Document:

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                                                                    Exhibit 10.B

                                                                       EXECUTION

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                            STOCK PURCHASE AGREEMENT

                                  BY AND AMONG

                             NATIONAL MENTOR, INC.,

                         MAGELLAN PUBLIC NETWORK, INC.,

                         MAGELLAN HEALTH SERVICES, INC.

                                       AND

                         NATIONAL MENTOR HOLDINGS, INC.

                          DATED AS OF JANUARY 18, 2001

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                                TABLE OF CONTENTS

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ARTICLE I -- DEFINITIONS..........................................................................................1
                  Section 1.1       DEFINITIONS...................................................................1
                  Section 1.2       CROSS REFERENCE...............................................................8

ARTICLE II -- THE CLOSING TRANSACTIONS...........................................................................10
                  Section 2.1       PRE-CLOSING ESTIMATES OF CERTAIN AMOUNTS.  ..................................10
                  Section 2.2       STOCK PURCHASE...............................................................10
                  Section 2.3       CLOSING TRANSACTIONS.........................................................10
                  Section 2.4       POST-CLOSING ADJUSTMENTS.....................................................11

ARTICLE III -- CONDITIONS TO CLOSING.............................................................................13
                  Section 3.1       CONDITIONS TO THE PURCHASER'S OBLIGATIONS....................................13
                  Section 3.2       CONDITIONS TO THE PARENT'S AND THE SELLER'S OBLIGATIONS......................16

ARTICLE IV -- COVENANTS BEFORE CLOSING...........................................................................18
                  Section 4.1       AFFIRMATIVE COVENANTS OF THE SELLER..........................................18
                  Section 4.2       NEGATIVE COVENANTS OF THE SELLER.............................................19
                  Section 4.3       EXCLUSIVITY..................................................................20
                  Section 4.4       COVENANTS OF PURCHASER.......................................................20
                  Section 4.5       INTERCOMPANY ACCOUNTS........................................................21
                  Section 4.6       FINANCIAL INFORMATION........................................................21
                  Section 4.7       ANTITRUST FILINGS............................................................21

ARTICLE V -- REPRESENTATIONS AND WARRANTIES OF THE SELLER ENTITIES...............................................22
                  Section 5.1       ORGANIZATION AND CORPORATE POWER.............................................22
                  Section 5.2       AUTHORIZATION OF TRANSACTIONS................................................23
                  Section 5.3       ABSENCE OF CONFLICTS.........................................................23
                  Section 5.4       CAPITALIZATION...............................................................23
                  Section 5.5       FINANCIAL STATEMENTS AND RELATED MATTERS.....................................24
                  Section 5.6       ABSENCE OF UNDISCLOSED LIABILITIES...........................................24
                  Section 5.7       ABSENCE OF CERTAIN DEVELOPMENTS..............................................25
                  Section 5.8       REAL PROPERTY................................................................26
                  Section 5.9       ASSETS.......................................................................27
                  Section 5.10      TAXES........................................................................27
                  Section 5.11      CONTRACTS AND COMMITMENTS....................................................29
                  Section 5.12      PROPRIETARY RIGHTS...........................................................31
                  Section 5.13      LITIGATION; PROCEEDINGS......................................................32
                  Section 5.14      BROKERAGE....................................................................32
                  Section 5.15      GOVERNMENTAL LICENSES AND PERMITS............................................32
                  Section 5.16      EMPLOYEES....................................................................33
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<TABLE>
<S>                                                                                                            <C>
                  Section 5.17      EMPLOYEE BENEFIT PLANS.......................................................33
                  Section 5.18      INSURANCE....................................................................34
                  Section 5.19      OFFICERS AND DIRECTORS; BANK ACCOUNTS........................................35
                  Section 5.20      AFFILIATE TRANSACTIONS.......................................................35
                  Section 5.21      COMPLIANCE WITH LAWS.........................................................35
                  Section 5.22      HEALTH CARE MATTERS..........................................................35
                  Section 5.23      ENVIRONMENTAL MATTERS........................................................36
                  Section 5.24      EARNOUT OBLIGATIONS..........................................................38
                  Section 5.25      ABSENCE OF CERTAIN BUSINESS PRACTICES........................................38
                  Section 5.26      CLIENT INCIDENTS.............................................................38
                  Section 5.27      DISCLOSURE...................................................................38
                  Section 5.28      SCHEDULE UPDATES.............................................................38

ARTICLE VI --  REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...................................................39
                  Section 6.1       ORGANIZATION.................................................................39
                  Section 6.2       AUTHORIZATION OF TRANSACTIONS................................................39
                  Section 6.3       ABSENCE OF CONFLICTS.........................................................39
                  Section 6.4       LITIGATION...................................................................39
                  Section 6.5       FINANCING....................................................................40
                  Section 6.6       BROKERAGE....................................................................40
                  Section 6.7       SCHEDULE UPDATES.............................................................40

ARTICLE VII -- TERMINATION.......................................................................................40
                  Section 7.1       TERMINATION..................................................................40
                  Section 7.2       EFFECT OF TERMINATION........................................................41

ARTICLE VIII -- INDEMNIFICATION AND RELATED MATTERS..............................................................41
                  Section 8.1       SURVIVAL.....................................................................41
                  Section 8.2       INDEMNIFICATION..............................................................42

ARTICLE IX -- ADDITIONAL AGREEMENTS..............................................................................48
                  Section 9.1       PRESS RELEASES AND ANNOUNCEMENTS.............................................48
                  Section 9.2       FURTHER TRANSFERS............................................................49
                  Section 9.3       SPECIFIC PERFORMANCE.........................................................49
                  Section 9.4       EXPENSES.....................................................................49
                  Section 9.5       NONCOMPETITION, NONSOLICITATION, AND CONFIDENTIALITY.........................49
                  Section 9.6       TAX MATTERS..................................................................51
                  Section 9.7       LEGEND FOR THE RESTRICTED SECURITIES.........................................55
                  Section 9.8       COMPANY EMPLOYEES............................................................56
                  Section 9.9       SELLER NOTE MATTERS..........................................................56
                  Section 9.10      USE OF MAGELLAN NAME.........................................................57
                  Section 9.11      INSURANCE MATTERS............................................................57

ARTICLE X -- MISCELLANEOUS.......................................................................................58

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<TABLE>
<S>                                                                                                            <C>
                  Section 10.1      AMENDMENT AND WAIVER.........................................................58
                  Section 10.2      NOTICES......................................................................58
                  Section 10.3      BINDING AGREEMENT; ASSIGNMENT................................................59
                  Section 10.4      SEVERABILITY.................................................................59
                  Section 10.5      NO STRICT CONSTRUCTION.......................................................60
                  Section 10.6      CAPTIONS.....................................................................60
                  Section 10.7      ENTIRE AGREEMENT.............................................................60
                  Section 10.8      COUNTERPARTS.................................................................60
                  Section 10.9      GOVERNING LAW................................................................60
                  Section 10.10     JURISDICTION AND CONSENT TO SERVICE..........................................60
                  Section 10.11     PARTIES IN INTEREST..........................................................60

