Document:

The transfer of this Debenture is subject to the restrictions set forth in
Section 4 of the Purchase Agreement dated January 20, 2000 between Paine Webber
Group Inc. and the original holder of this Debenture.

                             PAINE WEBBER GROUP INC.

                      6.25% CONVERTIBLE DEBENTURE DUE 2007

                                                          No. New York, New York
                                                              $ January 20, 2000

                  PAINE WEBBER GROUP INC., a Delaware corporation (the
"Company"), for value received, hereby promises to pay to (the "Employee") the
principal amount of ($ ) on January 20, 2007, and to pay interest (computed on
the basis of a 360-day year for the actual number of days elapsed) on the unpaid
balance of such principal amount at a rate of 6.25% per annum from the date
hereof, payable semiannually on each June 30 and December 31 after the date
hereof, commencing June 30, 2000, until such unpaid balance shall become due and
payable (whether at maturity or at a date fixed for prepayment or by
acceleration or otherwise).

                  If any payment of principal of or interest on this Debenture
is due on a day that is not a Business Day, such payment shall be made on the
next succeeding Business Day. Payments of principal of and interest on this
Debenture shall be made in lawful money of the United States of America at the
principal office of the Company in the borough of Manhattan, the City and State
of New York, or at such other office or agency in such Borough as the Company
shall have designated by written notice to the registered holder hereof, or by a
check of the Company payable to the registered holder hereof in such money and
mailed to such holder at his registered address.

                  This Debenture is being issued pursuant to, and is subject to
and incorporates by reference all of the terms of, the Purchase Agreement dated
as of the date hereof between the Company and the Employee (the "Purchase
Agreement"), including but not limited to the covenants set forth in Section 7
thereof.

                  1. Conversion and Redemption. On and subject to the terms and
conditions set forth below, all or any portion of the unpaid principal amount of
this Debenture equal to $1,000 or any integral multiple thereof may be converted
into ____ shares of Series A Convertible Redeemable Preferred Stock established
or to be established by the Company pursuant to the terms of the Purchase
Agreement (the "Preferred Stock") at a conversion price equal to the liquidation
value of $38.1875 per share (the "Conversion Price"). No part of this Debenture
may be converted prior to January 20, 2003, except as described below. On such
date and thereafter the original principal amount hereof shall become fully
convertible into shares of Preferred Stock at the Conversion Price.

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<PAGE>

                  Upon any conversion of this Debenture, the registered holder
hereof shall deliver to the Company a Notice of Conversion in the form attached
to this Debenture. The foregoing notwithstanding, this Debenture shall be
convertible as provided herein only under the following circumstances:

                  (a) While the Employee is a full-time employee of the Company
or any Subsidiary, he shall be entitled to convert this Debenture on or after
January 20, 2003 as of the date the Employee provides a Notice of Conversion,
provided that, if the Company has elected to redeem the debenture as described
below, the Employee may still elect to convert as of the date a Notice of
Conversion is provided to the Company as long as the Employee remains employed
as of the date of such Notice of Conversion and such Notice of Conversion is
provided to the Company prior to the date set forth in the redemption notice,
except as otherwise provided in clause (e) below.

                  (b) For one year following the death of the Employee or
termination of his employment with the Company or any Subsidiary due to
Retirement or Disability, the Employee or his estate or other legal
representative, as the case may be, shall be entitled to convert 100% of the
principal amount hereof and such conversion shall be effective as of the date
the Notice of Conversion is provided to the Company. If the Employee does not
elect conversion pursuant to this clause (b), the Company will automatically
redeem such Debenture for 100% principal amount, plus accrued interest as soon a
practicable following the expiration of the one year period described herein.

                  (c) For ninety days following a Termination Without Cause or a
         Voluntary Termination by the Employee that occurs on or after January
         20, 2003, the Employee shall be entitled to convert 100% of the
         principal amount hereof and such conversion shall be effective as of
         the date of the Notice of Conversion. To the extent that the Employee
         does not elect conversion pursuant to this clause (c) or if such
         termination of employment occurs prior to January 20, 2003, the Company
         will automatically redeem such Debenture for 100% principal amount,
         plus accrued interest as soon a practicable following the expiration of
         the conversion period described herein, if any.

                  (d) If the Employee's employment is terminated for Cause, the
         Debenture will cease to be convertible as of the date of such
         termination of employment and the Company will redeem it at the
         principal amount, plus accrued interest as of such date.

                  (e)
                           (A) In the event that prior to January 20, 2003, (i)
                  the Company enters into an agreement, (ii) the Board of
                  Directors of the Company approves a transaction, or (iii)
                  there is a tender offer, which in either case, might result in
                  a Change in Control, the Employee may elect to have the
                  Debenture converted even if his employment is terminated other
                  than for Cause or the Company may elect to redeem such
                  Debenture prior to the effective time of the Change in Control
                  and such conversion or redemption will be effective as of the
                  effective time of the Change in Control. However, if the
                  Company elects to redeem the Debenture prior to the Employee's
                  election to convert, the Employee may still elect to convert
                  such Debenture rather than having the Company redeem it as

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<PAGE>

                  long as the Employee provides a Notice of Conversion prior to
                  the effective time of the Change in Control. In the event the
                  Debenture is not redeemed or converted prior to the Change in
                  Control which occurs prior to January 20, 2003, such Debenture
                  shall become fully convertible following the Change of Control
                  but the Company may not redeem such Debenture until on or
                  after January 20, 2004 as described below. Any conversion or
                  redemption following a Change in Control will be implemented
                  in accordance with the procedures described herein. In the
                  event that the Change in Control does not become effective,
                  any election to convert or redeem will not be effectuated
                  unless the Debenture otherwise becomes convertible or
                  redeemable as described herein.

