

        5.3 Participant Investment Elections.

               (a) Any Deferral Election made by a Participant with respect to a
        Deferral Period beginning on or after the Effective Date shall be
        credited with investment earnings at the Fund Rate.

               (b) The Participant may prospectively change the investment
        allocation to Fund Media on a monthly basis in whole or part by
        submitting an Investment Election Form or by using such electronic means
        and under such procedures as the Committee may permit.

                                       8
<PAGE>

        5.4 Fund Media. The initial Fund Media under the Plan as of the
Effective Date shall be as set forth on Appendix A, attached hereto. The
Committee may add or delete Fund Media in its sole discretion from time to time.
Participants must make an investment allocation to Fund Media in whole
percentages equal to one hundred percent (100%), in the aggregate, of the amount
invested in Deferral Accounts.

        5.5 Statement of Accounts. The Committee shall provide to each
Participant periodic statements setting forth the balance of the Deferral
Account maintained for such Participant. Notwithstanding anything contained in
such statements, the provisions of the Plan shall govern exclusively the actual
rate of interest or investment earnings to be credited and paid.

                                   ARTICLE VI.
                               RETIREMENT BENEFITS

        6.1 Entitlement to Deferral Accounts. Upon Termination of Employment on
or after Retirement Date, the Company shall pay to the Participant a retirement
benefit, in the form and manner provided in Section 6.2 below, equal to the
balance of the Participant's Deferral Account with interest or investment
earnings credited at the Fund Rate.

        6.2 Form of Retirement Benefits. The retirement benefit shall be paid in
sixty (60) quarterly installments unless the Participant elects in the
Participation Agreement to have the retirement benefit paid in either a single
lump sum or in twenty (20) or forty (40) quarterly installments.

        6.3 Time of Commencement. A Participant may elect in the Participation
Agreement to have payments begin within sixty (60) days following the date of
Termination of Employment, or, alternatively, (a) on the first business day of
January of the next following calendar year or (b) on the first business day of
January of a later year (not to exceed ten (10) years from the date of
Termination of Employment or, if earlier, the year in which the Participant
attains age seventy (70)). Notwithstanding the foregoing, the commencement of
payments may be delayed (but not more than thirty (30) days) for reasons of
administrative convenience, including, without limitation, in order to complete
any necessary valuation or accounting with respect to the Deferral Account of
the Participant.

        6.4 Change in Payout Timing. A Participant may change his or her
Participation Agreement at any time prior to Termination of Employment in order
to revise the timing of retirement benefits to another method (or over another
period) permitted under Sections 6.2 and 6.3 above. If such a change is made
within a period not greater than twelve (12) months prior to Termination of
Employment (unless Termination of Employment is on account of Disability), there
shall be a ten percent (10%) penalty charged at the time of change against the
Participant's Deferral Account.

                                  ARTICLE VII.
                              TERMINATION BENEFITS

        7.1 Entitlement to Deferral Accounts. Upon Termination of Employment
prior to Retirement Date, the Company shall pay to the Participant a termination
benefit in the form and

                                       9
<PAGE>

manner provided in Section 7.2 below, equal to the balance of the Participant's
Deferral Account with interest or investment earnings credited at the Fund Rate.

        7.2 Form of Termination Benefits. The termination benefit shall be paid
in a single lump sum payment within sixty (60) days following the date of
Termination of Employment or, if otherwise elected in the Participation
Agreement, either (a) on the first business day of January following Termination
of Employment or (b) if at least five (5) years of Credited Service has elapsed,
in five (5) annual installments. If installments are to be paid under this
Section 7.2, they shall commence within sixty (60) days following the date of
Termination of Employment. Notwithstanding the foregoing, the commencement of
payments may be delayed (but not more than thirty (30) days) for reasons of
administrative convenience, including, without limitation, in order to complete
any necessary valuation or accounting with respect to the Deferral Account of
the Participant. In addition, notwithstanding the foregoing, the Company may, in
its sole discretion (except following a Change in Control as defined in Section
14.2), elect to revise the payment of a single lump sum and instead to pay the
termination benefits over a period of three (3) years in annual installments.

                                  ARTICLE VIII.
                                 DEATH BENEFITS

        8.1 Death of Employee Prior to Retirement Date. If a Participant dies
prior to Termination of Employment and before reaching Retirement Date (a) the
balance of the Participant's Deferral Election for the Deferral Period, if any,
will be credited to his or her Deferral Account and (b) the Participant's
Beneficiary will receive payment of the Participant's Deferral Account in a
single lump sum if the balance is fifty thousand dollars ($50,000) or less, and
in either a single lump sum or in twenty (20) or forty (40) quarterly
installments (as elected by the Participant in his or her Participation
Agreement) if the balance is more than fifty thousand dollars ($50,000).
Investment earnings on the Deferral Account not yet paid at death shall be
credited at the Fund Rate.

        8.2 Death of Employee on or After Retirement Date. If a Participant dies
prior to Termination of Employment and on or after reaching Retirement Date (a)
the balance of the Participant's Deferral Election for the Deferral Period, if
any, will be credited to his or her Deferral Account and (b) the Participant's
Beneficiary will receive payment of the Participant's Deferral Account in a
single lump sum payment or in twenty (20), forty (40) or sixty (60) quarterly
installments (as elected by the Participant for distribution of retirement
benefits in his or her Participation Agreement). The Beneficiary may request
that the Committee accelerate installment payments into a single lump sum
payment and the Committee shall decide, in its sole discretion, whether to so
accelerate based on factors, such as the Beneficiary's needs and Plan liquidity,
deemed appropriate under the circumstances by the Committee. Investment earnings
on the Deferral Account not yet paid at death shall be credited at the Fund
Rate.

        8.3 Death After Termination of Employment. If a Participant dies after
Termination of Employment, the Participant's Beneficiary will receive payment of
the Participant's Deferral Account (or remaining unpaid portion if distributions
have already begun) in the same manner and in all respects as the Participant
was entitled to receive (if the Participant continued to live) pursuant to the
terms of Article VI (Retirement Benefits) or Article VII (Termination Benefits)

                                       10
<PAGE>

whichever is applicable. Notwithstanding the foregoing, if, and only if, the
Participant dies after having reached Retirement Date at the time of Termination
of Employment, the Beneficiary may request that the Committee accelerate any
remaining installment payments into a single lump sum payment and the Committee
shall decide, in its sole discretion, whether to so accelerate based on factors,
such as the Beneficiary's needs and Plan liquidity, deemed appropriate under the
circumstances by the Committee.

        8.4 Investments After Death. Notwithstanding Sections 8.1 through 8.3,
the Committee shall transfer the remaining unpaid portions of a deceased
Participant's Deferral Account into one of the Fund Media which is a fixed
income investment at the time which is six (6) months from the death of the
Participant unless the Committee receives other investment directions from a
duly appointed representative or executor of the deceased Participant. The
Committee shall have no liability or responsibility with respect to the absolute
or relative return of such Fund Media during the period commencing on the date
that the amount is so invested and ending on the date of payment of all amounts
on deposit in the Participant's Deferral Account to the Participant's
Beneficiary.

                                   ARTICLE IX.
                                   DISABILITY

        9.1 Continuation of Participation. If a Participant suffers a
Disability, the Participant shall be deemed not to incur a Termination of
Employment if, and only as long as, he or she continues on the payroll of the
Company for Base Salary or Bonuses. In such event, the Participant may continue
participation in the Plan on the same basis as other Participants, provided that
payments to the Participant made under programs of the Company for Short-Term
Disability, Long-Term Disability, or sick pay may not be treated as Base Salary
or Bonuses for purposes of a Deferral Election.

        9.2 Availability of Financial Hardship Withdrawals. Consistent with
Section 9.1, in determining the availability of a Financial Hardship withdrawal,
a Participant who suffers a Disability shall not be deemed to incur a
Termination of Employment until the time that he or she ceases to receive Base
Salary or Bonuses on the payroll of the Company.

                                   ARTICLE X.
                            IN-SERVICE DISTRIBUTIONS

        10.1 Election to Take In-Service Distributions. A Participant may elect
in each Deferral Election Form, for that particular Deferral Election, to
receive in the future an In-Service Distribution from his or her Deferral
Account.

        10.2 Maximum In-Service Distribution. An In-Service Distribution must be
equal to one hundred percent (100%) of the amount of the particular Deferral
Election. Investment earnings on any In-Service Distributions shall be credited
at the Fund Rate. Notwithstanding the election under this Article, if benefit
payments with respect to a Deferral Election are otherwise made at a time
earlier than elected under an In-Service Distribution, for example due to an
Unscheduled Withdrawal, the In-Service Distribution shall be superseded by such
earlier distribution event and shall be reduced or eliminated to such extent.

                                       11
<PAGE>

        10.3 Timing of In-Service Distribution. The In-Service Distribution
shall be paid to the Participant in a single lump sum, or in two (2), three (3)
or four (4) annual installments as elected by the Participant in the Deferral
Election Form. However, in no event shall the In-Service Distribution be paid or
commence at any time before the second (2nd) year following the first business
day of the Deferral Period to which the In-Service Distribution relates. A
Participant may elect to change the date on which an In-Service Distribution is
to be paid or commence, provided that no more than two (2) such changes shall be
permitted, and provided further that the election must be made with at least
twelve (12) months advance notice under procedures adopted by the Committee.

                                   ARTICLE XI.
                 UNSCHEDULED AND FINANCIAL HARDSHIP WITHDRAWALS

        11.1 Unscheduled Withdrawals. A Participant may take Unscheduled
Withdrawals (but no more than one (1) in any Plan Year) from his or her Deferral
Account. The amount of any Unscheduled Withdrawal shall be equal to the portion
of the Deferral Account attributable to one or more Deferral Elections that have
been previously completed and shall include investment earnings at the Fund
Rate.

        11.2 Financial Hardship Withdrawal. A Participant may request that the
Committee permit him or her to take a withdrawal or withdrawals on account of
Financial Hardship (as defined in Section 2.19). In such event, the Committee
shall determine in its sole discretion whether a Financial Hardship exists and,
if it so determines, whether the Participant should be permitted to take such a
withdrawal. The Committee shall also determine the amount of the permitted
withdrawal, which shall not exceed the amount necessary to address the Financial
Hardship, and whether the Participant must reduce or cease a current Deferral
Election, if any, as a condition for a Financial Hardship withdrawal.

        11.3 Penalty for Unscheduled Withdrawals. There shall be a penalty
charged against the Deferral Account of a Participant at the time of an
Unscheduled Withdrawal. The penalty shall be equal to ten percent (10%) of the
Unscheduled Withdrawal, except the penalty shall be five percent (5%) if the
Unscheduled Withdrawal is made within two (2) years following a Change in
Control (as defined in Section 14.2). In addition to the foregoing penalty, upon
taking an Unscheduled Withdrawal a Participant's current Deferral Election, if
any, shall automatically be deemed terminated and the Participant may not make a
new Deferral Election for the next following Deferral Period.

                                  ARTICLE XII.
                        ADDITIONAL BENEFIT PAYMENT RULES

        12.1 Small Benefit Payments. Notwithstanding any other provision of the
Plan, in the event that the payment of a Deferral Account (or total remaining
installments under any method) to a Participant or Beneficiary is fifty thousand
dollars ($50,000) or less, the Company may, in its sole discretion, elect to
make such payment(s) in a single lump sum payment as soon as administratively
practicable.

                                       12
<PAGE>

        12.2 Constructive Receipt. The Committee may change any election or
option available under the Plan, or the form or timing of any benefit payment,
if the Committee determines, based on the advice of counsel or other consultants
to the Company, that such a change is necessary or advisable in order to avoid
or limit the risk of adverse tax consequences to Participants or Beneficiaries
based on application of the doctrine of "constructive receipt" or a similar
Federal or State tax principle.

        12.3 Postponement of Payment. If a distribution of all or part of a
Deferral Account would not be deductible to the Company because of the
restrictions imposed by Section 162(m) of the Code (or any successor provision),
such distribution shall be postponed (to the extent necessary) to the first
business day of the first Plan Year in which the limitation on deductibility
would not apply. Any postponed distribution under this Section 12.3 shall be
credited with interest or investment earnings at the rate otherwise applicable
to the Deferral Account at the time when the distribution was originally
scheduled for payment.

        12.4 Commencement Date and Investment Crediting for Benefit Payments.
Unless the Plan specifically provides otherwise, benefit payments (whether a
single lump sum payment or installments) shall commence to a Participant or
Beneficiary no later than sixty (60) days from the date of the event, e.g.,
Termination of Employment or request for Unscheduled Withdrawal, that gives rise
to such payments. Installment payments shall be made on the same day of each
quarter or year (depending on whether quarterly or annual installments apply)
following the initial payment. Investment earnings shall be credited to the date
that the Committee selects in its sole discretion for valuation for distribution
purposes and the Committee shall make appropriate adjustments to reflect
investment earnings where benefit payments are to be paid in installments.

                                  ARTICLE XIII.
                           ADMINISTRATION OF THE PLAN

        13.1 Administration by Committee. This Plan shall be administered by a
committee (the "Committee") which is appointed by the Corporate Benefits
Committee of AMO, and which may, but need not, consist of some or all of the
members of the Corporate Benefits Committee itself. A member of the Committee
may be a Participant in this Plan; provided, however, that any action to be
taken by the Committee solely with respect to the particular interest in this
Plan of a Committee member shall be taken by the remaining members of the
Committee.

        13.2 Committee Authority; Rules and Regulations. The Committee shall
have discretionary authority to (a) make, amend, interpret and enforce all
appropriate rules and regulations for the administration of the Plan, (b) decide
or resolve any and all questions, including interpretations of the Plan, as may
arise in connection with the Plan, and (c) take or approve all such other
actions relating to the Plan (other than amending or terminating the Plan or
making a final determination concerning an application for Plan benefits as set
forth in Section 13.6 hereof); provided, however, that the Board may, by written
notice to the Committee, withdraw all or any part of the Committee's authority
at any time, in which case such withdrawn authority shall immediately revest in
the Board. Subject to Section 13.6 hereof, the decision or action of the
Committee in respect of any question arising out of or in connection with the
administration, interpretation and application of this Plan and the rules and
regulations

                                       13
<PAGE>

promulgated hereunder shall be final, conclusive and binding upon all persons
having any interest in the Plan.

        13.3 Appointment of Agents. In the administration of the Plan, the Board
and the Committee may from time to time employ agents (which may include
officers and employees of the Company) and delegate to them such administrative
duties as the Board and the Committee see fit and may from time to time consult
with counsel who may be counsel to the Company.

        13.4 Application for Benefits. The Committee may require any person
claiming benefits under the Plan to submit an application therefor, together
with such documents and information as the Committee may require. In the case of
any person suffering from a disability or other condition which prevents such
person from making personal application for benefits, the Committee may, in its
discretion, permit application to be made by another person acting on his or her
behalf. Notwithstanding the foregoing, if the Committee shall have all
information necessary to determine the amount and form of Plan benefits payable
to a Participant or Beneficiary who is entitled to benefit payments under this
Plan (including, to the extent applicable and without limiting the generality of
the foregoing, the name, age, sex and proper mailing address of all parties
entitled to benefit payments), then the failure of a Participant or Beneficiary
to file an application for benefits shall not cause the Committee to defer the
commencement of benefit payments beyond the benefit commencement date required
under this Plan.

        13.5 Action on Application. Within sixty (60) days following receipt of
an application for benefits and all necessary documents and information, the
Committee shall furnish the claimant with written notice of the decision
rendered with respect to such application. Should special circumstances require
an extension of time for processing the claim, written notice of the extension
shall be furnished to the claimant prior to the expiration of the initial sixty
(60) day period. The notice shall indicate the special circumstances requiring
an extension of time and the date by which a final decision is expected to be
rendered. In no event shall the period of the extension exceed ninety (90) days
from the end of the initial sixty (60) day period. In the case of a denial of
the claimant's application, the written notice thereof shall set forth specific
reasons for the denial, with references to the Plan provisions upon which the
denial is based, a description of any additional information or material
necessary to perfect the application (together with an explanation why such
material or information is necessary), and an explanation of the Plan's claim
review procedure.

        13.6 Appeal of Committee Decision.

               (a) A claimant who does not agree with the decision rendered by
        the Committee with respect to his application may appeal such decision
        to the Corporate Benefits Committee. The appeal must be in writing and
        must be filed with the Corporate Benefits Committee within sixty-five
        (65) days after the date of notice of the Committee's decision with
        respect to the application, or, if the application has neither been
        approved nor denied within the applicable period provided in Section
        13.5 hereof, then the appeal must be filed within sixty-five (65) days
        after the expiration of such applicable period.

                                       14
<PAGE>

               (b) The claimant may request that his or her application be given
        full and fair review by the Corporate Benefits Committee. The claimant
        may review all pertinent documents and submit issues and comments to the
        Corporate Benefits Committee in writing in connection with the appeal.
        The decision of the Corporate Benefits Committee shall be made promptly,
        and not later than sixty (60) days after the Corporate Benefits
        Committee's receipt of a request for review and all supporting
        documentation and information to be submitted by the claimant, unless
        special circumstances require an extension of time for processing, in
        which case a decision shall be rendered as soon as possible, but not
        later than one hundred twenty (120) days after receipt of a request for
        review and such supporting documentation and information. The Corporate
        Benefits Committee's decision on review shall be in writing and shall
        include specific reasons for the decision, written in a manner
        calculated to be understood by the claimant, with specific reference to
        the pertinent Plan provisions upon which the decision is based.

                                  ARTICLE XIV.
                                CHANGE IN CONTROL

        14.1 Effect of a Change in Control. Notwithstanding any other provision
of the Plan, in the event that a Change in Control (as defined in Section 14.2)
occurs on or after the Effective Date hereof, the Company may not amend or
terminate the Plan in any manner in order to (a) change downward the method of
determining the Fund Rate of any Fund Medium to be credited to the Deferral
Accounts of Participants thereafter without the written consent of such
Participants or (b) modify or eliminate any distribution method, selection of
Fund Media, option or election (including all such methods, options and
elections set forth in Articles V through XII of the Plan) available to
Participants with respect to Deferral Accounts and Deferral Elections that exist
on the date such Change in Control occurs.

        14.2 Change in Control. As used in this Plan, "Change in Control" shall
mean the following and shall be deemed to occur if any of the following events
occur:

               (a) Any "person," as such term is used in Sections 13(d) and
        14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
        Act") (a "Person"), is or becomes the "beneficial owner," as defined in
        Rule 13d-3 under the Exchange Act (a "Beneficial Owner"), directly or
        indirectly, of securities of AMO representing (i) twenty percent (20%)
        or more of the combined voting power of AMO's then outstanding voting
        securities, which acquisition is not approved in advance of the
        acquisition or within thirty (30) days after the acquisition by a
        majority of the Incumbent Board (as hereinafter defined) or (ii)
        thirty-three percent (33%) or more of the combined voting power of AMO's
        then outstanding voting securities, without regard to whether such
        acquisition is approved by the Incumbent Board;

               (b) Individuals who, as of the Effective Date hereof, constitute
        the Board of Directors (the "Incumbent Board") cease for any reason to
        constitute at least a majority of the Board of Directors, provided that
        any person becoming a director subsequent to the Effective Date hereof
        whose election, or nomination for election by AMO's stockholders, is
        approved by a vote of at least a majority of the directors then
        comprising the Incumbent Board (other than an election or nomination of
        an individual whose initial

                                       15
<PAGE>

        assumption of office is in connection with an actual or threatened
        election contest relating to the election of the directors of AMO, as
        such terms are used in Rule 14a-11 of Regulation 14A promulgated under
        the Exchange Act) shall, for the purposes of this Plan, be considered as
        though such person were a member of the Incumbent Board of AMO;

               (c) The consummation of a merger, consolidation or reorganization
        involving AMO, other than one which satisfies both of the following
        conditions:

                      (i) a merger, consolidation or reorganization which would
               result in the voting securities of AMO outstanding immediately
               prior thereto continuing to represent (either by remaining
               outstanding or by being converted into voting securities of
               another entity) at least fifty-five percent (55%) of the combined
               voting power of the voting securities of AMO or such other entity
               resulting from the merger, consolidation or reorganization (the
               "Surviving Corporation") outstanding immediately after such
               merger, consolidation or reorganization and being held in
               substantially the same proportion as the ownership in AMO's
               voting securities immediately before such merger, consolidation
               or reorganization, and

                      (ii) a merger, consolidation or reorganization in which no
               Person is or becomes the Beneficial Owner, directly or
               indirectly, of securities of AMO representing twenty percent
               (20%) or more of the combined voting power of AMO's then
               outstanding voting securities; or

               (d) The stockholders of AMO approve a plan of complete
        liquidation of AMO or an agreement for the sale or other disposition by
        AMO of all or substantially all of AMO's assets.

        Notwithstanding the preceding provisions of this Section 14.2, a Change
in Control shall not be deemed to have occurred if the Person described in the
preceding provisions of this Section 14.2 is (i) an underwriter or underwriting
syndicate that has acquired the ownership of any of AMO's then outstanding
voting securities solely in connection with a public offering of AMO's
securities, (ii) AMO or any subsidiary of AMO or (iii) an employee stock
ownership plan or other employee benefit plan maintained by AMO (or any of its
affiliated companies) that is qualified under the provisions of the Code. In
addition, notwithstanding the preceding provisions of this Section 14.2, a
Change in Control shall not be deemed to have occurred if the Person described
in the preceding provisions of this Section 14.2 becomes a Beneficial Owner of
more than the permitted amount of outstanding securities as a result of the
acquisition of voting securities by AMO which, by reducing the number of voting
securities outstanding, increases the proportional number of shares beneficially
owned by such Person, provided, that if a Change in Control would occur but for
the operation of this sentence and such Person becomes the Beneficial Owner of
any additional voting securities (other than through the exercise of options
granted under any stock option plan of the Company or through a stock dividend
or stock split), then a Change in Control shall occur. Finally, notwithstanding
the preceding provisions of this Section 14.2, a Change in Control shall not be
deemed to have occurred as a result of the Distribution.

                                       16
<PAGE>

                                   ARTICLE XV.
                 ESTABLISHMENT OF TRUST AND INSURANCE CONTRACTS

        15.1 Establishment of Trust. Contemporaneous with the adoption of this
Plan, the Company has established the Trust Agreement for Advanced Medical
Optics, Inc. Executive Deferred Compensation Plan (the "Trust" or "Trust
Agreement"). The Trust created thereunder is a grantor trust within the meaning
of subpart E, part I, subchapter J, chapter 1, subtitle A of the Code. First
American Trust, FSB has been named as Trustee under such Trust Agreement. The
provisions of the Trust Agreement are incorporated herein by reference.

        15.2 Funding of Trust.

               (a) All amounts of Base Salary or Bonuses that are subject to
        Deferral Elections by Participants under this Plan shall be contributed
        by the Company to the Trust (or directly to insurance contracts or other
        investment vehicles to be held by the Trustee as part of the Trust's
        assets) at or about the same time as such amounts are credited to the
        Deferral Accounts of Participants. All amounts of Profit Sharing
        Restoration Credits shall be contributed by the Company to the Trust (or
        directly to insurance contracts or other investment vehicles to be held
        by the Trustee as part of the Trust's assets) no later than ninety (90)
        days after all "Profit Sharing Contributions" (as defined in the AMO
        401(k) Plan), if any, under the AMO 401(k) Plan are made. All amounts of
        Matching Contribution Restoration Credits shall be contributed by the
        Company to the Trust (or directly to insurance contracts or other
        investment vehicles to be held by the Trustee as part of the Trust's
        assets) no later than ninety (90) days after all "Matching
        Contributions" (as defined in the AMO 401(k) Plan, and including
        additional "Matching Contributions" under Section 5.3(b) of the AMO
        401(k) Plan), if any, under the AMO 401(k) Plan are made. All amounts of
        a Discretionary Credit shall be contributed by the Company to the Trust
        (or directly to insurance contracts or other investment vehicles to be
        held by the Trustee as part of the Trust's assets) no later than ninety
        (90) days after the determination of such Discretionary Credit.

               (b) In addition, effective upon the Distribution Date, the
        Company shall cause the assets attributable to Transferring Employees'
        Deferral Accounts under the Allergan EDCP to be transferred to the Trust
        from the "Trust" (as defined in the Allergan EDCP). Subject to such
        transfer of assets, Allergan shall have no further liability to any
        Transferring Employee with respect to his or her Deferral Account under
        the Allergan EDCP or with respect to such transferred assets, and AMO
        shall assume such liability.

        15.3 Investment in Insurance Contracts. The Committee shall direct the
Trustee to invest the majority or all of the assets of the Trust in life
insurance contracts, to be selected by the Committee, on the lives of
Participants. In order for a Participant's Participation Agreement to be
effective, the Committee may require that each Participant cooperate in signing
an insurance application, submit to medical examination, and provide any
relevant information to third parties, including the insurance company(ies) or
outside consultants. Such information shall be held in confidence by those who
receive it and such information shall not be provided to the Committee or the
Company. Participation shall not be denied to an Eligible Employee because he or
she is not insurable or must be rated in order for insurance to be issued.

                                       17
<PAGE>

Notwithstanding any other provision in this Plan, if insurance is denied or
discontinued because a Participant fails to disclose (or makes a material
misrepresentation of) medical or other information, or if the Participant
commits suicide during the first two (2) years of participation in the Plan, any
amounts which are deferred by the Participant under a Deferral Election shall be
repaid to the Participant with investment earnings credited at the Fund Rate,
and no other benefits shall be due to the Participant.

        15.4 Investment in Fund Media. With respect to assets of the Trust
attributable to Deferral Elections where the Fund Rate applies, the Committee
may provide, in its sole discretion, methods by electronic means or otherwise
for Participants (or the Committee where the Plan so provides) to make or change
investment decisions consistent with the terms of the Plan.

                                  ARTICLE XVI.
                            MISCELLANEOUS PROVISIONS

        16.1 Designation of Beneficiary.

               (a) A Participant shall be entitled to designate one or more
        individuals or entities, in any combination, as his or her "Beneficiary"
        or "Beneficiaries" to receive any Plan payments to which such
        Participant is entitled as of, or by reason of, his or her death. Any
        such designation may be made or changed at any time prior to the
        Participant's death by written notice filed with the Committee, with
        such written notice to be in such form and contain such information as
        the Committee may from time to time determine. In the event that either
        (i) a Beneficiary designation is not on file at the date of a
        Participant's death, (ii) no Beneficiary survives the Participant, or
        (iii) no Beneficiary is living at the time any payment becomes payable
        under this Plan, then, for purposes of making any further payment of any
        unpaid benefits under this Plan, such Participant's Beneficiary or
        Beneficiaries shall be deemed to be the estate of the Participant.

               (b) With respect to a Participant who is a Transferring Employee,
        the "Beneficiary" or "Beneficiaries" (as defined in the Allergan EDCP),
        if any, designated by such Participant under the Allergan EDCP, as
        determined immediately prior to the Effective Date, shall be the
        Beneficiary or Beneficiaries of such Participant, unless such
        Transferring Employee revokes such designation on or after the Effective
        Date.

        16.2 Payments During Incapacity. In the event a Participant (or
Beneficiary) is under mental or physical incapacity at the time of any payment
to be made to such Participant (or Beneficiary) pursuant to this Plan, any such
payment may be made to the conservator or other legally appointed personal
representative having authority over and responsibility for the person or estate
of such Participant (or Beneficiary), as the case may be, and for purposes of
such payment references in this Plan to the Participant (or Beneficiary) shall
mean and refer to such conservator or other personal representative, whichever
is applicable. In the absence or any lawfully appointed conservator or other
personal representative of the person or estate of the Participant (or
Beneficiary), any such payment may be made to any person or institution that has
apparent responsibility for the person and/or estate or the Participant (or
Beneficiary) as

                                       18
<PAGE>

determined by the Committee. Any payment made in accordance with the provisions
of this Section 16.2 to a person or institution other than the Participant (or
Beneficiary) shall be deemed for all purposes of this Plan as the equivalent of
a payment to such Participant (or Beneficiary), and the Company shall have no
further obligation or responsibility with respect to such payment.

        16.3 Prohibition Against Assignment. Except as otherwise expressly
provided in Sections 16.1 and 16.2 hereof, the rights, interests and benefits of
a Participant under this Plan (a) may not be sold, assigned, transferred,
pledged, hypothecated, gifted, bequeathed or otherwise disposed of to any other
party by such Participant or any Beneficiary, executor, administrator, heir,
distributee or other person claiming under such Participant, and (b) shall not
be subject to execution, attachment or similar process. Any attempted sale,
assignment, transfer, pledge, hypothecation, gift, bequest or other disposition
of such rights, interests or benefits contrary to the foregoing provisions of
this Section 16.3 shall be null and void and without effect.

        16.4 Binding Effect. The provisions of this Plan shall be binding upon
the Company, the Participants and any successor-in-interest to the Company or to
any Participant.

        16.5 No Transfer of Interest. Other than as provided in Article XV and
in the Trust Agreement, benefits under this Plan shall be payable solely from
the general assets of the Company and no person shall be entitled to look to any
source for payment of such benefits other than the general assets of the
Company. The Company shall have and possess all title to, and beneficial
interest in, any and all funds or reserves maintained or held by the Company on
account of any obligation to pay benefits as required under this Plan, whether
or not earmarked by the Company as a fund or reserve for such purpose; any such
funds or reserves shall be subject to the claims of the creditors of the
Company, and the provisions of this Plan are not intended to create, and shall
not be interpreted as vesting, in any Participant, Beneficiary or other person,
any right to or beneficial interest in any such funds or reserves.

        16.6 Amendment or Termination of the Plan. The Company, by action of its
Board of Directors, may amend this Plan from time to time in any respect that it
deems appropriate or desirable, and may terminate this Plan at any time;
provided, however, that any such Plan amendment or Plan termination shall not,
without a Participant's written consent, be given effect with respect to such
Participant to the extent such Plan amendment or Plan termination operates to
reduce or eliminate (except to the extent that amounts are distributed under the
Plan) such Participant's Deferral Account as of the date of such amendment or
termination. In addition, if the Board amends the Plan so as to make a change in
the formula for determining the Fund Rate of any Fund Medium to be credited
under the Plan, such amendment shall not become effective until thirty (30) days
advance written notice is given to Participants.

        16.7 No Right to Employment. This Plan is voluntary on the part of the
Company, and the Plan shall not be deemed to constitute an employment contract
between the Company and any Participant, nor shall the adoption or existence of
the Plan or any provision contained in the Plan be deemed to be a required
condition of the employment of any Participant. Nothing contained in this Plan
shall be deemed to give any Participant the right to continued employment with
the Company, and the Company may terminate the employment of any Participant at
any

                                       19
<PAGE>

time, in which case the Participant's rights arising under this Plan shall be
only those expressly provided under the terms of this Plan.

        16.8 Notices. All notices, requests, or other communications
(hereinafter collectively referred to as "Notices") required or permitted to be
given hereunder or which are given with respect to this Plan shall be in writing
and may be personally delivered, or may be deposited in the United States mail,
postage prepaid and addressed as follows:

             To the Company               Through August 2002:
             or the Committee at:         Advanced Medical Optics, Inc.
                                          Attention: Administrative Committee
                                          (Executive Deferred Compensation Plan)
                                          2525 Dupont Drive
                                          Irvine, California 92612
                                          cc: General Counsel

                                          Effective September 2002:
                                          Advanced Medical Optics, Inc.
                                          Attention: Administrative Committee
                                          (Executive Deferred Compensation Plan)
                                          1700 E. St. Andrew Place
                                          P. O. Box 25162
                                          Santa Ana, California  92799-5162
                                          cc: General Counsel

             To Participant at:           The Participant's residential mailing
                                          address as reflected in the Company's
                                          employment records

A Notice which is delivered personally shall be deemed given as of the date of
personal delivery, and a Notice mailed as provided herein shall be deemed given
on the second business day following the date so mailed. Any Participant may
change his or her address for purposes of Notices hereunder pursuant to a Notice
to the Committee, given as provided herein, advising the Committee of such
change. The Company and/or the Committee may at any time change its address for
purposes of Notices hereunder pursuant to a Notice to all Participants, given as
provided herein, advising the Participants of such change.

        16.9 Governing Law. This Plan shall be governed by, interpreted under,
and construed and enforced in accordance with ERISA and, to the extent
applicable, the internal laws (and not the laws pertaining to conflicts or
choice of laws), of the State of California applicable to agreements made and to
be performed wholly within the State of California.