</TABLE>

                                INDEX OF EXHIBITS

Exhibit A         -        Form of Seller Note A
Exhibit B         -        Form of Opinion of Dow, Lohnes & Albertson, PLLC
Exhibit C         -        Modification Schedule
Exhibit D         -        Debt and Equity Commitment Letters
Exhibit E         -        Form of Opinion of Kirkland & Ellis
Exhibit F         -        Form of Assignment and Consent for Oracle License
Exhibit G         -        Schedule of Specified Items of Indebtedness
Exhibit H         -        Net Working Capital Amount Schedule
Exhibit I         -        Form of Seller Note B

                               INDEX OF SCHEDULES

Affiliated Transactions Schedule
Allocation Schedule
Assets Schedule
Benefit Plans Schedule
Brokerage Schedule
Conflicts Schedule
Contracts Schedule
Developments Schedule
Earnout Schedule
Employees Schedule
Environmental Schedule
Financial Statements Schedule
Health Care Matters Schedule
Insurance Schedule
Key Employee Schedule
License Schedule
Litigation Schedule
Officers, Directors, and Bank Accounts Schedule
Organization Schedule

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Proprietary Rights Schedule
Real Property Schedule
Required Consents Schedule
Taxes Schedule

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<PAGE>

                            STOCK PURCHASE AGREEMENT

                  THIS STOCK PURCHASE AGREEMENT, dated as of January 18, 2001,
is made by and among National Mentor, Inc., a Delaware corporation (the
"COMPANY"), Magellan Public Network, Inc., a Delaware corporation (the
"SELLER"), Magellan Health Services, Inc., a Delaware corporation and the
ultimate parent of the Seller (the "PARENT," and together with the Seller, the
"SELLER ENTITIES"), and National Mentor Holdings, Inc., a Delaware corporation
(the "PURCHASER"). The Company, the Seller, the Parent and the Purchaser are
referred to herein collectively as the "PARTIES" and individually as a "PARTY."
Certain capitalized terms used herein are defined in Article I below.

                  WHEREAS, the authorized Capital Stock of the Company consists
of 100 shares of common stock, $1.00 par value per share (the "COMMON STOCK");

                  WHEREAS, the Seller owns beneficially and of record 100% of
the issued and outstanding Common Stock; and

                  WHEREAS, the Purchaser desires to acquire from the Seller, and
Seller desires to sell to the Purchaser, all of the Common Stock owned by the
Seller (the "ACQUIRED STOCK").

                  NOW, THEREFORE, in consideration of the premises and of the
mutual representations, warranties, and covenants which are to be made and
performed by the respective Parties, the Parties hereby agree as follows:

                            ARTICLE 1 -- DEFINITIONS

         SECTION 1.1       DEFINITIONS. When used in this Agreement, the
following terms have the meanings set forth below:

                  "ACQUIRED COMPANIES" means the Company and each of its
Subsidiaries, including, without limitation, each of the entities set forth on
the ORGANIZATION SCHEDULE.

                  "AFFILIATE" of any particular Person means any other Person
controlling, controlled by, or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract, or otherwise.

                  "AFFILIATED GROUP" means any affiliated group as defined in
Code Section 1504 that has filed a consolidated return for federal income tax
purposes (or any similar group under state, local, or foreign law).

                  "AGREEMENT" means this Stock Purchase Agreement, including all
Exhibits and Schedules hereto, as it may be amended from time to time in
accordance with its terms.

                  "APPLICABLE LAW" means any applicable decree, injunction,
judgment, law, order, ordinance, regulation, rule, statute, or writ of any
federal, state, local, or foreign governmental entity (or any agency,
department, or political subdivision of any governmental entity).

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                  "BOTTOM COLLAR AMOUNT" means $22.0 million.

                  "CAPITAL STOCK" means (i) in the case of a corporation, any
and all shares of capital stock, (ii) in the case of an association or business
entity, any and all shares, interests, participations, rights or other
equivalents (however designated) of capital stock, (iii) in the case of a
partnership or limited liability company, any and all partnership or membership
interests (whether general or limited), (iv) in any case, 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, and
(v) in any case, any right to acquire any of the foregoing.

                  "CASH" means all cash, cash equivalents, and marketable
securities.

                  "CASH AMOUNT" means the book value of the Company's Cash as of
the close of business on the day before the Closing Date, determined on a
consolidated basis in accordance with GAAP.

                  "CODE" means the Internal Revenue Code of 1986, as amended,
and any reference to any particular Code section shall be interpreted to include
any revision of or successor to that section regardless of how numbered or
classified.

                  "CONTRACTED NONPROFIT" means Alliance Human Services, Inc., a
Massachusetts charitable corporation, Mentor, Inc., a Massachusetts corporation,
and each other nonprofit or tax exempt Person (other than any state, county or
local governmental organizations) with which any Acquired Company has entered
into a service agreement or subcontract agreement or other similar agreement.

                  "EARNOUT OBLIGATIONS" means the payment obligations of the
Acquired Companies to former owners of businesses which were acquired by the
Acquired Companies prior to the Closing which are in the nature of deferred
purchase prices for such businesses.

                  "ENVIRONMENTAL AND SAFETY REQUIREMENTS" means all federal,
state and local statutes, regulations, ordinances and similar provisions having
the force or effect of law, all judicial and administrative orders and
determinations, and all common law concerning public health and safety, worker
health and safety and pollution or protection of the environment relating to the
presence, use, production, generation, handling, transport, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or by-products, asbestos,
polychlorinated biphenyls (or PCBs), noise or radiation.

                  "GAAP" means generally accepted accounting principles of the
United States, consistently applied.

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                  "GUARANTY OBLIGATION" shall mean, as to any Person (the
"GUARANTEEING PERSON"), any obligation of (a) the guaranteeing person or (b)
another Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any indebtedness, leases, dividends or
other obligations (the "PRIMARY OBLIGATIONS") of any other third Person (the
"PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including,
without limitation, any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (1) for the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (iv) otherwise to assure or hold harmless
the owner of any such primary obligation against loss in respect thereof;
PROVIDED, HOWEVER, that the term Guaranty Obligation shall not include
endorsements of instruments for deposit or collection or standard contractual
indemnities in the ordinary course of business.