                  (B) In the event that on or after January 20, 2003, (i) the
                  Company enters into an agreement, (ii) the Board of Directors
                  of the Company approves a transaction, or (iii) there is a
                  tender offer, which in either case, might result in a Change
                  in Control, the Debenture will remain convertible in
                  accordance with the procedures described herein, even if the
                  Employee's employment is terminated other than for Cause.
                  However the Company may elect to redeem such Debenture prior
                  to such Change in Control which occurs on or after January 20,
                  2003. However, if the Company elects to redeem the Debenture
                  prior to the Employee's election to convert, the Employee may
                  still elect to convert such Debenture rather than having the
                  Company redeem it as long as the Employee provides a Notice of
                  Conversion to the Company prior to the effective time of the
                  Change in Control. In the event the Debenture is not redeemed
                  or converted prior to the Change in Control which occurs on or
                  after January 20, 2003 or such Change in Control does not
                  occur, such Debenture shall remain fully convertible to the
                  extent such Debenture remains outstanding following the Change
                  in Control but the Company may not redeem such Debenture until
                  on or after January 20, 2004 in accordance with the procedures
                  described herein.

                  Notwithstanding the foregoing, on or after January 20, 2004,
the Company may redeem the Debenture, provided that it has not already been
converted or redeemed upon giving 60 days prior written notice and such
redemption will be effective at the end of the 60 day period. However, if the
Employee is entitled to convert the Debenture as described above, the Employee
may elect to do so following the receipt of a notice of redemption from the
Company and such conversion will be effective as of the date of the Notice of
Conversion as long as such notice is provided to the Company prior to the date
such redemption was to occur.

                  Promptly after a conversion of this Debenture or any portion
hereof, the Company shall pay to the registered holder hereof all interest
accrued hereon, or on the portion hereof converted, to the Conversion Date (as
hereinafter defined) and shall issue and deliver to the registered holder hereof
a certificate or certificates registered in his or its name for the number of
whole shares of Preferred Stock issuable upon such conversion. The "Conversion
Date" is the date on which this Debenture, or any portion hereof, is surrendered
for conversion as provided above.

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<PAGE>

                  If less than the full principal amount of this Debenture is
converted, the Company shall also deliver to the Pledgee, if any, or otherwise
to the registered holder hereof a new Debenture in the form hereof for the
balance of the principal amount of this Debenture.

                  2. Events of Default; Acceleration. If any of the following
conditions or events ("Events of Default") shall occur and be continuing
(whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or otherwise):

                  (a) the Company fails to (i) make any payment or prepayment of
         principal of this Debenture when due, or (ii) pay any interest on this
         Debenture when due and such failure to pay interest or such other
         amounts remains unremedied for ten Business Days; or

                  (b) any representation or warranty made by the Company in the
         Purchase Agreement proves to have been incorrect, in any material
         respect when made; or

                  (c) the Company fails to perform or observe any other term,
         covenant or agreement contained in this Debenture or the Purchase
         Agreement on its part to be performed or observed, and any such failure
         remains unremedied for 30 days after notice thereof is given to the
         Company by the registered holder of this Debenture; or

                  (d)       the Company or PaineWebber Incorporated ("PWI"):

                           (i) voluntarily commences any proceeding or files any
                  petition seeking relief under Title 11 of the United States
                  Code or any other Federal or state bankruptcy, insolvency or
                  similar law,

                           (ii) consents to the institution of, or fails to
                  controvert in a timely and appropriate manner, any such
                  proceeding or the filing of any such petition,

                           (iii) applies for or consents to the appointment of a
                  receiver, trustee, custodian, sequestrator or similar official
                  for the Company or PWI or for a substantial part of the
                  property of either of them, or

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

                  (e) an involuntary proceeding is commenced or a voluntary
         petition is filed in a court of competent jurisdiction seeking:

                           (i) relief against the Company or PWI, or all or a
                  substantial part of the property of either of them, under
                  Title 11 of the United States Code or any other federal or
                  state bankruptcy, insolvency or similar law,

                           (ii) the appointment of a receiver, trustee,
                  custodian, sequestrator or similar official for the Company or
                  PWI or for a substantial part of the property of either of
                  them, or

                           (iii) the winding-up or liquidation of the Company
                  or PWI;

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<PAGE>

         and such proceeding or petition continues undismissed for 60 days or an
         order or decree approving or ordering any of the foregoing is entered;

then, at any time thereafter during the continuance of any such event, the
registered holder hereof may, by written notice to the Company, declare this
Debenture to be due and payable, whereupon it shall forthwith mature and become
due and payable, together with all interest accrued thereon, without
presentment, demand, protest or further notice, all of which are hereby
expressly waived by the Company.

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<PAGE>

         3.       Definitions.

                  "Board" shall mean the Board of Directors of the Company.

                  "Business Day" shall mean any day on which banking
institutions in the Borough of Manhattan, City and State of New York, are open
for business and not authorized or obligated by law or executive order to close.

                  "Cause" shall mean (i) the Employee's conviction or plea of no
contest to a felony involving the business of the Company or any Subsidiary,
(ii) the Employee's fraud against the business of the Company or any Subsidiary
as determined by the Compensation Committee, (iii) any intentional act or
omission by the Employee not undertaken in the good faith belief that it was in
pursuit of the business of the Company or any Subsidiary and which is intended
to cause and does cause material injury to the business, financial condition or
prospects of the Company or any Subsidiary, or (iv) the Employee's continued and
repeated failure to perform the material duties of the Employee's position with
the Company or any Subsidiary (other than by reason of approved leave of
absence, illness or disability) after the Employee has received written notice
from the Company or any Subsidiary of such failure.

                  "Change in Control" shall mean the occurrence of one or more
of the following events:

                  (i) 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"), other than the Company or any Subsidiary (collectively referred
         to as "PWG"), any trustee or other fiduciary holding securities under
         an employee benefit plan of PWG, or any corporation owned, directly or
         indirectly, by the stockholders of Paine Webber in substantially the
         same proportions as their contemporaneous ownership of voting
         securities of Paine Webber, is or becomes a "20% Beneficial Owner." For
         purposes of this provision, a "20% Beneficial Owner" shall mean a
         person who is or becomes the "beneficial owner" (as defined in Rule
         13d-3 under the Exchange Act), directly or indirectly, of securities of
         Company representing 20% or more of the combined voting power of
         Company's then-outstanding voting securities (a "20% Beneficial
         Owner"); provided that (A) the term "20% Beneficial Owner" shall not
         include any Beneficial Owner that has crossed such 20% threshold solely
         as a result of an acquisition of securities directly from Company, or
         solely as a result of an acquisition by Company of Company securities,
         until such time thereafter as such person acquires additional voting
         securities other than directly from Company and, after giving effect to
         such acquisition, such person would constitute a 20% Beneficial Owner
         and (B) with respect to any person who is and remains eligible to file
         a Schedule 13G pursuant to Rule 13d-1(b)(1) under the Exchange Act with
         respect to Company securities, there shall be excluded from the number
         of securities deemed to be beneficially owned by such person for
         purposes of determining whether such person is a 20% Beneficial Owner a
         number of securities representing 10% of the combined voting power of
         Company's then-outstanding voting securities;