        16.10 Titles and Headings; Gender of Terms. Article and Section headings
herein are for reference purposes only and shall not be deemed to be part of the
substance of this Plan or in any way to enlarge or limit the meaning or
interpretation of any provision in this Plan. Use in this Plan of the masculine,
feminine or neuter gender shall be deemed to include each of the omitted genders
if the context so requires.

                                       20
<PAGE>

        16.11 Severability. In the event that any provision of this Plan is
found to be invalid or otherwise unenforceable by a court or other tribunal of
competent jurisdiction, such invalidity or unenforceability shall not be
construed as rendering any other provision contained herein invalid or
unenforceable, and all such other provisions shall be given full force and
effect to the same extent as though the invalid and unenforceable provision was
not contained herein.

                  [Remainder of page intentionally left blank]

                                       21
<PAGE>

        16.12 Tax Effect of Plan. The Company does not warrant any tax benefit
nor any financial benefit under the Plan. Without limiting the foregoing,
directors, officers, and employees of the Company (other than in their capacity
as Participants) shall be held harmless by the Company from, and shall not be
subject to any liability on account of, any Federal or State tax consequences or
any consequences under ERISA of any determination as to the amount of Plan
benefits to be paid, the method by which Plan benefits are paid, the persons to
whom Plan benefits are paid, or the commencement or termination of the payment
of Plan benefits.

        IN WITNESS WHEREOF, the Company has caused this Plan to be executed by
its duly authorized officer effective as of the Effective Date hereof.

                                     ADVANCED MEDICAL OPTICS, INC.,
                                     a Delaware corporation

                                     By:    ____________________________________
                                     Name:  ____________________________________
                                     Its:  _____________________________________

                                       22
<PAGE>

                                   APPENDIX A

                                   FUND MEDIA

        The following are designated as the initial Fund Media as of the
Effective Date subject to addition or deletion as set forth in Section 5.4 of
the Plan:

Scudder VIT EAFE Equity Index Fund
Capital Appreciation Fund (Subadvisor: Janus)
Putnam VT Small Cap Value Fund -- Class 1B
Equity Income Portfolio (Fidelity)
Equity Index Portfolio
Fidelity VIP II Asset Manager Portfolio
PIMCO Total Return -- Administration Class
Travelers Money Market Portfolio

        This Appendix A shall be changed automatically to reflect the current
Fund Media when the Committee adds or deletes Fund Media in accordance with
Section 5.4 of the Plan.

                                      A-1<PAGE>

                                                                     EXHIBIT 4.1

                          LYONDELL CHEMICAL COMPANY,

                    the SUBSIDIARY GUARANTORS party hereto

                                      and

                             THE BANK OF NEW YORK,

                                  as Trustee

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

                                   INDENTURE

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

                          % Senior Secured Notes Due
<PAGE>

                               TABLE OF CONTENTS

                               -----------------
<TABLE>
<CAPTION>
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                                                                                             ----
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                                            ARTICLE 1
                                            ---------
                     Definitions and Other Provisions of General Application
                     -------------------------------------------------------

Section 1.01.  Definitions.................................................................     1
Section 1.02.  Other Definitions...........................................................    27
Section 1.03.  Rules of Construction.......................................................    28
Section 1.04.  Incorporation by Reference of TIA...........................................    29
Section 1.05.  Conflict with TIA...........................................................    29
Section 1.06.  Compliance Certificates and Opinions........................................    29
Section 1.07.  Form of Documents Delivered to Trustee......................................    30
Section 1.08.  Acts of Noteholders; Record Dates...........................................    31
Section 1.09.  Notices, Etc., to Trustee and Company.......................................    33
Section 1.10.  Notices to Holders; Waivers.................................................    33
Section 1.11.  Effect of Headings and Table of Contents....................................    33
Section 1.12.  Successors and Assigns......................................................    33
Section 1.13.  Separability Clause.........................................................    34
Section 1.14.  Benefits of Indenture.......................................................    34
Section 1.15.  Governing Law...............................................................    34
Section 1.16.  Legal Holidays..............................................................    34
Section 1.17.  No Personal Liability of Directors, Officers, Employees,
          Incorporators and Stockholders ..................................................    34
Section 1.18.  Exhibits and Schedules......................................................    34
Section 1.19.  Counterparts................................................................    34

                                            ARTICLE 2
                                            ---------
                                           Note Forms
                                           ----------

Section 2.01.  Forms Generally.............................................................    35
Section 2.02.  Form of Trustee' Certificate of Authentication..............................    35
Section 2.03.  Global Note Legend..........................................................    36

                                            ARTICLE 3
                                            ---------
                                            The Notes
                                            ---------

Section 3.01.  Title and Terms.............................................................    36
Section 3.02.  Denominations...............................................................    37
Section 3.03.  Execution, Authentication and Delivery and Dating...........................    37
Section 3.04.  Temporary Notes.............................................................    38
Section 3.05.  Registration, Registration of Transfer and Exchange.........................    38
Section 3.06.  Mutilated, Destroyed, Lost and Stolen Notes.................................    39
Section 3.07.  Payment of Interest Rights Preserved........................................    40
Section 3.08.  Persons Deemed Owners.......................................................    41
Section 3.09.  Cancellation................................................................    41
Section 3.10.  Computation of Interest.....................................................    41
</TABLE>

<PAGE>

<TABLE>
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Section 3.11.  CUSIP Numbers...............................................................    41
Section 3.12.  Book-entry Provisions for Global Notes......................................    42

                                            ARTICLE 4
                                            ---------
                                            Covenants
                                            ---------

Section 4.01.  Payment of Principal, Premium and Interest..................................    43
Section 4.02.  Maintenance of Office or Agency.............................................    43
Section 4.03.  Money for Payments to Be Held in Trust......................................    44
Section 4.04.  SEC Reports.................................................................    45
Section 4.05.  Certificates to Trustee.....................................................    45
Section 4.06.  Limitation on Indebtedness..................................................    46
Section 4.07.  Limitation on Restricted Payments...........................................    50
Section 4.08.  Limitation on Dividend and other Payment Restrictions Affecting
     Restricted Subsidiaries and Joint Ventures ...........................................    56
Section 4.09.  Limitation on Sales of Assets...............................................    58
Section 4.10.  Limitation on Affiliate Transactions........................................    60
Section 4.11.  Limitation on Liens.........................................................    61
Section 4.12.  Equal and Ratable Liens.....................................................    62
Section 4.13.  No Amendment to Subordination Provisions....................................    62
Section 4.14.  Repurchase of Notes upon a Change in Control................................    62
Section 4.15.  Limitation on Sale and Leaseback Transactions...............................    63
Section 4.16.  Limitation on Line of Business..............................................    63
Section 4.17.  Limitation on Accounts Receivable Facilities................................    63
Section 4.18.  Limited Applicability of Covenants when Notes are Rated Investment-Grade....    64
Section 4.19.  Existence...................................................................    64
Section 4.20.  Payment of Taxes and Other Claims...........................................    64
Section 4.21.  Maintenance of Properties and Insurance.....................................    64
Section 4.22.  Limitation on Issuance of Guarantees by Restricted Subsidiaries.............    65
Section 4.23.  Payments for Consents.......................................................    65

                                            ARTICLE 5
                                            ---------
                            Consolidation, Merger or Sale of Assets
                            ----------------------------------------

Section 5.01.  Consolidation, Merger or Sale of Assets by the Company......................    66
Section 5.02.  Successor Company Substituted...............................................    67
Section 5.03.  Consolidation, Merger or Sale of Assets by a Subsidiary Guarantor...........    67
Section 5.04.  Opinion of Counsel to Trustee...............................................    68

                                           ARTICLE 6
                                           ---------
                                           Remedies
                                           --------
Section 6.01.  Events of Default...........................................................    68
Section 6.02.  Acceleration................................................................    70
</TABLE>

                                           ii
<PAGE>

<TABLE>
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Section 6.03.  Other Remedies..............................................................    70
Section 6.04.  Waiver of Past Defaults.....................................................    70
Section 6.05.  Control by Majority.........................................................    71
Section 6.06.  Limitation on Suits.........................................................    71
Section 6.07.  Rights of Holders to Receive Payment........................................    71
Section 6.08.  Collection Suit by Trustee..................................................    71
Section 6.09.  Trustee May File Proofs of Claim............................................    71
Section 6.10.  Priorities..................................................................    72
Section 6.11.  Undertaking for Costs.......................................................    72
Section 6.12.  Restoration of Rights and Remedies..........................................    73
Section 6.13.  Rights and Remedies Cumulative..............................................    73
Section 6.14.  Waiver of Stay, Extension or Usury Laws.....................................    73

                                           ARTICLE 7
                                           ---------
                                          The Trustee
                                          -----------

Section 7.01.  Certain Duties and Responsibilities.........................................    73
Section 7.02.  Notice of Defaults..........................................................    74
Section 7.03.  Certain Rights of Trustee...................................................    75
Section 7.04.  Not Responsible for Recitals or Issuance of Notes...........................    76
Section 7.05.  Trustee's Disclaimer........................................................    76
Section 7.06.  May Hold Notes..............................................................    76
Section 7.07.  Money Held in Trust.........................................................    76
Section 7.08.  Compensation and Reimbursement..............................................    76
Section 7.09.  Conflicting Interests.......................................................    77
Section 7.10.  Corporate Trustee Required; Eligibility.....................................    77
Section 7.11.  Resignation and Removal; Appointment of Successor...........................    77
Section 7.12.  Acceptance of Appointment by Successor......................................    78
Section 7.13.  Merger, Conversion, Consolidation or Succession to Business.................    79
Section 7.14.  Preferential Collection of Claims Against the Company.......................    79
Section 7.15.  Appointment of Authenticating Agent.........................................    79

                                            ARTICLE 8
                                            ---------
                      Holders' List and Reports by Trustee and the Company
                      ----------------------------------------------------

Section 8.01.  The Company to Furnish Trustee Names and Addresses of
        Holders; Stock Exchange Listing ...................................................    80
Section 8.02.  Preservation of Information; Communications to Holders......................    80
Section 8.03.  Reports by Trustee..........................................................    80

                                            ARTICLE 9
                                            ---------
                                Amendment, Supplement or Waiver
                                -------------------------------

Section 9.01.  Without Consent of the Holders..............................................    81
Section 9.02.  With Consent of Holders.....................................................    81
Section 9.03.  Execution of Amendments, Supplements or Waivers.............................    83
</TABLE>

                                      iii
<PAGE>

<TABLE>
<CAPTION>
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Section 9.04.  Revocation and Effect of Consents...........................................    83
Section 9.05.  Conformity with TIA.........................................................    83
Section 9.06.  Notation on or Exchange of Notes............................................    84

                                           ARTICLE 10
                                           ----------
                                       Redemption of Notes
                                       -------------------

Section 10.01.  Right of Redemption........................................................    84
Section 10.02.  Applicability of Article...................................................    84
Section 10.03.  Election to Redeem; Notice to Trustee......................................    84
Section 10.04.  Selection by Trustee of Notes to Be Redeemed...............................    85
Section 10.05.  Notice of Redemption.......................................................    85
Section 10.06.  Deposit of Redemption Price................................................    86
Section 10.07.  Notes Payable on Redemption Date...........................................    86
Section 10.08.  Notes Redeemed in Part.....................................................    87

                                           ARTICLE 11
                                           ----------
                                   Satisfaction and Discharge
                                   --------------------------

Section 11.01.  Satisfaction and Discharges of Indenture...................................    87
Section 11.02.  Application of Trust Money.................................................    88

                                           ARTICLE 12
                                           ----------
                               Defeasance and Covenant Defeasance
                               ----------------------------------

Section 12.01.  Option of the Company to Effect Defeasance or Covenant Defeasance..........    88
Section 12.02.  Legal Defeasance and Discharge.............................................    88
Section 12.03.  Covenant Defeasance........................................................    89
Section 12.04.  Conditions to Legal or Covenant Defeasance.................................    89
Section 12.05.  Deposited Money and Government Securities to Be
        Held in Trust; Other Miscellaneous Provisions .....................................    91
Section 12.06.  Repayment to Company.......................................................    91
Section 12.07.  Reinstatement..............................................................    92

                                           ARTICLE 13
                                           ----------
                                      Subsidiary Guarantees
                                      ---------------------

Section 13.01.  The Guarantees.............................................................    92
Section 13.02.  Guarantee Unconditional....................................................    92
Section 13.03.  Discharge; Reinstatement...................................................    93
Section 13.04.  Waiver by the Subsidiary Guarantors........................................    93
Section 13.05.  Subrogation and Contribution...............................................    93
Section 13.06.  Stay of Acceleration.......................................................    94
Section 13.07.  Limits of Guarantees.......................................................    94
Section 13.08.  Execution and Delivery of Note Guarantee...................................    94
</TABLE>

                                      iv
<PAGE>

<TABLE>
<CAPTION>
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                                           ARTICLE 14
                                           ----------
                                      Security Arrangements
                                      ---------------------
Section 14.01.  Security...................................................................    94
Section 14.02.  Notice of Payment, Discharge or Defeasance.................................    96
</TABLE>

EXHIBIT A  -  Form of Note
EXHIBIT B  -  Form of Supplemental Indenture

                                        v
<PAGE>

     INDENTURE, dated as of       ,     (as amended, supplemented or otherwise
modified from time to time, the "Indenture"), among LYONDELL CHEMICAL COMPANY, a
Delaware corporation (as further defined below, the "Company"), the Subsidiary
Guarantors party hereto and THE BANK OF NEW YORK, a New York banking
corporation, as trustee (the "Trustee").

                            RECITALS OF THE COMPANY

     The Company and the Subsidiary Guarantors have duly authorized the
execution and delivery of this Indenture to provide for the issuance of (i)
initially,         aggregate principal amount of   % Senior Secured Notes
due       of the Company (the "Initial Notes") and (ii) if and when issued,
additional    % Senior Secured Notes due      of the Company (the "Additional
Notes") issuable as provided in this Indenture, in each case, guaranteed to the
extent provided herein and in the Notes by the Subsidiary Guarantors. All things
necessary to make the Initial Notes, when duly issued, executed and delivered by
the Company and authenticated and delivered by the Trustee hereunder, the valid
obligation of the Company, and to make this Indenture a valid agreement of the
Company and the Subsidiary Guarantors as of the date hereof, in accordance with
the terms of the Initial Notes and this Indenture, have been done.

                  NOW, THEREFORE, THIS INDENTURE WITNESSETH:

     For and in consideration of the premises and the purchase of the Notes
(as defined herein) by the Holders (as defined herein) thereof, it is mutually
agreed, for the equal and ratable benefit of all Holders, as follows:

                                    ARTICLE 1
             Definitions and Other Provisions of General Application

         Section 1.01.  Definitions.

     "Accounts Receivable Subsidiary" means any Wholly Owned Subsidiary of
the Company (i) which is formed solely for the purpose of, and which engages in
no activities other than activities in connection with, financing accounts
receivable of the Company and/or its Restricted Subsidiaries, (ii) which is
designated by the Company as an Accounts Receivables Subsidiary pursuant to an
Officer's Certificate delivered to the Trustee, (iii) no portion of Indebtedness
or any other obligation (contingent or otherwise) of which is at any time
recourse to or obligates the Company or any Restricted Subsidiary in any way, or
subjects any property or asset of the Company or any Restricted Subsidiary,
directly or indirectly, contingently or otherwise, to the satisfaction thereof,
other than pursuant to (I) representations, warranties and covenants (or any
indemnity with respect to such representations, warranties and covenants)
entered into in the ordinary course of business in connection with the sale
(including a sale in exchange for a promissory note of or Equity Interest in
such Accounts Receivable Subsidiary) of accounts receivable to such Accounts
Receivable Subsidiary or (II) any guarantee of any such accounts receivable
financing by the Company or any Restricted Subsidiary that is
<PAGE>

permitted to be incurred pursuant to Section 4.06, (iv) with which neither the
Company nor any Restricted Subsidiary of the Company has any contract,
agreement, arrangement or understanding other than contracts, agreements,
arrangements and understandings entered into in the ordinary course of business
in connection with the sale (including a sale in exchange for a promissory note
of or Equity Interest in such Accounts Receivable Subsidiary) of accounts
receivable in accordance with Section 4.17 and fees payable in the ordinary
course of business in connection with servicing accounts receivable and (v) with
respect to which neither the Company nor any Restricted Subsidiary of the
Company has any obligation (a) to subscribe for additional shares of Capital
Stock or other Equity Interests therein or make any additional capital
contribution or similar payment or transfer thereto other than in connection
with the sale (including a sale in exchange for a promissory note of or Equity
Interest in such Accounts Receivable Subsidiary) of accounts receivable to such
Accounts Receivable Subsidiary in accordance with Section 4.17 or (b) to
maintain or preserve the solvency, any balance sheet term, financial condition,
level of income or results of operations thereof.

     "Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.

     "Acquired Disqualified Stock" means, with respect to any specified Person,
Disqualified Stock of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Disqualified Stock incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person.

     "Acquired Preferred Stock" means, with respect to any specified Person,
Preferred Stock of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Preferred Stock incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person.

     "Acquiring Person" means a Person other than a Subject Assets Transferee
which acquires (i) all or a portion of the Subject Assets or (ii) an interest in
a Subject Assets Transferee in connection with a Major Asset Sale.

     "Additional Notes" means any notes issued under this Indenture in addition
to the Initial Notes, having the same terms in all respects (or in all respects
except payment of interest (i) scheduled and paid prior to the date of issuance
of such notes or (ii) payable on the first Interest Payment Date following such
date of issuance) as the Initial Notes.

     "Adjusted Consolidated Cash Flow" means, for any period, the sum of
Consolidated Cash Flow of the Company for such period plus the aggregate
Distributable

                                       2
<PAGE>

Joint Venture Cash Flow of the Company and its Restricted Subsidiaries,
determined on a consolidated basis, for such period.

     "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control; provided further that the foregoing proviso shall not
apply for purposes of Section 4.07(b)(vii) and Section 4.07(b)(ix) and clause
(d) of the definition of "Unrestricted Subsidiary".

     "Asset Sale" means (i) the sale, lease, conveyance or other disposition
(other than the creation of a Lien) of any assets other than the disposition of
inventory, equipment or Cash Equivalents in the ordinary course of business
consistent with past practices (provided that the sale, conveyance or other
disposition of all or substantially all the assets of the Company and its
Restricted Subsidiaries taken as a whole will be governed by the provisions of
Section 4.14 and/or the provisions of Section 5.01 and not by the provisions of
Section 4.09), (ii) the sale by the Company or any of its Restricted
Subsidiaries of Equity Interests of any of the Company's Restricted
Subsidiaries, Unrestricted Subsidiaries or Joint Ventures and (iii) the issuance
by any of the Company's Restricted Subsidiaries of Equity Interests of such
Restricted Subsidiary, in the case of clause (i), (ii) or (iii), whether in a
single transaction or a series of related transactions (a) that have a fair
market value in excess of $25 million or (b) for Net Proceeds in excess of $25
million. Notwithstanding the foregoing: (a) a transfer of assets by the Company
to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to
another Restricted Subsidiary; (b) an issuance of Equity Interests by a
Restricted Subsidiary to the Company or to another Restricted Subsidiary; (c) a
Restricted Payment that is permitted by Section 4.07; (d) an issuance of
Preferred Stock by a Finance Subsidiary that is permitted by Section 4.06; (e)
sales (including a sale in exchange for a promissory note of or Equity Interest
in such Accounts Receivable Subsidiary) of accounts receivable to an Accounts
Receivable Subsidiary in connection with any Receivables Facility permitted by
Section 4.17; and (f) Sale and Leaseback Transactions will not be deemed to be
an Asset Sale.

     "Asset Sale Lien" means a Lien on the Subject Assets (including as a
Lien for this purpose contractual rights with respect to the operation of the
Subject Assets) arising in connection with a Major Asset Sale in favor of the
Acquiring Person (or an Affiliate thereof) which Lien does not secure any
Indebtedness.

     "Attributable Debt" in respect of a Sale and Leaseback Transaction that
is treated as a capital lease in accordance with GAAP means, at the time of
determination, the present value (discounted at the rate of interest implicit in
such transaction, determined in accordance with GAAP) of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such Sale and Leaseback

                                       3
<PAGE>

Transaction (including any period for which such lease has been extended or may,
at the option of the lessor, be extended).

     "Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 7.15 to act on behalf of the Trustee to authenticate Notes of one or
more series.

     "Board of Directors" means the board of directors of the Company or any
committee thereof duly authorized to act on behalf of such board of directors.

     "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 (or any committee thereof)
of such Person and to be in full force and effect on the date of such
certification, and delivered to the Trustee. Unless the context otherwise
requires, "Board Resolution" refers to a Board Resolution of the Company.

     "Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in The City of New York or Houston, Texas are authorized
by law to close.

     "Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.

     "Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or a business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.

     "Cash Equivalents" means (a) United States dollars, (b) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States is pledged in support thereof) having maturities of not
more than one year from the date of acquisition, (c) demand deposits, time
deposits and certificates of deposit with maturities of one year or less from
the date of acquisition, bankers' acceptances with maturities not exceeding one
year from the date of acquisition and overnight bank deposits, in each case with
any bank or trust company organized or licensed under the laws of the United
States or any State thereof having capital, surplus and undivided profits in
excess of $500 million, (d) repurchase obligations with a term of not more than
seven days for underlying securities of the type described in clauses (b) and
(c) above entered into with any financial institution meeting the qualifications
specified in clause (c) above, (e) commercial paper rated at least P-1 or A-1 by
Moody's or S&P, respectively, and in each case maturing within six months after
the date of acquisition, (f) any fund investing exclusively in investments of
the type described in clauses (a) through (e) above and (g)

                                       4
<PAGE>

in the case of a Foreign Subsidiary, substantially similar investments
denominated in foreign currencies (including similarly capitalized foreign
banks).

     "Change of Control" means the occurrence of any of the following: (i) the
sale, transfer, conveyance or other disposition, in one or a series of related
transactions, of all or substantially all the assets of the Company and its
Subsidiaries taken as a whole to any Person or group (as such term is used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) other than to a Person or
group who, prior to such transaction, held a majority of the voting power of the
voting stock of the Company, (ii) the acquisition by any Person or group (as
defined above) of a direct or indirect interest in more than 50% of the voting
power of the voting stock of the Company, by way of merger or consolidation or
otherwise, or (iii) the first day on which a majority of the members of the
board of directors of the Company are not Continuing Directors.

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

     "Collateral" means all assets of the Company and its Restricted
Subsidiaries which are subject to Liens pursuant to the terms and provisions of
the Security Documents in order to secure the Indenture Obligations equally and
ratably with the Existing Credit Facility Obligations.

     "Collateral Agent" means JPMorgan Chase Bank (as successor to Morgan
Guaranty Trust Company of New York), in its capacity as collateral agent or
administrative agent, or any other collateral agent under any or all of the
Security Documents.

     "Company" means Lyondell Chemical Company, a Delaware corporation, and
any successor in interest thereto.

     "Company Request," "Company Order" and "Company Consent" mean,
respectively, a written request, order or consent signed in the name of the
Company by an Officer of the Company.

     "Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period (less the Net Income
of any Joint Venture to the extent included therein pursuant to clause (i) of
the definition of "Consolidated Net Income"), plus in each case, without
duplication

     (i)  provision for taxes based on income or profits of such Person and
its Restricted Subsidiaries for such period (including any provision for taxes
on the Net Income of any Joint Venture that is a pass-through entity for federal
income tax purposes, to the extent such taxes are paid or payable by such Person
or any of its Restricted Subsidiaries), to the extent that such provision for
taxes was included in computing such Consolidated Net Income,

     (ii) the Fixed Charges of such Person and its Restricted Subsidiaries
for such period, to the extent that such Fixed Charges were deducted in
computing such Consolidated Net Income,

                                       5
<PAGE>

     (iii) depreciation and amortization (including amortization of goodwill
and other intangibles but excluding amortization of prepaid cash expenses that
were paid in a prior period) of such Person and its Restricted Subsidiaries for
such period to the extent that such depreciation and amortization were deducted
in computing such Consolidated Net Income and

     (iv)  any non-cash charges reducing Consolidated Net Income for such
period (excluding any such non-cash charge to the extent that it represents an
accrual of or reserve for cash expenses in any future period or an amortization
of a prepaid cash expense that was paid in a prior period); minus

     (v)   any non-cash items increasing Consolidated Net Income for such
period, in each case, on a consolidated basis and determined in accordance with
GAAP.

     Notwithstanding the foregoing, the provision for taxes on the income or
profits of, and the depreciation and amortization of, a Restricted Subsidiary of
the referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent (and in the same proportion) that the
Net Income of such Restricted Subsidiary was included in calculating the
Consolidated Net Income of such Person.

     "Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that

     (i)   the Net Income of any Person that is not a Restricted Subsidiary
shall be included only to the extent of the lesser of (x) the amount of
dividends or distributions paid in cash (but not by means of a loan) to the
referent Person or a Restricted Subsidiary thereof or (y) the referent Person's
(or a Restricted Subsidiary of the referent Person's) proportionate share of the
Net Income of such other Person,

     (ii)  the Net Income (but not loss) of any Restricted Subsidiary shall
be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary or its
stockholders,

     (iii) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded and

     (iv)  the cumulative effect of a change in accounting principles shall be
excluded.

     "Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its Restricted Subsidiaries as of such date plus (ii) the respective
amounts reported on such

                                       6
<PAGE>

Person's balance sheet as of such date with respect to any series of Preferred
Stock (other than Disqualified Stock), less all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of tangible assets of
a going concern business made in accordance with GAAP as a result of the
acquisition of such business) subsequent to the date of the Indenture in the
book value of any asset owned by such Person or a Restricted Subsidiary of such
Person, and excluding the cumulative effect of a change in accounting
principles, all as determined in accordance with GAAP.

     "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election or any successor Continuing Directors appointed by such
Continuing Directors (or their successors).

     "Corporate Trust Office" means the principal office of the Trustee, at
which at any particular time its corporate trust business shall be administered,
which office on the Issue Date is located at 101 Barclay Street, Floor 21 West,
New York, New York 10286.

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

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

     "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 redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
on which the Notes mature; provided that any Capital Stock that would not
constitute Disqualified Stock but for provisions thereof giving holders thereof
the right to require such Person to repurchase or redeem such Capital Stock upon
the occurrence of an "asset sale" or a "change of control" occurring prior to
the date on which the Notes mature shall not constitute Disqualified Stock if
the "asset sale" or "change of control" provisions applicable to such Capital
Stock are no more favorable to the holders of such Capital Stock than the
provisions contained in Section 4.09 of the Senior Subordinated Notes Indenture
and Section 4.14 hereof and such Capital Stock specifically provides that such
Person will not repurchase or redeem any such stock pursuant to such provision
prior to the Company's repurchase of such Notes as are required pursuant to such
covenants.

     "Distributable Joint Venture Cash Flow" means, with respect to any Person
for any period, in the case of each Joint Venture that is not a Restricted
Subsidiary of the referent Person, the sum of:

     (I) the lesser of

                                       7
<PAGE>

                  (x)  the amount of dividends or distributions paid in cash
         (but not by means of a loan) by such Joint Venture to the referent
         Person or a Restricted Subsidiary thereof or

                  (y)  the referent Person's (or a Restricted Subsidiary of the
         referent Person's) proportionate share of

                         (i)    the Net Income of such Joint Venture for such
                  period, plus

                         (ii)   to the extent deducted therefrom, depreciation
                  and amortization (including amortization of goodwill and other
                  intangibles but excluding amortization of prepaid cash
                  expenses that were paid in a prior period) of such Joint
                  Venture for such period, plus

                         (iii)  any non-cash charges reducing Net Income of such
                  Joint Venture for such period (excluding any such non-cash
                  charge to the extent that it represents an accrual of or
                  reserve for cash expenses in any future period or an
                  amortization of a prepaid cash expense that was paid in a
                  prior period), less

                         (iv)   any non-cash items increasing Net Income of such
                  Joint Venture for such period, minus

         (II)  the aggregate amount of all Investments made by the Company or
any of its Restricted Subsidiaries in such Joint Venture during such period
pursuant to Section 4.07(b)(viii),

in each case determined on a consolidated basis and in accordance with GAAP.

         "Equistar Assumed Debt" means (i) the 9.125% Notes Due 2002 issued by
the Company pursuant to an Indenture dated as of March 10, 1992 between the
Company and First Trust National Association, as Trustee, as supplemented by the
First Supplemental Indenture dated as of March 10, 1992 and the Second
Supplemental Indenture dated as of December 1, 1997; (ii) the 6.5% Notes Due
2006 and the 7.55% Notes Due 2026, each issued by the Company pursuant to an
Indenture dated as of January 29, 1996 between the Company and Texas Commerce
Bank National Association, as Trustee, as supplemented by the First Supplemental
Indenture dated as of February 15, 1996 and the Second Supplemental Indenture
dated as of December 1, 1997; and (iii) Indebtedness under the medium term notes
issued by the Company, maturing at various dates from 2002 to 2005; in each case
outstanding as of the Issue Date, and with respect to which, either (x) the
Company is a guarantor or (y) as between the Company and Equistar, Equistar is
the primary obligor and the Company is an obligor; in each case, as may be
amended from time to time, provided that any such amendment does not increase
the principal amount thereof or interest rate applicable thereto or shorten the
Weighted Average Life to Maturity or Stated Maturity thereof or add any
Restricted Subsidiary as an obligor with respect thereto.

                                       8
<PAGE>

         "Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

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

         "Existing ARCO Chemical Debt" means the 9.375% Debentures Due 2005, the
10.25% Debentures Due 2010 and the 9.8% Debentures Due 2020, all issued pursuant
to the Indenture dated June 15, 1988 between the Company (as successor to ARCO
Chemical Company) and The Bank of New York, as Trustee.

         "Existing Credit Facility" means that certain Credit Agreement dated as
of July 23, 1998 and as amended through the date hereof by and among the Company
and JPMorgan Chase Bank, as administrative agent, DLJ Capital Funding, Inc., as
syndication agent, and the other lenders that are parties thereto, including any
related notes, instruments and agreements executed in connection therewith, as
amended, restated, modified, extended, renewed, refunded, replaced or
refinanced, in whole or in part, from time to time, after the Issue Date,
whether or not with the same lenders or agents.

         "Existing Credit Facility Obligations" means all Obligations of the
Company and its Subsidiaries outstanding under the Existing Credit Facility and
all Hedging Obligations payable to a lender or an Affiliate thereof or to a
Person that was a lender or an Affiliate thereof at the time the contract was
entered into under the Existing Credit Facility, including, without limitation,
interest accruing subsequent to the filing of, or which would have accrued but
for the filing of, a petition for bankruptcy, whether or not such interest is an
allowable claim in such bankruptcy proceeding.

         "Existing Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries in existence, and considered Indebtedness of the Company
or any of its Restricted Subsidiaries, on the Issue Date, until such amounts are
repaid, including all reimbursement obligations with respect to letters of
credit outstanding as of the date of the Indenture.

         "Existing Security Documents" means each of the Security Documents
referred to in clause (i) of the definition thereof, in each case as amended,
modified, restated or supplemented from time to time.

         "Existing Senior Secured Note Indentures" means the indentures among
the Company, the Subsidiary Guarantors party thereto and The Bank of New York,
as Trustee, pursuant to which the Company issued the Existing Senior Secured
Notes.

         "Existing Senior Secured Notes" means the Company's 9.625% Senior
Secured Notes, Series A, Due 2007, the Company's 9.875% Senior Secured Notes,
Series B, Due 2007 and the Company's 9 1/2% Senior Secured Notes due 2008.

         "Finance Subsidiary" means a Restricted Subsidiary of the Company, all
the Capital Stock of which (other than Preferred Stock) is owned by the Company
that does

                                       9
<PAGE>

not engage in any activity other than: (i) holding of Indebtedness of the
Company; (ii) the issuance of Capital Stock; and (iii) any activity necessary,
incidental or related to the foregoing.

         "Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Adjusted Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the Company or any of its Restricted Subsidiaries incurs, assumes or redeems any
Indebtedness (other than revolving credit borrowings) or issues or redeems
Preferred Stock subsequent to the commencement of the period for which the Fixed
Charge Coverage Ratio is being calculated but prior to the date on which the
event for which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption or redemption of
Indebtedness, or such issuance or redemption of Preferred Stock, as if the same
had occurred at the beginning of the applicable four-quarter reference period.