                  "INCIDENTS" means each of the matters, incidents and
occurrences occurring on or prior to the Closing Date that are related to the
Acquired Companies (including, without limitation, to a client of or mentor
retained by the Acquired Companies or a Contracted Nonprofit) that (i) have been
or should have been reported to companies providing insurance to or for the
benefit of the Acquired Companies, (ii) have been or should have been reported
under the risk management policies of the Acquired Companies to a risk manager
(or person or committee acting as such) of the Acquired Companies or (iii) have
been recorded in the Acquired Companies' "incident database" (such database
includes over 13,000 entries as of December 31, 2000 and has incidents assigned
a risk rating of 1, 2, 3 or 4 therein) (the "RISK DATABASE") other than, in the
case of this clause (iii), any item which by its nature should not have been
recorded in the Risk Database in accordance with the Acquired Companies'
guidelines and policies governing the matters to be recorded in the Risk
Database.

                  "INDEBTEDNESS" means, without duplication, all liabilities and
obligations of the Acquired Companies (other than (i) items included in the Net
Working Capital Amount, (ii) items excluded from the Net Working Capital Amount
pursuant to "EXHIBIT H" attached hereto (other than item 1 on EXHIBIT H), (ii)
matters for which the Purchaser has been indemnified by the Seller Entities
pursuant to Sections 8.2(a)(iv), (vii) or (viii) or Section 9.6(c), and (iii)
the deferred portion of the change-in-control bonuses described in the BENEFIT
PLANS SCHEDULE in an amount not to exceed $805,000) including, without
duplication, in each case (but subject to the preceding parenthetical): (a) all
indebtedness for borrowed money or for the deferred purchase price of property
or services in respect of which any Acquired Company is liable, contingently or
otherwise, as obligor or in respect of which obligations any Acquired Company
assures a creditor against loss; (b) all obligations under capitalized leases in
respect of which any Acquired Company is liable as obligor or in respect of
which obligations any Acquired Company assures a creditor against loss; (c) each
of the matters set forth on "EXHIBIT G" attached hereto; and (d) all reserves
and contra accounts for any of the foregoing; and, to the extent not included in
the foregoing, all intercompany liabilities owing from any Acquired Company to
the Parent or its Affiliates (except other Acquired

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Companies). For purposes of calculating Indebtedness, all accrued interest,
prepayment penalties, premiums, fees and expenses (if any) which would be
payable if Indebtedness were paid in full at the Closing shall be treated as
Indebtedness.

                  "INDEBTEDNESS AMOUNT" means the book value of the Company's
Indebtedness as of the close of business on the day before the Closing Date,
determined on a consolidated basis in accordance with GAAP.

                  "INSIDER" means, any officer, director, executive employee,
stockholder, partner or Affiliate, as applicable, of any Acquired Company or any
spouse or descendent (whether natural or adopted) of any such individual or any
entity in which any of the foregoing Persons owns a 5% or greater direct or
indirect beneficial interest.

                  "KNOWLEDGE" and "AWARE" and terms of similar import mean, with
respect to a Person, the actual knowledge of such Person (and if such Person is
an entity, this means the actual knowledge of the officers, directors and
executive employees of such Person).

                  "LEASED REAL PROPERTY" means all land, building, fixtures or
other real property in which any Acquired Company has a leasehold, subleasehold,
license, or other real property right or interest under the Real Property
Leases.

                  "LEASEHOLD IMPROVEMENTS" means all buildings, fixtures and
other improvements located on each Leased Real Property which are owned by any
Acquired Company, regardless of whether such improvements are subject to
reversion to the landlord or other third party upon the expiration or
termination of the Real Property Lease for such Leased Real Property.

                  "LICENSES" means all permits, licenses, franchises,
certificates, approvals, and other authorizations of third parties or foreign,
federal, state, or local governments or other similar rights.

                  "LIENS" means any mortgage, pledge, security interest,
encumbrance, lien, or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof), any sale of receivables with recourse against the Acquired Companies,
any filing or agreement to file a financing statement as debtor under the
Uniform Commercial Code or any similar statute other than to reflect ownership
by a third party of property leased to any Acquired Company under a lease which
is not in the nature of a conditional sale or title retention agreement.

                  "LOSS" means, with respect to any Person, any damage,
liability, diminution in value, demand, claim, action, cause of action, cost,
damage, deficiency, Tax, penalty, fine or other loss or expense, whether or not
arising out of a third party claim, including all interest, penalties,
reasonable attorneys' fees and expenses and all amounts paid or incurred in
connection with any action, demand, proceeding, investigation or claim by any
third party (including any governmental entity or any department, agency or
political subdivision thereof) against or affecting such Person or which, if
determined adversely to such Person, would give rise to, evidence the existence
of, or relate to, any other Loss and the investigation, defense or settlement of
any of the foregoing.

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                  "MATERIAL ADVERSE EFFECT" means any material adverse effect on
the business, assets, condition (financial or otherwise) or operations of the
Acquired Companies, taken as a whole; provided, however, that "Material Adverse
Effect" shall be deemed to exclude (i) changes in general economic conditions
and (ii) changes generally affecting the industries in which the Acquired
Companies operate.

                  "NET WORKING CAPITAL AMOUNT" means the book value of (i) the
Company's current assets (other than Cash and Taxes receivable (if any)) MINUS
(ii) the book value of the Company's current liabilities (other than Taxes
payable and without duplication of liabilities included in Indebtedness); in
each case, as of the close of business on the day before the Closing Date,
determined on a consolidated basis in accordance with GAAP; provided, however,
that, without duplication, the items set forth in EXHIBIT H shall be excluded
(i.e., assigned a value of zero) for purposes of calculating the Net Working
Capital Amount.

                  "ORDINARY COURSE OF BUSINESS" means the ordinary course of the
Company's businesses consistent with ordinary and past business practices
(including, without limitation, with respect to collection of accounts
receivable, purchases of supplies, repairs and maintenance, payment of accounts
payable and accrued expenses, terms of sale, levels of capital expenditures, and
operation of cash management practices generally).

                  "PARENT CREDIT AGREEMENT" means the Credit Agreement, dated as
of February 12, 1998, by and among Magellan Health Services, Inc., a Delaware
corporation; Charter Behavioral Health System of New Mexico, Inc., a New Mexico
corporation; Merit Behavioral Care Corporation, a Delaware corporation; The
Chase Manhattan Bank, as Administrative Agent, Collateral Agent and Issuing
Bank; First Union National Bank, as Syndication Agent and Issuing Bank; and
Credit Lyonnais, as Documentation Agent and Issuing Bank; as the same may be
amended and supplemented from time to time.