                           (ii) during any period of two consecutive years,
         individuals who at the beginning of such period constitute the Board of
         Directors of the Company,

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<PAGE>

         together with any new director (other than a director designated by a
         person who has entered into an agreement with Company to effect a
         transaction described in paragraph (i), (iii) or (iv) hereof) whose
         election by the Board of Directors or nomination for election by
         Company's stockholders was approved by a vote of at least two-thirds
         (K) of the directors then still in office who either were directors at
         the beginning of the period or whose election or nomination for
         election was previously so approved (the "Continuing Directors"), cease
         for any reason to constitute at least a majority thereof;

                           (iii) the stockholders of Company approve a merger,
         consolidation, recapitalization, or reorganization of Company, or a
         reverse stock split of any class of voting securities of Company, or
         the consummation of any such transaction if stockholder approval is not
         obtained, other than any such transaction which would result in at
         least 80% of the total voting power represented by the voting
         securities of Company or the surviving entity outstanding immediately
         after such transaction being beneficially owned by persons who together
         beneficially owned at least 80% of the combined voting power of the
         voting securities of Company outstanding immediately prior to such
         transaction, with the relative voting power of each such continuing
         holder compared to the voting power of each other continuing holder not
         substantially altered as a result of the transaction; provided that,
         for purposes of this paragraph (iii), such continuity of ownership (and
         preservation of relative voting power) shall be deemed to be satisfied
         if the failure to meet such 80% threshold (or to substantially preserve
         such relative voting power) is due solely to the acquisition of voting
         securities by an employee benefit plan of Company or such surviving
         entity or of any subsidiary of Company or such surviving entity;

                           (iv) the stockholders of Company approve a plan of
         complete liquidation of PWG or an agreement for the sale or disposition
         by PWG of all or substantially all of PWG's assets (or any transaction
         having a similar effect); or

                           (v) any other event which the Board of the Company
         determines shall constitute a Change in Control for purposes of the
         Program.

                  "Common Stock" shall mean the common stock, $1.00 par value
per share, of the Company.

                  "Disability" shall have the same meaning as is ascribed to
such term in the PaineWebber Long Term Disability Plan.

                  "Pledgee" shall mean any person or other entity that holds the
Debenture in pledge and has given written notice thereof, and of its current
mailing address, to the Company.

                  "Retirement" shall mean the Employee's termination of
employment on the first day of the month coincident with or next following (x)
the tenth anniversary of the date on which his employment with the Company
commenced and the date the Employee is at least 55 years old; provided that the
Compensation Committee of the Company approves of such retirement, or (y) the
date of his 65th birthday.

                                       7
<PAGE>

                  "Subsidiary" shall mean any corporation, association or other
business entity which is required to be consolidated with the Company under
generally accepted accounting principles.

                  "Termination Without Cause" shall mean a termination by the
Company or a Subsidiary of the Employee's employment for any reason other than
death, Retirement, Disability or Cause, if the Employee does not continue in the
employment of, or promptly commence employment with, the Company or any
Subsidiary.

                  "Voluntary Termination" shall mean a termination of employment
with the Company or a Subsidiary at the initiative of the Employee, (unless upon
such termination, the Employee remains in the employment of, or commences
employment with, the Company or one or more Subsidiaries.

                  4. Governing Law. This Debenture shall be governed by and
construed in accordance with the laws of the State of New York, without
reference to principles of conflict of laws.

                                             PAINE WEBBER GROUP INC.

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

                                       8PAINE WEBBER GROUP INC.

          TERMS OF THE SERIES A CONVERTIBLE REDEEMABLE PREFERRED STOCK

                  This series of Series Preferred Stock authorized under the
Restated Certificate of Incorporation of Paine Webber Group Inc. (the
"Certificate of Incorporation") shall be the Series A Convertible
Redeemable Preferred Stock, (the "Convertible Preferred Stock").

                  (i) Holders of shares of Convertible Preferred Stock will be
         entitled to receive, when and as declared by the Board of Directors
         (the "Board") of Paine Webber Group Inc. (the "Corporation") out of
         assets of the Corporation legally available for payment, an annual cash
         dividend of $.48 per share, payable in quarterly installments on March
         31, June 30, September 30 and December 31, commencing June 30, 2000.
         Dividends on the Convertible Preferred Stock will be cumulative from
         the date of initial issuance of any shares of Convertible Preferred
         Stock. Dividends will be payable to holders of record as they appear on
         the stock books of the Corporation on such record dates, not more than
         60 days nor less than 10 days preceding the payment dates thereof, as
         shall be fixed by the Board. When dividends are not paid in full upon
         the Convertible Preferred Stock and any other preferred stock ranking
         on a parity as to dividends with the Convertible Preferred Stock (such
         other preferred stock and the Convertible Preferred Stock hereinafter
         being collectively referred to as "Parity Preferred Stock"), all
         dividends declared upon shares of Parity Preferred Stock will be
         declared pro rata so that in all cases the amount of dividends declared
         per share on the Convertible Preferred Stock and such other Parity
         Preferred Stock shall bear to each other the same ratio that
         accumulated and unpaid dividends per share on the shares of Convertible
         Preferred Stock and such other Parity Preferred Stock bear to each
         other. Except as set forth in the preceding sentence, unless full
         cumulative dividends on the Convertible Preferred Stock have been paid,
         no dividends (other than in Common Stock of the Corporation (as defined
         in paragraph (iii)(I) below) or any other stock of the Corporation
         ranking junior to the Convertible Preferred Stock as to dividends) may
         be paid or declared and set aside for payment or other distribution
         made upon the Common Stock or on any other stock of the Corporation
         ranking junior to or on a parity with the Convertible Preferred Stock
         as to dividends, nor may any Common Stock or any other stock of the
         Corporation ranking junior to or on a parity with the Convertible
         Preferred Stock as to dividends be redeemed, purchased or otherwise
         acquired for any consideration (or any payment made to or available for
         a sinking fund for the redemption of any shares of such stock) by the
         Corporation (except by conversion into or exchange for stock of the
         Corporation ranking junior to the Convertible Preferred Stock as to
         dividends). Dividends payable for any partial dividend period shall be
         calculated on the basis of a 360-day year of 12 30-day months.