         In addition, for purposes of making the computation referred to above,
(i) acquisitions that have been made by the Company or any of its Restricted
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the four-quarter reference
period, (ii) the Adjusted Consolidated Cash Flow and Fixed Charges attributable
to operations or businesses disposed of prior to the Calculation Date shall be
excluded, but, in the case of such Fixed Charges, only to the extent that the
obligations giving rise to such Fixed Charges will not be obligations of the
referent Person or any of its Restricted Subsidiaries following the Calculation
Date and (iii) if since the beginning of the four-quarter reference period any
Person was designated as an Unrestricted Subsidiary or redesignated as or
otherwise became a Restricted Subsidiary, such event shall be deemed to have
occurred on the first day of the four-quarter reference period.

         "Fixed Charges" means, with respect to any Person for any period, the
sum, without duplication, of

         (i)   the consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued (including,
without limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
commissions, discounts and other fees and charges incurred in respect of letters
of credit or bankers' acceptance financings and net payments or receipts (if
any) pursuant to Hedging Obligations) and

         (ii)  the consolidated interest expense of such Person and its
Restricted Subsidiaries that was capitalized during such period and

         (iii) any interest expense on Indebtedness of another Person (other
than Non-Recourse Debt of a Joint Venture or an Unrestricted Subsidiary secured
by a pledge by

                                      10
<PAGE>

the Company or any Restricted Subsidiary of Capital Stock which pledge is
permitted by Section 4.07(b)(xi) or Section 4.07(b)(xii)) that is Guaranteed by
such Person or one of its Restricted Subsidiaries or secured by a Lien on assets
of such Person or one of its Restricted Subsidiaries (whether or not such
Guarantee or Lien is called upon) and

         (iv)  the product of (a) all dividend payments (other than any payments
to the referent Person or any of its Restricted Subsidiaries) on any series of
Preferred Stock of such Person and its Restricted Subsidiaries, times (b) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
such Person, expressed as a decimal, in each case, on a consolidated basis and
in accordance with GAAP;

provided that (i) interest payments by Equistar on the Equistar Assumed Debt and
(ii) interest payments on Indebtedness of a Joint Venture shall, in each case,
not be deemed Fixed Charges of the Company as of any date of determination when
such Indebtedness is not considered Indebtedness of the Company or any
Restricted Subsidiary of the Company.

         "Foreign Subsidiary" means any Restricted Subsidiary that has 50% or
more of its assets located outside the United States or any territory thereof.

         "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 have been approved by a significant segment of the accounting
profession, as in effect on the Issue Date.

         "General Partner" means a Restricted Subsidiary of the Company or any
of its Restricted Subsidiaries that has no assets and conducts no operations
other than its ownership of a general partnership interest in a Joint Venture.

         "Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or Disqualified
Stock of any other Person and, without limiting the generality of the foregoing,
any obligation, direct or indirect, contingent or otherwise, of such Person (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or Disqualified Stock of such other Person (including those
arising by virtue of partnership arrangements (other than, in the case of the
Company or a Restricted Subsidiary of the Company, with respect to the
obligations of a Joint Venture, solely by virtue of a Restricted Subsidiary of
the Company being the General Partner of such Joint Venture if, as of the date
of determination, no payment on such Indebtedness or obligation has been made by
such General Partner of such Joint Venture and such arrangement would not be
classified and accounted for, in accordance with GAAP, as a liability on a
consolidated balance sheet of the Company)) or (ii) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness or Disqualified
Stock of the payment thereof or to protect such obligee against loss in respect
thereof in whole or in part (including by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, to maintain

                                      11
<PAGE>

financial statement conditions or otherwise); provided that the term "Guarantee"
shall not include endorsements for collection or deposit in the ordinary course
of business. The term "Guarantee" used as a verb has a corresponding meaning.

         "Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements, (ii) forward foreign
exchange contracts or currency swap agreements, (iii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency values and (iv) agreements designed to protect such Person
against fluctuations in raw material prices.

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

         "Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing net Hedging Obligations,
except any such balance that constitutes an accrued expense or a trade payable,
if and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability on a balance sheet
of such Person prepared in accordance with GAAP, as well as all indebtedness of
others secured by a Lien on any asset of such Person whether or not such
indebtedness is assumed by such Person (provided that, for purposes of
determining the amount of any Indebtedness of the type described in this clause,
if recourse with respect to such Indebtedness is limited to such asset, the
amount of such Indebtedness shall be limited to the lesser of the fair market
value of such asset or the amount of such Indebtedness) and, to the extent not
otherwise included, the Guarantee by such Person of any indebtedness of the
types described above of any other Person; provided that Indebtedness shall not
include the pledge by the Company or any of its Restricted Subsidiaries of the
Capital Stock of a Joint Venture Subsidiary, an Unrestricted Subsidiary or a
Joint Venture permitted by Section 4.07(b)(xi) or Section 4.07(b)(xii) to secure
Non-Recourse Debt of such Unrestricted Subsidiary or Joint Venture.

         The Equistar Assumed Debt shall not constitute Indebtedness of the
Company as of any date of determination if the Company has not made any
principal or interest payments on such Indebtedness after the Issue Date;
provided that, the payment by the Company of any principal or interest thereon
shall be deemed to be an incurrence of such Indebtedness on the day of such
payment. The amount of any Indebtedness outstanding as of any date shall be (i)
the accreted value thereof, in the case of any Indebtedness that does not
require current payments of interest and (ii) the principal amount thereof,
together with any interest thereon that is more than 30 days past due, in the
case of any other Indebtedness.

         "Indenture Obligations" means (a) all principal of and interest
(including, without limitation, any interest which accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the

                                      12
<PAGE>

Company, whether or not allowed or allowable as a claim in any such proceeding)
on any Note issued pursuant to the Indenture, (b) all other amounts payable by
the Company or any Subsidiary Guarantor under the Indenture and (c) any renewals
or extensions of any of the foregoing.

         "Initial Notes" means the Company's .% Senior Secured Notes Due 2012,
issued on the Issue Date (and any Notes issued in respect thereof pursuant to
Section 3.04, 3.05, 3.06, 3.12 or 10.08).

         "Interest Payment Date" means, when used with respect to any Note and
any installment of interest thereon, the date specified in such Note as the
fixed date on which such installment of interest is due and payable, as set
forth in such Note.

         "Investment Grade" means a rating of BBB- or higher by S&P or Baa3 or
higher by Moody's or the equivalent of such ratings by S&P or Moody's. In the
event that the Company shall select any other Rating Agency pursuant to the
provisions of the definition thereof, the equivalent of such ratings by such
Rating Agency shall be used.

         "Investments" means, with respect to any Person, all investments by
such Person in another Person (including an Affiliate of such Person) in the
form of direct or indirect loans, advances or extensions of credit to such other
Person (including any Guarantee by such Person of the Indebtedness or
Disqualified Stock of such other Person) or capital contributions or purchases
or other acquisitions for consideration of Indebtedness, Equity Interests or
other securities of such other Person, together with all items that are or would
be classified as investments of such investing Person on a balance sheet
prepared in accordance with GAAP; provided that (x) trade credit and accounts
receivable in the ordinary course of business, (y) commissions, loans, advances,
fees and compensation paid in the ordinary course of business to officers,
directors and employees and (z) reimbursement obligations in respect of letters
of credit and tender, bid, performance, government contract, surety and appeal
bonds, in each case solely with respect to obligations of the Company or any of
its Restricted Subsidiaries shall not be considered Investments. If the Company
or any Restricted Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Restricted Subsidiary of the Company
such that, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary of the Company, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Restricted Subsidiary not sold
or disposed of in an amount determined as provided in Section 4.07(a).

         "Issue Date" means the date on which the Initial Notes are originally
issued.

         "Joint Venture" means any joint venture between the Company or any
Restricted Subsidiary and any other Person, whether or not such joint venture is
a Subsidiary of the Company or any Restricted Subsidiary.

         "Joint Venture Subsidiary" means a Subsidiary of the Company or any of
its Subsidiaries that has no assets and conducts no operations other than its
ownership of Equity Interests of a Joint Venture.

                                      13
<PAGE>

         "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest (other than, in the case of a Receivables Facilities,
security interests under the Uniform Commercial Code arising solely by virtue of
the application of Article 9 thereof to sales of accounts) or encumbrance of any
kind in respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement, and any lease in the nature thereof) or the assignment or
conveyance of any right to receive income therefrom.

         "Lyondell TDI" means Lyondell Chimie France TDI, a French limited
partnership and a wholly-owned Subsidiary of the Company.

         "Major Asset Sale" means an Asset Sale designated by the Company by
prior notice to the Trustee as a Major Asset Sale, so long as in connection
therewith

         (i)    the Company receives Net Proceeds in an aggregate amount not
less than $1,000,000,000 (which shall be deemed Net Proceeds of such Major Asset
Sale for purposes of Section 4.09),

         (ii)   at the time of such Major Asset Sale and after giving effect
thereto, no Default shall exist,

         (iii)  the sum of the gross cash proceeds received by the Company in
respect of such Major Asset Sale plus the value of the interest of the Company
in the Subject Assets Transferee (if any) after giving effect to such Major
Asset Sale is not less than the value (as conclusively determined by the Board
of Directors of the Company) of the portion of the Subject Assets transferred by
the Company in connection with such Major Asset Sale, and

         (iv)   the Company directly or indirectly is the operator of the
Subject Assets in which it or a Subject Assets Transferee retains an interest.
For purposes of clause (i) of this definition (1) a transaction that produces
substantially the same economic result as a sale of a partial interest in an
asset, as might be achieved, for instance, through contractual arrangements
allocating future revenues and costs attributable to the asset, shall be deemed
an Asset Sale even though there may be no change in title to the asset or in the
ownership of the Person that has title to the asset and (2) a subsequent related
transaction with the same Acquiring Person (or an Affiliate thereof)
contemplated by the terms of the initial Major Asset Sale with such Person
shall, for purposes of determining the applicability of and compliance with this
definition, be deemed a single cumulative transaction.

         "Moody's" means Moody's Investors Service, Inc., and its successors.

         "Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of Preferred Stock dividends, excluding, however, (i) any gain or loss,
together with any related provision for taxes on such gain or loss, realized in
connection with (a) any Asset Sale or any disposition pursuant to a Sale and
Leaseback Transaction or (b) the disposition of any securities by such Person or
any of its Restricted Subsidiaries or the

                                      14
<PAGE>

extinguishment of any Indebtedness of such Person or any of its Restricted
Subsidiaries and (ii) any extraordinary gain or loss, together with any related
provision for taxes on such extraordinary gain or loss.

         "Net Proceeds" means the aggregate cash proceeds (excluding any
proceeds deemed to be "cash" pursuant to Section 4.09) received by the Company
or any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be paid to holders of minority interests in
Restricted Subsidiaries as a result of such Asset Sale, amounts required to be
applied to the repayment of Indebtedness (other than Indebtedness under the
Existing Credit Facility, the Existing Senior Secured Notes or the Existing ARCO
Chemical Debt) secured by a Lien on any asset sold in such Asset Sale and any
reserves for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP and any reserve for future liabilities
established in accordance with GAAP; provided that the reversal of any such
reserve that reduced Net Proceeds when issued shall be deemed a receipt of Net
Proceeds in the amount of such proceeds on such day.

         "Non-Recourse Debt" means Indebtedness as to which the lenders have
been notified in writing that they will not have any recourse to the stock or
assets (in each case, other than the stock of a Joint Venture or an Unrestricted
Subsidiary or of a Joint Venture Subsidiary that has no assets and conducts no
operations other than the holding, directly or indirectly, of Equity Interests
of such Joint Venture pledged by the Company or any of its Restricted
Subsidiaries to secure debt of such Joint Venture or Unrestricted Subsidiary) of
the Company or any of its Restricted Subsidiaries.

         "Notes" means the Initial Notes and any Additional Notes.

         "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness and in all cases whether direct or
indirect, absolute or contingent, now outstanding or hereafter created, assumed
or incurred and including, without limitation, interest accruing subsequent to
the filing of a petition in bankruptcy or the commencement of any insolvency,
reorganization or similar proceedings at the rate provided in the relevant
documentation, whether or not an allowed claim, and any obligation to redeem or
defease any of the foregoing.

         "Officer" means, with respect to the Company, any Subsidiary Guarantor
or any other obligor on the Notes, the Chairman of the Board, the President, the
Chief Executive Officer, the Chief Financial Officer, the Secretary, the
Treasurer, any Assistant Secretary or Assistant Treasurer or any Vice President
of such Person.

         "Officer's Certificate" means, with respect to the Company or any other
obligor on the Notes, a certificate signed by an Officer of such Person.

                                      15
<PAGE>

     "Opinion of Counsel" means a written opinion from legal counsel. The
counsel may be an employee of or counsel to the Company or the Trustee.

     "Outstanding" when used with respect to Notes means, as of the date of
determination, all Notes theretofore authenticated and delivered under this
Indenture, except:

               (i)     Notes theretofore canceled by the Trustee or delivered to
     the Trustee for cancellation;

               (ii)    Notes for whose payment or redemption money in the
     necessary amount has been theretofore deposited with the Trustee or any
     Paying Agent in trust for the Holders of such Notes, provided that, if such
     Notes are to be redeemed, notice of such redemption has been duly given
     pursuant to this Indenture or provision therefor reasonably satisfactory to
     the Trustee has been made;

               (iii)   Notes paid pursuant to Section 3.06; and

               (iv)    Notes in exchange for or in lieu of which other Notes
     have been authenticated and delivered pursuant to this Indenture.

     A Note does not cease to be Outstanding because the Company or any
Affiliate of the Company holds the Note, provided that in determining whether
the Holders of the requisite amount of Outstanding Notes have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, Notes
owned by the Company or any Affiliate of the Company shall be disregarded and
deemed not to be Outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such request, demand,
authorization, direction, notice, consent or waiver, only Notes which a
Responsible Officer of the Trustee actually knows are so owned shall be so
disregarded. Notes so owned that have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the reasonable satisfaction of the
Trustee the pledgee's right to act with respect to such Notes and that the
pledgee is not the Company or an Affiliate of such Company.

     "Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Notes on behalf of the
Company.

     "Payment Default" means any failure to pay any scheduled installment of
interest or principal on any Indebtedness within the grace period provided for
such payment in the documentation governing such Indebtedness.

     "PBGC Settlement" means the settlement agreement between the Company and
the Pension Benefit Guaranty Corporation (or any successor entity) as amended,
modified, restated or replaced from time to time.

                                      16
<PAGE>

     "Permitted Business" means the petrochemical, chemical and petroleum
refining businesses and any business reasonably related, incidental,
complementary or ancillary thereto.

     "Permitted Investments" means:

     (a)   any Investment in the Company or in a Restricted Subsidiary of the
Company that is engaged in a Permitted Business;

     (b)   any Investment in Cash Equivalents;

     (c)   any Investment by the Company or any Subsidiary of the Company in a
Person, if as a result of such Investment: (i) such Person becomes a Restricted
Subsidiary of the Company engaged in a Permitted Business or (ii) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all its assets to, or is liquidated into, the Company or a
Restricted Subsidiary of the Company engaged in a Permitted Business;

     (d)   any non-cash consideration (other than a joint venture interest
received in full or partial satisfaction of the 80% requirement in clause (ii)
of Section 4.09(a)) received as consideration in an Asset Sale that was made
pursuant to and in compliance with Section 4.09;

     (e)   any acquisition of assets or Equity Interests solely in exchange for
the issuance of Equity Interests (other than Disqualified Stock) of the Company;

     (f)   Hedging Obligations entered into in the ordinary course of business
and otherwise permitted under the Indenture;

     (g)   Investments in an Accounts Receivable Subsidiary that, as
conclusively determined by the Board of Directors, are necessary or advisable to
effect a Receivables Facility;

     (h)   Investments in Unrestricted Subsidiaries and Joint Ventures in an
aggregate amount, taken together with all other Investments made in reliance on
this clause (h), not to exceed at any time outstanding $25 million (after giving
effect to any reductions in the amount of any such Investments as a result of
the repayment or other disposition thereof for cash, the amount of such
reduction not to exceed the amount of such Investments previously made pursuant
to this clause (h)); and

     (i)   any Investment received by the Company or any Restricted Subsidiary
as consideration for the settlement of any litigation, arbitration or claim in
bankruptcy or in partial or full satisfaction of accounts receivable owned by a
financially troubled Person to the extent reasonably necessary in order to
prevent or limit any loss by the Company or any of its Restricted Subsidiaries
in connection with such accounts receivable.

                                      17
<PAGE>

     "Permitted Liens" means:

     (i)      Liens in favor of the Company or any Subsidiary Guarantor;

     (ii)     Liens securing the Notes and the Subsidiary Guarantees;

     (iii)    Liens on property of a Person existing at the time such Person is
merged into or consolidated with the Company or any Restricted Subsidiary of the
Company or becomes a Subsidiary of the Company; provided that such Liens were in
existence prior to the contemplation of such merger, consolidation or
acquisition and do not extend to any assets of the Company or its Restricted
Subsidiaries other than those of the Person merged into or consolidated with the
Company or that becomes a Restricted Subsidiary of the Company;

     (iv)     Liens on property existing at the time of acquisition thereof by
the Company or any Restricted Subsidiary of the Company; provided that such
Liens were in existence prior to the contemplation of such acquisition;

     (v)      Liens (including the interest of a lessor under a capital lease)
on any asset existing at the time of acquisition thereof or incurred within 180
days of the time of acquisition or completion of construction thereof, whichever
is later, to secure or provide for the payment of all or any part of the
purchase price (or construction price) thereof;

     (vi)     Liens incurred or assumed in connection with the issuance of
revenue bonds the interest on which is exempt from federal income taxation
pursuant to Section 103(b) of the Internal Revenue Code;

     (vii)    Liens imposed by law, such as laborers' or other employees',
carriers', warehousemen's, mechanics', materialmen's and vendors' Liens and
Liens imposed by law on pipelines or pipeline facilities;

     (viii)   Liens arising by reason of deposits necessary to qualify the
Company or any Restricted Subsidiary to conduct business, maintain self
insurance or comply with any law and Liens securing the PBGC Settlement;

     (ix)     Liens to secure the performance of statutory obligations, tender,
bid, performance, government contract, surety or appeal bonds or other
obligations of a like nature incurred in the ordinary course of business;

     (x)      Liens existing on the Issue Date other than Liens securing
Indebtedness under the Existing Credit Facility, the Existing Senior Secured
Notes or the Existing ARCO Chemical Debt;

     (xi)     Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings, prejudgment Liens that are being contested in good
faith by appropriate proceedings and Liens arising out of judgments or awards
against the Company or any Restricted Subsidiary with respect to which the
Company or such Restricted Subsidiary at the time

                                      18
<PAGE>

shall be prosecuting an appeal or proceedings for review and with respect to
which it shall have secured a stay of execution pending such appeal or
proceedings for review; provided that in each case any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor;

     (xii)     easements, rights-of-way, restrictions, irregularities of title
and other similar charges or encumbrances, not interfering in any material
respect with the ordinary conduct of the business of the Company or any of its
Restricted Subsidiaries;

     (xiii)    Liens securing reimbursement obligations with respect to
commercial letters of credit obtained in the ordinary course of business which
encumber documents and other property or assets relating to such letters of
credit and products and proceeds thereof;

     (xiv)     Liens securing assets under construction arising from progress or
partial payments by a customer of the Company or its Restricted Subsidiaries
relating to such property or assets;

     (xv)      licenses or leases by the Company or any of its Restricted
Subsidiaries as licensor or lessor in the ordinary course of business and
otherwise permitted by the Indenture for patents, copyrights, trademarks,
tradenames and other intellectual property;

     (xvi)     leases or subleases by the Company or any of its Restricted
Subsidiaries as lessor or sublessor in the ordinary course of business and
otherwise permitted by the Indenture;

     (xvii)    Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;

     (xviii)   Liens resulting from the deposit of funds or evidences of
Indebtedness in trust for the purpose of (A) defeasing Indebtedness of the
Company or any of its Restricted Subsidiaries (which defeasance is otherwise
permitted under the Indenture) having an aggregate principal amount at any one
time outstanding not to exceed $25 million or (B) defeasing Indebtedness ranking
pari passu with the Notes; provided that the Notes are defeased concurrently
with such Indebtedness;

     (xix)     from and after the first date when the Notes are rated Investment
Grade, Liens on any asset of the Company other than any of the Company's or any
of its Restricted Subsidiary's manufacturing plants or Liens on any Equity
Interests of any Restricted Subsidiary that owns a manufacturing plant;

     (xx)      the pledge of Equity Interests of an Unrestricted Subsidiary or a
Joint Venture (or of a Joint Venture Subsidiary that has no assets and conducts
no operations other than the holding, directly or indirectly, of Equity
Interests of such Joint Venture) organized (or designated as an Unrestricted
Subsidiary and holding no other assets and conducting no other operations) to
construct, own and/or operate a propylene oxide plant in the European Union to
secure Non-Recourse Debt of such Joint Venture or Unrestricted Subsidiary;

                                      19
<PAGE>

     (xxi)     the pledge of Equity Interests of an Unrestricted Subsidiary or a
Joint Venture (or of a Joint Venture Subsidiary that has no assets and conducts
no operations other than the holding, directly or indirectly, of Equity
Interests of such Joint Venture) organized (or designated as an Unrestricted
Subsidiary and holding no other assets and conducting no other operations) to
participate in the improvement of the Rhodia TDI Plant to secure Non-Recourse
Debt of such Joint Venture or Unrestricted Subsidiary or Rhodia or a wholly-
owned subsidiary of Rhodia;

     (xxii)    Liens on equipment of the Company or any Restricted Subsidiary
arising as a result of a sale and leaseback with respect to such equipment;
provided that the proceeds from such sale and leaseback are applied pursuant to
Section 4.09;

     (xxiii)   Asset Sale Liens;

     (xxiv)    customary Liens for the fees, costs and expenses of trustees and
escrow agents pursuant to any indenture, escrow agreement or similar agreement
establishing a trust or an escrow arrangement, and Liens pursuant to merger
agreements, stock purchase agreements, asset sale agreements, option agreements
and similar agreements in respect of the disposition of property or assets of
the Company or any Restricted Subsidiary, to the extent such dispositions are
permitted hereunder;

     (xxv)     netting provisions and setoff rights in favor of counterparties
to agreements creating Hedging Obligations;

     (xxvi)    other Liens on assets of the Company or any Restricted Subsidiary
of the Company securing Indebtedness that is permitted by the terms of the
Indenture to be outstanding having an aggregate principal amount at any one time
outstanding not to exceed $100 million; and

     (xxvii)   Liens to secure a Permitted Refinancing incurred to refinance
Indebtedness that was secured by a Lien permitted under the Indenture and that
was incurred in accordance with the provisions of the Indenture; provided that
such Liens do not extend to or cover any property or assets of the Company or
any Restricted Subsidiary other than assets or property securing the
Indebtedness so refinanced.

          "Permitted Refinancing" means any Indebtedness of the Company or any
of its Subsidiaries or Preferred Stock of a Finance Subsidiary issued in
exchange for, or the net proceeds of which are used solely to extend, refinance,
renew, replace, defease or refund, other Indebtedness of the Company or any of
its Restricted Subsidiaries; provided that:

          (i)  the principal amount (or liquidation preference in the case of
Preferred Stock) of such Permitted Refinancing (or if such Permitted Refinancing
is issued at a discount, the initial issuance price of such Permitted
Refinancing) does not exceed the principal amount of the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of any premiums paid and reasonable expenses incurred in connection therewith);

                                      20
<PAGE>

     (ii)    such Permitted Refinancing or, in the case of Preferred Stock of a
Finance Subsidiary, the Indebtedness issued to such Finance Subsidiary, has a
Stated Maturity date later than the Stated Maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded;

     (iii)   if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated by its terms in right of payment to the
Notes or the Subsidiary Guarantees, such Permitted Refinancing, or, in the case
of Preferred Stock, the Indebtedness issued to such Finance Subsidiary, has a
Stated Maturity date later than the Stated Maturity date of, and is subordinated
in right of payment to, the Notes on subordination terms at least as favorable
to the Holders of Notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;

     (iv)    such Indebtedness is incurred by the Company or a Subsidiary
Guarantor (or such Preferred Stock is issued by a Finance Subsidiary) if the
Company or a Subsidiary Guarantor is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and

     (v)     such Indebtedness is incurred by the Company or a Restricted
Subsidiary (or such Preferred Stock is issued by a Finance Subsidiary) if a
Restricted Subsidiary that is not a Subsidiary Guarantor is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.

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

     "Place of Payment" means a city or any political subdivision thereof
referred to in Article 3 and initially designated under Section 4.02.

     "Predecessor Notes" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 3.06 in lieu of a mutilated,
destroyed, lost or stolen Note shall be deemed to evidence the same debt as the
mutilated, destroyed, lost or stolen Note.

     "Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of preferred or preference stock of such Person which is
outstanding or issued on or after the date of the Indenture.

     "principal" of a Note means the principal of the Note plus the premium, if
any, payable on the Note which is due or overdue or is to become due at the
relevant time.

                                      21
<PAGE>

     "Qualified Equity Interests" shall mean all Equity Interests of a Person
other than Disqualified Stock of such Person.

     "Rating Agency" means (i) S&P or (ii) Moody's or (iii) if neither S&P nor
Moody's shall exist, a nationally recognized securities rating agency or
agencies, as the case may be, selected by the Company, which shall be
substituted for S&P or Moody's or both, as the case may be.

     "Receivables Facility" means one or more receivables financing facilities
or arrangements, as amended from time to time, pursuant to which the Company or
any of its Restricted Subsidiaries sells (including a sale in exchange for a
promissory note of or an Equity Interest in an Accounts Receivable Subsidiary)
its accounts receivable to an Accounts Receivable Subsidiary.

     "Receivables Fees" means distributions or payments made directly or by
means of discounts with respect to any participation interests issued or sold in
connection with, and other fees paid to a Person that is not the Company or a
Restricted Subsidiary in connection with, any Receivables Facility.

     "Redemption Date" when used with respect to any Note to be redeemed or
purchased means the date fixed or such redemption or purchase by or pursuant to
this Indenture and the Notes.

     "Redemption Price" when used with respect to any Note to be redeemed or
purchased means the price at which it is to be redeemed or purchased pursuant to
this Indenture and the Notes.

     "Regular Record Date" for the interest payable on any Interest Payment Date
means the date specified for that purpose in Section 3.01.

     "Responsible Officer" when used with respect to the Trustee means any
officer in the corporate trust department of the Trustee, and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his or her knowledge of and familiarity with the
particular subject.

     "Restricted Investment" means an Investment other than a Permitted
Investment.

     "Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary. Unless the context otherwise
requires, references to a "Restricted Subsidiary" refer to a Restricted
Subsidiary of the Company.

     "Rhodia" means Rhodia S.A., a French company and the successor in interest
to Rhone-Poulenc Chemie S.A. under the TDI Agreements.

     "Rhodia TDI Plant" means the manufacturing facilities for the production of
toluene diisocyanate, currently owned by Rhodia and located at Pont-de-Claix,
France.

                                      22
<PAGE>

     "Sale and Leaseback Transaction" means, with respect to any Person, any
arrangement with a lender or an investor providing for the leasing by such
Person of any property or asset of such Person which has been or is being sold
or transferred by such Person to such lender or investor if such arrangement is
accounted for as a capitalized lease by such Person under GAAP.

     "SEC" means the Securities and Exchange Commission.

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

     "Security Documents" means (i) the Security Agreement dated May 17, 1999
between the Company and the Collateral Agent, each of the Pledge Agreements
dated as of July 28, 1998 between the Company and the Collateral Agent, the
Security Agreement dated as of July 28, 1998 among Lyondell Petrochemical G.P.
Inc., Lyondell Petrochemical L.P. Inc., and the Collateral Agent, the Security
Agreement dated as of July 28, 1998 among Lyondell Refining Company and the
Collateral Agent, the Security Agreement dated as of July 28, 1998 among
Lyondell General Methanol Company and Lyondell Limited Methanol Company and the
Collateral Agent, the Pledge Agreement dated as of December 31, 1998 between the
Company and the Collateral Agent relating to the pledge of shares of capital
stock of Lyondell Refining LP, LLC, the Security Agreement dated as of May 17,
1999 between the Company (as successor to Lyondell Chemical Worldwide, Inc.) and
the Collateral Agent, the Pledge Agreement dated as of May 17, 1999 between the
Company (as successor to Lyondell Chemical Worldwide, Inc.) and the Collateral
Agent, the Security Agreement dated as of December 31, 1998 between Lyondell
Refining LP, LLC and the Collateral Agent, the Deed of Trust dated as of May 13,
1999 (but effective as of May 17, 1999) relating to Bayport, Texas facility from
the Company (as successor to Lyondell Chemical Worldwide, Inc.) to the trustee
named therein for the benefit of the Collateral Agent, the Deed of Trust dated
May 13, 1999 (but effective as of May 17, 1999) relating to Channelview, Texas
facility from the Company (as successor to Lyondell Chemical Worldwide, Inc.) to
the trustee named therein for the benefit of the Collateral Agent, the Mortgage
dated as of May 13, 1999 (but effective as of May 17, 1999) relating to Lake
Charles, Louisiana facility from the Company (as successor to Lyondell Chemical
Worldwide, Inc.) to the Collateral Agent, the Pledge Agreement dated as of March
31, 2000 between Company and the Collateral Agent relating to the pledge of
limited liability company interests in each of Lyondell POJVGP, LLC, Lyondell
POJVLP1, LLC, Lyondell POJVLP2, LLC and Lyondell POJVLP3, LLC, the Security
Agreement dated as of March 31, 2000 between PO Offtake, LP and the Collateral
Agent; and the Security Agreement dated as of March 31, 2000 among Lyondell
POTechGP, Inc., Lyondell POTechLP, Inc. and the Collateral Agent and (ii) any
other pledge agreements, security agreements, mortgages, deeds of trust or other
agreements or instruments between the Company and/or any of its Restricted
Subsidiaries and the Collateral Agent granting Liens on any asset of the Company
or any of its Restricted Subsidiaries to secure the Existing Credit Facility
Obligations, in each case as amended, modified, restated or supplemented from
time to time.

     "Senior Indebtedness" has the meaning assigned to such term in the Senior
Subordinated Notes Indenture.

                                      23
<PAGE>

         "Senior Subordinated Notes" means the Company's 10 7/8% Senior
Subordinated Notes Due 2009 issued by the Company pursuant to the Senior
Subordinated Notes Indenture.

         "Senior Subordinated Notes Indenture" means the indenture among the
Company, the Subsidiary Guarantors party thereto and The Bank of New York, as
trustee, pursuant to which the Company issued the Senior Subordinated Notes.

         "Significant Asset Sale" means an Asset Sale of (x) any of the
Company's or its Restricted Subsidiaries' plants that (a) has a fair market
value in excess of $50 million or (b) for Net Proceeds in excess of $50 million
(a "Significant Asset") or (y) a controlling interest in any Restricted
Subsidiary that owns a Significant Asset (other than, in each case, an
involuntary disposition, to the extent that the Existing Credit Facility (but
not any refinancing thereof other than a credit facility with commercial banks
and other lenders) permits the proceeds thereof to be reinvested prior to any
mandatory prepayment of amounts outstanding thereunder).

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

         "Specified Joint Ventures" means (i) Equistar Chemicals, LP, (ii)
LYONDELL-CITGO Refining LP ("LCR") and (iii) Lyondell Methanol Company, L.P.

         "Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.07.

         "S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors.

         "Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness (or any later date established by any amendment to
such original documentation) and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.

         "Subject Assets" means, with respect to any Major Asset Sale, the
assets that are the subject of such Major Asset Sale.

         "Subject Assets Transferee" means any Restricted Subsidiary or Joint
Venture that becomes the owner of Subject Assets in connection with a Major
Asset Sale.