                  "PERMITTED LIENS" means (i) real estate taxes, assessments and
other governmental fees or other charges not yet due and payable as of the
Closing Date; (ii) mechanics and similar statutory liens arising or incurred in
the Ordinary Course of Business for amounts which are not delinquent and which
would not, individually or in the aggregate, have a Material Adverse Effect;
(iii) zoning, entitlement, building and other land use and similar laws or
regulations imposed by any governmental authority having jurisdiction over such
parcel which are not violated by the current use and operation thereof; (iv)
easements, covenants, conditions, restrictions and other similar matters of
record which do not materially impair the use or occupancy of such parcel in the
operation of the Acquired Companies' businesses; (v) statutory landlord liens;
and (vi) liens arising under the Parent Credit Agreement; provided that any such
lien arising under the Parent Credit Agreement shall be released at Closing.

                  "PERSON" means and includes an individual, a partnership, a
joint venture, a limited liability company, a corporation or trust, an
unincorporated organization, a group, or a government or other department or
agency thereof, or any other entity.

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                  "PROPRIETARY RIGHTS" means any and all of the following in any
jurisdiction throughout the world (i) patents, patent applications, patent
disclosures, as well as any reissues, continuations, continuations-in-part,
divisions, extensions or reexaminations thereof, (ii) trademarks, service marks,
trade dress, trade names, logos, and corporate names and registrations and
applications for registration thereof, together with all of the goodwill
associated therewith, (iii) Internet domain names, (iv) copyrights (registered
or unregistered) and copyrightable works and registrations and applications for
registration thereof, (v) mask works and registrations and applications for
registration thereof, (vi) computer software (including, without limitation,
source code and executable code), data, databases, and documentation thereof,
(vii) trade secrets and other confidential information (including, without
limitation, ideas, formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, manufacturing
and production processes and techniques, if any, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, financial and marketing plans, and customer and supplier lists and
information), (viii) other intellectual property rights, (ix) copies and
tangible embodiments thereof (in whatever protectable form or medium), and (x)
license agreements related thereto.

                  "REAL PROPERTY LEASES" means all leases, subleases, licenses,
concessions and other agreements (written or oral), including, without
limitation, all amendments, extensions, renewals, guaranties and other
agreements with respect thereto, together with all security deposits thereunder,
held by the Acquired Companies for the use and occupancy of any real property or
interests therein.

                  "RESTRICTED SECURITIES" means the Seller Notes issued to the
Seller pursuant to Section 2.2 below and any securities issued with respect to
such security by way of a refinancing, merger, consolidation, or other
reorganization. As to any particular Restricted Securities, such securities
shall cease to be Restricted Securities when they have (i) been effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (ii) been distributed to the public
through a broker, dealer, or market maker pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act or become eligible for sale
pursuant to Rule 144(k) (or any similar provision then in force) under the
Securities Act, or (iii) been otherwise transferred and new securities not
bearing the Securities Act legend set forth in Section 9.7 have been delivered
by the Company. Whenever any particular securities of the Company cease to be
Restricted Securities, the holder thereof shall be entitled to receive from the
Company, without expense, new securities of like tenor not bearing a Securities
Act legend of the character set forth in Section 9.7.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar federal law then in force.

                  "SELLER ENTITIES" means the Seller and the Parent.

                  "SELLER NOTE B AMOUNT" means an amount equal to the LESSER OF
(A) $5 million and (B) the greater of zero and the result of the following (i)
the amount by which $79 million exceeds the Senior Debt Financing Amount on the
Closing Date MULTIPLIED BY (ii) the quotient of five divided by nine.

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<PAGE>

                  "SELLER NOTES" means the Seller Note A and the Seller Note B,
if any.

                  "SENIOR CREDIT FACILITY" means the senior syndicated loan
facility of the Company in place at the Closing, which facility is related to
the Senior Debt Commitment Letter.

                  "SENIOR DEBT FINANCING AMOUNT" means an amount equal to, as of
any date of determination, the aggregate principal amount of indebtedness then
owing under the term and revolving credit facilities under the Senior Credit
Facility on such date PLUS the outstanding unused and undrawn amount that the
Company has the right to borrow on such date of determination under the Senior
Credit Facility's revolving credit facility, not including any borrowing
availability that is contingent upon further syndication of the Senior Credit
Facility or other transactions that would involve amending or supplementing the
terms and conditions (in any material respect) of or changing the lenders
participating in the Senior Credit Facility.

                  "SUBSIDIARY" means, with respect to any Person, any
corporation, limited liability company, partnership, association, or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of 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 such Person or a combination thereof,
or (ii) if a limited liability company, partnership, association, or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more Subsidiaries of such Person or a combination thereof.
For purposes hereof, a Person shall be deemed to have a majority ownership
interest in a limited liability company, partnership, association, or other
business entity if such Person shall be allocated a majority of limited
liability company, partnership, association, or other business entity gains or
losses or shall be or control any managing director or general partner of such
limited liability company, partnership, association, or other business entity.

                  "TAX" or "TAXES" means any federal, state, county, local,
foreign, or other income, gross receipts, ad valorem, franchise, profits, sales
or use, transfer, registration, excise, utility, environmental, communications,
real or personal property, capital stock, license, payroll, wage or other
withholding, employment, social security, severance, stamp, occupation,
alternative or add-on minimum, estimated, and other taxes of any kind
whatsoever, whether computed on a separate or consolidated, unitary or combined
basis or in any other manner, including, without limitation, deficiencies,
penalties, additions to tax, and interest attributable thereto.

                  "TAX RETURN" means returns, declarations, reports, claims for
refund, information returns or other documents (including any related or
supporting schedules, statements, or information) filed or required to be filed
in connection with the determination, assessment, or collection of Taxes of any
party or the administration of any laws, regulations, or administrative
requirements relating to any Taxes.

                  "TOP COLLAR AMOUNT" means $23.0 million.

                                       7
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                  "TRANSACTION DOCUMENTS" means this Agreement, and all other
agreements, instruments, certificates, and other documents to be entered into or
delivered by any Party in connection with the consummation of the transactions
contemplated by this Agreement, including, without limitation, the Seller Notes.

                  "TREASURY REGULATIONS" means the United States Treasury
Regulations promulgated pursuant to the Code.