                  (ii) The shares of Convertible Preferred Stock shall rank
         prior to the shares of Common Stock and of any other class of stock of
         the Corporation ranking junior to the Series Preferred Stock upon

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<PAGE>

         liquidation, so that, in the event of any liquidation, dissolution or
         winding-up of the Corporation, whether voluntary or involuntary, the
         holders of the Convertible Preferred Stock shall be entitled to receive
         out of the assets of the Corporation available for distribution to its
         stockholders, whether from capital, surplus or earnings, before any
         distribution is made to holders of shares of Common Stock or any other
         such junior stock, an amount equal to $38.1875 per share (the
         "Liquidation Preference" of a share of Convertible Preferred Stock)
         plus an amount equal to all dividends (whether or not earned or
         declared) accumulated and unpaid on the shares of Convertible Preferred
         Stock to the date of final distribution. If, upon any liquidation,
         dissolution or winding-up of the Corporation, the assets of the
         Corporation, or proceeds thereof, distributable among the holders of
         shares of Parity Preferred Stock shall be insufficient to pay in full
         the liquidation preference amounts of the Parity Preferred Stock and
         all dividends (whether or not earned or declared) accumulated and
         unpaid thereon, then such assets, or the proceeds thereof, shall be
         distributable among such holders ratably in accordance with the
         respective amounts which would be payable on such shares if all amounts
         payable thereon were paid in full. For the purposes hereof, the
         voluntary sale, conveyance, exchange or transfer (for cash, shares of
         stock, securities or other consideration) of all or substantially all
         the property or assets of the Corporation shall be deemed a voluntary
         liquidation, dissolution or winding-up of the Corporation, but a
         consolidation or merger of the Corporation with one or more other
         corporations shall not be deemed to be a liquidation, dissolution or
         winding-up, voluntary or involuntary.

                  (iii) (I) Subject to and upon compliance with the provisions
         of this paragraph (iii), the holder of a share of Convertible Preferred
         Stock shall have the right, at his or her option, at any time, except
         that, if such share is called for redemption, not after the date fixed
         for such redemption, to convert such share into that number of fully
         paid and nonassessable shares of Common Stock (calculated as to each
         conversion to the nearest 1/100th of a share) obtained by dividing the
         Liquidation Preference of such share being converted by the Conversion
         Price (as defined below), upon surrender of such share so to be
         converted, such surrender to be made in the manner provided in
         subsection (II) of this paragraph (iii).

                  The term "Common Stock" shall mean the Common Stock, $1 par
         value, of the Corporation as the same exists at the date of this
         Certificate or as such stock may be constituted from time to time,
         except that, for the purpose of subsection (V) of this paragraph (iii),
         the term "Common Stock" shall also mean and include stock of the
         Corporation of any class, whether now or hereafter authorized, which
         shall have the right to participate in the distribution of either
         earnings or assets of the Corporation without limit as to amount or
         percentage.

                  The term "Conversion Price" shall mean $38.1875, as adjusted
         in accordance with the provisions of this paragraph (iii).

                  (II) In order to exercise the conversion privilege, the holder
         of each share of Convertible Preferred Stock to be converted shall
         surrender the Certificate representing such share at the office of the
         conversion agent for the Convertible Preferred Stock in the

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<PAGE>

         Borough of Manhattan, City of New York, appointed for such purpose by
         the Corporation, with the Notice of Election to Convert on the back of
         said certificate completed and signed. Unless the shares issuable on
         conversion are to be issued in the same name as the name in which such
         share of Convertible Preferred Stock is registered, each share
         surrendered for conversion shall be accompanied by instruments of
         transfer, in form satisfactory to the Corporation and duly executed by
         the holder or his duly authorized attorney, and an amount sufficient to
         pay any transfer or similar tax. No payment or adjustment shall be made
         on conversion for dividends accumulated on the Convertible Preferred
         Stock surrendered for conversion or for dividends on Common Stock
         delivered on such conversion. As promptly as practicable after the
         surrender of the certificates for shares of Convertible Preferred Stock
         as aforesaid, the Corporation shall issue and shall deliver at such
         office to such holder, or on his written order, a certificate or
         certificates for the number of full shares of Common Stock issuable
         upon the conversion of such shares in accordance with the provisions of
         this paragraph (iii), and any fractional interest in respect of a share
         of Common Stock arising upon such conversion shall be settled as
         provided in subsection (III) of this paragraph (iii).

                  Each conversion shall be deemed to have been effected
         immediately prior to the close of business on the date on which the
         certificates for shares of Convertible Preferred Stock shall have been
         surrendered and such notice received by the Corporation as aforesaid,
         and the person or persons in whose name or names any certificate or
         certificates for shares of Common Stock shall be issuable upon such
         conversion shall be deemed to have become the holder or holders of
         record of the shares represented thereby at such time on such date, and
         such conversion shall be at the Conversion Price in effect at such time
         on such date, unless the stock transfer books of the Corporation shall
         be closed on that date, in which event such person or persons shall be
         deemed to have become such holder or holders of record at the close of
         business on the next succeeding day on which such stock transfer books
         are open, but such conversion shall be at the Conversion Price in
         effect on the date upon which such shares shall have been surrendered
         and such notice received by the Corporation. All shares of Common Stock
         delivered upon conversions of the Convertible Preferred Stock will upon
         delivery be duly and validly issued and fully paid and nonassessable,
         free of all liens and charges and not subject to any preemptive rights.