         "Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that

                                      24
<PAGE>

Person (or a combination thereof) and (ii) any partnership (a) the sole general
partner or the managing general partner of which is such Person or a Subsidiary
of such Person or (b) the only general partners of which are such Person or one
or more Subsidiaries of such Person (or any combination thereof) or (c) that is
a Specified Joint Venture and as to which (i) a general partner of which is such
Person or a Subsidiary of such Person, (ii) such Person owns, directly or
indirectly, 50% or more of the partnership interests of such Specified Joint
Venture and (iii) the Board of Directors of such Person has designated such
Specified Joint Venture to be a "Subsidiary" (which designation shall be
irrevocable for so long as such Specified Joint Venture satisfies the foregoing
requirements). As of the Issue Date, none of the Specified Joint Ventures (other
than Lyondell Methanol Company, L.P.) are Subsidiaries of the Company. Unless
the context otherwise requires, references to a "Subsidiary" refer to a
Subsidiary of the Company. No Specified Joint Venture that otherwise would be a
"Subsidiary" under this definition shall be deemed to be or become a Subsidiary
or Restricted Subsidiary until such designation would not result in a Default
under Section 4.06 (provided that, if (i) such Specified Joint Venture would
otherwise be or become a "Subsidiary" as a result of an Investment by the
Company or any Restricted Subsidiary made after June 12, 2002, and (ii) such
Investment is not made in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary or Joint Venture of
the Company) of, Qualified Equity Interests of the Company, then this sentence
shall not apply); at such time as the designation of such Specified Joint
Venture would not result in a Default under Section 4.06, such Specified Joint
Venture shall automatically be a Subsidiary and a Restricted Subsidiary (unless
designated as an Unrestricted Subsidiary).

         "Subsidiary Guarantee" means a Guarantee by a Subsidiary Guarantor of
the Company' obligations with respect to the Notes.

         "Subsidiary Guarantor" means (i) ARCO Chemical Technology, Inc., ARCO
Chemical Technology, L.P. and Lyondell Chemical Nederland, Ltd. and (ii) any
other Restricted Subsidiary that executes a supplemental indenture, in the form
of Exhibit B hereto, providing for the Guarantee of the payment of the Notes, in
each case until such time as such Subsidiary is released from its Subsidiary
Guarantee as permitted by this Indenture.

         "TDI Agreements" means (i) the Share Purchase Agreement dated as of
January 23, 1995 between ARCO Chemical Europe Inc. and Rhone-Poulenc Chemie
S.A., as such agreement may be amended, supplemented or otherwise modified from
time to time, (ii) the Processing Agreement dated as of January 23, 1995 between
ARCO Chemical Chemie TDI and Rhone-Poulenc Chemie S.A., as such agreement may be
amended, supplemented or otherwise modified from time to time, and (iii) the TDI
License.

         "TDI Assets" means (i) all rights of ARCO Chemical Europe Inc., ARCO
Chemical Chemie TDI, ARCO Chemical Technology, LP and their respective
successors under the TDI Agreements and (ii) all of Lyondell TDI's customer
lists relating to the Rhodia TDI Plant.

                                      25
<PAGE>

         "TDI License" means the TDI Technology Agreement dated as of January
23, 1995 between ARCO Chemical Technology LP and Rhone-Poulenc Chemie S.A., as
such agreement may be amended, supplemented or otherwise modified from time to
time.

         "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. sections
77aaa-77bbbb) as in effect on the date of this Indenture, except as provided by
Section 9.04.

         "Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.

         "Unrestricted Subsidiary" means (i) any Subsidiary of the Company that
is designated by the Board of Directors of the Company as an Unrestricted
Subsidiary pursuant to a board resolution, (ii) any Subsidiary of an
Unrestricted Subsidiary and (iii) any Accounts Receivable Subsidiary. The Board
of Directors may designate any Subsidiary of the Company (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary or any of its Subsidiaries owns any Equity Interest or
Indebtedness of, or holds any Lien on any property of, the Company or any other
Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so
designated; provided that

         (a)  any Guarantee (other than as a co-obligor of the Equistar Assumed
Debt so long as the Equistar Assumed Debt is not considered Indebtedness of the
Company pursuant to the definition thereof) by the Company or any Restricted
Subsidiary of any Indebtedness of the Subsidiary being so designated shall be
deemed an "Incurrence" of such Indebtedness and an "Investment" by the Company
or such Restricted Subsidiary (or both, if applicable) at the time of such
designation,

         (b)  either (i) the Subsidiary to be so designated has total assets of
$1,000 or less or (ii) if such Subsidiary has assets greater than $1,000, such
designation would be permitted under Section 4.07,

         (c)  if applicable, the Investment and the incurrence of Indebtedness
referred to in clause (a) of this proviso would be permitted under Section 4.06
and Section 4.07 and

         (d)  in the case of any Subsidiary that is a Joint Venture as of the
date of its designation as an Unrestricted Subsidiary, such Subsidiary has an
aggregate of 15% or more of its outstanding Capital Stock or other voting
interests (other than directors' qualifying shares) held by another Person other
than the Company or any Restricted Subsidiary or any Affiliate of the Company.

         Any such designation by the Board of Directors of the Company pursuant
to clause (i) above shall be evidenced to the Trustee by filing with the Trustee
a certified copy of the Board Resolution giving effect to such designation and
an Officer's Certificate certifying that such designation complied with the
foregoing conditions and was permitted by Section 4.06 and Section 4.07.

                                      26
<PAGE>

         If (i) at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements of clause (d) (because the Company has acquired more than
85% of the outstanding Capital Stock or other voting interests of any Subsidiary
that was a Joint Venture on the date of its designation as an Unrestricted
Subsidiary), or (ii) at any time the Company or any Restricted Subsidiary
Guarantees any Indebtedness of such Unrestricted Subsidiary or makes any other
Investment in such Unrestricted Subsidiary and such incurrence of Indebtedness
or Investment would not be permitted under Section 4.06 and Section 4.07 it
shall thereafter cease to be an Unrestricted Subsidiary for purposes of the
Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred
by a Restricted Subsidiary of the Company as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under Section 4.06,
the Company shall be in default of such covenant). The Board of Directors of the
Company may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that such designation shall be deemed to be an incurrence
of Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall be
permitted only if (i) such Indebtedness is permitted under Section 4.06 and (ii)
no Default or Event of Default would be in existence following such designation.

         "U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.

         "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments 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, by (ii) the then outstanding principal
amount of such Indebtedness.

         "Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all the outstanding Equity Interests of which (other
than directors' qualifying shares) shall at the time be owned by such Person or
by one or more Wholly Owned Restricted Subsidiaries of such Person or by such
Person and one or more Wholly Owned Restricted Subsidiaries of such Person.

         "Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all the outstanding Equity Interests of which (other than directors'
qualifying shares) shall at the time be owned by such Person or by one or more
Wholly Owned Subsidiaries of such Person or by such Person and one or more
Wholly Owned Subsidiaries of such Person.

         Section 1.02.  Other Definitions.

                                      27
<PAGE>

                        Term                          Defined
                                                     in Section

              Act                                       1.08
              Affiliate Transaction                     4.10
              Agent Members                             3.12
              Asset Sale Offer                          4.09
              Authentication Order                      3.03
              Change of Control Offer                   4.14
              Change of Control Payment                 4.14
              Change of Control Payment Date            4.14
              Covenant Defeasance                      12.03
              Defaulted Interest                        3.07
              DTC                                       2.03
              Event of Default                          6.01
              Excess Proceeds                           4.09
              Expiration Date                           1.08
              Global Notes                              2.01
              Guaranteed Indebtedness                   4.13
              incur                                     4.06
              Legal Defeasance                         12.02
              Physical Notes                            2.01
              Place of Payment                          3.01
              Redemption Amount                        10.01
              redemption date                          13.01
              Regular Record Date                       3.01
              Restricted Payment                        4.07
              Successor Company                         5.01
              Subordinated Debt                         4.07

         Section 1.03. Rules of Construction. For all purposes of this
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:

         (a)   the terms defined in this Indenture have the meanings assigned to
them in this Indenture;

         (b)   "or" is not exclusive;

         (c)   all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP and, unless expressly provided
otherwise, all determinations and computations made pursuant to any provision
hereof shall be made in accordance with GAAP; provided that references to any
Person and its Restricted Subsidiaries on a consolidated basis, and any
calculations of amounts with respect to any Person and its Restricted
Subsidiaries on a consolidated basis, shall refer to such Person and all its
Restricted Subsidiaries, whether or not such Restricted Subsidiaries would be
accounted for as consolidated subsidiaries on such Person's financial statements
prepared in accordance with GAAP;

                                      28
<PAGE>

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

          (e)  all references to "$" or "dollars" shall refer to the lawful
currency of the United States of America;

          (f)  the words "include," "included" and "including" as used herein
shall be deemed in each case to be followed by the phrase "without limitation,"
if not expressly followed by such phrase or the phrase "but not limited to";

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

          (h)  any reference to a Section or Article refers to such Section or
Article of this Indenture unless otherwise indicated.

          Section 1.04. Incorporation by Reference of TIA. Whenever this
Indenture refers to a provision of the TIA, the provision is incorporated by
reference in and made a part of this Indenture. This Indenture is subject to the
mandatory provisions of the TIA, which are incorporated by reference in and made
a part of this Indenture. Any terms incorporated by reference in this Indenture
that are defined by the TIA, defined by any TIA reference to another statute or
defined by SEC rule under the TIA, have the meanings so assigned to them
therein. The following TIA terms have the following meanings:

          "indenture securities" means the Notes.

          "indenture security holder" means a Holder or Noteholders.

          "indenture to be qualified" means this Indenture.

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

          "obligor" on the indenture securities means the Company, any
Subsidiary Guarantor and any other obligor on the indenture securities.

          Section 1.05. Conflict with TIA. If any provision hereof limits,
qualifies or conflicts with a provision of the TIA that is required under the
TIA to be a part of and govern this Indenture, the latter provision shall
control. If any provision of this Indenture modifies or excludes any provision
of the TIA that may be so modified or excluded, the latter provision shall be
deemed (a) to apply to this Indenture as so modified or (b) to be excluded, as
the case may be.

          Section 1.06. Compliance Certificates and Opinions. Upon any
application or request by the Company or by any other obligor upon the Notes to
the Trustee to take any action under any provision of this Indenture, the
Company or such other obligor upon the Notes, as the case may be, shall furnish
to the Trustee such certificates and

                                      29
<PAGE>

opinions as may be required under the TIA. Each such certificate or opinion
shall be given in the form of one or more Officer's Certificates, if to be given
by an Officer, or an Opinion of Counsel, if to be given by counsel, and shall
comply with the requirements of the TIA and any other requirements set forth in
this Indenture. Notwithstanding the foregoing, in the case of any such request
or application as to which the furnishing of any Officer's Certificate or
Opinion of Counsel is specifically required by any provision of this Indenture
relating to such particular request or application, no additional certificate or
opinion need be furnished.

          Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (except for certificates
provided for in Section 4.05) shall include:

          (a) a statement that the individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;

          (b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;

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

          (d) a statement as to whether, in the opinion of such individual, such
condition or covenant has been complied with.

          Section 1.07. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.

          Any certificate or opinion of an Officer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such Officer knows that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an Officer or Officers to the effect that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous.

          Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

                                      30
<PAGE>

          Section 1.08. Acts of Noteholders; Record Dates. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee, and, where it is
hereby expressly required, to the Company. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 7.01)
conclusive in favor of the Trustee, the Company and any other obligor upon the
Notes, if made in the manner provided in this Section 1.08.

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

          (c)  The ownership of Notes shall be proved by the Register.

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

          (e)  (i) The Company may set any day as a record date for the purpose
of determining the Holders of Outstanding Notes entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders, provided that the Company may not set a record date for, and the
provisions of this paragraph shall not apply with respect to, the giving or
making of any notice, declaration, request or direction referred to in Section
1.08(e)(ii). If any record date is set pursuant to this paragraph, the Holders
of Outstanding Notes on such record date (or their duly designated proxies), and
no other Holders, shall be entitled to take the relevant action, whether or not
such Persons remain Holders after such record date; provided that no such action
shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Notes on such record date. Nothing in this paragraph shall be construed to
prevent the Company from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with

                                      31
<PAGE>

no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Notes on the date such action
is taken. Promptly after any record date is set pursuant to this paragraph, the
Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Trustee in writing and to each Holder in the manner set forth in Section 1.10.

        (ii)  The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Notes entitled to join in the giving or
making of (w) any Notice of Default, (x) any declaration of acceleration
referred to in Section 6.02, (y) any request to institute proceedings referred
to in Section 6.06(b) or (z) any direction referred to in Section 6.05, in each
case with respect to Notes. If any record date is set pursuant to this
paragraph, the Holders of Outstanding Notes on such record date, and no other
Holders, shall be entitled to join in such notice, declaration, request or
direction, whether or not such Holders remain Holders after such record date;
provided that no such action shall be effective hereunder unless taken on or
prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Notes on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Notes on the date such action
is taken. Promptly after any record date is set pursuant to this paragraph, the
Trustee, at the expense of the Company, shall cause notice of such record date,
the proposed action by Holders and the applicable Expiration Date to be given to
the Company in writing and to each Holder in the manner set forth in Section
1.10.

        (iii) With respect to any record date set pursuant to this Section 1.08,
the party hereto that sets such record dates may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the Company or the
Trustee, whichever such party is not setting a record date pursuant to this
Section 1.08(e) in writing, and to each Holder in the manner set forth in
Section 1.10, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the party hereto that set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.

        (iv)  Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Note may do so with
regard to all or any part of the principal amount of such Note or by one or more
duly appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.

                                      32
<PAGE>

       Section 1.09. Notices, Etc., to Trustee and Company. Any request, demand,
authorization, direction, notice, consent, waiver or Act of Holders or other
document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,

       (a) the Trustee by any Holder or by the Company or any other obligor upon
the Notes shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at the Corporate Trust
Office (telephone: (212) 815-6286; facsimile: (212) 815-5915), or at any other
address furnished in writing to the Company by the Trustee, or

       (b) the Company by the Trustee or by any Holder shall be sufficient for
every purpose hereunder if in writing and delivered in person or mailed, first-
class postage prepaid, to the Company at One Houston Center, Suite 700, 1221
McKinney, Houston, Texas 77010, Attention: General Counsel (facsimile: (713)
309-2143), with copies to Baker Botts LLP at 910 Louisiana, Houston, Texas
77002, Attention: Stephen A. Massad, Esq. (facsimile: (713) 229-1522), or at any
other address previously furnished in writing to the Trustee by the Company.

       Section 1.10. Notices to Holders; Waivers. Where this Indenture provides
for notice to Holders of any event, such notice shall be deemed to have been
given upon the mailing by first class mail, postage prepaid, of such notices to
Holders at their registered addresses as recorded in the Register, not later
than the latest date, and not earlier than the earliest date, prescribed herein
for the giving of such notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders.

       Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.

       In case, by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail notice of any event as
required by any provision of this Indenture, then such notification as shall be
made with the approval of the Trustee (such approval not to be unreasonably
withheld) shall constitute a sufficient notification for every purpose
hereunder.

       Section 1.11. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.

       Section 1.12. Successors and Assigns. All covenants and agreements in
this Indenture by the Company shall bind its respective successors and assigns,
whether so expressed or not.

                                      33
<PAGE>

       Section 1.13. Separability Clause. In case any provision in this
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

       Section 1.14. Benefits of Indenture. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, any Paying Agent and the Holders, any
benefit or any legal or equitable right, remedy or claim under this Indenture.

       Section 1.15. Governing Law. THIS INDENTURE, THE NOTES AND THE
SUBSIDIARY GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF
CONFLICT OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY. TO THE EXTENT PERMITTED BY LAW, THE
TRUSTEE, THE COMPANY, THE SUBSIDIARY GUARANTORS, ANY OTHER OBLIGORS IN RESPECT
OF THE NOTES AND (BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS, AGREE TO SUBMIT
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT
LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES.

       Section 1.16. Legal Holidays. In any case where any Interest Payment
Date, Redemption Date or Stated Maturity of any Note shall not be a Business
Day, then (notwithstanding any other provision of this Indenture or of the
Notes) payment of interest, principal and premium (if any) need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the Interest Payment Date or Redemption Date, or
at the Stated Maturity.

       Section 1.17. No Personal Liability of Directors, Officers, Employees,
Incorporators and Stockholders. No director, officer, employee, incorporator,
shareholder or other holder of Equity Interests of the Company or the Subsidiary
Guarantors, as such, shall have any liability for any obligations of the Company
or the Subsidiary Guarantors under the Notes, the Subsidiary Guarantees, the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.

       Section 1.18. Exhibits and Schedules. All exhibits and schedules
attached hereto are by this reference made a part hereof with the same effect as
if herein set forth in full.

       Section 1.19. Counterparts. This Indenture may be executed in any number
of counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.

                                      34
<PAGE>

                                   ARTICLE 2
                                  Note Forms

       Section 2.01. Forms Generally. The Notes and the Trustee's certificate
of authentication relating thereto shall be in substantially the forms set
forth, or referenced, in Exhibit A annexed hereto and in this Article 2. The
Notes may have such appropriate insertions, omissions, substitutions, notations,
legends, endorsements, identifications and other variations as are required or
permitted by law, stock exchange rule or depository rule or usage, the
certificate of incorporation, bylaws or other similar governing instruments of
the Company, agreements to which the Company is subject, if any, or other
customary usage, or as may consistently herewith be determined by the Officers
of the Company executing such Notes, as evidenced by such execution (provided
always that any such notation, legend, endorsement, identification or variation
is in a form acceptable to the Company). Each Note shall be dated the date of
its authentication.

       Initial Notes and Additional Notes shall be issued initially in the
form of one or more permanent global Notes in substantially the form set forth
in Exhibit A (the "Global Note"), registered in the name of the nominee of the
Depositary, deposited with the Trustee, as custodian for the Depositary or its
nominee, duly executed by the Company and authenticated by the Trustee as
hereinafter provided or, at the Company's option, in the form of permanent
certificated notes ("Physical Notes") in substantially the form set forth in
Exhibit A duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the 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 or its nominee, in connection with any
transfers of interests therein as provided in Section 3.12.

       Section 2.02. Form of Trustee' Certificate of Authentication. The
Trustee's certificate of authentication shall be in substantially the following
form:

       This is one of the Notes referred to in the within-mentioned Indenture.

                                    THE BANK OF NEW YORK,
                                     as Trustee

Dated: __________                   By: __________________________
                                           Authorized Signatory

       If an appointment of an Authenticating Agent is made pursuant to
Section 7.15, the Notes may have endorsed thereon, in lieu of the Trustee's
certificate of authentication, an alternative certificate of authentication in
the following form:

                                      35
<PAGE>

       This is one of the Notes referred to in the within-mentioned Indenture.

                                      THE BANK OF NEW YORK,
                                       As Trustee

                                           By _____________________________
                                              As Authenticating Agent

                                           By _____________________________
                                              Authorized Signatory

Dated:

       Section 2.03. Global Note Legend. Each Global Note, whether or not an
Initial Note or Additional Note, shall bear the following legend on the face
thereof:

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

       TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 3.12 OF THE INDENTURE.

                                   ARTICLE 3
                                   The Notes

       Section 3.01. Title and Terms. The aggregate principal amount of Notes
that may be authenticated and delivered and Outstanding under this Indenture is
initially limited to $275,000,000, but may be increased, subject to compliance
with the covenants contained in Article 4 below and the conditions set forth in
Section 3.03, and except as may be limited by applicable law. The Initial Notes
will be issued in an aggregate principal amount of $275,000,000. Subject to the
conditions set forth in Section 3.03 and the covenants contained in Article 4
below, the Company may issue Additional

                                      36
<PAGE>

Notes hereunder. Additional Notes shall vote (or consent) as a class with the
Initial Notes and otherwise be treated as Notes for all purposes of this
Indenture.

       The Notes shall be known and designated as the ".% Senior Secured
Notes, Due 2012" of the Company. The final Stated Maturity of the Notes shall be
July 1, 2012. Interest on the Outstanding principal amount of Notes will accrue
at the rate of .% per annum and will be payable semiannually in arrears on
January 1 and July 1 in each year, commencing on January 1, 2003, to Holders of
record at the close of business on the immediately preceding June 15 and
December 15, respectively (each such June 15 and December 15 a "Regular Record
Date"). Interest on the Notes will accrue from the most recent date to which
interest has been paid or duly provided for or, if no interest has been paid,
from ., 2002; provided that if any Note is surrendered for exchange on or after
a record date for an Interest Payment Date that will occur on or after the date
of such exchange, interest on the Note received in exchange thereof will accrue
from the date of such Interest Payment Date. The Company will pay interest on
overdue principal and, to the extent lawful, on overdue installments of interest
at a rate of 1% per annum in excess of the interest rate referred to above.

       The principal of, and premium, if any, and interest on the Notes shall
be payable at the Corporate Trust Office or at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, The City of New
York (each, a "Place of Payment") in the manner provided in Section 4.01(b);
provided, however, that, under the circumstances set forth in Section 4.01(b),
payment of interest on a Note may be made by wire transfer of immediately
available funds to the account specified by the Holder of a Global Note or by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Register.

       Section 3.02. Denominations. The Notes shall be issuable only in
registered form without coupons and only in denominations of $1,000 and any
integral multiple thereof.

       Section 3.03. Execution, Authentication and Delivery and Dating. The
Notes shall be executed on behalf of the Company by an Officer of such Company.
The signature of such Officer on the Notes may be manual or facsimile.

       Notes bearing the manual or facsimile signature of an individual who was
at any time a proper Officer of the Company shall bind the Company,
notwithstanding that such individual has ceased to hold such office prior to the
authentication and delivery of such Notes or did not hold such office at the
date of such Notes.

       At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Notes executed by the Company to the
Trustee for authentication; and the Trustee shall authenticate and deliver (i)
Initial Notes for original issue in the aggregate principal amount not to exceed
$275,000,000 and (ii) Additional Notes from time to time for original issue in
aggregate principal amounts specified by the Company, in each case upon a
written order of the Company in the form of an Officer's Certificate (an
"Authentication Order"), and in the case of clause (ii), upon receipt by the
Trustee of an Opinion of Counsel confirming that the Holders of the Outstanding

                                      37
<PAGE>

Notes will be subject to federal income tax in the same amounts, in the same
manner and at the same times as would have been the case if such Additional
Notes were not issued. Such Officer's Certificates shall specify the amount of
Notes to be authenticated and the date on which the Notes are to be
authenticated, whether the Notes are to be Initial Notes or Additional Notes,
that, in the case of Additional Notes, (x) the issuance of such Notes does not
contravene any provision of Article 4 of this Indenture and (y) after giving
effect to such issuance of Additional Notes and the application of the use of
proceeds therefrom, the aggregate principal amount of Notes outstanding does not
exceed the amount permitted to be equally and ratably secured under the Existing
Credit Facility without causing a default thereunder, whether the Notes are to
be issued as one or more Global Notes or Physical Notes, the name or names of
the Initial Holder or Holders and such other information as the Company may
include or the Trustee may reasonably request.

       All Notes shall be dated the date of their authentication.

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

       Section 3.04. Temporary Notes. Until definitive Notes are ready for
delivery, the Company may prepare and upon receipt of an Authentication Order
the Trustee shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. If temporary Notes are
issued, the Company will cause definitive Notes to be prepared without
unreasonable delay. After the preparation of definitive Notes, the temporary
Notes shall be exchangeable for definitive Notes upon surrender of the temporary
Notes at the office or agency of the Company in a Place of Payment, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Notes, the Company shall execute and upon receipt of an Authentication
Order the Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Notes of authorized denominations. Until so
exchanged the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as definitive Notes of the same series and tenor.

       Section 3.05. Registration, Registration of Transfer and Exchange. The
Company shall cause to be kept at the Corporate Trust Office of the Trustee a
register (the register maintained in such office and in any other office or
agency of the Company in a Place of Payment being herein sometimes collectively
referred to as the "Register") in which, subject to such reasonable regulations
as it may prescribe, the Company shall provide for the registration of Notes and
of transfers of Notes. The Trustee is hereby appointed "Registrar" for the
purpose of registering Notes and transfers of Notes as herein provided.

       Upon surrender for transfer of any Note at the office or agency of the
Company in a Place of Payment, in compliance with all applicable requirements of
this Indenture

                                      38
<PAGE>

and applicable law, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes, of any authorized denominations and of a
like aggregate principal amount.

         At the option of the Holder, Notes may be exchanged for other Notes, of
any authorized denominations and of a like tenor and aggregate principal amount,
upon surrender of the Notes to be exchanged at such office or agency. Whenever
any Notes are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Notes that the Holder making the
exchange is entitled to receive.

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

         Every Note presented or surrendered for registration of transfer or
exchange shall (if so required by the Company or the Registrar) 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 such Holder's attorney duly authorized in writing.

         No service charge shall be made for any registration of transfer or
exchange or redemption of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes under this
Section 3.05.

         Section 3.06. Mutilated, Destroyed, Lost and Stolen Notes. If (a) any
mutilated Note is surrendered to the Trustee, or the Company and the Trustee
receive evidence to their satisfaction of the destruction, loss or theft of any
Note, and (b) there is delivered to the Company and the Trustee such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Company or the Trustee that such Note has been acquired
by a bona fide purchaser, the Company shall execute and upon receipt of an
Authentication Order the Trustee shall authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note of
like tenor and principal amount, bearing a number not contemporaneously
Outstanding.

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

         Upon the issuance of any new Note under this Section 3.06, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

                                      39
<PAGE>

     Every new Note issued pursuant to this Section 3.06 in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and ratably with
any and all other Notes duly issued hereunder.

     The provisions of this Section 3.06 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.

     Section 3.07. Payment of Interest Rights Preserved. Interest on any Note
that is payable, and is punctually paid or duly provided for, on any Interest
Payment Date shall be paid to the Person in whose name that Note (or one or more
Predecessor Notes) is registered at the close of business on the Regular Record
Date for such interest specified in Section 3.01.

     Any interest on any Note that is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered Holder on the
relevant Regular Record Date by virtue of having been such Holder; and such
Defaulted Interest shall be paid by the Company, as provided in 3.07(a) or
3.07(b) below:

     (a)  The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Notes (or their respective Predecessor Notes) are
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Note and the date of the proposed payment, and at
the same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements reasonably satisfactory to the Trustee for
such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as provided in this Section 3.07(a). Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 nor less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted Interest,
the amount thereof and the Special Record Date and payment date therefor to be
mailed, first class postage prepaid, to each Holder at such Holder's address as
it appears in the Register, not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so mailed, such Defaulted Interest shall be
paid to the Persons in whose names the Notes (or their respective Predecessor
Notes) are registered on such Special Record Date and shall no longer be payable
pursuant to the following 3.07(b).

     (b)  The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
on

                                      40
<PAGE>

which the Notes may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause (b), such payment shall be deemed practicable by
the Trustee.

     Subject to the foregoing provisions of this Section 3.07, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, that were carried by such other Note.

     Section 3.08.  Persons Deemed Owners. Prior to due presentment of a Note
for registration of transfer, the Company, the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name such Note is
registered as the owner of such Note for the purpose of receiving payment of
principal of (and premium, if any, on) and (subject to Section 3.07) interest on
such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and none of the Company, the Subsidiary Guarantors, the Trustee or any
agent of the Company, the Subsidiary Guarantors or the Trustee shall be affected
by notice to the contrary.

     Section 3.09.  Cancellation. All Notes surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and, if not already canceled,
shall be promptly canceled by it. The Company may at any time deliver to the
Trustee for cancellation any Notes previously authenticated and delivered
hereunder that the Company may have acquired in any manner whatsoever, and all
Notes so delivered shall be promptly canceled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section 3.09, except as expressly permitted by this Indenture. All canceled
Notes held by the Trustee shall be disposed of in accordance with the Trustee's
customary procedures.

     Section 3.10.  Computation of Interest. Interest on the Notes shall be
computed on the basis of a 360-day year of twelve 30-day months.

     Section 3.11.  CUSIP Numbers. The Company in issuing the Notes may use
"CUSIP" or "CINS" numbers (if then generally in use) in addition to serial
numbers, and, if so, the Trustee shall use such "CUSIP" or "CINS" numbers in
addition to serial numbers in notices of redemption, repurchase or other notices
to Holders as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such "CUSIP" or "CINS"
numbers either as printed on the Notes or as contained in any notice of a
redemption or repurchase and that reliance may be placed only on the serial or
other identification numbers printed on the Notes, and any such redemption or
repurchase shall not be affected by any defect in or omission of such numbers.
The Company will promptly notify the Trustee of any change in the "CUSIP" or
"CINS" numbers.

                                      41
<PAGE>

     Section 3.12.  Book-entry Provisions for Global Notes.

     (a)  Each Global Note initially shall (i) be registered in the name of the
Depositary for such Global Notes or the nominee of such Depositary, (ii) be
delivered to the Trustee as custodian for such Depositary and (iii) bear a
legend as set forth in Section 2.03. None of the Company or the Subsidiary
Guarantors, nor any of their agents shall have any responsibility or liability
for any aspect of the records relating to, or payments made on account of
beneficial ownership interests of, a Global Note, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.

     Members of, or participants in, the Depositary ("Agent Members") shall have
no rights under this Indenture with respect to any Global Note, and the
Depositary may be treated by the Company, the Subsidiary Guarantors, the Trustee
and any agent of the Company, the Subsidiary Guarantors or the Trustee as the
absolute owner of such Global Note for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Company, the Subsidiary
Guarantors, the Trustee or any agent of the Company, the Subsidiary Guarantors
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 beneficial owner of any Note. The registered Holder
of a 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.

     (b)  Interests of beneficial owners in a Global Note may be transferred in
accordance with the applicable rules and procedures of the Depositary. Transfers
of a Global Note shall be limited to transfers of such Global Note in whole, but
not in part, to the Depositary, its successors or their respective nominees,
except that Physical Notes shall be transferred to all beneficial owners in
exchange for their beneficial interests in the Global Note in the event that (A)
the Depositary notifies the Company that it is unwilling or unable to continue
as Depositary for the Global Note and a successor depositary is not appointed by
the Company within 90 days or has ceased to be a clearing agency registered
under the Exchange Act or (B) an Event of Default has occurred and is continuing
and the Registrar has received a request from the Depositary. In addition,
beneficial interests in a Global Note may be exchanged for Physical Notes (x) at
the Company's option or (y) upon request but only upon at least 20 days' prior
written notice given to the Trustee by or on behalf of the Depository in
accordance with customary procedures. In connection with any transfer or
exchange of a portion of the beneficial interest in any Global Note to
beneficial owners for Physical Notes pursuant to this Section 3.12(b), the
Registrar shall record on its books and records (and make a notation on the
Global Note of) the date and a decrease in the principal amount of such Global
Note in an amount equal to the beneficial interest in the Global Note being
transferred, and the Company shall execute, and the Trustee shall authenticate
and deliver, one or more Physical Notes of like tenor and principal amount of
authorized denominations. In connection with a transfer of an entire Global Note
to beneficial owners pursuant to this paragraph (b), the applicable Global Note
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depositary in

                                      42
<PAGE>

exchange for its beneficial interest in the applicable Global Note, an equal
aggregate principal amount at maturity of Physical Notes of authorized
denominations.

     (c)  The Company, the Subsidiary Guarantors, any other obligor upon the
Notes or the Trustee, in the discretion of any of them, may treat as the Act of
a Holder any instrument or writing of any Person that is identified by the
Depositary as the owner of a beneficial interest in the Global Note, provided
that the fact and date of the execution of such instrument or writing is proved
in accordance with Section 1.08(b).

     (d)  The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to this Section 3.12. The Company shall
have the right to require the Registrar to deliver to the Company, at the
Company's expense, copies of all such letters, notices or other written
communications at any reasonable time upon the giving of reasonable written
notice to the Registrar.

     In connection with any transfer of any Note, the Trustee, the Registrar and
the Company shall be entitled to receive, shall be under no duty to inquire
into, may conclusively presume the correctness of, and shall be fully protected
in relying upon the certificates, opinions and other information referred to
herein received from any Holder and any transferee of any Note regarding the
validity, legality and due authorization of any such transfer and any other
facts and circumstances related to such transfer.

     (e)  Any transferee entitled to receive a Physical Note may request that
the principal amount thereof be evidenced by one or more Physical Notes in any
authorized denomination or denominations and the Registrar shall comply with
such request if all other transfer restrictions are satisfied.

                                   ARTICLE 4
                                   Covenants

     Section 4.01. Payment of Principal, Premium and Interest. (a) The Company
will duly and punctually pay the principal of (and premium, if any) and interest
on the Notes in accordance with the terms of the Notes and this Indenture. An
installment of principal (and premium, if any) or interest shall be considered
paid on the date it is due if the Trustee or Paying Agent or Paying Agents hold
on that date money designated for and sufficient to pay the installment.