         SECTION 1.2       CROSS REFERENCE. The following terms are defined in
the following Sections of this Agreement:

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<CAPTION>
                  TERM                                                            SECTION
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                  <S>                                                             <C>
                  Accounts Receivable                                             5.5
                  Acquired Stock                                                  Recitals
                  Acquisition Proposal                                            4.3
                  Actual Cash Amount                                              2.4
                  Actual Closing Common Value                                     2.4
                  Actual Indebtedness Amount                                      2.4
                  Actual Net Working Capital Amount                               2.4
                  Antitrust Filings                                               4.7
                  Applicable Limitation Date                                      8.1
                  Assignment and Consent                                          3.1
                  Basket                                                          8.2
                  Bonuses                                                         5.17
                  Cap                                                             8.2
                  CERCLA                                                          5.23
                  Closing                                                         2.3
                  Closing Date                                                    2.3
                  Closing Review                                                  2.4
                  Commitment Letters                                              6.5
                  Common Stock                                                    Recitals
                  Company                                                         Preface
                  Confidential Information                                        9.5
                  Consolidated Subsidiaries                                       9.6
                  Cost Reports                                                    5.22
                  DOJ                                                             4.7
                  Draft Computations                                              2.4
                  ERISA                                                           5.17
                  Estimated Cash Amount                                           2.1
                  Estimated Cash Portion                                          2.2
                  Estimated Closing Common Value                                  2.1
                  Estimated Indebtedness Amount                                   2.1
                  Estimated Net Working Capital Amount                            2.1
</TABLE>

                                       8
<PAGE>

<TABLE>
                 <S>                                                             <C>
                  Financial Statements                                            5.5
                  Firm                                                            2.4
                  FTC                                                             4.7
                  Fundamental Representations and Warranties                      8.1
                  Government Contract                                             5.11
                  HSR Act                                                         3.1
                  Indemnification Statement                                       9.6
                  Indemnified Party                                               8.2
                  Indemnified Party Controlled Proceeding                         8.2
                  Indemnifying Party                                              8.2
                  Insurance Policies                                              9.11
                  Latest Balance Sheet                                            5.5
                  Lease Extensions                                                3.1
                  Management Agreements                                           3.1
                  Noncompete Period                                               9.5
                  Objection Notice                                                2.4
                  Oracle License                                                  3.1
                  Other Contracts                                                 5.11
                  Other Filings                                                   4.7
                  Parent                                                          Preface
                  Parent Tax Group                                                9.6
                  Parties                                                         Preface
                  Party                                                           Preface
                  Plans                                                           5.17
                  Pre-Closing Period                                              9.6
                  Pre-Closing Period Returns                                      9.6
                  Previous Acquisitions                                           5.24
                  Prime Rate                                                      2.4
                  Purchaser                                                       Preface
                  Purchaser Parties                                               8.2
                  Purchase Price                                                  2.2
                  Risk Database                                                   1.2
                  Real Property                                                   5.8
                  Schedule Update                                                 5.28
                  Section 338(h)(10) Election                                     9.6
                  Seller                                                          Preface
                  Seller Entities                                                 Preface
                  Seller Note A                                                   2.2
                  Seller Note B                                                   2.2
                  Seller Parties                                                  8.2
                  Senior Debt Commitment Letter                                   6.5
                  Straddle Period                                                 9.6
                  Straddle Period Returns                                         9.6
                  Tax Claim                                                       9.6
</TABLE>

                                       9
<PAGE>

<TABLE>
                 <S>                                                             <C>
                  Transaction Expenses                                            9.4
                  Uncovered Incident Claims                                       8.2
                  Unregistered Proprietary Rights                                 5.12
</TABLE>

                     ARTICLE II -- THE CLOSING TRANSACTIONS

         SECTION 2.1       PRE-CLOSING ESTIMATES OF CERTAIN AMOUNTS. Not later
than three days before the Closing, the Seller and the Purchaser will in good
faith jointly estimate, on a reasonable basis using the Company's then available
financial information, the Cash Amount (such estimate is referred to as the
"ESTIMATED CASH AMOUNT"), the Indebtedness Amount (such estimate is referred to
as the "ESTIMATED INDEBTEDNESS AMOUNT") and the Net Working Capital Amount (such
estimate is referred to as the "ESTIMATED NET WORKING CAPITAL AMOUNT) each as of
the close of business on the day before Closing Date; provided, however, that if
the Seller and the Purchaser cannot agree on an estimate of any of the foregoing
amounts, such estimate will be deemed to be equal to the average of the Seller's
and the Purchaser's good faith determinations thereof. The "ESTIMATED CLOSING
COMMON VALUE" means an amount equal to (A) $121.0 million, (B) plus the amount
by which the Estimated Cash Amount exceeds $8.0 million or minus the amount by
which $8.0 million exceeds the Estimated Cash Amount, (C) less the Estimated
Indebtedness Amount, and (D) plus the amount by which the Estimated Net Working
Capital Amount exceeds the Top Collar Amount or minus the amount by which the
Bottom Collar Amount exceeds the Estimated Net Working Capital Amount or zero if
the Estimated Net Working Capital Amount is between the Top Collar Amount and
the Bottom Collar Amount.

         SECTION 2.2       STOCK PURCHASE. On the basis of the representations,
warranties, covenants, and agreements herein, and subject to the satisfaction or
waiver of the conditions set forth herein and the terms hereof, at the Closing,
the Purchaser shall purchase from the Seller, and the Seller shall sell and
transfer to the Purchaser, the Acquired Stock, free and clear of any Liens, for
a purchase price equal to the Estimated Closing Common Value (the "PURCHASE
PRICE") by delivery to the Seller of (A) a subordinated promissory note issued
by the Purchaser in the form of EXHIBIT A attached hereto in a principal amount
equal to $10 million (the "SELLER NOTE A"), (B) if the Seller Note B Amount is
greater than zero, a subordinated promissory note issued by the Purchaser in the
form of EXHIBIT I attached hereto in a principal amount equal to the Seller Note
B Amount (the "SELLER NOTE B") and (C) cash for the balance of the Purchase
Price by wire transfer or other delivery of immediately available funds (the
"ESTIMATED CASH PORTION").

         SECTION 2.3       CLOSING TRANSACTIONS.

                  (a)      CLOSING. The closing of the transactions contemplated
by this Agreement (the "CLOSING") shall take place at the offices of Kirkland &
Ellis, 200 East Randolph Drive, Chicago, Illinois 60601, commencing at 10:00
a.m. on the third business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself), or at such other place or
on such other date as may be mutually agreeable to the

                                       10
<PAGE>

Purchaser and the Seller; provided that in any event, if the Purchaser's senior
lenders require that the Closing take place at the offices of their attorneys,
the Parties agree that the Closing shall take place at such offices. The date
and time of the Closing are herein referred to as the "CLOSING DATE."