                  (III) No fractional shares or scrip representing fractions of
         shares of Common Stock shall be issued upon conversion of the
         Convertible Preferred Stock. Instead of any fractional interest in a
         share of Common Stock which would otherwise be deliverable upon the
         conversion of a share of Convertible Preferred Stock, the Corporation
         shall pay to the holder of such share an amount in cash (computed to
         the nearest cent) equal to the current market price (as defined in
         subsection (IV)(d) of this paragraph (iii)) thereof at the close of
         business on the business day next preceding the day of conversion. If
         more than one share shall be surrendered for conversion at one time by
         the same holder, the number of full shares of Common Stock issuable
         upon conversion thereof shall be computed on the basis of the aggregate
         Liquidation Preference of the shares of Convertible Preferred Stock so
         surrendered.

                  (IV) The Conversion Price shall be adjusted from time to time
         as follows:

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<PAGE>

                           (a) In case the Corporation shall hereafter (i) pay a
                  dividend or make a distribution on the Common Stock in shares
                  of Common Stock, (ii) subdivide its outstanding shares of
                  Common Stock into a greater number of shares, (iii) combine
                  its outstanding shares of Common Stock into a smaller number
                  of shares, or (iv) issue by reclassification of the Common
                  Stock any shares of capital stock of the Corporation, the
                  Conversion Price in effect immediately prior to such action
                  shall be adjusted so that the holder of any share of
                  Convertible Preferred Stock thereafter surrendered for
                  conversion shall be entitled to receive the number of shares
                  of Common Stock or other capital stock of the Corporation
                  which he would have owned or been entitled to receive
                  immediately following such action had such share been
                  converted immediately prior thereto. An adjustment made
                  pursuant to this subdivision (a) shall become effective
                  immediately after the record date, in the case of a dividend
                  or distribution, or immediately after the effective date, in
                  the case of a subdivision, combination or reclassification.
                  If, as a result of an adjustment made pursuant to this
                  subdivision (a), the holder of any share of Convertible
                  Preferred Stock thereafter surrendered for conversion shall
                  become entitled to receive shares of two or more classes of
                  capital stock or shares of Common Stock and other capital
                  stock of the Corporation, the Board (whose determination shall
                  be conclusive and shall be described in a statement filed with
                  the conversion agent by the Corporation as soon as
                  practicable) shall determine the allocation of the adjusted
                  Conversion Price between or among shares of such classes of
                  capital stock or shares of Common Stock and other capital
                  stock.

                           (b) In case the Corporation shall hereafter issue
                  rights or warrants to holders of its outstanding shares of
                  Common Stock generally entitling them (for a period expiring
                  within 45 days after the record date mentioned below) to
                  subscribe for or purchase shares of Common Stock at a price
                  per share less than the current market price per share (as
                  determined pursuant to subdivision (d) of this subsection
                  (IV)) of the Common Stock on the record date mentioned in the
                  next sentence (other than pursuant to an automatic dividend
                  reinvestment plan of the Corporation or any substantially
                  similar plan), the Conversion Price shall be adjusted so that
                  the same shall equal the price determined by multiplying the
                  Conversion Price in effect immediately prior to the date of
                  issuance of such rights or warrants by a fraction of which the
                  numerator shall be the number of shares of Common Stock
                  outstanding on the date of issuance of such rights or warrants
                  plus the number of shares which the aggregate offering price
                  of the total number of shares so offered would purchase at
                  such current market price, and of which the denominator shall
                  be the number of shares of Common Stock outstanding on the
                  date of issuance of such rights or warrants plus the number of
                  additional shares of Common Stock offered for subscription or
                  purchase. Such adjustment shall become effective immediately
                  after the record date for the determination of stockholders
                  entitled to receive such rights or warrants.

                           (c) In case the Corporation shall hereafter
                  distribute to holders of its outstanding shares of Common
                  Stock generally evidences of its indebtedness or assets
                  (excluding any cash dividend paid from retained earnings of
                  the Corporation and dividends or distributions payable in

                                       4
<PAGE>

                  stock for which adjustment is made pursuant to subdivision (a)
                  of this subsection (IV)) or rights or warrants to subscribe to
                  securities of the Corporation (excluding those referred to in
                  subdivision (b) of this subsection (IV)), then in each such
                  case the Conversion Price shall be adjusted so that the same
                  shall equal the price determined by multiplying the Conversion
                  Price in effect immediately prior to the date of such
                  distribution by a fraction of which the numerator shall be the
                  current market price per share (determined as provided in
                  subdivision (d) of this subsection (IV)) of the Common Stock
                  on the record date mentioned in the next sentence less the
                  then fair market value (as determined by the Board, whose
                  determination shall be conclusive and shall be described in a
                  statement filed with the conversion agent by the Corporation
                  as soon as practicable) of the portion of the evidences of
                  indebtedness or assets so distributed to the holder of one
                  share of Common Stock or of such subscription rights or
                  warrants applicable to one share of Common Stock, and of which
                  the denominator shall be such current market price per share
                  of Common Stock. Such adjustment shall become effective
                  immediately after the record date for the determination of
                  stockholders entitled to receive such distribution.

                           (d) For the purpose of subsection (III) and
                  subdivisions (b) and (c) of this subsection (IV), the current
                  market price per share of Common Stock on any date shall mean
                  the price of a share of Common Stock on the relevant date,
                  determined on the basis of the last reported sale price
                  regular way of the Common Stock as reported on the composite
                  tape; or similar reporting system, for issues listed on the
                  New York Stock Exchange (or if the Common Stock is not then
                  listed on that Exchange, for issues listed on such other
                  national securities exchange upon which the Common Stock is
                  listed as may be designated by the Board for the purposes
                  hereof) or, if there is no such reported sale on the day in
                  question, on the basis of the average of the closing bid and
                  asked quotations as so reported, or, if the Common Stock is
                  not then listed on any national securities exchange, on the
                  basis of the closing price, if the Common Stock is a national
                  market issue, or the average of the high bid and low asked
                  quotations on the day in question in the over-the-counter
                  market as reported by the National Association of Securities
                  Dealers' Automated Quotations System, or if not so quoted, as
                  reported by National Quotation Bureau, Incorporated, or a
                  similar organization.