     (b)  Payments (including principal, premium, if any, and interest) in
respect of the Notes represented by the Global Notes, the Holder of which has
given wire transfer instructions on or prior to the relevant record date, shall
be made by wire transfer of immediately available funds to the accounts
specified by the Global Note Holder. With respect to Physical Notes, the Company
will make all payments of principal, premium, if any, and interest at the office
or agency maintained by the Company in The City of New York referred to in
Section 4.02 or, at the option of the Company, by mailing a check to each such
Holder's registered address.

     Section 4.02. Maintenance of Office or Agency. The Company will maintain
in the Borough of Manhattan, The City of New York an office or agency where
Notes may

                                      43
<PAGE>

be presented or surrendered for payment, where Notes may be surrendered for
transfer or exchange and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company will give
prompt written notice to the Trustee of the location, and of any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain such office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee. The Company hereby
designates the Corporate Trust Office as an initial Place of Payment and as such
office of the Company in the Borough of Manhattan, The City of New York, and
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands so long as such Corporate Trust Office remains a Place of
Payment.

     Section 4.03. Money for Payments to Be Held in Trust. If the Company shall
at any time act as its own Paying Agent, it will, on or before each due date of
the principal of (and premium, if any) or interest on, any of the Notes,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal (and premium, if any) or interest so
becoming due until such sums shall be paid to such Persons or otherwise disposed
of as herein provided, and will promptly notify the Trustee of its action or
failure so to act.

     If the Company is not acting as its own Paying Agent, it will, prior to
each due date of the principal of (and premium, if any) or interest on, any
Notes, deposit with a Paying Agent a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due, such sum to be held in trust for
the benefit of the Persons entitled to such principal, premium or interest, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.

     If the Company is not acting as its own Paying Agent, the Company will
cause any Paying Agent other than the Trustee to execute and deliver to the
Trustee an instrument in which such Paying Agent shall agree with the Trustee,
subject to the provisions of this Section 4.03, that such Paying Agent will:

     (a)  hold all sums held by it for the payment of principal of (and premium,
if any) or interest on Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided;

     (b)  give the Trustee notice of any default by the Company (or any other
obligor upon the Notes) in the making of any such payment of principal (and
premium, if any) or interest;

     (c)  at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent; and

     (d)  acknowledge, accept and agree to comply in all respects with the
provisions of this Indenture and TIA relating to the duties, rights and
liabilities of such Paying Agent.

                                      44
<PAGE>

     The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.

     Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest on any Note and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and payable shall be
paid in the appropriate proportion to the Company upon a Company Request, or (if
then held by the Company) shall be discharged from such trust; and the Holder of
such Note shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease.

     Section 4.04. SEC Reports. (a) Whether or not required by the rules and
regulations of the SEC, so long as any Notes issued hereunder are outstanding,
the Company will furnish to each Trustee and the Holders of Notes (i) all
quarterly and annual financial information that would be required to be
contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were
required to file such Forms, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and, with respect to the
annual information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed with
the SEC on Form 8-K if the Company were required to file such reports. In
addition, whether or not required by the rules and regulations of the SEC, the
Company will file a copy of all such information and reports with the SEC for
public availability and make such information available to securities analysts
and prospective investors upon request.

     (b)  All obligors on the Notes will comply with Section 314(a) of the TIA.

     (c)  The Company shall promptly mail copies of all such annual reports,
information, documents and other reports provided to the Trustee pursuant to
clauses (a) and (c) hereof to the Holders at their addresses appearing in the
Register maintained by the Registrar.

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

     Section 4.05. Certificates to Trustee. (a) The Company will deliver to
the Trustee within 120 days after the end of each fiscal year of the Company a
certificate

                                      45
<PAGE>

from the principal executive, financial or accounting officer of the Company
stating that such officer has conducted or supervised a review of the activities
of the Company and its Restricted Subsidiaries and the Company's and its
Restricted Subsidiaries' performance under this Indenture and that, based upon
such review, to the best of such officer's knowledge, the Company has fulfilled
all obligations thereunder or, if there has been a default in the fulfillment of
any such obligation (determined without regard to any period of grace or
requirement of notice provided in this Indenture), specifying each such default
and the nature and status thereof.

     (b)  The Company will deliver to the Trustee, as soon as possible and in
any event within 30 days after the Company becomes aware of an Event of Default
or a Default, an Officer's Certificate setting forth the details of such Event
of Default or Default, and the action which the Company proposes to take or has
taken with respect thereto.

     (c)  The Company will deliver to the Trustee within 120 days after the end
of each fiscal year of the Company a written statement by the Company's
independent public accountants stating (i) that their audit examination has
included a review of the terms of this Indenture and the Notes as they relate to
accounting matters, and (ii) whether, in connection with their audit
examination, any Default has come to their attention and, if such a Default has
come to their attention, specifying the nature and period of the existence
thereof.

     Section 4.6.  Limitation on Indebtedness.  (a) On or after the Issue Date:

          (i)    the Company will not, and will not permit any of its Restricted
     Subsidiaries to, directly or indirectly, create, incur, issue, assume,
     Guarantee or otherwise become directly or indirectly liable, contingently
     or otherwise, with respect to (collectively, "incur") any Indebtedness
     (including Acquired Debt);

          (ii)   the Company will not, and will not permit any of its Restricted
     Subsidiaries to, issue any Disqualified Stock (including Acquired
     Disqualified Stock);

          (iii)  and the Company will not permit any of its Restricted
     Subsidiaries that are not Subsidiary Guarantors to issue any shares of
     Preferred Stock (including Acquired Preferred Stock);

provided, however, that the Company and the Subsidiary Guarantors may incur
Indebtedness (including Acquired Debt) and the Company and the Subsidiary
Guarantors may issue shares of Disqualified Stock (including Acquired
Disqualified Stock) if the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which financial statements have
been filed with the SEC pursuant to Section 4.04 immediately preceding the date
on which such additional Indebtedness is incurred or such Disqualified Stock is
issued would have been at least 2.0 to 1, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred or the Disqualified Stock had been
issued, as the case may be, at the beginning of such four-quarter period.
Letters of credit and

                                      46
<PAGE>

bankers' acceptances shall be deemed to have an aggregate principal amount of
Indebtedness equal to the maximum amount available thereunder.

          (b)   The foregoing provisions will not apply to:

                  (i)   the incurrence by the Company of Indebtedness pursuant
         to the Existing Credit Facility (and by its Subsidiaries of Guarantees
         thereof) in an aggregate principal amount at any time outstanding not
         to exceed an amount equal to $3.202 billion less the aggregate amount
         of all mandatory repayments (other than mandatory prepayments triggered
         solely by the issuance of Indebtedness or Preferred Stock of a Finance
         Subsidiary to refinance the Existing Credit Facility) applied after May
         17, 1999 to (x) repay loans (other than revolving credit loans)
         outstanding thereunder or (y) permanently reduce the revolving credit
         commitments thereunder;

                  (ii)  the incurrence by the Company and the Subsidiary
         Guarantors of Indebtedness represented by the Notes (other than
         Additional Notes) and the Subsidiary Guarantees thereof;

                  (iii) the incurrence by the Company and its Restricted
         Subsidiaries of Existing Indebtedness (other than Indebtedness of the
         type described in clause (i), (ii) or (v) through (xii) of this
         covenant);

                  (iv)  the incurrence by the Company or any of its Restricted
         Subsidiaries of any Permitted Refinancing in exchange for, or the net
         proceeds of which are used to extend, refinance, renew, replace,
         defease or refund, Indebtedness that was permitted to be incurred under
         the Fixed Charge Coverage Ratio test set forth above or clause (ii) or
         (iii) above or (xiii) or (xiv) below or this clause (iv);

                  (v)   the incurrence by the Company or any of its Restricted
         Subsidiaries of intercompany Indebtedness between or among the Company
         and any of its Restricted Subsidiaries; provided, however, that (i) if
         the Company or any Subsidiary Guarantor is the obligor on such
         Indebtedness, such Indebtedness is expressly subordinated to the prior
         payment in full in cash of all Obligations with respect to the Notes or
         the Subsidiary Guarantee, as the case may be, and (ii)(A) any
         subsequent issuance or transfer of Equity Interests that results in any
         such Indebtedness being held by a Person other than the Company or a
         Restricted Subsidiary and (B) any sale or other transfer of any such
         Indebtedness to a Person that is not either the Company or a Restricted
         Subsidiary shall be deemed, in each case, to constitute an incurrence
         of such Indebtedness by the Company or such Restricted Subsidiary, as
         the case may be;

                  (vi)  the incurrence by the Company or any Restricted
         Subsidiary of Hedging Obligations that are incurred for the purpose of
         (A) fixing or hedging interest rate or currency risk with respect to
         any fixed or floating rate Indebtedness that is permitted by the
         Indenture to be outstanding or any receivable or liability the payment
         of which is determined by reference to a

                                      47
<PAGE>

         foreign currency; provided that the notional principal amount of any
         such Hedging Obligation does not exceed the principal amount of the
         Indebtedness to which such Hedging Obligation relates or (B) fixing or
         hedging risk with respect to fluctuations in the cost of raw materials;
         provided that such obligation is entered into for valid business
         purposes other than speculative purposes (as determined by the
         Company's or such Restricted Subsidiary's principal financial officer
         in the exercise of his or her good faith business judgment);

               (vii)  the issuance by any of the Company's Restricted
         Subsidiaries of shares of Preferred Stock to the Company or a Wholly
         Owned Restricted Subsidiary; provided that (A) any subsequent issuance
         or transfer of Equity Interests that results in such Preferred Stock
         being held by a Person other than the Company or a Wholly Owned
         Restricted Subsidiary or (B) the transfer or other disposition by the
         Company or a Wholly Owned Restricted Subsidiary of any such shares to a
         Person other than the Company or a Wholly Owned Restricted Subsidiary
         shall be deemed, in each case, to constitute an issuance of such
         Preferred Stock by such Subsidiary on such date that is not permitted
         by this clause (vii);

               (viii) the incurrence by the Company or any of its Restricted
         Subsidiaries of Indebtedness represented by tender, bid, performance,
         government contract, surety or appeal bonds, standby letters of credit
         and warranty and contractual service obligations of like nature, trade
         letters of credit or documentary letters of credit, in each case to the
         extent incurred in the ordinary course of business of the Company or
         such Restricted Subsidiary and the incurrence by the Company of
         Indebtedness represented by letters of credit incurred in connection
         with the PBGC Settlement;

               (ix)   the incurrence by any Restricted Subsidiary of the Company
         of Indebtedness or the issuance by any Restricted Subsidiary of
         Preferred Stock, the aggregate principal amount or liquidation
         preference of which, together with all other Indebtedness and Preferred
         Stock of the Company's Restricted Subsidiaries at the time outstanding
         and incurred or issued in reliance upon this clause (ix), does not
         exceed $50.0 million;

               (x)    the issuance by any Finance Subsidiary of Preferred Stock
         with an aggregate liquidation preference not exceeding the amount of
         Indebtedness of the Company held by such Finance Subsidiary; provided
         that the Fixed Charge Coverage Ratio for the Company's most recently
         ended four full fiscal quarters for which financial statements have
         been filed with the SEC pursuant to the covenant described below under
         Section 4.04 immediately preceding the date on which such Preferred
         Stock is issued would have been at least 2.0 to 1, determined on a pro
         forma basis (including a pro forma application of the net proceeds
         therefrom) as if such Preferred Stock had been issued at the beginning
         of such four-quarter period;

               (xi)   the incurrence of Indebtedness by Foreign Subsidiaries in
         an aggregate principal amount (or accreted value, as applicable) at any
         time

                                      48
<PAGE>

         outstanding and incurred in reliance upon this clause (xi) not to
         exceed $100.0 million;

               (xii)  the Guarantee by any Restricted Subsidiary of Indebtedness
         of the Company or a Restricted Subsidiary that was permitted to be
         incurred by another provision of this covenant;

               (xiii) Acquired Debt or Acquired Disqualified Stock; provided
         that such Indebtedness or Disqualified Stock was not incurred in
         connection with or in contemplation of such Person's becoming a
         Restricted Subsidiary; and provided further that immediately after
         giving effect to such incurrence, the Fixed Charge Coverage Ratio for
         the Company's most recently ended four full fiscal quarters for which
         financial statements have been filed with the SEC pursuant to Section
         4.04 immediately preceding the date of such incurrence would have been
         at least 2.0 to 1, determined on a pro forma basis;

               (xiv)  Indebtedness or Disqualified Stock of a Specified Joint
         Venture or a Subsidiary thereof existing at the time such Specified
         Joint Venture first becomes a Restricted Subsidiary; provided that such
         Indebtedness or Disqualified Stock was not incurred in connection with
         or in contemplation of such Specified Joint Venture's becoming a
         Restricted Subsidiary; and provided further that immediately after
         giving effect to such Specified Joint Venture's becoming a Restricted
         Subsidiary, the Fixed Charge Coverage Ratio for the Company's most
         recently ended four full fiscal quarters for which financial statements
         have been filed with the SEC pursuant to Section 4.04 immediately
         preceding the date on which such Specified Joint Venture became a
         Restricted Subsidiary would have been, determined on a pro forma basis,
         (x) at least 2.0 to 1 or (y) equal to or greater than it was
         immediately prior to such Specified Joint Venture's becoming a
         Restricted Subsidiary;

               (xv)   with respect to any Specified Joint Venture that becomes a
         Restricted Subsidiary, the incurrence by such Specified Joint Venture
         of Indebtedness under any revolving credit facility in an aggregate
         principal amount at any time outstanding not to exceed the aggregate
         principal amount of committed financing under all revolving credit
         facilities of such Specified Joint Venture as in effect on May 17,
         1999; and

               (xvi)  the incurrence by the Company or any Subsidiary Guarantor
         of Indebtedness in an aggregate principal amount (or accreted value, as
         applicable) at any time outstanding and incurred in reliance on this
         clause (xvi) not to exceed $25.0 million.

         (c)   For purposes of determining compliance with this covenant, in the
event that an item of Indebtedness or Preferred Stock meets the criteria of more
than one of the categories of permitted Indebtedness described in clauses (i)
through (xvi) above or is entitled to be incurred pursuant to Section 4.06(a),
the Company shall, in its sole discretion, classify such item of Indebtedness or
Preferred Stock in any manner that complies with this covenant and such
Indebtedness or Preferred Stock will be treated as

                                      49
<PAGE>

having been incurred pursuant to the clauses or Section 4.06(a), as the case may
be, designated by the Company. The amount of Indebtedness issued at a price
which is less than the principal amount thereof shall be equal to the amount of
the liability in respect thereof determined in accordance with GAAP.

         Section 4.07.  Limitation on Restricted Payments. (a) The Company will
not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly:

                  (i)   declare or pay any dividend or make any distribution on
         account of the Company's or any of its Restricted Subsidiaries' Equity
         Interests (other than (x) dividends or distributions payable in
         Qualified Equity Interests of the Company and (y) dividends or
         distributions payable to the Company or any Restricted Subsidiary of
         the Company);

                  (ii)  purchase, redeem or otherwise acquire or retire for
         value any Equity Interests of the Company, any of its Restricted
         Subsidiaries or any Affiliate of the Company (other than any such
         Equity Interests owned by the Company or any of its Restricted
         Subsidiaries);

                  (iii) make any principal payment on, or purchase, redeem,
         defease or otherwise acquire or retire for value any Indebtedness
         ("Subordinated Debt") of the Company or any Restricted Subsidiary that
         is subordinated by its terms to the Notes or the Subsidiary Guarantees
         (other than Indebtedness owed to the Company or any Restricted
         Subsidiary), except, in each case, payment of interest or principal at
         Stated Maturity; or

                  (iv)  make any Restricted Investment (all such payments and
         other actions set forth in clauses (i) through (iv) above being
         collectively referred to as "Restricted Payments");

unless, at the time of and after giving effect to such Restricted Payment (the
amount of any such Restricted Payment, if other than cash, shall be the fair
market value (as conclusively evidenced by a Board Resolution) of the asset(s)
proposed to be transferred by the Company or such Restricted Subsidiary, as the
case may be, pursuant to such Restricted Payment):

         (A) no Default or Event of Default shall have occurred and be
continuing after giving effect thereto; and

         (B) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the most recently ended four full fiscal quarters for which
financial statements have been filed with the SEC pursuant to Section 4.04
immediately preceding the date of such Restricted Payment, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in Section 4.06(a) and

                                      50
<PAGE>

          (C) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted Subsidiaries after
May 17, 1999 (excluding Restricted Payments permitted by Section 4.07(b)(ii) (to
the extent paid to the Company or any of its Restricted Subsidiaries or to the
extent such distributions are deducted as a minority interest in calculating
Consolidated Net Income), Section 4.07(b)(iii), Section 4.07(b)(iv), Section
4.07(b)(v), Section 4.07(b)(vii), Section 4.07(b)(x), Section 4.07(b)(xiv) and
Section 4.07(b)(xvi) and 50% of any Restricted Payments permitted by Section
4.07(b)(viii)), is less than the sum, without duplication, of:

              (i)   50% of the Consolidated Net Income of the Company for the
              period (taken as one accounting period) from the beginning of the
              first fiscal quarter commencing on April 1, 1999, to the end of
              the Company's most recently ended fiscal quarter for which
              financial statements have been filed with the SEC pursuant to
              Section 4.04 at the time of such Restricted Payment (or, if such
              Consolidated Net Income for such period is a deficit, less 100% of
              such deficit), plus

              (ii)  100% of the aggregate net cash proceeds received by the
              Company or any of its Restricted Subsidiaries from the issue or
              sale (other than to a Subsidiary or Joint Venture of the Company)
              after May 17, 1999 of Qualified Equity Interests of the Company or
              of debt securities of the Company or any of its Restricted
              Subsidiaries that have been converted into or exchanged for such
              Qualified Equity Interests of the Company, plus

              (iii) to the extent that any Restricted Investment (other than a
              Restricted Investment permitted to be made pursuant to Section
              4.07(b)(vii) or Section 4.07(b)(viii) below) that was made after
              May 17, 1999 is sold for cash or otherwise liquidated, repaid or
              otherwise reduced, including by way of dividend (to the extent not
              included in calculating Consolidated Net Income), for cash, the
              lesser of (A) the cash return with respect to such Restricted
              Investment (less the cost of disposition, if any) and (B) the
              initial amount of such Restricted Investment plus

              (iv)  an amount equal to the sum of (A) the net reduction in
              Investments in Unrestricted Subsidiaries resulting from dividends,
              repayments of loans or other transfers of assets (to the extent
              not included in calculating Consolidated Net Income), in each case
              to the Company or any Restricted Subsidiary from Unrestricted
              Subsidiaries and (B) the portion (proportionate to the Company's
              equity interest in such Subsidiary) of the fair market value of
              the net assets of an Unrestricted Subsidiary at the time such
              Unrestricted Subsidiary is designated a Restricted Subsidiary;
              provided, however, that the foregoing sum shall not exceed, in the
              case of any Unrestricted Subsidiary, the amount of Restricted
              Investments (other than Restricted Investments permitted to be
              made pursuant to Section 4.07(b)(vii) or Section 4.07(b)(viii)
              below)

                                      51
<PAGE>

              previously made after May 17, 1999 by the Company or any
              Restricted Subsidiary in such Unrestricted Subsidiary.

         (b)  If, other than with respect to payments made under Section
4.07(b)(i) and Section 4.07(b)(xiv) below, no Default or Event of Default shall
have occurred and be continuing after giving effect to such Restricted Payment,
the foregoing provisions will not prohibit the following Restricted Payments:

              (i)   the payment of any dividend within 60 days after the date of
         declaration thereof, if at said date of declaration such payment would
         have complied with the provisions of the Indenture;

              (ii)  dividends or distributions by any Restricted Subsidiary of
         the Company payable (x) to all holders of a class of Capital Stock of
         such Restricted Subsidiary on a pro rata basis or on a basis that is
         more favorable to the Company; provided that at least 50% of such class
         of Capital Stock is held by the Company and/or one or more of its
         Restricted Subsidiaries or (y) to all holders of a class of Preferred
         Stock of a Restricted Subsidiary that is not a Subsidiary Guarantor
         issued after the Issue Date in compliance with Section 4.06;

              (iii) the payment of cash dividends on any series of Disqualified
         Stock issued after May 17, 1999 in an aggregate amount not to exceed
         the cash received by the Company since May 17, 1999 upon issuance of
         such Disqualified Stock;

              (iv)  the redemption, repurchase, retirement or other acquisition
         of any Equity Interests of the Company, any Restricted Subsidiary or
         any Joint Venture (or the acquisition of all the outstanding Equity
         Interests of any Person that conducts no operations and has no assets
         or liabilities other than the ownership of Equity Interests in a Joint
         Venture) in exchange for, or out of the net cash proceeds of the
         substantially concurrent sale (other than to a Subsidiary or Joint
         Venture of the Company) of, Qualified Equity Interests of the Company;
         provided that the amount of any such net cash proceeds that are
         utilized for any such redemption, repurchase, retirement or other
         acquisition shall be excluded from clause (C)(ii) of Section 4.07(a);

              (v)   the defeasance, redemption or repurchase of Subordinated
         Debt with the net cash proceeds from an incurrence of Permitted
         Refinancing or in exchange for or out of the net cash proceeds from the
         substantially concurrent sale (other than to a Subsidiary or Joint
         Venture of the Company) of Qualified Equity Interests of the Company;
         provided that the amount of any such net cash proceeds that are
         utilized for any such redemption, repurchase, retirement or other
         acquisition shall be excluded from clause (C)(ii) of Section 4.07(a);

              (vi)  the repurchase, redemption or other acquisition or
         retirement for value of (x) any Equity Interests of the Company or any
         Subsidiary of the Company held by any member of the Company's (or any
         of its Subsidiaries')

                                      52
<PAGE>

         management pursuant to any management equity subscription agreement or
         stock option agreement or (y) any Equity Interests of the Company that
         are or are intended to be used to satisfy issuances of Equity Interests
         upon exercise of employee or director stock options or upon exercise or
         satisfaction of other similar instruments outstanding under employee or
         director benefit plans of the Company or any Subsidiary of the Company;
         provided that the aggregate price paid for all such repurchased,
         redeemed, acquired or retired Equity Interests shall not exceed $5.0
         million in any fiscal year of the Company;

                (vii)  Restricted Investments in any of the Specified Joint
         Ventures (including without limitation, the purchase of Equity
         Interests of a Specified Joint Venture directly from another Person or
         the purchase of all the outstanding Equity Interests of any Person that
         conducts no operations and has no assets or liabilities other than the
         ownership of Equity Interests of a Specified Joint Venture) to the
         extent that the proceeds thereof are used to purchase or redeem an
         interest of another Person in such Specified Joint Venture (other than
         the Company, a Restricted Subsidiary or an Affiliate of the Company,
         except a Person that is deemed to be an Affiliate solely by virtue of
         its ownership of Equity Interests of the Company acquired in exchange
         for Equity Interests in such Specified Joint Venture); provided that
         after giving pro forma effect thereto as if such Restricted Payment
         (and any related incurrence of Indebtedness) had been made at the
         beginning of the most recently ended four-full-fiscal-quarter period
         for which financial statements have been filed with the SEC pursuant to
         Section 4.04 immediately preceding the date of such Restricted Payment,
         the Company would have been permitted to incur at least $1.00 of
         additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
         test set forth in Section 4.06(a);

                (viii) Restricted Investments in any Joint Venture made during
         any fiscal year of the Company or within 45 days after the end of such
         fiscal year in amounts that, together with all other Restricted
         Investments made in such Joint Venture in respect of such fiscal year
         in reliance on this Section 4.07(b)(viii) during such fiscal year or
         within 45 days after the end of such fiscal year, do not exceed the
         amount of dividends or distributions previously paid in respect of such
         fiscal year to the Company or any Restricted Subsidiary by such Joint
         Venture;

                (ix)   the payment of dividends on the Company's common stock at
         a rate not to exceed $0.90 per share per annum (such $0.90 amount to be
         appropriately adjusted to reflect any stock split, reverse stock split,
         stock dividend or similar transactions made after the Issue Date so
         that the aggregate amount of dividends payable after such transaction
         is the same as the amount payable immediately prior to such
         transaction);

                (x)    distributions or payments of Receivables Fees;

                (xi)   (A) Investments in any Joint Venture or Unrestricted
         Subsidiary organized to construct, own and/or operate a propylene oxide
         plant in the

                                      53
<PAGE>

         European Union in an aggregate amount that, together with all other
         Investments made pursuant to this Section 4.07(b)(xi), does not exceed
         $100.0 million and (B) the pledge of the Capital Stock of such Joint
         Venture or Unrestricted Subsidiary or of a Joint Venture Subsidiary
         that has no assets and conducts no operations other than the holding
         directly or indirectly of Equity Interests of such Joint Venture to
         secure Non-Recourse Debt of such Joint Venture or Unrestricted
         Subsidiary;

                (xii)  (A) (x) the transfer of the TDI Assets to a newly formed
         Joint Venture or Unrestricted Subsidiary or (y) the designation of any
         Restricted Subsidiary that has no assets or liabilities other than all
         or a portion of the TDI Assets as an Unrestricted Subsidiary, in each
         case, in connection with the incurrence of Indebtedness by such Joint
         Venture or Unrestricted Subsidiary or Rhodia or a wholly-owned
         subsidiary of Rhodia to improve the Rhodia TDI Plant and (B) the pledge
         of the Capital Stock of such Joint Venture or Unrestricted Subsidiary
         or of a Joint Venture Subsidiary that has no assets and conducts no
         operations other than the holding directly or indirectly of Equity
         Interests of such Joint Venture to secure Non-Recourse Debt of such
         Joint Venture or Unrestricted Subsidiary or Rhodia or a wholly-owned
         subsidiary of Rhodia;

                (xiii) the repurchase of any Subordinated Debt at a purchase
         price not greater than 101% of the principal amount thereof in the
         event of (x) a Change of Control pursuant to a provision no more
         favorable to the holders thereof than the provisions of Section 4.14 or
         (y) an Asset Sale pursuant to a provision no more favorable to the
         holders thereof than the provisions of Section 4.09; provided that, in
         each case, prior to such repurchase the Company has made a Change of
         Control Offer or Asset Sale Offer, as applicable, and repurchased all
         Notes that were validly tendered for payment in connection with such
         Change of Control Offer or Asset Sale Offer;

                (xiv)  distributions by any Restricted Subsidiary or Joint
         Venture of chemicals to a holder of Capital Stock of such Restricted
         Subsidiary or Joint Venture if such distributions are made pursuant to
         a provision in a joint venture agreement or other arrangement entered
         into in connection with the establishment of such Joint Venture or
         Restricted Subsidiary that requires such holder to pay a price for such
         chemicals equal to that which would be paid in a comparable transaction
         negotiated on an arm's-length basis (or pursuant to a provision that
         imposes a substantially equivalent requirement);

                (xv)   any other Restricted Payment that, together with all
         other Restricted Payments made pursuant to this Section 4.07(b)(xv) on
         or after May 17, 1999, does not exceed $25 million (after giving effect
         to any subsequent reduction in the amount of any Investments made
         pursuant to this Section 4.07(b)(xv) as a result of the repayment or
         other disposition thereof for cash as set forth in clause (iii) of the
         first paragraph above, the amount of such reduction not to exceed the
         amount of such Investments previously made pursuant to this Section
         4.07(b)(xv)); and

                                      54
<PAGE>

              (xvi)  dividends or distributions by any Joint Venture (other
         than a Specified Joint Venture) to all holders of a class of Capital
         Stock of such Joint Venture permitted by Section 4.07(b)(ii)(x) above;
         provided that after giving effect to such dividends or distributions
         and any related transactions, the Joint Venture making such dividends
         or distributions to such holders is contractually entitled to receive,
         and receives within 180 days before or after the date of such dividends
         or distributions, directly or indirectly, an equivalent or larger cash
         payment from each such holder (other than from a holder that is the
         Company or any Restricted Subsidiary) or from an Affiliate of such
         holder, which cash payment has not been previously applied pursuant to
         this Section 4.07(b)(xvi) to offset any other dividend or distribution
         by such Joint Venture to such holder and (y) such dividends or
         distributions do not exceed such holders' pro rata share of the Joint
         Venture's cash flows from operating activities, minus any non-cash
         charge to the extent that it represents an accrual of or reserve for
         cash expenditures in any future period or amortization of a prepaid
         cash expense in any future period.

         (c)  The Board of Directors of the Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if such designation would not cause
a Default. For purposes of making such determination, all outstanding
Investments by the Company and its Restricted Subsidiaries in the Subsidiary so
designated will be deemed to be Restricted Payments at the time of such
designation and will reduce the amount available for Restricted Payments Section
4.07(a) (except to the extent such Investments were repaid in cash, and, in the
case of a Joint Venture (and any Subsidiary of a Joint Venture) designated as an
Unrestricted Subsidiary on the first day that it is a Subsidiary of the Company,
except to the extent that (1) such Investments were made after May 17, 1999 or
(2) in the case of a Specified Joint Venture, such Investments were made prior
to May 17, 1999). All such outstanding Investments (except as provided in the
parenthetical included in the preceding sentence) will be deemed to constitute
Investments in an amount equal to the fair market value of such Investments at
the time of such designation (as conclusively determined by the Board of
Directors). Such designation will only be permitted if any such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary. In the case of any
designation by the Company of a Person as an Unrestricted Subsidiary on the
first day that such Person is a Subsidiary of the Company in accordance with the
provisions of the Indenture, such designation shall be deemed to have occurred
for all purposes of the Indenture simultaneously with, and automatically upon,
such Person becoming a Subsidiary.

         (d)  Not later than the date of making any Restricted Payment, other
than those permitted by Sections 4.07(b)(ii)(x), 4.07(b)(vi), 4.07(b)(x) and
4.07(b)(xiv) above, and not later than the 120th day after making any Restricted
Payment permitted by Section 4.07(b)(vi) above, the Company shall deliver to the
Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
this Section 4.07 were computed.

                                      55
<PAGE>

     (e)  For purposes of this covenant, any payment made on or after May 17,
1999 but prior to the Issue Date shall be deemed to be a "Restricted Payment" to
the extent such payment would have been a Restricted Payment had the Indenture
been in effect at the time of such payment (and, to the extent that any such
Restricted Payment was permitted by clauses (b)(i) through (xvi) above, such
Restricted Payment may be deemed by the Company to have been made pursuant to
such clause).

     Section 4.08. Limitation on Dividend and other Payment Restrictions
Affecting Restricted Subsidiaries and Joint Ventures. (a) The Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
restriction on the ability of any Restricted Subsidiary to:

          (i)   (A) pay dividends or make any other distributions to the Company
     or any of its Restricted Subsidiaries (1) on its Capital Stock, or (2) with
     respect to any other interest or participation in, or measured by, its
     profits, or (B) pay any Indebtedness owed to the Company or any of its
     Restricted Subsidiaries;

          (ii)  make loans or advances to the Company or any of its Restricted
     Subsidiaries; or

          (iii) transfer any of its properties or assets to the Company or any
     of its Restricted Subsidiaries;

except for such restrictions existing under or by reason of:

     (a) existing agreements as in effect on the Issue Date;

     (b) Indebtedness permitted by the Indenture to be incurred containing
restrictions on the ability of Restricted Subsidiaries to consummate
transactions of the types described in clause (i), (ii) or (iii) above not
materially more restrictive than those contained in the Indenture;

     (c) the Indenture;

     (d) applicable law;

     (e) existing restrictions with respect to a Person acquired by the Company
or any of its Restricted Subsidiaries (except to the extent such restrictions
were put in place in connection with or in contemplation of such acquisition),
which restrictions are not applicable to any Person, or the properties or assets
of any Person, other than the Person, or the property or assets of the Person,
so acquired;

     (f) customary non-assignment provisions in leases and other agreements
entered into in the ordinary course of business;

     (g) construction loans and purchase money obligations (including Capital
Lease Obligations) for property acquired in the ordinary course of business that
impose

                                      56
<PAGE>

restrictions of the nature described in clause (iii) above on the property so
constructed or acquired;

     (h) in the case of clause (iii) above, restrictions contained in security
agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the
extent such restrictions restrict the transfer of the property subject to such
security agreements or mortgages;

     (i) a Permitted Refinancing, provided that the restrictions contained in
the agreements governing such Permitted Refinancing are not materially more
restrictive, taken as a whole, than those contained in the agreements governing
the Indebtedness being refinanced (as conclusively evidenced by a Board
Resolution);

     (j) customary restrictions on a Finance Subsidiary imposed in such Finance
Subsidiary's organizational documents or by the terms of its Preferred Stock;

     (k) any restriction with respect to shares of Capital Stock of a Restricted
Subsidiary imposed pursuant to an agreement entered into for the sale or
disposition of such shares of Capital Stock or any restriction with respect to
the assets of a Restricted Subsidiary imposed pursuant to an agreement entered
into for the sale or disposition of such assets or all or substantially all the
Capital Stock of such Restricted Subsidiary pending the closing of such sale or
disposition;

     (l) in the case of any Restricted Subsidiary that is a Joint Venture,
customary restrictions on such Restricted Subsidiary contained in its joint
venture agreement, which restrictions are consistent with the past practice of
the Company and its Restricted Subsidiaries (as conclusively evidenced by a
Board Resolution);

     (m) existing restrictions with respect to a Specified Joint Venture or the
property or assets thereof or a Subsidiary of a Specified Joint Venture or the
property or assets thereof, in each case, at the time such Specified Joint
Venture first becomes a Restricted Subsidiary (except to the extent such
restrictions were put in place in connection with or in contemplation of such
Specified Joint Venture becoming a Restricted Subsidiary), which restrictions
are not applicable to any Person, or the properties or assets of any Person,
other than such Specified Joint Venture or the property or assets thereof or a
Subsidiary of such Specified Joint Venture or the property or assets thereof;
and

     (n) the Existing Credit Facility and related documentation as the same is
in effect on the Issue Date and as amended, modified, extended, renewed,
refunded, refinanced, restated or replaced from time to time; provided that the
Existing Credit Facility and related documentation as so amended, modified,
extended, reviewed, refunded, refinanced, restated or replaced is not materially
more restrictive, taken as a whole, as to the matters enumerated above than the
Existing Credit Facility and related documentation as in effect on the Issue
Date (as conclusively evidenced by a Board Resolution).