                  (b)      CLOSING TRANSACTIONS.  At the Closing:

                           (i)      the Seller shall deliver to the Purchaser,
         free and clear of any Liens, one or more certificates representing the
         Acquired Stock, duly endorsed in blank or accompanied by stock powers
         or other instruments of transfer duly executed in blank, and bearing
         or accompanied by all requisite stock transfer stamps;

                           (ii)     the Purchaser shall deliver to the Seller
         the Estimated Cash Portion in immediately available funds;

                           (iii)    the Purchaser shall deliver to the Seller
         the Seller Notes;

                           (iv)     the Purchaser shall cause the Company to
         repay all Indebtedness outstanding as of the close of business on the
         day before the Closing Date owed to the Seller or the Parent or their
         Affiliates (other than the Acquired Companies), as the case may be;
         and

                           (v)      each Party shall deliver the opinions,
         certificates and other documents and instruments required to be
         delivered by or on behalf of such Party under Article III.

         SECTION 2.4       POST-CLOSING ADJUSTMENTS.

                  (a)      POST-CLOSING DETERMINATION. Within 90 days after the
Closing Date, the Purchaser and its auditors will conduct a review (the "CLOSING
REVIEW") of the Cash Amount, the Indebtedness Amount and the Net Working Capital
Amount and will prepare and deliver to the Seller a computation of such amounts
(the "DRAFT COMPUTATIONS"). The Draft Computation shall be prepared from the
Company's books and records, which in return shall be prepared in accordance
with GAAP, consistently applied. The Purchaser and its auditors will make
available to the Seller and its auditors all records and work papers used in
preparing the Draft Computations. If the Seller disagrees with the computation
of the Cash Amount, the Indebtedness Amount or the Net Working Capital Amount
reflected in the Draft Computations, the Seller may, within 30 days after
receipt of the Draft Computations, deliver a notice (an "OBJECTION NOTICE") to
the Purchaser setting forth the Seller's calculation of the Cash Amount, the
Indebtedness Amount and the Net Working Capital Amount. The Purchaser and the
Seller will use reasonable best efforts to resolve any disagreements as to the
computation of the Cash Amount, the Indebtedness Amount and the Net Working
Capital Amount, but if they do not obtain a final resolution within 30 days
after the Purchaser has received the Objection Notice, the Purchaser and the
Seller will jointly retain an independent accounting firm of recognized national
standing (the "FIRM") to resolve any remaining disagreements. If the Purchaser
and the Seller are unable to agree on the choice of the Firm, then the Firm will
be a "big-five" accounting firm (or a successor) selected by lot (after
excluding one firm designated by the Purchaser and one firm designated by the
Seller). The Purchaser and the Seller will direct the Firm

                                       11
<PAGE>

to render a determination within 30 days of its retention and the Purchaser, the
Seller, and their respective agents will cooperate with the Firm during its
engagement. The Firm will consider only those items and amounts in the Draft
Computations set forth in the Objection Notice which the Purchaser and the
Seller are unable to resolve. The Purchaser and the Seller shall each make a
submission to the Firm promptly (and in any event within 20 days after the
Firm's engagement), which submission shall contain such Party's computation of
the Cash Amount, the Indebtedness Amount and the Net Working Capital Amount and
information, arguments, and support for such Party's position. The Firm shall
review such submissions and base its determination solely on them. In resolving
any disputed item, the Firm may not assign a value to any item greater than the
greatest value for such item claimed by either party or less than the smallest
value for such item claimed by either party. The Firm's determination will be
based on the definition of the Cash Amount, the Indebtedness Amount and the Net
Working Capital Amount included herein. The determination of the Firm will be
conclusive and binding upon the Parties. The Seller and the Purchaser shall each
bear 50% of the costs and expenses of the Firm. The Cash Amount, the
Indebtedness Amount and the Net Working Capital Amount, as finally determined
pursuant to this Section 2.4(a), is referred to herein as the "ACTUAL CASH
AMOUNT," the "ACTUAL INDEBTEDNESS AMOUNT" and the "ACTUAL NET WORKING CAPITAL
AMOUNT," respectively. The "ACTUAL CLOSING COMMON VALUE" means an amount equal
to (A) $121.0 million, (B) plus the amount by which the Actual Cash Amount
exceeds $8.0 million or minus the amount by which $8.0 million exceeds the
Actual Cash Amount, (C) less the Actual Indebtedness Amount, and (D) plus the
amount by which the Actual Net Working Capital Amount exceeds the Top Collar
Amount or minus the amount by which the Bottom Collar Amount exceeds the Actual
Net Working Capital Amount or zero if the Actual Net Working Capital Amount is
between the Top Collar Amount and the Bottom Collar Amount.

                  (b)      POST-CLOSING ADJUSTMENT.

                           (i)      PAYMENT BY THE PURCHASER. If the Actual
         Closing Common Value is greater than the Estimated Closing Common
         Value, the Purchaser will, within five (5) business days after the
         determination thereof, pay to the Seller an amount equal to the sum of
         (A) the Actual Closing Common Value MINUS the Estimated Closing Common
         Value PLUS (B) a fee on such difference from the Closing Date to the
         date of payment calculated using a rate equal to the "Prime Rate" as
         listed in THE WALL STREET JOURNAL (Midwest Edition) on the Closing
         Date (the "PRIME RATE"). Such payment will be made by wire transfer or
         delivery of other immediately available funds.

                           (ii)     PAYMENT BY THE SELLER. If the Actual
         Closing Common Value is less than the Estimated Closing Common Value,
         the Seller will, within five (5) business days after the determination
         thereof, pay to the Purchaser an amount equal to the sum of (A) the
         Estimated Closing Common Value MINUS the Actual Closing Common Value
         PLUS (B) a fee on such difference from the Closing Date to the date of
         payment calculated using a rate equal to the Prime Rate. Such payment
         will be made by wire transfer or delivery of other immediately
         available funds.

                                       12
<PAGE>

                           (iii)    DISPUTE. If, pursuant to Section 2.4(a)
         above, there is a dispute as to the final determination of the Actual
         Cash Amount, the Actual Indebtedness Amount, or the Actual Net Working
         Capital Amount, the Purchaser and the Seller shall promptly pay to the
         other, as appropriate, such amounts as are not in dispute, pending
         final determination of such dispute pursuant to Section 2.4(a).

Any adjustments pursuant to this Section 2.4 shall constitute adjustments to the
Purchase Price for Tax purposes.

                      ARTICLE III -- CONDITIONS TO CLOSING

         SECTION 3.1       CONDITIONS TO THE PURCHASER'S OBLIGATIONS. The
obligation of the Purchaser to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of the following conditions as of the
Closing Date:

                  (a)      The representations and warranties set forth in
Article V hereof shall be true and correct in all material respects (except that
the representations and warranties which are qualified as to "materiality" or
"Material Adverse Effect" shall be true and correct in all respects) at and as
of the Closing Date as though then made without giving effect to any Schedule
Updates thereto, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations and
warranties shall be true and correct in all material respects as of such earlier
date); provided that the condition set forth in this Section 3.1(a) shall be
deemed satisfied if the facts, events and circumstances underlying any
inaccuracies in any such representations and warranties as of the Closing Date
(without giving effect to any materiality or Material Adverse Effect
qualifications or any materiality or Material Adverse Effect exceptions
contained therein), individually or in the aggregate, could not have a Material
Adverse Effect.