                           (e) In any case in which this paragraph (iii) shall
                  require that an adjustment be made immediately following a
                  record date or an effective date, the Corporation may elect to
                  defer (but only until five business days following the filing
                  by the Corporation with the conversion agent of the
                  certificate of independent public accountants required by
                  subdivision (g) of this subsection (IV)) issuing to the holder
                  of any share of Convertible Preferred Stock converted after
                  such record date or effective date the additional shares of
                  Common Stock or other capital stock issuable upon such
                  conversion over and above the shares of Common Stock or other
                  capital stock issuable upon such conversion on the basis of
                  the Conversion Price prior to adjustment, and paying to such
                  holder any amount of cash in lieu of a fractional share.

                                       5
<PAGE>

                           (f) No adjustment in the Conversion Price shall be
                  required to be made unless such adjustment would require an
                  increase or decrease of at least 1% of such price; provided,
                  however, that any adjustments which by reason of this
                  subdivision (f) are not required to be made shall be carried
                  forward and taken into account in any subsequent adjustment.
                  All calculations under this paragraph (iii) shall be made to
                  the nearest cent or to the nearest 1/100th of a share, as the
                  case may be. Anything in this paragraph (iii) to the contrary
                  notwithstanding, the Corporation shall be entitled to make
                  such reduction in the Conversion Price, in addition to those
                  required by this paragraph (iii), as it in its discretion
                  shall determine to be advisable in order that any stock
                  dividend, subdivision of shares, distribution of rights to
                  purchase stock or securities, or distribution of securities
                  convertible into or exchangeable for stock hereafter made by
                  the Corporation to its stockholders shall not be taxable to
                  the recipients.

                           (g) Whenever the Conversion Price is adjusted as
                  herein provided, (i) the Corporation shall promptly file with
                  the conversion agent a certificate of a firm of independent
                  public accountants (who may be the regular accountants
                  employed by the Corporation) setting forth the Conversion
                  Price after such adjustment and setting forth a brief
                  statement of the facts requiring such adjustment and the
                  manner of computing the same, which certificate shall be
                  conclusive evidence of the correctness of such adjustment, and
                  (ii) a notice stating that the Conversion Price has been
                  adjusted and setting forth the adjusted Conversion Price shall
                  forthwith be mailed by the Corporation to the holders of the
                  Convertible Preferred Stock at their addresses as shown on the
                  stock books of the Corporation.

                           (h) In the event that at any time as a result of an
                  adjustment made pursuant to subdivision (a) of this subsection
                  (IV), the holder of any share of Convertible Preferred Stock
                  thereafter surrendered for conversion shall become entitled to
                  receive any shares of the Corporation other than shares of
                  Common Stock, thereafter the Conversion Price of such other
                  shares so receivable upon conversion of any share shall be
                  subject to adjustment from time to time in a manner and on
                  terms as nearly equivalent as practicable to the provisions
                  with respect to Common Stock contained in this paragraph
                  (iii).

                  (V) In case:

                           (a) the Corporation shall take any action which would
                  require any adjustment in the Conversion Price pursuant to
                  subsection (IV)(c); or

                           (b) the Corporation shall authorize the granting to
                  the holders of the Common Stock of rights or warrants to
                  subscribe for or purchase any shares of stock of any class or
                  of any other rights; or

                           (c) there shall be any capital stock reorganization
                  or reclassification of the Common Stock (other than a
                  subdivision or combination of the outstanding Common Stock and
                  other than a change in the par value of the Common Stock),

                                       6
<PAGE>

                  or any consolidation or merger to which the Corporation is a
                  party or any statutory exchange of securities with another
                  corporation and for which approval of any stockholders of the
                  Corporation is required, or any sale or transfer of all or
                  substantially all the assets of the Corporation; or

                           (d)  there shall be a voluntary dissolution,
                  liquidation or winding-up of the Corporation;

         then the Corporation shall cause to be filed with the conversion agent,
         and shall cause to be mailed to the holders of shares of the
         Convertible Preferred Stock at their addresses as shown on the stock
         books of the Corporation, at least 10 days prior to the applicable date
         hereinafter specified, a notice stating (i) the date on which a record
         is to be taken for the purpose of such distribution or rights, or, if a
         record is not to be taken, the date as of which the holders of Common
         Stock of record to be entitled to such distribution or rights are to be
         determined, or (ii) the date on which such reorganization,
         reclassification, consolidation, merger, statutory exchange, sale,
         transfer, dissolution, liquidation or winding-up is expected to become
         effective, and the date as of which it is expected that holders of
         Common Stock of record shall be entitled to exchange their shares of
         Common Stock for securities or other property deliverable upon such
         reorganization, reclassification, consolidation, merger, statutory
         exchange, sale, transfer, dissolution, liquidation or winding-up.
         Failure to give such notice or any defect therein shall not affect the
         legality or validity of the proceedings described in subdivision (a),
         (b), (c) or (d) of this subsection (V).

                  (VI) The Corporation covenants that it will at all times
         reserve and keep available, free from preemptive rights, out of the
         aggregate of its authorized but unissued shares of Common Stock or its
         issued shares of Common Stock held in its treasury, or both, for the
         purpose of effecting conversions of the Convertible Preferred Stock,
         the full number of shares of Common Stock deliverable upon the
         conversion of all shares of Convertible Preferred Stock then
         outstanding and not theretofore converted or then deliverable upon
         conversion of the Corporation's 6.25% Convertible Debentures Due
         January 20, 2007 (the "2007 Debentures"). For purposes of this
         subsection (VI), the number of shares of Common Stock that shall be
         deliverable upon the conversion of all such shares of Convertible
         Preferred Stock shall be computed as if at the time of computation all
         such shares were held by a single holder.

                  Before taking any action that would cause an adjustment
         reducing the Conversion Price below the then par value (if any) of the
         shares of Common Stock deliverable upon conversion of the Convertible
         Preferred Stock, the Corporation will take any corporate action which
         may, in the opinion of its counsel, be necessary in order that the
         Corporation may validly and legally issue fully paid and nonassessable
         shares of Common Stock at such adjusted Conversion Price.

                  To the extent not already listed, the Corporation will
         endeavor to list the shares of Common Stock required to be delivered
         upon conversion of the Convertible Preferred Stock prior to such
         delivery upon each national securities exchange, if any, upon which the
         outstanding Common Stock is listed at the time of such delivery.