     For purposes of determining compliance with this covenant, in the event
that a restriction meets the criteria of more than one of the categories of
permitted restrictions

                                      57
<PAGE>

described in clauses (a) through (n) above, the Company shall, in its sole
discretion, classify such restriction in any manner that complies with this
covenant, and such restriction will be treated as existing pursuant to the
clauses designated by the Company.

     (b)  The Company will use best efforts (consistent with its contractual
obligations and fiduciary duties to any Joint Venture, in each case, as in
effect on the Issue Date) not to permit any of its Joint Ventures that are not
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any restriction on the ability of such Joint
Venture to:

          (i)   (A) pay dividends or make any other distributions to the Company
     or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with
     respect to any other interest or participation in, or measured by, its
     profits or (B) pay any Indebtedness owed to the Company or any of its
     Restricted Subsidiaries;

          (ii)  make loans or advances to the Company or any of its Restricted
     Subsidiaries; or

          (iii) transfer any of its properties or assets to the Company or any
     of its Restricted Subsidiaries;

except for such restrictions existing under or by reason of:

     (a) such Joint Venture's joint venture agreement or its credit facility
(provided that in each case such restrictions are consistent with the past
practice of the Company);

     (b) in the case of any Joint Venture existing on the Issue Date, its
existing agreements as in effect on the date of the Indenture and as amended,
modified, extended, restated or replaced from time to time; provided that no
such amendment, modification, extension, restatement or replacement results in
agreements that are materially more restrictive, taken as a whole, as to the
matters enumerated above than the existing agreements as in effect on the date
of the Indenture (as conclusively evidenced by a Board Resolution);

     (c) in the case of LCR, any instrument governing its Indebtedness; and

     (d) the restrictions described in clauses (d), (e), (f), (g), (h), (j), (k)
and (n) of Section 4.08(a) (assuming that references in clauses (h) and (k) to a
Restricted Subsidiary were references to a Joint Venture).

     Section 4.09. Limitation on Sales of Assets. (a) The Company will not, and
will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale
unless:

          (i)   the Company and/or the Restricted Subsidiary, as the case may
     be, receives consideration at the time of such Asset Sale at least equal to
     the fair market value (as conclusively evidenced by a Board Resolution set
     forth in an Officers' Certificate delivered to the Trustee) of the assets
     or Equity Interests issued or sold or otherwise disposed of; and

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<PAGE>

          (ii)  at least 80% of the consideration therefor received by the
     Company and/or such Restricted Subsidiary is in the form of

                (A) cash or Cash Equivalents or

                (B) a controlling interest or a joint venture interest (to the
          extent otherwise permitted by the Indenture) in a business engaged in
          a Permitted Business or long-term property or assets that are used or
          useful in a Permitted Business;

     provided that the amount of (x) any liabilities (as shown on the Company's
     or such Restricted Subsidiary's most recent balance sheet) of the Company
     or any Restricted Subsidiary (other than contingent liabilities and
     liabilities that are by their terms subordinated to the Notes or any
     guarantee thereof) that are assumed by the transferee of any such assets
     pursuant to a customary novation agreement that releases the Company or
     such Restricted Subsidiary from further liability and (y) any securities,
     notes or other obligations received by the Company or any such Restricted
     Subsidiary from such transferee that are promptly converted by the Company
     or such Restricted Subsidiary into cash (to the extent of the cash
     received), shall be deemed to be cash for purposes of this provision.

     (b) Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds, at its option:

          (i)   to permanently repay Senior Indebtedness (and to correspondingly
     reduce commitments with respect thereto in the case of revolving
     borrowings) of the Company or a Subsidiary Guarantor or Indebtedness (and
     to correspondingly reduce commitments with respect thereto in the case of
     revolving borrowings) of any Restricted Subsidiary that is not a Subsidiary
     Guarantor; provided that, so long as the provisions of Section 4.12 are in
     effect, only (A) repayment of Senior Indebtedness incurred under the
     Existing Credit Facility (but not any refinancing thereof other than a
     credit facility with commercial banks and other lenders) or (B) if a
     Restricted Subsidiary that is not a Subsidiary Guarantor has consummated
     the Asset Sale, repayment of Indebtedness of such Restricted Subsidiary
     (with a corresponding reduction in commitments with respect thereto in the
     case of revolving borrowings), shall constitute a repayment of Indebtedness
     permitted pursuant to this clause (i); or

          (ii)  to acquire a controlling interest or a joint venture interest
     (to the extent otherwise permitted by the Indenture) in another business
     or, the making of a capital expenditure or the acquisition of other long-
     term assets, in each case, in a Permitted Business (or enter into a binding
     commitment for any such expenditure or acquisition); provided that such
     binding commitment shall be treated as a permitted application of Net
     Proceeds from the date of such commitment until and only until the earlier
     of (x) the date on which such expenditure or acquisition is consummated and
     (y) the 180th day following the expiration of the aforementioned 360 day
     period. If the expenditure or

                                      59
<PAGE>

     acquisition contemplated by such binding commitment is not consummated on
     or before such 180th day and the Company shall not have applied such Net
     Proceeds pursuant to clause (i) above on or before such 180th day, such
     commitment shall be deemed not to have been a permitted application of Net
     Proceeds at any time;

provided that, so long as the provisions of Section 4.12 are in effect, the
Company may not apply Net Proceeds of a Significant Asset Sale pursuant to
clause (ii) above to satisfy its obligations to apply such proceeds pursuant to
this paragraph except to the extent that the provisions of the Existing Credit
Facility (but not any refinancing thereof other than a credit facility with
commercial banks and other lenders) require a mandatory prepayment from such
proceeds but the requisite lenders thereunder have waived such mandatory
prepayment.

     Pending the final application of any such Net Proceeds, the Company may
temporarily reduce the revolving Indebtedness under the Existing Credit Facility
or otherwise invest such Net Proceeds in any manner that is not prohibited by
the Indenture. Any Net Proceeds from Asset Sales that are not applied or
invested as provided in the first sentence of this Section 4.09(b) will be
deemed to constitute "Excess Proceeds."

     (c)  When the aggregate amount of Excess Proceeds exceeds $25 million, the
Company will be required to make an offer to all Holders of Notes (an "Asset
Sale Offer") to purchase the maximum principal amount of Notes and, (x) if the
Company is required to do so under the terms of any other Indebtedness ranking
pari passu with such Notes, such other Indebtedness, and (y) if the Company
elects to do so, any Existing ARCO Chemical Debt, on a pro rata basis with the
Notes, that may be purchased out of the Excess Proceeds, at an offer price in
cash in an amount equal to 100% of the principal amount thereof plus accrued and
unpaid interest thereon to the date of purchase, in accordance with the
procedures set forth herein.

     To the extent that the aggregate amount of Notes (and any other pari passu
Indebtedness subject to such Asset Sale Offer) tendered pursuant to such Asset
Sale Offer is less than the Excess Proceeds, the Company may, subject to the
other terms of the Indenture, use any remaining Excess Proceeds for general
corporate purposes.

     If the aggregate principal amount of Notes surrendered by Holders thereof
in connection with an Asset Sale Offer exceeds the amount of Excess Proceeds,
the Trustee shall select the Notes to be purchased on a pro rata basis.

     Upon completion of the offer to purchase made under the Indenture, the
amount of Excess Proceeds shall be reset at zero.

     (d)  The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with any Asset
Sale Offer.

     Section 4.10. Limitation on Affiliate Transactions. (a) The Company will
not, and will not permit any of its Restricted Subsidiaries to, sell, lease,
transfer or otherwise

                                      60
<PAGE>

dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make any contract, agreement, understanding, loan,
advance or Guarantee with, or for the benefit of, any Affiliate (each of the
foregoing, an "Affiliate Transaction"), unless (i) such Affiliate Transaction is
on an arm's-length basis and (ii) the Company delivers to the Trustee (a) with
respect to any Affiliate Transaction involving aggregate consideration in excess
of $10 million, a Board Resolution set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction involving aggregate consideration in excess of $25
million, an opinion as to the fairness to the Company or such Restricted
Subsidiary of such Affiliate Transaction from a financial point of view issued
by an investment banking firm of national standing; provided that:

     (i)   transactions or payments pursuant to any employment arrangements or
employee, officer or director benefit plans or arrangements entered into by the
Company or any of its Restricted Subsidiaries in the ordinary course of
business;

     (ii)  transactions between or among the Company and/or its Restricted
Subsidiaries;

     (iii) any Restricted Payment permitted by Section 4.07 of the type
described in clause (i) or (ii) of the first paragraph thereof;

     (iv)  customary loans, advances, fees and compensation paid to, and
indemnity provided on behalf of, officers, directors, employees or consultants
of the Company or any of its Restricted Subsidiaries;

     (v)   transactions entered into on an arm's-length basis in the ordinary
course of business between the Company or any of its Restricted Subsidiaries and
any Joint Venture;

     (vi)  sales (including a sale in exchange for a promissory note of or
Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable
and the provision of billing, collection and other services in connection
therewith, in each case, to an Accounts Receivable Subsidiary in connection with
any Receivables Facility; and

     (vii) transactions pursuant to any contract or agreement in effect on the
date of the Indenture as the same may be amended, modified or replaced from time
to time so long as any such contract or agreement as so amended, modified or
replaced is, taken as a whole, no less favorable to the Company and its
Restricted Subsidiaries than the contract or agreement as in effect on the date
of the Indenture (as conclusively evidenced by a Board Resolution);

in each case, shall not be deemed to be Affiliate Transactions and therefore not
subject to the requirements of clauses (i) and (ii) of the initial sentence
above.

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<PAGE>

     Section 4.11. Limitation on Liens. (a) The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, create,
incur, assume or suffer to exist any Lien (except Permitted Liens) on any asset
now owned or hereafter acquired, or any income or profits therefrom, unless all
payments due under the Indenture and the Notes or the Subsidiary Guarantees are
secured on an equal and ratable basis with the obligations so secured (or, if
such obligations are subordinated by their terms to the Notes or the Subsidiary
Guarantees, prior to the obligations so secured) until such time as such
obligations are no longer so secured.

     (b)  The Company and its Subsidiaries shall also comply with the provisions
of Section 4.12(a) until such provisions cease to be in effect pursuant to
Section 4.12(b).

     Section 4.12. Equal and Ratable Liens. (a) To the extent the Company or any
Subsidiary of the Company grants a Lien upon any of its property or assets to
secure the Existing Credit Facility Obligations, the Company or such Subsidiary,
as the case may be, shall, contemporaneously with the granting of such Lien,
secure the Indenture Obligations equally and ratably with the Existing Credit
Facility Obligations secured by such Lien.

     (b)  Notwithstanding the foregoing, from and after the date when all Liens
granted in favor of the holders of Existing Credit Facility Obligations are
released (and are not concurrently replaced with any new Liens on any asset of
the Company or any of its Restricted Subsidiaries securing Existing Credit
Facility Obligations), the provisions of this Section 4.12 will no longer apply.
The provisions of Section 4.11 will, however, continue to apply.

     Section 4.13. No Amendment to Subordination Provisions. The Company will
not amend, modify or alter the Senior Subordinated Notes Indenture in any way
that would amend the subordination provisions of the Senior Subordinated Notes
Indenture or any of the defined terms used therein in a manner that would be
adverse to the holders of the Notes.

     Section 4.14. Repurchase of Notes upon a Change in Control. (a) Upon the
occurrence of a Change of Control, each Holder will have the right to require
the Company to repurchase all or any part (equal to $1,000 or an integral
multiple thereof) of such Holder's Notes pursuant to the offer described below
(the "Change of Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest thereon to
the date of purchase (the "Change of Control Payment") on a date that is not
more than 90 days after the occurrence of such Change of Control (the "Change of
Control Payment Date"). Within 30 days following any Change of Control, the
Company will mail, or at the Company's request the Trustee will mail, a notice
to each Holder offering to repurchase the Notes held by such Holder pursuant to
the procedures specified in such notice.

     (b)  The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control.

                                      62
<PAGE>

     (c)  On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
and not withdrawn pursuant to the Change of Control Offer, (2) deposit with the
Paying Agent an amount equal to the Change of Control Payment in respect of all
Notes or portions thereof so tendered, and (3) deliver or cause to be delivered
to the Trustee the Notes so accepted together with an Officer's Certificate
stating the aggregate principal amount of Notes or portions thereof being
purchased by the Company.

     The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such Note will be in a principal amount
of $1,000 or an integral multiple thereof.

     (d)  The Company will not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer at
the same or a higher purchase price, at the same times and otherwise in
substantial compliance with the requirements applicable to a Change of Control
Offer made by the Company and purchases all Notes validly tendered and not
withdrawn under such Change of Control Offer.

     Section 4.15. Limitation on Sale and Leaseback Transactions. The Company
will not, and will not permit any of its Restricted Subsidiaries to, enter into
any Sale and Leaseback Transaction; provided that the Company or any Restricted
Subsidiary may enter into a Sale and Leaseback Transaction if: (a) the Company
or such Restricted Subsidiary, as the case may be, could have (i) incurred
Indebtedness in an amount equal to the Attributable Debt relating to such Sale
and Leaseback Transaction pursuant to the Fixed Charge Coverage Ratio test set
forth in Section 4.06(a) (whether or not such covenant has ceased to be
otherwise in effect pursuant to Section 4.18) and (ii) incurred a Lien to secure
such Indebtedness pursuant to Section 4.11 without securing the Notes; and (b)
the gross cash proceeds of such Sale and Leaseback Transaction are at least
equal to the fair market value (as conclusively determined by the Board of
Directors) of the property that is the subject of such Sale and Leaseback
Transaction.

     Section 4.16. Limitation on Line of Business. The Company will not, and
will not permit any of its Restricted Subsidiaries to, engage in any business
other than Permitted Businesses, except to such extent as would not be material
to the Company and its Subsidiaries taken as a whole.

     Section 4.17. Limitation on Accounts Receivable Facilities. The Company
may, and any of its Restricted Subsidiaries may, sell (including a sale in
exchange for a promissory note of or an Equity Interest in such Accounts
Receivable Subsidiary) at any time and from time to time, accounts receivable to
any Accounts Receivable Subsidiary; provided that the aggregate consideration
received in each such sale is at least equal to the aggregate fair market value
of the receivables sold.

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<PAGE>

     Section 4.18. Limited Applicability of Covenants when Notes are Rated
Investment-Grade. Notwithstanding the foregoing, the Company's and its
Restricted Subsidiaries' obligations to comply with the provisions of Sections
4.06, 4.07, 4.08, 4.09, 4.10, 4.16, 4.17 and 4.22 will terminate and cease to
have any further effect from and after the first date when the Notes are rated
Investment Grade.

     Section 4.19. Existence. Subject to Articles 4 and 5 of this Indenture, the
Company will do or cause to be done all things necessary to preserve and keep in
full force and effect its existence and the existence of each of its Restricted
Subsidiaries in accordance with the respective organizational documents of the
Company and each such Subsidiary and the rights (whether pursuant to charter,
partnership certificate, agreement, statute or otherwise), material licenses and
franchises of the Company and each such Subsidiary; provided that the Company
shall not be required by this Section 4.19 to preserve any such right, license
or franchise, or the existence of any Restricted Subsidiary, if the Company
shall determine that the maintenance or preservation thereof is no longer
desirable in the conduct of the business of the Company and its Restricted
Subsidiaries taken as a whole.

     Section 4.20. Payment of Taxes and Other Claims. The Company will pay or
discharge and shall cause each of its Restricted Subsidiaries to pay or
discharge, or cause to be paid or discharged, before the same shall become
delinquent (a) all material taxes, assessments and governmental charges levied
or imposed upon (i) the Company or any such Subsidiary, (ii) the income or
profits of any such Subsidiary which is a corporation or (iii) the property of
the Company or any such Subsidiary and (b) all material lawful claims for labor
materials and supplies that, if unpaid, might by law become a lien upon the
property of the Company or any such Subsidiary; provided 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 the amount, applicability or validity of which
is being contested in good faith by appropriate proceedings and for which
adequate reserves have been established in accordance with GAAP.

     Section 4.21. Maintenance of Properties and Insurance. The Company will
cause all material assets necessary in the conduct of its business or the
business of any of its Restricted Subsidiaries, to be maintained and kept in
good condition, repair and working order (ordinary wear and tear excepted) and
will cause to be made all necessary repairs, renewals and replacements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly conducted at all times;
provided that nothing in this Section 4.21 shall prevent the Company or any such
Subsidiary from discontinuing the use, operation or maintenance of any of such
assets or disposing or abandoning of any of them, if such discontinuance,
disposal or abandonment is, in the judgment of the Company, desirable in the
conduct of the business of the Company or such Subsidiary.

     The Company will maintain, and will cause each of its Restricted
Subsidiaries to maintain (either in the Company's name or in such Subsidiary's
own name) insurance on all their respective properties consistent with the
insurance maintained on the Issue Date or otherwise in at least such amounts
(with no materially greater risk retention) and against at least such risks as
are usually maintained, retained or insured against in the

                                      64
<PAGE>

same general area by companies of established repute owning similar properties
in such area and engaged in the same or a similar business, in either case, to
the extent available to the Company and its Restricted Subsidiaries on
commercially reasonable terms.

     Section 4.22. Limitation on Issuance of Guarantees by Restricted
Subsidiaries . (a) The Company will not permit any Restricted Subsidiary that is
not a Subsidiary Guarantor, directly or indirectly, to Guarantee or secure the
payment of any other Indebtedness of the Company or any of its Restricted
Subsidiaries (except Indebtedness of such Restricted Subsidiary or a Restricted
Subsidiary of such Restricted Subsidiary) unless (i) such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture in the form of
Exhibit B hereto providing for the Guarantee of the payment of the Notes by such
Restricted Subsidiary and shall deliver an Opinion of Counsel to the Trustee
pursuant to paragraph (c) below; provided that this paragraph shall not be
applicable to (x) any Guarantee of any Restricted Subsidiary that existed at the
time such Person became a Restricted Subsidiary and was not incurred in
connection with, or in contemplation of, such Person's becoming a Restricted
Subsidiary, (y) Guarantees of Indebtedness of a Restricted Subsidiary that is a
Foreign Subsidiary by a Restricted Subsidiary that is a Foreign Subsidiary or
(z) the granting of Liens by a Joint Venture Subsidiary to secure Indebtedness
under the Existing Credit Facility, the Existing Senior Secured Notes and the
Notes. If the Notes are (A) pari passu with the Guaranteed Indebtedness, then
the Subsidiary Guarantee shall be pari passu with, or senior to, the guarantee
of such Guaranteed Indebtedness or (B) senior to the Guaranteed Indebtedness,
then the Subsidiary Guarantee shall be senior to the guarantee of such
Guaranteed Indebtedness at least to the extent that the Notes are senior to such
Guaranteed Indebtedness.

     (b)  Notwithstanding the foregoing, each Subsidiary Guarantee by a
Restricted Subsidiary shall be automatically and unconditionally released and
discharged upon (i) any sale, exchange or transfer, to any Person not an
Affiliate of the Company, of all the Company's and each Restricted Subsidiary's
Capital Stock in such Restricted Subsidiary (which sale, exchange or transfer is
not prohibited by the Indenture) as provided in Section 5.03(b), (ii) the
release or discharge of the Guarantee which resulted in the creation of such
Subsidiary Guarantee (or, in the case of the Subsidiary Guarantees of ARCO
Chemical Technology, Inc., ARCO Chemical Technology, L.P. and Lyondell Chemical
Nederland, Ltd. issued on the Issue Date, the release or discharge of its
Guarantee of Indebtedness under the Existing Credit Facility and the Existing
Senior Secured Notes), except a discharge or release by or as a result of
payment under such Guarantee, and (iii) the designation of such Restricted
Subsidiary as an Unrestricted Subsidiary in accordance with the terms of the
Indenture.

     (c)  The Opinion of Counsel described above shall be to the effect that
such supplemental indenture has been duly authorized, executed and delivered by
such Subsidiary and constitutes a valid and binding obligation of such
Subsidiary, enforceable against such Subsidiary in accordance with its terms
(subject to customary exceptions).

     Section 4.23. Payments for Consents. Neither the Company nor any of its
Subsidiaries or Affiliates will, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
of any Notes

                                      65
<PAGE>

for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of the Indenture or the Notes unless such consideration is offered
to be paid or agreed to be paid to all Holders of the Notes that consent, waive
or agree to amend such term or provision in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.

                                   ARTICLE 5
                    Consolidation, Merger or Sale of Assets

         Section 5.01. Consolidation, Merger or Sale of Assets by the Company.
(a) The Company may not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, convey or
otherwise dispose of all or substantially all its assets in one or more related
transactions, to another corporation, Person or entity unless:

                (i)   the Company is the surviving corporation or the entity or
         the Person formed by or surviving any such consolidation or merger (if
         other than the Company) or to which such sale, assignment, transfer,
         conveyance or other disposition shall have been made is a corporation
         organized or existing under the laws of the United States, any state
         thereof or the District of Columbia;

                (ii)  the corporation formed by or surviving any such
         consolidation or merger (if other than the Company) or the corporation
         to which such sale, assignment, transfer, lease, conveyance or other
         disposition shall have been made assumes all the Obligations of the
         Company under the Notes, the Indenture and the Security Documents to
         which it is a party pursuant to a supplemental indenture in form
         reasonably satisfactory to the Trustee;

                (iii) immediately after such transaction no Default or Event of
         Default exists; and

                (iv)  the Company or the entity or Person formed by or surviving
         any such consolidation or merger (if other than the Company), or to
         which such sale, assignment, transfer, lease, conveyance or other
         disposition shall have been made (A) will have a Consolidated Net Worth
         immediately after the transaction equal to or greater than the
         Consolidated Net Worth of the Company immediately preceding the
         transaction and (B) except with respect to a consolidation or merger of
         the Company with or into a Person that has no outstanding Indebtedness,
         will, at the time of such transaction and after giving pro forma effect
         thereto as if such transaction had occurred at the beginning of the
         applicable four-quarter period, be permitted to incur at least $1.00 of
         additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
         test set forth in Section 4.06(a). The foregoing shall not prohibit the
         merger or consolidation of a Wholly Owned Restricted Subsidiary with
         the Company; provided that, in connection with any such merger or
         consolidation, no

                                      66
<PAGE>

         consideration (other than common stock in the surviving Person or the
         Company) shall be issued or distributed to the stockholders of the
         Company.

         (b)  The Company will not lease all or substantially all its assets to
another Person.

         Section 5.02. Successor Company Substituted. (a) Except as provided in
Section 5.02(b), upon any consolidation or merger, or any sale, assignment,
transfer, conveyance or other disposition of all or substantially all the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, conveyance or other disposition is made
shall succeed to, and be substituted for (so that from and after the date of
such consolidation, merger, sale, assignment, transfer, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation), and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and the predecessor
Company shall be released from all its obligations hereunder and under the
Notes.

         (b)  The sale, assignment, transfer, lease, conveyance or other
disposition by the Company of all or substantially all its property or assets
taken as a whole to one or more of the Company's Subsidiaries shall not relieve
the Company from its obligations under the Indenture and the Notes.

         Section 5.03. Consolidation, Merger or Sale of Assets by a Subsidiary
Guarantor. (a) No Subsidiary Guarantor may consolidate with or merge with or
into (whether or not such Subsidiary Guarantor is the surviving Person), another
corporation, Person or entity whether or not affiliated with such Subsidiary
Guarantor unless:

              (i)   subject to the provisions of Section 5.03(b) below, the
         Person formed by or surviving any such consolidation or merger (if
         other than the Company or such Subsidiary Guarantor) assumes all the
         obligations of such Subsidiary Guarantor, pursuant to a supplemental
         indenture in form and substance reasonably satisfactory to the Trustee,
         under the Notes;

              (ii)  immediately after giving effect to such transaction, no
         Default or Event of Default exists; and

              (iii) the Company would, at the time of such transaction and after
         giving pro forma effect thereto as if such transaction had occurred at
         the beginning of the applicable four-quarter period, (A) have a
         Consolidated Net Worth immediately after the transaction equal to or
         greater than the Consolidated Net Worth of the Company immediately
         preceding the transaction and (B) except with respect to a
         consolidation or merger with a Person that has no outstanding
         Indebtedness, be permitted to incur at least $1.00 of additional
         Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth
         in 4.06(a).

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         All the Subsidiary Guarantees issued pursuant to clause (i) above shall
in all respects have the same legal rank and benefit under this Indenture as the
Subsidiary Guarantees theretofore and thereafter issued in accordance with the
terms of this Indenture as though all such Subsidiary Guarantees had been issued
at the date of the execution hereof.

         (b)  (i) The requirements of clauses (i) and (iii) of Section 5.03(a)
will not apply in the case of a consolidation with or merger with or into the
Company and the requirements of clause (iii) of Section 5.03(a) will not apply
in the case of a consolidation with or merger with or into another Subsidiary
Guarantor.

         (ii) In the event of a sale or other disposition, by way of merger,
consolidation or otherwise, of all the Capital Stock of any Subsidiary Guarantor
to any Person that is not an Affiliate of the Company permitted by the
applicable provisions of the Indenture, such Subsidiary Guarantor will be
released and relieved of any obligations under its Subsidiary Guarantee;
provided that the Net Proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of the Indenture.

         Section 5.04. Opinion of Counsel to Trustee. The Trustee, subject to
the provisions of Sections 7.01 and 7.03, may receive an Opinion of Counsel as
conclusive evidence that any such consolidation, merger, conveyance, sale,
transfer, lease, exchange or other disposition referred to in Section 5.01 or
5.03 complies with the applicable provisions of this Indenture.

                                   ARTICLE 6
                                   Remedies

         Section 6.01. Events of Default. Each of the following constitutes an
"Event of Default":

         (a)  a default in the payment of interest on the Notes when due, which
has continued for 30 days;

         (b)  a default in the payment when due of principal of or premium on,
any Note when due at its Stated Maturity, upon optional redemption, upon
required repurchase, upon declaration or otherwise;

         (c)  the failure by the Company to comply with its obligations under
Article 5, Section 4.09 or Section 4.14;

         (d)  the Company or any Subsidiary Guarantor defaults in the
performance of or breaches any other covenant or agreement in this Indenture or
under the Notes (other than (a), (b) or (c) above) and such default or breach
continues for a period of 60 consecutive days after written notice by the
Trustee or the Holders of 25% or more in aggregate principal amount of the
Notes;

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         (e)  any default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Significant
Subsidiaries (or any Indebtedness for money borrowed Guaranteed by the Company
or any of its Significant Subsidiaries if the Company or a Significant
Subsidiary does not perform its payment obligations under such Guarantee within
any grace period provided for in the documentation governing such Guarantee)
and, whether such Indebtedness or Guarantee exists on the date of the indenture
or is thereafter created, which default (a) constitutes a Payment Default or (b)
results in the acceleration of such Indebtedness prior to its Stated Maturity,
and in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has been a
Payment Default or that has been so accelerated, aggregates $50 million or more;

         (f)  failure by the Company or any of its Significant Subsidiaries to
pay a final judgment or final judgments aggregating in excess of $50 million,
which judgment or judgments are not paid, discharged or stayed for a period of
60 days;

         (g)  a court having jurisdiction in the premises enters a decree or
order for (i) relief in respect of the Company or any Significant Subsidiary in
an involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, (ii) appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the Company or
any Significant Subsidiary or for all or substantially all the property and
assets of the Company or any Significant Subsidiary or (iii) the winding up or
liquidation of the affairs of the Company or any Significant Subsidiary and, in
each case, such decree or order shall remain unstayed and in effect for a period
of 60 consecutive days;

         (h)  the Company or any Significant Subsidiary (i) commences a
voluntary case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or consents to the entry of an order for relief in
an involuntary case under any such law, (ii) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any Significant Subsidiary or
for all or substantially all the property and assets of the Company or any
Significant Subsidiary or (iii) effects any general assignment for the benefit
of creditors;

         (i)  except as permitted by the Indenture, any Subsidiary Guarantee
issued hereunder shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any
Subsidiary Guarantor, or any Person acting on behalf of any Subsidiary
Guarantor, shall deny or disaffirm its obligations under the Subsidiary
Guarantees issued thereunder; or

         (j)  any of the Security Documents ceases to be in full force and
effect, or any of the Security Documents ceases to give the holders of the Notes
any of the Liens purported to be created thereby, or any of the Security
Documents is declared null and void or the Company or any Restricted Subsidiary
denies in writing that it has any further liability under any Security Document
or gives written notice to such effect (in

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each case other than in accordance with the terms of this Indenture (including
Section 14.01(b)) or the terms of the Existing Credit Facility or the Security
Documents (including the cessation of effectiveness of any Security Document in
connection with a release of all collateral covered thereby in accordance with
the terms of this Indenture, the Existing Credit Facility, the Existing Senior
Secured Note Indentures and such Security Document) or unless waived by the
requisite lenders under the Existing Credit Facility if, after the waiver, the
Company is in compliance with Section 4.12; provided that if a failure of the
sort described in this clause (j) is susceptible of cure, no Event of Default
shall arise under this clause (j) with respect thereto until 30 days after
notice of such failure shall have been given to the Company by the Trustee or
the Holders of at least 25% in principal amount of the then outstanding Notes
issued under the Indenture.

         Section 6.2. Acceleration. If an Event of Default (other than an Event
of Default specified in clause (g) or (h) of Section 6.01 that occurs with
respect to the Company or any Subsidiary Guarantor) occurs and is continuing
under this Indenture, the Trustee or the Holders of at least 25% in aggregate
principal amount of the Notes then Outstanding, by written notice to the Company
(and to the Trustee if such notice is given by the Holders), may, and the
Trustee at the request of such Holders shall, declare the principal of, premium,
if any, and accrued but unpaid interest on all the Notes to be due and payable.
Upon a declaration of acceleration, such principal, premium, if any, and accrued
interest shall be immediately due and payable. If an Event of Default specified
in clause (g) or (h) of Section 6.01 occurs with respect to the Company or any
Subsidiary Guarantor, the principal of, premium, if any, accrued interest on the
Notes then Outstanding shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.

         Section 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal or interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.

         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. All remedies are cumulative
to the extent permitted by law.

         Section 6.04. Waiver of Past Defaults. The Holders of at least a
majority in principal amount of the outstanding Notes, by written notice to the
Company and to the Trustee, may waive all past defaults and rescind and annul a
declaration of acceleration and its consequences under the Notes, if (i) all
existing Events of Default, other than the nonpayment of the principal of and
premium, if any, and interest on such Notes that have become due solely by such
declaration of acceleration, have been cured or waived and (ii) the rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction. Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.