                  (b)      The Company, the Seller and the Parent shall have
performed and complied in all material respects with all of the covenants and
agreements required to be performed by each of them under this Agreement on or
before the Closing;

                  (c)      The following third party consents shall have been
obtained on terms reasonably satisfactory to the Purchaser: (i) all third party
consents listed on the "REQUIRED CONSENTS SCHEDULE" attached hereto and (ii) all
third party consents that are or may be required as a result of the consummation
of the transactions contemplated hereby in order to maintain the validity and
effectiveness, on and after the Closing Date, of each of the Licenses required
to be set forth on the LICENSE SCHEDULE;

                  (d)      Each of the leases set forth on the Real Property
Schedule for which CCS Land Trust or an Affiliate thereof is lessor shall have
had the term thereof extended to June 30, 2006, with the aggregate annual
payments thereunder for the period beginning July 1, 2003 and ending on June 30,
2006 not exceeding $750,000 per annum (the "LEASE EXTENSIONS") and with the
other terms and conditions of the Lease Extensions being consistent with the
terms of such leases prior to the

                                       13
<PAGE>

Lease Extensions, and the Lease Extensions shall not have been amended or
modified and shall be in full force and effect as of the Closing;

                  (e)      The Parent, the Company and Oracle Corporation shall
have entered into an assignment and consent (the "ASSIGNMENT AND CONSENT"), in
the form of EXHIBIT F hereto, with respect to that certain Software License and
Service Agreement, between the Parent and Oracle Corporation, dated February 25,
2000 (the "ORACLE LICENSE"), and the Assignment and Consent shall not have been
amended or modified or revoked and shall be in full force and effect as of the
Closing;

                  (f)      All governmental filings, authorizations, and
approvals that are required for the consummation of the transactions
contemplated hereby shall have been duly made and obtained on terms reasonably
satisfactory to the Purchaser (without limiting the generality of the foregoing,
all applicable waiting periods (and any extensions thereof) under the
Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, as amended (the "HSR
ACT"), shall have expired or otherwise been terminated);

                  (g)      No action, suit, or proceeding that has, in the
reasonable opinion of the Purchaser, a reasonable likelihood of success shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable judgment, decree, injunction, order, or ruling
would prevent the performance of this Agreement or any of the transactions
contemplated hereby, declare unlawful the transactions contemplated by this
Agreement, cause such transactions to be rescinded, or materially and adversely
affect the right of the Purchaser to own, operate, or control any Acquired
Company, and no judgment, decree, injunction, order, or ruling shall have been
entered which has any of the foregoing effects;

                  (h)      Since September 30, 2000, there shall have been no
Material Adverse Effect (without limiting the generality of the foregoing, since
September 30, 2000, there shall have been no modification or change (or threat
of modification or change that has a reasonable likelihood of success) of any
Medicare or Medicaid law, rule, regulation or payment policy, or any rule or
policy of any third-party payor, or any other applicable law or regulation,
which has had or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect);

                  (i)      Except as otherwise specified in writing by the
Purchaser to the Seller prior to the Closing Date, all of the directors of each
Acquired Company shall have resigned and such resignations shall be effective as
of the Closing Date;

                  (j)      The Purchaser shall have received an opinion, dated
the Closing Date, of Dow, Lohnes & Albertson, PLLC, counsel to the Company, the
Seller and the Parent, with respect to the matters set forth on EXHIBIT B
attached hereto, and the lenders providing debt financing in connection with the
transactions contemplated by this Agreement shall be entitled to rely thereon;

                  (k)      On or before the Closing Date, the Seller shall have
delivered to the Purchaser all of the following:

                                       14
<PAGE>

                           (i)      a certificate from the Seller in a form
         reasonably satisfactory to the Purchaser, dated the Closing Date,
         stating that the preconditions specified in Sections 3.1(a), (b) and
         (h) have been satisfied;

                           (ii)     a copy of the resolutions of the board of
         directors of the Company, the Seller and the Parent, respectively,
         approving the transactions contemplated by this Agreement, certified
         by the Company, the Seller and the Parent, respectively;

                           (iii)    a copy of the certificate of incorporation
         or equivalent document for each Acquired Company, certified by the
         appropriate authority in the jurisdiction in which such entity was
         incorporated or organized and dated as of or about the Closing Date;

                           (iv)     a copy of the bylaws or equivalent document
         for each Acquired Company, certified by such Acquired Company;

                           (v)      certificates from appropriate authorities,
         dated as of or about the Closing Date, as to the good standing and
         qualification to do business of each Acquired Company in each
         jurisdiction where they are so qualified;

                           (vi)     all original stock certificates and other
         instruments evidencing ownership of each of the Company's
         Subsidiaries;

                           (vii)    all minute books, stock books, ledgers and
         registers, corporate seals and other corporate records relating to the
         organization, ownership and maintenance of each Acquired Company;

                           (viii)   copies of the consents, filings,
         authorizations and approvals described in Sections 3.1(c) and (f) to
         the extent applicable to the Company, the Seller or the Parent;

                           (ix)     copies of the resignations described in
         Section 3.1(i); and

                           (x)      such other documents or instruments as the
         Purchaser may reasonably request to effect the transactions
         contemplated hereby;

                  (l)      The Purchaser or, at the option of the Purchaser,
the Company shall have entered into new employment, equity participation and
non-competition agreements on substantially the terms and conditions set forth
in the attachments to the "KEY EMPLOYEE SCHEDULE" attached hereto with each of
the persons listed on the KEY EMPLOYEE SCHEDULE (the "MANAGEMENT AGREEMENTS"),
and each of the Management Agreements shall not have been amended or modified
and shall be in full force and effect as of the Closing;

                                       15
<PAGE>

                  (m)      The Acquired Companies and each Contracted Nonprofit
shall have entered into an amendment to each Service Agreement or similar
agreement between them which effectuates the terms set forth on the
"MODIFICATION SCHEDULE" attached hereto as EXHIBIT C;

                  (n)      The Company shall have received sufficient senior
debt financing so that the Senior Debt Financing Amount on the Closing Date
equals or exceeds $70.0 million, on substantially the terms and conditions set
forth in the Senior Debt Commitment Letter attached as a part of EXHIBIT D
hereto;

                  (o)      The Seller shall have delivered to the Purchaser the
audited consolidated balance sheets of the Company as of September 30, 1999 and
2000 and the related statements of income and cash flows (or the equivalent) for
the respective twelve-month periods then ended, prepared in accordance with
GAAP, and the consolidated financial results of the Company set forth in such
financial statements shall not differ materially from the consolidated financial
results of the Company set forth in the unaudited financial statements for the
same periods that are a part of the Financial Statements Schedule, without
regard to any Schedule Updates thereto; and

                  (p)      All proceedings to be taken by the Company, the
Seller and the Parent in connection with the consummation of the transactions
contemplated by this Agreement and all certificates, opinions, instruments, and
other documents required to be delivered by the Company, the Seller and the
Parent to effect the transactions contemplated hereby reasonably requested by
the Purchaser shall be reasonably satisfactory in form and substance to the
Purchaser.