                                       7
<PAGE>

                  Prior to the delivery of any securities which the Corporation
         shall be obligated to deliver upon conversion of the Convertible
         Preferred Stock, the Corporation will endeavor to comply with all
         federal and state laws and regulations thereunder requiring the
         registration of such securities with, or any approval of or consent to
         the delivery thereof by, any governmental authority.

                  (VII) The Corporation will pay any and all documentary stamp
         or similar issue or transfer taxes payable in respect of the issue or
         delivery of shares of Common Stock on conversions of the Convertible
         Preferred Stock pursuant hereto; provided, however, that the
         Corporation shall not be required to pay any tax which may be payable
         in respect of any transfer involved in the issue or delivery of shares
         of Common Stock in a name other than that of the holder of the
         Convertible Preferred Stock to be converted and no such issue or
         delivery shall be made unless and until the person requesting such
         issue or delivery has paid to the Corporation the amount of any such
         tax or has established, to the satisfaction of the Corporation, that
         such tax has been paid.

                  (VIII) Notwithstanding any other provision herein to the
         contrary, in case of any consolidation or merger to which the
         Corporation is a party (other than a merger or consolidation in which
         the Corporation is the continuing corporation), or in case of any
         statutory exchange of securities with another corporation (including
         any exchange effected in connection with a merger of a third
         corporation into the Corporation), the holder of each share of
         Convertible Preferred Stock then outstanding shall have the right
         thereafter to convert such share into the kind and amount of
         securities, cash or other property receivable upon such consolidation,
         merger or statutory exchange by a holder of the number of shares of
         Common Stock into which such share of Convertible Preferred Stock might
         have been converted immediately prior to such consolidation, merger or
         statutory exchange, assuming such holder of Common Stock failed to
         exercise his rights of election, if any, as to the kind or amount of
         securities, cash or other property receivable upon such consolidation,
         merger or statutory exchange (provided that if the kind or amount of
         securities, cash or other property receivable upon such consolidation,
         merger or statutory exchange is not the same for each share of Common
         Stock in respect of which such rights of election shall not have been
         exercised ("non-electing share"), then for the purpose of this
         subsection (VIII) the kind and amount of securities, cash or other
         property receivable upon such consolidation, merger or statutory
         exchange for each nonelecting share shall be deemed to be the kind and
         amount so receivable per share by a plurality of the nonelecting
         shares). Thereafter, the holders of the Convertible Preferred Stock
         shall be entitled to appropriate adjustments with respect to their
         conversion rights to the end that the provisions set forth in this
         paragraph (iii) shall correspondingly be made applicable, as nearly as
         may be reasonable, in relation to any shares of stock or other
         securities or property thereafter deliverable on the conversion of the
         Convertible Preferred Stock. Any such adjustment shall be approved by a
         firm of independent public accountants, evidenced by a certificate to
         that effect delivered to the conversion agent; and any adjustment so
         approved shall for all purposes hereof conclusively be deemed to be an
         appropriate adjustment.

                  The above provisions of this subsection (VIII) shall similarly
         apply to successive consolidations, mergers or statutory exchanges.

                                       8
<PAGE>

                  (iv) Upon any conversion or redemption of shares of
         Convertible Preferred Stock, the shares of Convertible Preferred Stock
         so converted or redeemed shall have the status of authorized and
         unissued shares of Series Preferred Stock, and the number of shares of
         Series Preferred Stock which the Corporation shall have authority to
         issue shall not be decreased by the conversion or redemption of shares
         of Convertible Preferred Stock.

                  (v) The holders of shares of Convertible Preferred Stock shall
         have no voting rights whatsoever, except for any voting rights to which
         they may be entitled under the laws of the State of Delaware, and
         except as follows:

                           (I) If and whenever at any time or times dividends
                  payable on the Convertible Preferred Stock or on any other
                  Parity Preferred Stock shall have been in arrears and unpaid
                  in an aggregate amount equal to or exceeding the amount of
                  dividends payable thereon for six quarterly periods or three
                  semi-annual periods, as the case may be, then the holders of
                  Parity Preferred Stock shall have, in addition to the other
                  voting rights set forth herein, the exclusive right, voting
                  separately as a class, to elect two directors of the
                  Corporation, such directors to be in addition to the number of
                  directors constituting the Board of Directors immediately
                  prior to the accrual of such right, the remaining directors to
                  be elected by the other class or classes of stock entitled to
                  vote therefor at each meeting of stockholders held for the
                  purpose of electing directors. Such voting right shall
                  continue until such time as all cumulative dividends
                  accumulated on all the Parity Preferred Stock having
                  cumulative dividends shall have been paid in full and until
                  any noncumulative dividends payable on all the Parity
                  Preferred Stock having noncumulative dividends shall have been
                  paid regularly for at least one year, at which time such
                  voting right of the holders of the Parity Preferred Stock
                  shall terminate, subject to revesting in the event of each and
                  every subsequent event of default of the character indicated
                  above.

                           Whenever such voting right shall have vested, such
                  right may be exercised initially either at a special meeting
                  of the holders of the Parity Preferred Stock, called as
                  hereinafter provided, or at any annual meeting of stockholders
                  held for the purpose of electing directors, and thereafter at
                  each successive annual meeting.

                           At any time when such voting right shall have vested
                  in the holders of the Parity Preferred Stock, and if such
                  right shall not already have been initially exercised, a
                  proper officer of the Corporation shall, upon the written
                  request of the holders of record of 10% in number of shares of
                  the Parity Preferred Stock then outstanding, addressed to the
                  Secretary of the Corporation, call a special meeting of the
                  holders of the Parity Preferred Stock and of any other class
                  or classes of stock having voting power with respect thereto
                  for the purpose of electing directors. Such meeting shall be
                  held at the earliest practicable date upon the notice required
                  for annual meetings of stockholders at the place for holding
                  of annual meetings of stockholders of the Corporation, or, if
                  none, at a place designated by the Secretary of the
                  Corporation.