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         Section 6.05. Control by Majority. The Holders of at least a majority
in aggregate principal amount of the Outstanding Notes may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee. However, the
Trustee may refuse to follow any direction that conflicts with law or this
Indenture, that may involve the Trustee in personal liability, or that the
Trustee determines in good faith may be unduly prejudicial to the rights of
Holders not joining in the giving of such direction and may take any other
action it deems proper that is not inconsistent with any such direction received
from the Holders.

         Section 6.06. Limitation on Suits. A Holder may not pursue any remedy
with respect to this Indenture or the Notes unless:

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

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

         (c)  such Holder or Holders offer the Trustee security or indemnity
satisfactory to it against any loss, liability or expense;

         (d)  the Trustee does not comply with the request within 60 days after
receipt thereof and the offer of security or indemnity; and

         (e)  during such 60 day period, the Holders of at least a majority in
aggregate principal amount of the Outstanding Notes do not give the Trustee a
direction inconsistent with the request.

         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, premium, if any, and interest on the Note, on or after the respective
due dates expressed in the Note, or to bring suit for the enforcement of any
such payment on or after such respective dates, shall not be impaired or
affected without the consent of the Holder.

         Section 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(a) or (b) hereof occurs and is continuing, the Trustee
is authorized to recover judgment in its own name and as trustee of an express
trust against the Company or any other obligor for the whole amount of
principal, premium, if any, and interest remaining unpaid on the Notes and
interest on overdue principal and, to the extent lawful, interest, and such
further amount as shall be sufficient to cover amounts due the Trustee under
Section 7.08, including the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.

         Section 6.09. Trustee May File Proofs of Claim. The Trustee is
authorized to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any
claim for the reasonable

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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, receive and distribute any money or
other property payable or deliverable on any such claims and any custodian in
any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.08. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.08 out of the
estate in any such proceeding, shall be denied for any reason, payment of the
same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties which the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the 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 proceeding.

         Section 6.10. Priorities. If the Trustee collects any money pursuant to
this Article or receives any money from the Collateral Agent as the distribution
of proceeds received upon realization of any Collateral, it shall pay out the
money in the following order:

         First: to the Trustee, its agents and attorneys for amounts due under
Section 7.08, including payment of all compensation, expense and liabilities
incurred, and all advances made, by the Trustee and the costs and expenses of
collection;

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

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

         The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.10 upon five Business Days prior notice to
the Company.

         Section 6.11. Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as a Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good

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faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.06,
or a suit by Holders of more than 10% in aggregate principal amount of the then
Outstanding Notes.

         Section 6.12. Restoration of Rights and Remedies. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture or any Note and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Trustee or to such Holder,
then and in every such case the Company, any other obligor upon the Notes, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.

         Section 6.13. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.

         Section 6.14. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury or other similar
law wherever enacted, now or at any time hereafter in force, that would prohibit
or forgive the Company from paying all or any portion of the principal of (or
premium, if any) or interest on the Notes contemplated herein or in the Notes or
that may affect the covenants or the performance of this Indenture; and the
Company (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenant that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.

                                   ARTICLE 7
                                  The Trustee

         Section 7.01. Certain Duties and Responsibilities. (a) Except during
the continuance of an Event of Default,

                  (i)  the Trustee need perform only those duties that are
         specifically set forth in this Indenture and no others, and no implied
         covenants or obligations shall be read into this Indenture against the
         Trustee; and

                  (ii) in the absence of bad faith on its part, the Trustee may
         conclusively rely, as to the truth of the statements and the
         correctness of the

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         opinions expressed therein, upon certificates or opinions furnished to
         the Trustee and conforming to the requirements of this Indenture.
         However, in the case of any such certificates or opinions which by any
         provision hereof are specifically required to be furnished to the
         Trustee, the Trustee shall examine the certificates and opinions to
         determine whether or not they conform to the requirements of this
         Indenture (but need not confirm or investigate the accuracy of
         mathematical calculations or other facts stated therein).

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

         (c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that (i) this paragraph does not
limit the effect of Section 7.01(a); (ii) the Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it takes or
omits to take in good faith in accordance with a direction received by it
pursuant to Section 6.06.

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

         (e) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
Sections 7.01 and 7.03.

         Section 7.02. Notice of Defaults. (a) Within 90 days after the
occurrence of any Default, the Trustee shall transmit by mail to all Holders, as
their names and addresses appear in the Register, notice of such Default
hereunder actually known to the Trustee unless such Default shall have been
cured or waived; provided, however, that, except in the case of a Default in the
payment of the principal of, premium (if any) or interest on, any Note, the
Trustee may withhold such notice if and so long as the board of directors, the
executive committee or a trust committee of Responsible Officers of the Trustee
determines that the withholding of such notice is not opposed to the interests
of the Holders.

         (b) The Trustee shall not be required to take notice or be deemed to
have notice or knowledge of any event or of any Default (except default in the
payment of monies to the Trustee which are required to be paid to the Trustee on
or before a specified date or within a specified time after receipt by the
Trustee of a notice or a certificate which was in fact received), unless the
Trustee shall receive from the Company or a Holder a notice stating that the
same has occurred and is continuing, and specifying the same, and in the absence
of such notice the Trustee may conclusively assume that the same does not exist,
except as aforesaid.

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         Section 7.03. Certain Rights of Trustee. Subject to the provisions of
Section 7.01:

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

               (ii)   any request or direction of the Company mentioned herein
         shall be sufficiently evidenced by a Company Request or a Company Order
         thereof, and any resolution of any Person's board of directors (or any
         committee thereof) shall be sufficiently evidenced if certified by an
         Officer of such Person as having been duly adopted and being in full
         force and effect on the date of such certificate;

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

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

               (v)    in case an Event of Default occurs and is continuing, the
         Trustee shall be under no obligation to exercise any of the rights or
         powers vested in it by this Indenture at the request or direction of
         any of the Holders pursuant to this Indenture, unless such Holders
         shall have offered to the Trustee security or indemnity satisfactory to
         it against any loss, liability or expense which might be incurred by it
         in compliance with such request or direction;

               (vi)   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, note, other evidence of indebtedness or other
         paper or document;

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

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

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<PAGE>

         hereunder, and to each agent, custodian and other Person employed to
         act hereunder.

         Section 7.04. Not Responsible for Recitals or Issuance of Notes. The
recitals contained herein and in the Notes, except the Trustee's certificates of
authentication, shall be taken as the statements of the Company, and neither the
Trustee nor any Authenticating Agent assumes any responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Notes, except that the Trustee
represents that it is duly authorized to execute and deliver this Indenture,
authenticate the Notes and perform its obligations hereunder and that the
statements made by it in a Statement of Eligibility and Qualification on Form
T-1 supplied to the Company in connection with the registration of any Notes
issued hereunder will be true and accurate subject to the qualifications set
forth therein. Neither the Trustee nor any Authenticating Agent shall be
accountable for the use or application by the Company of the Notes or the
proceeds thereof.

         Section 7.05. Trustee's Disclaimer. The Trustee makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company' use of the proceeds from the Notes, it shall not be
responsible for any statement in the prospectus for the Notes or in the
Indenture or the Notes (other than its certificate of authentication), the acts
of a prior Trustee hereunder, or the determination as to which beneficial owners
are entitled to receive any notices hereunder.

         Section 7.06. May Hold Notes. The Trustee, any Authenticating Agent,
any Paying Agent, any Registrar or any other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee of Notes and,
subject to Section 7.09 and Section 7.14, may otherwise deal with the Company or
its Affiliates with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Registrar or such other agent.

         Section 7.07. Money Held in Trust. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed in writing with the Company.

         Section 7.08.  Compensation and Reimbursement.  The Company agrees:

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

         (b) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses, advances and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and

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<PAGE>

          (c) to indemnify the Trustee and any predecessor Trustee for, and to
hold it harmless against, any loss, damage, claims, liability or expense
(including taxes, other than taxes based on the income of the Trustee) incurred
without negligence or bad faith on its part, arising out of or in connection
with the acceptance or administration of this trust, including the reasonable
costs and expenses of defending itself against any claim (whether asserted by
the Company, a Holder or any other person) or liability in connection with the
exercise or performance of any of its powers or duties hereunder.

          The Company' payment obligations pursuant to this Section 7.08 shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 6.01(g) or 6.01(h), the
expenses are intended to constitute expenses of administration under any
Bankruptcy Law.

          Section 7.09. Conflicting Interests. If the Trustee has or shall
acquire a conflicting interest within the meaning of the TIA, within 90 days the
Trustee shall either eliminate such conflicting interest, apply to the SEC for
permission to continue as Trustee with such conflicting interest, or resign, to
the extent and in the manner provided by, and subject to the provisions of, the
TIA and this Indenture. To the extent permitted by such Act, the Trustee shall
not be deemed to have a conflicting interest by virtue of being a trustee under
this Indenture with respect to Initial Notes and Additional Notes, or a trustee
under any other indenture between the Company and the Trustee.

         Section 7.10. Corporate Trustee Required; Eligibility. (a) There shall
at all times be one (and only one) Trustee hereunder. The Trustee shall be a
Person that is eligible pursuant to the TIA to act as such and has a combined
capital and surplus of at least $100,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this Section
7.10 and to the extent permitted by the TIA, the combined capital and surplus of
such Person shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
7.10, it shall resign immediately in the manner and with the effect hereinafter
specified in this Article.

         Section 7.11. Resignation and Removal; Appointment of Successor. (a) No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 7.12.

          (b) The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor Trustee
required by Section 7.12 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

          (c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Notes, delivered to the Trustee
and to the Company. If the instrument of acceptance by a successor Trustee
required by Section 7.12 shall not have been delivered to the Trustee within 30
days after the giving

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of such notice of removal, the Trustee being removed may petition any court of
competent jurisdiction for the appointment of a successor Trustee.

          If at any time:

               (i)   the Trustee shall fail to comply with Section 7.09 after
         written request therefor by the Company or by any Holder who has been a
         bona fide Holder for at least six months, or

               (ii)  the Trustee shall cease to be eligible under Section 7.10
         and shall fail to resign after written request therefor by the Company
         or by any such Holder, or

               (iii) the Trustee shall become incapable of acting or shall be
         adjudged bankrupt or insolvent or a receiver of the Trustee or of its
         property shall be appointed or any public officer shall take charge or
         control of the Trustee or of its property or affairs for the purpose of
         rehabilitation, conservation or liquidation,

then, in any such case, (A) the Company may remove the Trustee, or (B) subject
to Section 6.11, any Holder who has been a bona fide Holder for at least six
months may, on behalf of itself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee or Trustees.

          (d) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company shall promptly appoint a successor Trustee and shall comply with the
applicable requirements of Section 7.12. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Notes delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable requirements of
Section 7.12, become the successor Trustee and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee shall have
been so appointed by the Company or the Holders and accepted appointment in the
manner required by Section 7.12, then, subject to Section 6.11, any Holder who
has been a bona fide Holder for at least six months may, on behalf of itself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee.

          (e) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to all Holders in the
manner provided in Section 1.10. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.

          Section 7.12. Acceptance of Appointment by Successor. (a) In case of
the appointment hereunder of a successor Trustee, every such successor Trustee
so appointed shall execute, acknowledge and deliver to the Company and to the
retiring

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

          (b) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to above.

          (c) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article 7.

          Section 7.13. Merger, Conversion, Consolidation or Succession to
Business. (a) Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article 7, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Notes shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Notes so authenticated with the same effect
as if such successor Trustee had itself authenticated such Notes.

          Section 7.14. Preferential Collection of Claims Against the Company.
(a) If and when the Trustee shall be or become a creditor of the Company (or any
other obligor upon the Notes), the Trustee shall be subject to the provisions of
the TIA regarding the collection of claims against the Company (or any such
other obligor).

          Section 7.15. Appointment of Authenticating Agent. The Trustee may
appoint an Authenticating Agent acceptable to the Company to authenticate the
Notes. Any such appointment shall be evidenced by an instrument in writing
signed by a Responsible Officer, a copy of which instrument shall be promptly
furnished to the Company. Unless limited by the terms of such appointment, an
Authenticating Agent may authenticate Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication (or execution of a certificate of
authentication) by the Trustee includes authentication (or execution of a
certificate of authentication) by such Authenticating Agent. An Authenticating
Agent has the same rights as any Registrar, Paying Agent or agent for service of
notices and demands.

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                                   ARTICLE 8
             Holders' List and Reports by Trustee and the Company

          Section 8.01. The Company to Furnish Trustee Names and Addresses of
Holders; Stock Exchange Listing. (a) The Company will furnish or cause to be
furnished to the Trustee

               (i)  semi-annually, not more than 15 days after each Regular
          Record Date, a list, in such form as the Trustee may reasonably
          require, of the names and addresses of the Holders as of such Regular
          Record Date, and

               (ii) at such other times as the Trustee may request in writing,
          within 30 days after the receipt by the Company of any such request, a
          list of similar form and content as of a date not more than 15 days
          prior to the time such list is furnished;

provided, however, that if and so long as the Trustee shall be the Registrar, no
such list need be furnished pursuant to this Section 8.01.

          (b)  The Company will promptly notify the Trustee when any Notes are
listed on any stock exchange and of any delisting thereof.

          Section 8.02. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list, if any, furnished to the Trustee as provided in Section 8.01 and the names
and addresses of Holders received by the Trustee in its capacity as Registrar;
provided, however, that if and so long as the Trustee shall be the Registrar,
the Register shall satisfy the requirements relating to such list. None of the
Company, the Trustee or any other Person shall be under any responsibility with
regard to the accuracy of such list. The Trustee may destroy any list furnished
to it as provided in Section 8.01 upon receipt of a new list so furnished.

          (b)  The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Notes, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
TIA.

          (c)  Every Holder, by receiving and holding the same, agrees with the
Company and the Trustee that neither the Company nor the Trustee nor any agent
of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to the TIA.

          Section 8.03. Reports by Trustee. The Trustee shall transmit to
Holders such reports concerning the Trustee and its actions under this Indenture
as may be required pursuant to the TIA at the times and in the manner provided
pursuant thereto. If required by Section 313(a) of the TIA, the Trustee shall,
within 60 days after each May 15, following the date of this Indenture deliver
to Holders a brief report, dated as of such May 15, which complies with the
provisions of such Section 313(a). A copy of each such report shall, at the time
of such transmission to Holders, be filed by the Trustee

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with each stock exchange, if any, upon which any Notes are listed, with the SEC
and with the Company.

                                   ARTICLE 9
                        Amendment, Supplement or Waiver

         Section 9.01.  Without Consent of the Holders. (a) Without the consent
of any Holder, the Company and the Trustee may enter into one or more indentures
supplemental hereto, for any of the following purposes:

                  (i)  to cure any ambiguity, omission, defect or inconsistency,

                 (ii)  to provide for the assumption by a successor of the
         obligations of the Company under this Indenture,

                (iii)  to provide for uncertificated Notes in addition to or in
         place of certificated Notes; provided that the uncertificated Notes are
         issued in registered form for purposes of Section 163(f) of the Code,
         or in a manner such that the uncertificated Notes are described in
         Section 163(f)(2)(B) of the Code,

                 (iv)  to add Subsidiary Guarantees with respect to the Notes,
         to grant a Lien under this Indenture to the Trustee as security for the
         Notes, to confirm and evidence the release, termination or discharge of
         any Subsidiary Guarantee or any such Lien with respect to or securing
         the Notes when such release, termination or discharge is permitted
         under this Indenture,

                  (v)  to add to the covenants of the Company for the benefit of
         the Holders or to surrender any right or power conferred upon the
         Company,

                 (vi)  to provide for or confirm the issuance of Additional
         Notes in accordance with the terms of the Indenture,

                (vii)  to make any change that does not adversely affect the
         rights of any Holder under the Notes or this Indenture, or

               (viii)  to comply with any requirement of the SEC in connection
         with the qualification of this Indenture under the TIA or otherwise.

         Section 9.02. With Consent of Holders. (a) Subject to Section 6.07, the
Company, the Trustee and (if applicable) any Subsidiary Guarantor may amend or
supplement this Indenture or the Notes with the written consent of the Holders
of not less than a majority in aggregate principal amount of the Outstanding
Notes, and any past Default or compliance with any provisions may also be waived
with the written consent of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Notes.

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<PAGE>

         (b) Notwithstanding the provisions of this Section 9.02, without the
consent of each Holder affected, an amendment or waiver, including a waiver
pursuant to Section 6.04, may not (with respect to any Notes held by a
non-consenting Holder):

                (i) change the Stated Maturity of the principal of, or any
         installment of interest on, any Note,

               (ii) reduce the principal amount of or premium, if any, or
         interest on any Note,

              (iii) reduce any amount payable on redemption of the Notes or upon
         the occurrence of an Event of Default or reduce the Change of Control
         Payment or the amount to be paid in connection with an Asset Sale
         Offer,

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

                (v) impair the right to institute suit for the enforcement of
         any payment on or after the Stated Maturity (or, in the case of a
         redemption, on or after the Redemption Date) of any Note,

               (vi) reduce the above-stated percentage of outstanding Notes the
         consent of whose Holders is necessary to modify or amend the Indenture,

              (vii) waive a default in the payment of principal of or premium,
         if any, or interest on the Notes (except as set forth in Section 6.04),

             (viii) reduce the percentage or aggregate principal amount of
         outstanding Notes the consent of whose Holders is necessary for waiver
         of compliance with provisions of the Indenture or for waiver of
         Defaults,

               (ix) modify or change any provision of the Indenture affecting
         the ranking of the Notes or the Subsidiary Guarantees in a manner
         adverse to the Holders of the Notes,

                (x) release any Subsidiary Guarantor from any of its obligations
         under its Subsidiary Guarantee or the Indenture other than in
         accordance with the provisions of the Indenture, or amend or modify any
         provision relating to such release, or

               (xi) directly or indirectly release the Liens created by the
         Security Documents on all or substantially all the Collateral (other
         than in accordance with the terms of the Existing Credit Facility or
         the Security Documents or with the consent of the requisite lenders
         under the Existing Credit Facility if, after such consent, the Company
         is in compliance with Section 4.12).

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<PAGE>

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

     (d) After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders of each Note affected
thereby, with a copy to the Trustee, 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 supplemental indenture or the effectiveness of any such amendment,
supplement or waiver.

     Section 9.03. Execution of Amendments, Supplements or Waivers. The Trustee
shall sign any amendment, supplement or waiver authorized pursuant to this
Article 9 if the amendment, supplement or waiver does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, but need not, sign it. In signing or refusing to sign such
amendment, supplement or waiver, the Trustee shall be entitled to receive, and
shall be fully protected in relying upon, an Officer's Certificate and an
Opinion of Counsel to the effect that the execution of such amendment,
supplement or waiver has been duly authorized, executed and delivered by the
Company and that such amendment, supplement or waiver is a valid and binding
agreement of the Company, enforceable against it in accordance with its terms
(subject to customary exceptions).

     Section 9.04. Revocation and Effect of Consents. (a) Until an amendment,
supplement or waiver becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of that Note or any
Note that evidences all or any part of 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 of this Section 9.04, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note by notice to the Trustee or the
Company received by the Trustee or the Company, as the case may be, before the
date on which the Trustee receives an Officer's 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 as set forth in Section 1.08.

     (b) After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it makes a change described in any of clauses (i)
through (viii) of Section 9.02(b). In that case, the amendment, supplement or
waiver shall bind each Holder of a Note who has consented to it and every
subsequent Holder of such Note or any Note that evidences all or any part of the
same debt as the consenting Holder's Note.

     Section 9.05. Conformity with TIA. (a) Every amendment or supplemental
indenture executed pursuant to this Article shall conform to the requirements of
the TIA as then in effect.

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     Section 9.06.  Notation on or Exchange of Notes. (a) If an amendment,
supplement or waiver changes the terms of a Note, the Trustee shall (if required
by the Company and in accordance with the specific direction of the Company)
request the Holder to deliver its Note to the Trustee. The Trustee shall (if
required by the Company and in accordance with the specific written direction of
the Company) 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
determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the 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.

                                   ARTICLE 10
                               Redemption of Notes

     Section 10.01. Right of Redemption. The Notes will not be redeemable at the
option of the Company prior to July 1, 2007. Thereafter, the Notes will be
redeemable, at the option of the Company, in whole or in part, at any time or
from time to time on and prior to maturity. Such redemption may be made upon
notice mailed by first-class mail to each Holder's registered address in
accordance with Section 10.05. The Notes will be so redeemable at the following
Redemption Prices (expressed as a percentage of principal amount on the relevant
Redemption Date), plus accrued and unpaid interest to the relevant Redemption
Date, if redeemed during the twelve-month period commencing on July 1 of the
years set forth below:

                                           Redemption
          Year                               Price
          ----                             ----------
          2007........................           .%
          2008........................           .%
          2009........................           .%
          2010 and thereafter.........     100.000%

     Section 10.02. Applicability of Article. Redemption or purchase of Notes as
permitted by Section 10.01 shall be made in accordance with this Article 10.

     Section 10.03. Election to Redeem; Notice to Trustee. In case of any
redemption at the election of the Company of the Notes, the Company shall, at
least 30 days prior to the Redemption Date initially fixed by the Company
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date and of the principal amount of Notes to be
redeemed.

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<PAGE>

     Section 10.04. Selection by Trustee of Notes to Be Redeemed. In the case of
any partial redemption, selection of the Notes for redemption will be made not
more than 60 days prior to the Redemption Date by the Trustee in compliance with
the requirements of the principal national securities exchange, if any, on which
the Notes are listed or, if the Notes are not so listed, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate; provided
that no Notes of $1,000 or less shall be redeemed in part.

     (a) The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the portion of the principal amount thereof to be redeemed. On and
after the Redemption Date, interest will cease to accrue on Notes or portions
thereof called for redemption.

     (b) For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the 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 of such Note that has been or is to be redeemed.

     Section 10.05. Notice of Redemption. (a) Notice of redemption or purchase
as provided in Section 10.01 shall be deemed to have been given upon the mailing
by first class mail, postage prepaid, of such notice to each Holder of Notes to
be redeemed, at its registered address as recorded in the Register, not later
than 30 nor more than 60 days prior to the Redemption Date.

     Any such notice shall state:

          (i) the expected Redemption Date,

         (ii) the Redemption Price,

        (iii) if less than all Outstanding Notes are to be redeemed, the
     identification (and, in the case of partial redemption, the respective
     principal amounts) of the particular Notes to be redeemed,

         (iv) that on the Redemption Date the Redemption Price will become due
     and payable upon each such Note to be redeemed, and that, unless the
     Company default in making such redemption payment or any Paying Agent is
     prohibited from making such payment pursuant to the terms of this
     Indenture, interest hereon shall cease to accrue from and after said date,

          (v) the place or places where such Notes are to be surrendered for
     payment of the Redemption Price and the name and address of the Paying
     Agent or Paying Agents,

         (vi) the CUSIP and other security identification numbers, if any,
     subject to Section 3.11 hereof, and

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<PAGE>

        (vii) the section of this Indenture pursuant to which the Notes are to
     be redeemed.

     Notices of redemption may not be conditional.

     (b) Notice of such redemption or purchase of Notes to be so redeemed or
purchased at the election of the Company shall be given by the Company or, at
the written request of the Company delivered at least five Business Days prior
to the date proposed for the mailing of such notice, by the Trustee in the name
and at the expense of the Company; provided that such notice to the Trustee may
be revoked by the Company by written notice delivered to the Trustee prior to
the date proposed for the mailing of the notice of such redemption to the
Holders.

     (c) The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Note designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Note.

     Section 10.06. Deposit of Redemption Price. (a) On or prior to 10:00 a.m.,
New York City time on any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, the Company shall segregate and hold in trust as provided in Section
4.03) an amount of money sufficient to pay the Redemption Price of, and any
accrued and unpaid interest on, all the Notes or portions thereof which are to
be redeemed on that date.

     Section 10.07. Notes Payable on Redemption Date. (a) Notice of redemption
having been given as provided in this Article 10, the Notes so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
herein specified and from and after such date (unless Company shall default in
the payment of the Redemption Price or any Paying Agent is prohibited from
paying the Redemption Price pursuant to the terms of this Indenture) such Notes
shall cease to bear interest. Upon surrender of such Notes for redemption in
accordance with such notice, such Notes shall be paid by the Company at the
Redemption Price. Installments of interest whose Interest Payment Date is on or
prior to the Redemption Date shall be payable to the Holders of such Notes
registered as such on the relevant Regular Record Dates according to their terms
and the provisions of Section 3.07.

     (b) On and after any Redemption Date, if money sufficient to pay the
Redemption Price of and any accrued and unpaid interest on Notes called for
redemption shall have been made available in accordance with Section 10.06, the
Notes (or the portions thereof) called for redemption will cease to accrue
interest and the only right of the Holders of such Notes (or portions thereof)
will be to receive payment of the Redemption Price of, and subject to the last
sentence of Section 10.07(a), any accrued and unpaid interest on such Notes (or
portions thereof) to the Redemption Date. If any Note (or portion thereof)
called for redemption shall not be so paid upon surrender thereof for
redemption, the principal (and premium, if any) shall, until paid, bear interest
from the Redemption Date at the rate borne by the Note (or portion thereof).

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<PAGE>

     Section 10.08. Notes Redeemed in Part. Any Note that is to be redeemed only
in part shall be surrendered at a Place of Payment (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing) and the Company
shall execute and the Trustee shall authenticate and deliver to the Holder of
such Note without service charge, a new Note or Notes, of any authorized
denomination as requested by such Holder in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Note so
surrendered.

                                  ARTICLE 11
                          Satisfaction and Discharge

     Section 11.01. Satisfaction and Discharges of Indenture. (a) This Indenture
shall cease to be of further effect (except as to any surviving rights of
transfer or exchange of Notes herein provided for), and the Trustee, on demand
of and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when

         (i)  either

               (A) all Notes theretofore authenticated and delivered (other than
         (y) Notes that have been destroyed, lost or stolen and that have been
         replaced or paid as provided in Section 3.06, and (z) 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, as provided in Section 4.03) have been
         delivered to the Trustee canceled or for cancellation; or

               (B) all such Notes not theretofore delivered to the Trustee
         canceled or for cancellation

                    (x) have become due and payable, or

                    (y) will become due and payable at their Stated Maturity
               within one year, or

                    (z) are to be called for redemption within one year under
               arrangements reasonably satisfactory to the Trustee for the
               giving of notice of redemption by the Trustee in the name, and at
               the expense, of the Company,

         (ii) the Company has irrevocably deposited or caused to be deposited
     with the Trustee an amount in United States dollars, U.S. Government
     Obligations, or a combination thereof, sufficient to pay and discharge the
     entire

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<PAGE>

     Indebtedness on such Notes not theretofore delivered to the Trustee
     canceled or for cancellation, for principal (and premium, if any) and
     interest to the date of such deposit (in the case of Notes that have become
     due and payable), or to the Stated Maturity or Redemption Date, as the case
     may be;

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

         (iv)  the Company has delivered to the Trustee an Officer's Certificate
     and an Opinion of Counsel each to the effect that all conditions precedent
     provided for in this Section 11.01 relating to the satisfaction and
     discharge of this Indenture have been complied with; provided that any such
     counsel may rely on any Officer's Certificate as to matters of fact
     (including as to compliance with the foregoing clauses (i), (ii) and
     (iii)).

     (b) Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 7.08 and, if money
shall have been deposited with the Trustee pursuant to clause (ii) of Section
11.01(a), the obligations of the Trustee under Section 11.02, shall survive.

     Section 11.02. Application of Trust Money. Subject to the provisions of the
last paragraph of Section 4.03, all money deposited with the Trustee pursuant to
Section 11.01 shall be held in trust and applied by it, in accordance with the
provisions of the Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own Paying Agent)
as the Trustee may determine, to the Persons entitled thereto, of the principal
(and premium, if any) and interest on the Notes; but such money need not be
segregated from other funds except to the extent required by law.

                                  ARTICLE 12
                      Defeasance and Covenant Defeasance

     Section 12.01. Option of the Company to Effect Defeasance or Covenant
Defeasance. The Company may at its option by a Board Resolution, at any time,
elect to have either Section 12.02 or Section 12.03 applied to the Outstanding
Notes upon compliance with the conditions set forth below in this Article 12.

     Section 12.02. Legal Defeasance and Discharge. Upon the exercise by the
Company under Section 12.01 of the option applicable to this Section 12.02, the
Company shall be deemed to have been discharged from any and all Obligations
with respect to all Outstanding Notes (and any Subsidiary Guarantor will be
discharged from any and all Obligations in respect of its Subsidiary Guarantee)
on the date which is the 123rd day after the deposit referred to in Section
12.04(a); provided that all of the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance means
that the Company shall be deemed to have paid and discharged the entire
Indebtedness represented by the Outstanding Notes, which

                                      88
<PAGE>

shall thereafter be deemed to be "outstanding" only for the purposes of Section
12.05 hereof and the other Sections of this Indenture referred to in clauses (i)
and (ii) of this Section 12.02, 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), 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 12.04 hereof,
and as more fully set forth in such Section, payments in respect of the
principal of, premium, if any, and interest on such Notes when such payments are
due, (ii) the obligations of the Company with respect to such Notes under
Sections 1.06, 2.03, 3.03, 3.04, 3.05, 3.06, 3.12, 4.01, 4.02, 4.03 and 12.05
hereof, (iii) the rights, powers, trusts, duties and immunities of the Trustee
hereunder, including, without limitation, the Trustee's rights under Section
7.08 hereof, and the obligations of the Company in connection therewith and with
this Article 12. Subject to compliance with this Article 12, the Company may
exercise its option under this Section 12.02 notwithstanding the prior exercise
of its option under Section 12.03 hereof with respect to the Notes.

     Section 12.03. Covenant Defeasance. Upon the exercise by the Company under
Section 12.01 of the option applicable to this Section 12.03, the Company shall
be released from its obligations under the covenants contained in Sections 4.06
through Section 4.18, Section 4.22, Article 14 and clause (iv) of Section
5.01(a) hereof with respect to the Outstanding Notes and no Default under
Section 6.01(e), (f) and (g) shall thereafter constitute a Default or Event of
Default on the date which is the 123rd day after the deposit referred to in
Section 12.04(a); provided that all of the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter
be deemed not Outstanding for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed Outstanding for
all other purposes hereunder. 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 of Default
under Section 6.01(c) or (d), but, except as specified above, the remainder of
this Indenture and such Notes shall be unaffected thereby.

     Section 12.04. Conditions to Legal or Covenant Defeasance. The following
shall be the conditions to application of either Section 12.02 or Section 12.03
to the Outstanding Notes:

     (a) the Company has deposited with the Trustee, in trust, money and/or U.S.
Government Obligations that through the payment of interest and principal in
respect thereof in accordance with their terms will provide money in an amount
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay (i) the principal of, premium, if any, and accrued interest on
the Notes when such payments are due in accordance with

                                      89
<PAGE>

the terms of this Indenture and the Notes or (ii) in the case of Legal
Defeasance, accrued interest on the Notes through a scheduled redemption date
and the principal of, and premium on the Notes on such redemption date; provided
that, at the time of deposit, the Company irrevocably authorize the Trustee to
issue a timely notice of redemption and to take such other steps reasonably
requested by the Trustee to ensure that such redemption will be effectuated;

     (b) in the case of an election under Section 12.02, the Company has
delivered to the Trustee (i) either (x) an Opinion of Counsel to the effect that
Holders will not recognize income, gain or loss for Federal income tax purposes
as a result of the exercise by the Company of its option under this Article 12
and will be subject to Federal income tax on the same amount and in the same
manner and at the same times as would have been the case if such deposit,
defeasance and discharge had not occurred, which Opinion of Counsel must be
based upon (and accompanied by a copy of) a ruling of the Internal Revenue
Service to the same effect unless there has been a change in applicable Federal
income tax law after the date of this Indenture such that a ruling is no longer
required or (y) a ruling directed to the Trustee received from the Internal
Revenue Service to the same effect as the aforementioned Opinion of Counsel and
(ii) an Opinion of Counsel to the effect that, as a result of the creation of
the defeasance trust, the Company will not be required to register under the
Investment Company Act of 1940 and after the passage of 123 days following the
deposit, the trust fund will not be subject to the effect of Section 547 of the
United States Bankruptcy Code or Section 15 of the New York Debtor and Creditor
Law or any comparable provision of applicable law;

     (c) in the case of an election under Section 12.03, the delivery by the
Company to the Trustee of (i) an Opinion of Counsel to the effect that, among
other things, the Holders will not recognize income, gain or loss for Federal
income tax purposes as a result of such deposit and defeasance and will be
subject to Federal income tax on the same amount and in the same manner and at
the same times as would have been the case if such deposit and defeasance had
not occurred and (ii) an Opinion of Counsel to the effect that, as a result of
the creation of the defeasance trust, the Company will not be required to
register under the Investment Company Act of 1940 and after the passage of 123
days following the deposit, the trust fund will not be subject to the effect of
Section 547 of the United States Bankruptcy Code or Section 15 of the New York
Debtor and Creditor Law or any comparable provision of applicable law;

     (d) immediately after giving effect to such deposit on a pro forma basis,
no Event of Default, or event that after the giving of notice or lapse of time
or both would become an Event of Default, shall have occurred and be continuing
on the date of such deposit or during the period ending on the 123rd day after
the date of such deposit, and such deposit shall not result in a breach or
violation of, or constitute a default under, any other agreement or instrument
to which the Company is a party or by which the Company is bound;

     (e) if at such time the Notes are listed on a national securities exchange,
the Company has delivered to the Trustee an Opinion of Counsel to the effect
that the Notes will not be delisted as a result of such deposit, defeasance and
discharge;

                                      90
<PAGE>

     (f) the Company shall have delivered to the Trustee Officer's Certificates
stating that the deposit made by the Company pursuant to its election under
Sections 12.02 or 12.03 was not made by the Company with the intent of
preferring the Holders over the other creditors of the Company with the intent
of defeating, hindering, delaying or defrauding creditors of the Company or
others; and

     (g) the Company shall have delivered to the Trustee Officer's Certificates
and an Opinion of Counsel, each stating that all conditions precedent provided
for relating to either the Legal Defeasance under Section 12.02 or the Covenant
Defeasance under Section 12.03 (as the case may be) have been complied with as
contemplated by this Section 12.04.