                                       9
<PAGE>

                  If such meeting shall not be called by the proper officers of
                  the Corporation within 30 days after the personal service of
                  such written request upon the Secretary of the Corporation, or
                  within 30 days after mailing the same within the United States
                  of America, by registered mail, addressed to the Secretary of
                  the Corporation at its principal office (such mailing to be
                  evidenced by the registry receipt issued by the postal
                  authorities), then the holders of record of 10% in number of
                  shares of the Parity Preferred Stock then outstanding may
                  designate in writing one of their number to call such meeting
                  at the expense of the Corporation, and such meeting may be
                  called by such person so designated upon the notice required
                  for annual meetings of stockholders and shall be held at the
                  same place as is elsewhere provided for in this subsection
                  (I). Any holder of the Parity Preferred Stock shall have
                  access to the stock books of the Corporation for the purpose
                  of causing a meeting of stockholders to be called pursuant to
                  the provisions of this paragraph. Notwithstanding the
                  provisions of this paragraph, however, no such special meeting
                  shall be called during a period within 90 days immediately
                  preceding the date fixed for the next annual meeting of
                  stockholders.

                           At any meeting held for the purpose of electing
                  directors at which the holders of the Parity Preferred Stock
                  shall have the right to elect directors as provided herein,
                  the presence in person or by proxy of the holders of 33-1/3%
                  of the then-outstanding shares of the Parity Preferred Stock
                  shall be required and be sufficient to constitute a quorum of
                  the Parity Preferred Stock for the election of directors by
                  the holders of the Parity Preferred Stock. At any such meeting
                  or adjournment thereof (A) the absence of a quorum of the
                  holders of the Parity Preferred Stock shall not prevent the
                  election of directors other than those to be elected by the
                  holders of the Parity Preferred Stock and the absence of a
                  quorum or quorums of the holders of other classes of capital
                  stock entitled to elect such other directors shall not prevent
                  the election of directors to be elected by the holders of the
                  Parity Preferred Stock and (B) in the absence of a quorum of
                  the holders of any class of stock entitled to vote for the
                  election of directors, a majority of the holders present in
                  person or by proxy of such class shall have the power to
                  adjourn the meeting for the election of directors which the
                  holders of such class are entitled to elect, from time to
                  time, without notice other than announcement at the meeting,
                  until a quorum shall be present.

                           The directors elected pursuant to this subsection (I)
                  shall serve until the next annual meeting or until their
                  respective successors shall be elected and shall qualify;
                  provided, however, that when the right of the holders of the
                  Parity Preferred Stock to elect directors as herein provided
                  shall terminate, the terms of office of all persons so elected
                  by the holders of the Parity Preferred Stock shall terminate,
                  and the number of directors of the Corporation shall thereupon
                  be such number as may be provided in the By-Laws of the
                  Corporation irrespective of any increase made pursuant to this
                  subsection (I).

                           (II) So long as any shares of the Convertible
                  Preferred Stock remain outstanding, the Corporation will not,
                  either directly or indirectly or through merger or
                  consolidation with any other corporation:

                                       10
<PAGE>

                                    (a) without the affirmative vote at a
                           meeting or the written consent with or without a
                           meeting of the holders of at least 66-2/3% in number
                           of shares of the Series Preferred Stock of all series
                           then outstanding, (A) create any class or classes of
                           stock ranking equal or prior to the Series Preferred
                           Stock either as to dividends or upon liquidation or
                           increase the authorized number of shares of any class
                           or classes of stock ranking equal or prior to the
                           Series Preferred Stock either as to dividends or upon
                           liquidation, (B) amend, alter or repeal any of the
                           provisions of the Certificate of Incorporation so as
                           to affect adversely the preferences, special rights
                           or powers of the Series Preferred Stock or (C)
                           authorize any reclassification of the Series
                           Preferred Stock;

                                    (b) without the affirmative vote at a
                           meeting or the written consent with or without a
                           meeting of the holders of at least 66-2/3% in number
                           of shares of the Convertible Preferred Stock then
                           outstanding, amend, alter or repeal any of the
                           provisions hereof so as to affect adversely the
                           preferences, special rights or powers of the
                           Convertible Preferred Stock; or

                                    (c) without the affirmative vote at a
                           meeting or the written consent with or without a
                           meeting of the holders of at least a majority in
                           number of shares of the Series Preferred Stock of all
                           series then outstanding, increase the authorized
                           number of shares of the Series Preferred Stock.

                  (vi) The shares of the Convertible Preferred Stock may be
         redeemed at the option of the Corporation as a whole at any time on or
         after January 20, 2004, upon not less than 25 or more than 60 days'
         prior notice mailed to the holders of the shares to be redeemed at
         their addresses as shown on the stock books of the Corporation, at a
         redemption price of $38.1875 per share, together with an amount equal
         to all dividends (whether or not earned or declared) accumulated and
         unpaid to the date fixed for redemption. Upon such redemption date, all
         holders of shares of Convertible Preferred Stock shall cease to be
         stockholders with respect to such shares and thereafter such shares
         shall no longer be transferable on the books of the Corporation and
         such holders shall have no interest or claim against the Corporation
         with respect to such shares except the right to receive payment of the
         redemption price upon surrender of their certificates.

                  If full cumulative dividends on the Convertible Preferred
         Stock have not been paid, the Corporation may not purchase or acquire
         any shares of the Convertible Preferred Stock otherwise than pursuant
         to a purchase or exchange offer made on the same terms to all holders
         of the Convertible Preferred Stock.

                  (vii) No consent of the holders of the Convertible Preferred
         Stock shall be required for (i) the creation of any indebtedness of any
         kind of the Corporation, (ii) the creation of any class of stock of the
         Corporation ranking junior as to dividends or upon liquidation to the
         Series Preferred Stock or (iii) any increase or decrease in the amount

                                       11
<PAGE>

         of authorized Common Stock or any increase, decrease or change in the
         par value thereof or in any other terms thereof.

                  (viii) The Board reserves the right by subsequent amendment
         from time to time to increase (subject to the provisions of paragraph
         (v)(II)(c)) or decrease the number of shares which constitute the
         Convertible Preferred Stock (but not below the aggregate number of
         shares thereof then outstanding or then deliverable upon conversion of
         the 2007 Debentures) and in other respects to amend the terms of the
         Convertible Preferred Stock within the limitations provided by law,
         resolutions of the Board and the Certificate of Incorporation.

                                       12

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