     Section 12.05. Deposited Money and Government Securities to Be Held in
Trust; Other Miscellaneous Provisions. Subject to Section 12.06, all money and
U.S. Government Obligations (including the proceeds thereof) deposited with the
Trustee pursuant to Section 12.04 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 (including the Company acting as 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 of, premium, if any, and interest, but such
money need not be segregated from other funds except to the extent required by
law.

     The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the money or U.S. Government
Obligations deposited pursuant to Section 12.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the Outstanding Notes.

     Anything in this Article 12 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or U.S. Government Obligations held by it as provided in
Section 12.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
12.04(a) hereof), 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 12.06. Repayment to Company. Any money deposited with the Trustee
or any Paying Agent, or then held by the Company, in trust for the payment of
the principal of, premium, if any, or interest on any Note and remaining
unclaimed for two years after such principal, premium, if any, or interest has
become due and payable shall be paid to the Company on its written request or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
shall at the

                                      91
<PAGE>

expense of the Company cause to be published once, in The New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.

     Section 12.07. Reinstatement. If the Trustee or Paying Agent is unable to
apply any money or U.S. Government Obligations in accordance with Section 12.02
or 12.03, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the obligations of the Company under this Indenture and the
Notes shall be revived and reinstated as though no deposit had occurred pursuant
to Section 12.02 or 12.03 until such time as the Trustee or Paying Agent is
permitted to apply all such amounts in accordance with Section 12.02 or 12.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its Obligations, the Company shall be subrogated to the rights
of the Holder of such Note to receive such payment from the amounts held by the
Trustee or Paying Agent.

                                  ARTICLE 13
                             Subsidiary Guarantees

     Section 13.01. The Guarantees. (a) Subject to the provisions of this
Article 13, each Subsidiary Guarantor hereby irrevocably and unconditionally
guarantees, jointly and severally, the full and punctual payment (whether at
Stated Maturity, upon acceleration, optional redemption, upon repurchase
following a Change of Control Offer or an Asset Sale Offer or otherwise) of the
principal of and premium, if any, and interest on, and all other amounts payable
under, each Note provided for under this Indenture, and the full and punctual
payment of all other amounts payable by the Company under this Indenture. Upon
failure by the Company to pay punctually any such amount, each Subsidiary
Guarantor shall forthwith on demand pay the amount not so paid at the place and
in the manner specified in this Indenture.

     Section 13.02. Guarantee Unconditional. The obligations of the Subsidiary
Guarantors hereunder shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall, to the fullest extent permitted by law,
not be released, discharged or otherwise affected by:

     (a) any extension, renewal, settlement, compromise, waiver or release in
respect of any obligation of the Company under this Indenture or any Note, by
operation of law or otherwise;

     (b) any modification or amendment of or supplement to this Indenture or any
Note; provided that any such modification which increases the obligations of
each Subsidiary Guarantor hereunder shall not be effective as to such Subsidiary
Guarantor without its consent;

                                      92
<PAGE>

     (c) any release, impairment, non-perfection or invalidity of any direct or
indirect security for any obligation of the Company or any Subsidiary Guarantor
hereunder;

     (d) any change in the corporate existence, structure or ownership of the
Company, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Company or its assets or any resulting release or
discharge of any obligation of the Company contained in this Indenture or any
Note;

     (e) the existence of any claim, set-off or other rights which the
Subsidiary Guarantors may have at any time against the Company, the Trustee or
any other Person, whether in connection with this Indenture or any unrelated
transactions, provided that nothing herein shall prevent the assertion of any
such claim by separate suit or compulsory counterclaim;

     (f) any invalidity or unenforceability relating to or against the Company
for any reason of this Indenture or any Note, or any provision of applicable law
or regulation purporting to prohibit the payment by the Company of the principal
of or interest on any Note or any other amount payable by the Company under this
Indenture; or

     (g) any other act or omission to act or delay of any kind by the Company,
the Trustee or any other Person or any other circumstance whatsoever which
might, but for the provisions of this paragraph, constitute a legal or equitable
discharge of or defense to such Subsidiary Guarantor's obligations hereunder.

     Section 13.03. Discharge; Reinstatement. The Subsidiary Guarantors'
obligations hereunder shall remain in full force and effect until the principal
of, premium, if any, and interest on the Notes and all other amounts payable by
the Company under this Indenture shall have been paid in full. If at any time
any payment of the principal of, premium, if any, or interest on any Note or any
other amount payable by the Company under this Indenture is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or reorganization
of the Company or otherwise, the Subsidiary Guarantors' obligations hereunder
with respect to such payment shall be reinstated as though such payment had been
due but not made at such time.

     Section 13.04. Waiver by the Subsidiary Guarantors. The Subsidiary
Guarantors irrevocably waive acceptance hereof, presentment, demand, protest and
any notice not provided for herein, as well as any requirement that at any time
any action be taken by any Person against the Company or any other Person.

     Section 13.05. Subrogation and Contribution. Upon making any payment with
respect to any obligation of the Company under this Article 13, the Subsidiary
Guarantor making such payment shall be subrogated to the rights of the payee
against the Company with respect to such obligation; provided that such
Subsidiary Guarantor shall not enforce either (i) any right to receive payment
by way of subrogation against the Company or against any direct or indirect
security for such obligation, or any other right to be reimbursed, indemnified
or exonerated by or for the account of the Company in

                                      93
<PAGE>

respect thereof or (ii) any right to receive payment, in the nature of
contribution or for any other reason, from any other Subsidiary Guarantor with
respect to such payment, in each case so long as any amount payable by the
Company hereunder or under the Notes remains unpaid.

     Section 13.06. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by the Company under this Indenture or the Notes
is stayed upon the insolvency, bankruptcy or reorganization of the Company, all
such amounts otherwise subject to acceleration under the terms of this Indenture
shall nonetheless be payable by the Subsidiary Guarantors hereunder forthwith on
demand by the Trustee or the Holders.

     Section 13.07. Limits of Guarantees. Notwithstanding anything to the
contrary in this Article 13, each Subsidiary Guarantor, and by its acceptance of
Notes, each Holder, hereby confirms that it is the intention of all such parties
that the Subsidiary Guarantee of such Guarantor not constitute a fraudulent
conveyance under applicable fraudulent conveyance provisions of the United
States Bankruptcy Code or any comparable provision of state law. To effectuate
the foregoing intention, the Trustee, the Holders and the Subsidiary Guarantors
hereby irrevocably agree that the obligations of such Subsidiary Guarantor under
its Subsidiary Guarantee and this Article 13 shall be limited to the maximum
amount that would not render such Subsidiary Guarantor's obligations subject to
avoidance under applicable fraudulent conveyance provisions of the United States
Bankruptcy Code or any comparable provision of state law.

     Section 13.08. Execution and Delivery of Note Guarantee. To evidence its
Subsidiary Guarantee set forth in Section 13.01, each Subsidiary Guarantor
hereby agrees that this Indenture (or a supplemental indenture in the form of
Exhibit B hereto) shall be executed on behalf of such Subsidiary Guarantor by
one of its Officers.

     The signature of an Officer of a Subsidiary Guarantor on the Indenture
shall bind such Subsidiary Guarantor, notwithstanding that such individual has
ceased to hold such office prior to the authentication and delivery of any Note
or did not hold such office at the date of such Note.

     The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth
in this Indenture on behalf of the Subsidiary Guarantors.

                                  ARTICLE 14
                              Security Arrangements

     Section 14.01. Security. (a) In order to secure the Indenture Obligations
equally and ratably with the Existing Credit Facility Obligations and
Obligations in respect of the Existing Senior Secured Notes and, with respect to
certain of the Collateral, the Existing ARCO Chemical Debt, the Company will,
and will cause each of its Restricted Subsidiaries named in any Existing
Security Document as a party thereto, to execute and deliver to the Collateral
Agent prior to the Issue Date each Existing

                                      94
<PAGE>

Security Document to which it is a party. The Company and its Restricted
Subsidiaries shall comply with all covenants and agreements contained in the
Security Documents the failure to comply with which would have a material and
adverse effect on the Liens purported to be created thereby, unless such failure
to comply is waived by the requisite lenders under the Existing Credit Facility
if, after that waiver, the Company is in compliance with Section 4.12.

         (b) The Trustee and each holder of each Note by its acceptance of that
Note acknowledges and agrees that:

                  (i) this Indenture, as originally executed and delivered by
         the parties hereto, does not create any Lien on any property or
         securities which secures the Indenture Obligations or this Indenture;

                 (ii) the Existing Security Documents, when executed and
         delivered by the parties thereto, will comply with the provisions of
         Section 4.12;

                (iii) the Existing Security Documents provide, and any Security
         Document that becomes effective after the Issue Date, may provide, that
         the Liens created thereby or thereunder automatically will be released
         and extinguished with respect to any property or security that is
         transferred or otherwise disposed of in accordance with the terms of
         the Existing Credit Facility, including any property or security that
         is the subject of a Major Asset Sale and is transferred to a Subject
         Asset Transferee;

                 (iv) without the necessity of any consent of or notice to the
         Trustee or any holder of Indenture Obligations, the Company and the
         Collateral Agent may amend, modify, supplement or terminate any
         Security Document as long as the Company remains in compliance with
         Section 4.12;

                  (v) as among the Trustee and the holders of Indenture
         Obligations and the lenders under the Existing Credit Facility and the
         Collateral Agent, those lenders and the Collateral Agent will have the
         sole ability to control and obtain remedies with respect to all
         Collateral (including on sale or liquidation of any Collateral after
         acceleration of the Notes, the Existing Senior Secured Notes, the
         Existing Credit Facility Obligations or the Existing ARCO Chemical
         Debt) without the necessity of any consent of or notice to the Trustee
         or any such holder;

                 (vi) any or all Liens granted under the Security Documents for
         the benefit of the Holders will be automatically released, without the
         necessity of any consent of the Trustee or any Holders, upon a release
         of such Lien or Liens pursuant to the terms of the Security Documents
         and the Existing Credit Facility or if such release is approved by the
         requisite lenders under the Existing Credit Facility.

                (vii) the relative rights of the holders of Indenture
         Obligations and the holders of Indebtedness or other obligations
         secured by Liens on the Collateral

                                      95
<PAGE>

         are governed by, and are subject to the terms and conditions of, the
         Security Documents and not this Indenture; and

               (viii) without the necessity of any consent of or notice to the
         Trustee or any holder of Indenture Obligations, the Company may, on
         behalf of itself or any of its Restricted Subsidiaries, request and
         instruct the Collateral Agent to, on behalf of each secured party under
         the Security Documents, (A) execute and deliver to the Company, for the
         benefit of any Person, such release documents as the Company may
         reasonably request, of all liens and security interests held by the
         Collateral Agent in such assets, and such Person shall be entitled to
         rely conclusively on such release document, and (B) deliver any such
         assets in the possession of the Collateral Agent to the Company.

         Section 14.02. Notice of Payment, Discharge or Defeasance. The Trustee
and each Holder, by its acceptance of a Note, agree that upon the payment in
full or discharge pursuant to Article 11 of the Indenture Obligations, the
Trustee shall without notice to or consent of any Holder, upon the written
request of the Company, certify to the Collateral Agent, in writing, that the
Indenture Obligations have been paid in full, or that this Indenture has been
discharged in accordance with Article 11.

                                      96
<PAGE>

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

                                            LYONDELL CHEMICAL COMPANY

                                            By: ________________________________
                                                Name:
                                                Title:

                                            ARCO CHEMICAL TECHNOLOGY, INC., as
                                            a Subsidiary Guarantor

                                            By: ________________________________
                                                Name:
                                                Title:

                                            ARCO CHEMICAL TECHNOLOGY, L.P., as a
                                            Subsidiary Guarantor

                                            By: ARCO Chemical Technology
                                                Management, Inc., its General
                                                Partner

                                            By: ________________________________
                                                Name:
                                                Title:

                                            LYONDELL CHEMICAL NEDERLAND, LTD.,
                                            as a Subsidiary Guarantor

                                            By: ________________________________
                                                Name:
                                                Title:
<PAGE>

                                         THE BANK OF NEW YORK,
                                         as Trustee

                                         By: _________________________________
                                             Name:
                                             Title:
<PAGE>

                                                                       EXHIBIT A

                                [FORM OF NOTE]

                          LYONDELL CHEMICAL COMPANY.

                          % Senior Secured Note due

No.________                                         [CUSIP/CINS] No. __________

                                                    $_________

         LYONDELL CHEMICAL COMPANY, a Delaware corporation (the "Company", which
term includes any successor Persons under the Indenture hereinafter referred
to), for value received promises to pay to ___________, or its registered
assigns, the principal sum of __________________________________ Dollars
($___________) [or such other amount as indicated on the Schedule of Exchanges
of Securities attached hereto]/1/, on             .

         Interest Rate:                          % per annum.

         Interest Payment Dates:                          and        of each
                                                year commencing                .

         Regular Record Dates:                          and             of each
                                                year.

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

__________________

         /1/ To be included in any Global Note

                                      A-1
<PAGE>

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

                                                  LYONDELL CHEMICAL COMPANY

                                                  By:_________________________
                                                     Name:
                                                     Title:

                                      A-2
<PAGE>

               (Form of Trustee's Certificate of Authentication)

         This is one of the    % Senior Secured Notes due      referred to in
the within-mentioned Indenture.

                                                  THE BANK OF NEW YORK,
                                                    as Trustee

Dated: ______________                             By:_________________________
                                                     Authorized Signatory

                                      A-3
<PAGE>

                            [REVERSE SIDE OF NOTE]

                           LYONDELL CHEMICAL COMPANY

                           % Senior Secured Note due

         (1)  Principal and Interest. The Company agrees to pay the principal of
this Note on             .

         The Company agrees to pay interest on the principal amount of this Note
on each Interest Payment Date, as set forth below, at the rate of  % per annum.

         Interest will be payable semi-annually (to the Holders of record of the
Notes (or any predecessor Notes) at the close of business on the Regular Record
Date immediately preceding the Interest Payment Date) on each Interest Payment
Date, commencing                .

         Interest on this Note will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from  , 2002; provided
that, if there is no existing default in the payment of interest and if this
Note is authenticated between a Regular Record Date referred to on the face
hereof and the next succeeding Interest Payment Date, interest shall accrue from
such Interest Payment Date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.

         The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum equal to 1% per annum in excess of the rate of interest
applicable to the Notes.

         (2)  Method of Payment. The Company will pay interest (except defaulted
interest) on the principal amount of the Notes on each           and        to
the Persons who are Holders (as reflected in the Register at the close of
business on the             and         immediately preceding the Interest
Payment Date), in each case, even if the Note is canceled on registration of
transfer or registration of exchange after such Regular Record Date; provided
that, with respect to the payment of principal, the Company will make payment to
the Holder that surrenders this Note to any Paying Agent on or after July 1,
2012.

         The Company will pay principal, premium, if any, and interest in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. Payments (including principal, premium, if any, and
interest) in respect of the Notes represented by the Global Notes, the Holders
of which have given wire transfer instructions on or prior to the relevant
record date, shall be made by wire transfer of immediately available funds to
the accounts specified by the Global Note Holder. With respect to Physical
Notes, the Company will make all payments of principal, premium, if any, and
interest at the office or agency maintained by the Company for such purposes in
The City of New York or, at the Company's option, by mailing a check to each
such Holder's registered address. If a payment date is a date other than a
Business Day,

                                      A-4
<PAGE>

payment may be made at that place on the next succeeding day that is a Business
Day and no interest shall accrue for the intervening period.

          (3) Paying Agent and Registrar. Initially, the Trustee will act as
Paying Agent and Registrar. The Company may change any Paying Agent or Registrar
upon written notice thereto. The Company, any Subsidiary or any Affiliate of any
of them may act as Paying Agent, Registrar or co-registrar.

          (4) Indenture; Limitations. The Company issued the Notes under an
Indenture dated as of   ,      (the "Indenture"), among the Company, the
Subsidiary Guarantors and The Bank of New York, as trustee (the "Trustee").
Capitalized terms herein are used as defined in the Indenture unless otherwise
indicated. 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
(the "TIA"). The Notes are subject to all such terms, and Holders are referred
to the Indenture and the TIA for a statement of all such terms. To the extent
permitted by applicable law, in the event of any inconsistency between the terms
of this Note and the terms of the Indenture, the terms of the Indenture shall
control.

          The Notes are secured senior obligations of the Company. The Indenture
limits the initial aggregate principal amount of the Notes to $            but
permits the issuance of Additional Notes subject to compliance with certain
conditions and covenants contained in the Indenture and except as may be limited
by applicable law.

          (5) Optional Redemption. The Notes may be redeemed at the option of
the Company, in whole or in part, at any time and from time to time, on or after
            , at the following Redemption Prices (expressed in percentages of
principal amount on the relevant Redemption Date), plus accrued and unpaid
interest to the Redemption Date, if redeemed during the 12-month period
commencing        of each of the years set forth below:

                      Year                                  Redemption Price

2007..........................................                        %

2008..........................................                        %

2009..........................................                        %

2010 and thereafter...........................                 100.000%

          If less than all the Notes are to be redeemed at any time, selection
of Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot
or by such method as the Trustee shall deem fair and appropriate; provided that
no Notes of $1,000 or less shall be redeemed in part.

                                      A-5
<PAGE>

          Notices of redemption shall be mailed by first class mail at least 30
but not more than 60 days before the redemption date to each Holder of Notes to
be redeemed at its registered address. Notices of redemption may not be
conditional. 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. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on Notes or portions of them called for redemption.

          (6) Repurchase upon a Change in Control and Sale of Assets. Upon the
occurrence of (a) a Change in Control, each Holder shall have the right to
require that the Company repurchase such Holder's Notes at a purchase price in
cash equal to 101% of the principal amount thereof on the date of purchase, plus
accrued and unpaid interest to the date of purchase and (b) an Asset Sale, the
Company may be obligated to make an offer to purchase on a pro rata basis from
the Holders the Notes with the Excess Proceeds of such Asset Sales at a purchase
price equal to 100% of the principal amount of such Notes plus accrued interest
to the date of purchase.

          (7) Denominations; Transfer; Exchange. The Notes are in fully
registered form without coupons, in denominations of $1,000 and any integral
multiples of $1,000. A Holder may 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
any taxes and fees required by law or permitted by the Indenture.

          (8) Persons Deemed Owners. A Holder may be treated as the owner of a
Note for all purposes.

          (9) Unclaimed Money. If money for the payment of principal, premium,
if any, or interest remains unclaimed for two years, the Trustee and the Paying
Agent will pay the money back to the Company at its written request. After that,
Holders entitled to the money must look to the Company for payment, unless an
abandoned property law designates another Person, and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.

         (10) Discharge Prior to Redemption or Maturity. If the Company
irrevocably deposits, or causes to be deposited, with the Trustee money or U.S.
Government Obligations sufficient to pay the then outstanding principal of and
premium, if any, and accrued interest on the Notes (a) to redemption or
maturity, the Company will be discharged from the Indenture and the Notes,
except in certain circumstances for certain sections thereof, and (b) to
redemption or maturity, the Company will be discharged from certain covenants
set forth in the Indenture.

         (11) Amendment; Supplement; Waiver. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in aggregate principal amount of the Notes then
Outstanding, and any existing Default or compliance with any provision may be
waived with the consent

                                      A-6
<PAGE>

of the Holders of a majority in aggregate principal amount of the Notes then
Outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend the Indenture or the Notes to the extent set forth in the Indenture.

         (12) Restrictive Covenants. The Indenture contains certain covenants,
including, without limitation, covenants with respect to the following matters:
(i) Indebtedness; (ii) Restricted Payments; (iii) distributions from Restricted
Subsidiaries and Joint Ventures; (iv) sales of assets; (v) transactions with
Affiliates; (vi) Liens; (vii) no amendment to subordination provisions; (viii)
repurchase of Notes upon a Change in Control; (ix) Sale and Leaseback
Transactions; (x) Subsidiary Guarantees; and (xi) consolidation, merger and sale
of assets. Within 120 days after the end of each fiscal year, the Company must
report to the Trustee on compliance with such limitations.

         (13) Successor Persons. When a successor person or other entity (other
than a Subsidiary of the Company) assumes all the obligations of its predecessor
under the Notes and the Indenture, the predecessor person will be released from
those obligations.

         (14) Remedies for Events of Default. If an Event of Default (other than
an Event of Default specified in Section 6.01(g) or (h) of the Indenture that
occurs with respect to the Company or a Subsidiary Guarantor) occurs and is
continuing under this Indenture, then in every such case the Trustee or the
Holders of at least 25% in aggregate principal amount of the Outstanding Notes,
by written notice to the Company (and to the Trustee if such notice is given by
the Holders), may, and the Trustee at the written request of such Holders shall,
declare the principal of, premium, if any, and accrued interest on all of the
Outstanding Notes to be immediately due and payable. Upon a declaration of
acceleration, such principal of, premium, if any, and accrued interest shall be
immediately due and payable. If an Event of Default specified in Section 6.01(g)
or (h) of the Indenture occurs with respect to the Company or a Subsidiary
Guarantor, the principal of, premium, if any, and accrued interest on the
Outstanding Notes shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
The Holders of at least a majority in aggregate principal amount of the
Outstanding Notes by written notice to the Company and to the Trustee, may waive
all past defaults and rescind and annul a declaration of acceleration and its
consequences if (1) all existing Events of Default, other than the nonpayment of
the principal of, premium, if any, and interest on the Notes that have become
due solely by such declaration of acceleration, have been cured or waived and
(2) the recission would not conflict with any judgment or decree of a court of
competent jurisdiction.

         Holders may not enforce the Indenture, the Notes or the Subsidiary
Guarantees except as provided in the Indenture. The Trustee may require security
or indemnity satisfactory to it before it enforces the Indenture, the Notes or
the Subsidiary Guarantees. The Holders of at least a majority in aggregate
principal amount of the Notes then Outstanding may direct the Trustee in the
exercise of any trust or power in accordance with the terms of the Indenture.

         (15) Security. In order to secure the Indenture Obligations, the
Company and certain of its Restricted Subsidiaries have entered into the
Security Documents. The Indenture Obligations shall be secured by Liens on the
Collateral in accordance with the

                                      A-7
<PAGE>

terms and provisions of the Security Documents. The Indenture requires that
Holders of the Notes be granted a lien equally and ratably with any lien granted
on additional assets to secure the holders of Existing Credit Facility
Obligations subsequent to the Issue Date. Each Holder of this Note, by accepting
the same, agrees that (i) the Existing Security Documents provide, and any
Security Document that becomes effective after the Issue Date, may provide, that
the Liens created thereby or thereunder automatically will be released and
extinguished with respect to any property or security that is transferred or
otherwise disposed of in accordance with the terms of the Existing Credit
Facility, including any property or security that is the subject of a Major
Asset Sale and is transferred to a Subject Asset Transferee; (ii) without the
necessity of any consent of or notice to the Trustee or any holder of Indenture
Obligations, the Company and the Collateral Agent may amend, modify, supplement
or terminate any Security Document as long as the Company remains in compliance
with the Indenture; (iii) as among the Trustee and the holders of Indenture
Obligations and the lenders under the Existing Credit Facility and the
Collateral Agent, those lenders and the Collateral Agent will have the sole
ability to control and obtain remedies with respect to all Collateral (including
on sale or liquidation of any Collateral after acceleration of the Notes, the
Existing Senior Secured Notes, the Existing Credit Facility Obligations or the
Existing ARCO Chemical Debt) without the necessity of any consent of or notice
to the Trustee or any such holder; (iv) any or all Liens granted under the
Security Documents for the benefit of the Holders will be automatically
released, without the necessity of any consent of the Trustee or the Holders,
upon a release of such Lien or Liens pursuant to the terms of the Security
Documents and the Existing Credit Facility or if such release is approved by the
requisite lenders under the Existing Credit Facility; (v) the relative rights of
the holders of Indenture Obligations and the holders of Indebtedness or other
obligations secured by Liens on the Collateral are governed by, and are subject
to the terms and conditions of, the Security Documents and not this Indenture;
and (vi) without the necessity of any consent of or notice to the Trustee or any
holder of Indenture Obligations, the Company may, on behalf of itself or any of
its Restricted Subsidiaries, request and instruct the Collateral Agent to, on
behalf of each secured party under the Security Documents, (A) execute and
deliver to the Company, for the benefit of any Person, such release documents as
the Company may reasonably request, of all liens and security interests held by
the Collateral Agent in such assets, and such Person shall be entitled to rely
conclusively on such release document, and (B) deliver any such assets in the
possession of the Collateral Agent to the Company. From and after the date when
all liens granted in favor of the holders of Existing Credit Facility
Obligations are released, the provisions regarding security described above will
no longer apply.

         (16) Subsidiary Guarantees. Each Subsidiary Guarantor irrevocably and
unconditionally guarantees, jointly and severally, on a senior basis, the full
and punctual payment (whether at Stated Maturity, upon acceleration, optional
redemption, upon repurchase following a Change of Control Offer or an Asset Sale
Offer or otherwise) of the principal of, premium, if any, and interest on, and
all other amounts payable under, this Note provided for under this Indenture,
and the full and punctual payment of all other amounts payable by the Company
under the Indenture; provided that, notwithstanding anything to the contrary
herein, the aggregate amount of the Obligations guaranteed under the Indenture
by any Subsidiary Guarantor shall be limited in amount to the maximum amount
that would not render such Subsidiary Guarantor's obligations

                                      A-8
<PAGE>

subject to avoidance under the applicable fraudulent conveyance provisions of
the United States Bankruptcy Code or any comparable provision of any applicable
state law.

         (17)  Additional Subsidiary Guarantees. If any of the Company's
Restricted Subsidiaries shall Guarantee or secure the payment of any other
Indebtedness of the Company or any of its Restricted Subsidiaries, then, subject
to certain exceptions specified in the Indenture, such Restricted Subsidiary
shall become a Subsidiary Guarantor by executing a supplemental indenture.

         (18)  Trustee Dealings with Company. The Trustee under the Indenture,
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, and
otherwise deal with, the Company and its Affiliates as if it were not the
Trustee.

         (19)  Authentication. This Note shall not be valid until the Trustee
signs the certificate of authentication on this Note.

         (20)  Abbreviations. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the 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).

         (21)  Governing Law. This Note shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any principles of conflict of laws to the extent that the application
of the law of another jurisdiction is required thereby.

         The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to the Company, One Houston
Center, Suite 700, 1221 McKinney, Houston, Texas 77010; Attention: General
Counsel.

                                      A-9
<PAGE>

                           [FORM OF TRANSFER NOTICE]

     FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto

Insert Taxpayer Identification No.

__________________________________________________________________________
(Please print or typewrite name and address including zip code of assignee)

__________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing

__________________________________________________________________________
attorney to transfer such Note on the books of the Company with full power of
substitution in the premises.

                                     A-10
<PAGE>

                      OPTION OF HOLDER TO ELECT PURCHASE

     If you wish to have this Note purchased by the Company pursuant to Section
4.09 or Section 4.14 of the Indenture, check the box: [_]

     If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.09 or Section 4.14 of the Indenture, state the amount (in
original principal amount) below:

$________________.

Date:____________

Your Signature:__________________________

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

Signature Guarantee:_____________________________

Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

                                     A-11
<PAGE>

                      SCHEDULE OF EXCHANGES OF SECURITIES

The following exchanges of a part of this Global Note for Physical Notes have
been made:

<TABLE>
<CAPTION>
                          Amount of          Amount of       Principal amount
                         decrease in        increase in       of this Global      Signature of
                      principal amount   principal amount     Note following       authorized
                       of this Global     of this Global    such decrease (or      officer of
  Date of Exchange          Note               Note             increase)            Trustee
<S>                   <C>                <C>                <C>                   <C>
</TABLE>

                                     A-12
<PAGE>

                                                                       EXHIBIT B

                            SUPPLEMENTAL INDENTURE

                         dated as of __________, ____

                                     among

                          LYONDELL CHEMICAL COMPANY,

                                  as Company

                            [SUBSIDIARY GUARANTORS]

                                      and

                             THE BANK OF NEW YORK,
                                  as Trustee
                                 _____________

                          % Senior Secured Notes due
<PAGE>

         THIS SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), entered
into as of __________, ____, among LYONDELL CHEMICAL COMPANY., a Delaware
corporation (the "Company") [INSERT EACH SUBSIDIARY GUARANTOR EXECUTING THIS
SUPPLEMENTAL INDENTURE AND ITS JURISDICTION OF INCORPORATION] (each an
"Undersigned") and THE BANK OF NEW YORK, as trustee (the "Trustee").

                                   RECITALS

         WHEREAS, the Company, the Subsidiary Guarantors party thereto and the
Trustee entered into the Indenture, dated as of   ,      (the "Indenture"),
relating to the Company's    % Senior Secured Notes due      (the "Notes");

         WHEREAS, as a condition to the Trustee entering into the Indenture and
the purchase of the Notes by the Holders, the Company agreed, subject to certain
exceptions, pursuant to Section 4.22 of the Indenture to cause any Restricted
Subsidiary that has guaranteed or secured Indebtedness of the Company or any of
its Restricted Subsidiaries to provide Subsidiary Guarantees.

                                   AGREEMENT

         NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and intending to be legally bound, the parties hereto hereby
agree as follows:

         Section 1. Capitalized terms used herein and not otherwise defined
herein are used as defined in the Indenture.

         Section 2. Each Undersigned, by its execution of this Supplemental
Indenture, agrees to be a Subsidiary Guarantor under the Indenture and to be
bound by the terms of the Indenture applicable to Subsidiary Guarantors,
including, but not limited to, Article 13 thereof.

         Section 3. This Supplemental Indenture shall be governed by and
construed in accordance with the internal laws of the State of New York.

         Section 4. This Supplemental Indenture may be signed in various
counterparts which together shall constitute one and the same instrument.

         Section 5. This Supplemental Indenture is an amendment supplemental to
the Indenture and said Indenture and this Supplemental Indenture shall
henceforth be read together.

         IN WITNESS WHEREOF, the parties have duly executed and delivered this
Supplemental Indenture or have caused this Supplemental Indenture to be duly
executed on their respective behalf by their respective officers thereunto duly
authorized, as of the day and year first above written.

                                      B-2
<PAGE>

                                            LYONDELL CHEMICAL COMPANY

                                            By: _______________________________
                                                Name:
                                                Title:

                                            [SUBSIDIARY GUARANTORS]

                                            THE BANK OF NEW YORK,
                                              as Trustee

                                            By: _______________________________
                                                Name:
                                                Title:

                                      B-3

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