Any condition specified in this Section 3.1 may be waived by the Purchaser in
its sole discretion; provided that no such waiver shall be effective unless it
is set forth in a writing executed by the Purchaser.

         SECTION 3.2       CONDITIONS TO THE PARENT'S AND THE SELLER'S
OBLIGATIONS. The obligation of the Seller and the Parent to consummate the
transactions contemplated by this Agreement is subject to the satisfaction of
the following conditions as of the Closing Date:

                  (a)      The representations and warranties set forth in
Article VI hereof shall be true and correct in all material respects (except
that the representations and warranties which are qualified as to "materiality"
or "Material Adverse Effect" shall be true and correct in all respects) at and
as of the Closing Date as though then made without giving effect to any Schedule
Updates thereto, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations and
warranties shall be true and correct in all material respects as of such earlier
date); provided that the condition set forth in this Section 3.2(a) shall be
deemed satisfied if the facts, events and circumstances underlying any
inaccuracies in any such representations and warranties as of the Closing Date
(without giving effect to any materiality or Material Adverse Effect
qualifications or any materiality or Material Adverse Effect exceptions
contained therein), individually or in the aggregate, could not have be expected
to have a material adverse effect on the ability of the Purchaser to perform
under the terms of this Agreement.

                                       16
<PAGE>

                  (b)      The Purchaser shall have performed and complied in
all material respects with all of the covenants and agreements required to be
performed by it under this Agreement on or before the Closing;

                  (c)      Each third party consent listed on the REQUIRED
CONSENTS SCHEDULE that has an asterisk next to it in the left margin (if any)
shall have been obtained on terms reasonably satisfactory to the Seller and the
Parent;

                  (d)      All governmental filings, authorizations, and
approvals that are required for the consummation of the transactions
contemplated hereby shall have been duly made and obtained on terms reasonably
satisfactory to the Seller (without limiting the generality of the foregoing,
all applicable waiting periods (and any extensions thereof) under the HSR Act
shall have expired or otherwise been terminated);

                  (e)      No action, suit, or proceeding that has, in the
reasonable opinion of the Seller, a reasonable likelihood of success shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable judgment, decree, injunction, order, or ruling
would prevent the performance of this Agreement or any of the transactions
contemplated hereby, declare unlawful the transactions contemplated by this
Agreement, cause such transactions to be rescinded, or materially and adversely
affect the right of the Parent or the Seller to receive benefits to be enjoyed
by it under this Agreement, and no judgment, decree, injunction, order, or
ruling shall have been entered which has any of the foregoing effects;

                  (f)      The Seller shall have received an opinion, dated the
Closing Date, of Kirkland & Ellis, counsel to the Purchaser, with respect to the
matters set forth on EXHIBIT E attached hereto, and the lenders providing debt
financing in connection with the transactions contemplated by this Agreement
shall be entitled to rely thereon;

                  (g)      On or before the Closing Date, the Purchaser shall
have delivered to the Seller all of the following:

                           (i)      a certificate from the Purchaser in a form
         reasonably satisfactory to the Seller, dated the Closing Date, stating
         that the preconditions specified in Sections 3.2(a) and (b) have been
         satisfied;

                           (ii)     a copy of the resolutions of the board of
         directors of the Purchaser approving the transactions contemplated by
         this Agreement, certified by the Purchaser;

                           (iii)    a copy of the certificate of incorporation
         for the Purchaser, certified by the Secretary of State of the State of
         Delaware;

                           (iv)     a copy of the bylaws of the Purchaser,
         certified by the Purchaser;

                                       17
<PAGE>

                           (v)      a certificate from the Secretary of State
         of the State of Delaware, dated as of or about the Closing Date, as to
         the good standing of the Purchaser;

                           (vi)     copies of the consents, filings,
         authorizations and approvals  described in Section 3.2(c) to the extent
         applicable to the Purchaser; and

                           (vii)    such other documents or instruments as the
         Seller may reasonably request to effect the transactions contemplated
         hereby; and

                  (h)      All proceedings to be taken by the Purchaser in
connection with the consummation of the transactions contemplated by this
Agreement and all certificates, opinions, instruments, and other documents
required to be delivered by the Purchaser to effect the transactions
contemplated hereby reasonably requested by the Seller shall be reasonably
satisfactory in form and substance to the Seller.

Any condition specified in this Section 3.2 may be waived by the Seller in its
sole discretion; provided that no such waiver shall be effective unless it is
set forth in a writing executed by the Seller.

                     ARTICLE IV -- COVENANTS BEFORE CLOSING

         SECTION 4.1       AFFIRMATIVE COVENANTS OF THE SELLER. Except as
otherwise contemplated by this Agreement, between the date hereof and the
Closing, unless the Purchaser otherwise agrees in writing, the Seller shall and
shall cause each Acquired Company to:

                  (a)      conduct each Acquired Company's business and
operations only in the Ordinary Course of Business, including, without
limitation, paying accounts payable, collecting accounts receivable and making
capital expenditures, in each case, in the Ordinary Course of Business;

                  (b)      keep in full force and effect each Acquired Company's
corporate existence and use its reasonable best efforts to keep in full force
and effect all material contracts, rights, franchises, and intellectual property
relating or pertaining to its business and use its reasonable best efforts to
cause its current insurance (or reinsurance) policies not to be canceled or
terminated or any of the coverage thereunder to lapse;

                  (c)      use their reasonable best efforts to carry on the
business of each Acquired Company substantially in the same manner as presently
conducted and to keep each Acquired Company's business organization and
properties intact, including its present business operations, physical
facilities, working conditions, and employees and including each Acquired
Company's present relationships with lessors, licensors, suppliers, customers,
and others having business relations with each such Acquired Company,
respectively;

                                       18
<PAGE>

                  (d)      use its reasonable best efforts to maintain the Real
Property and other assets of each Acquired Company in good repair, order, and
condition (normal wear and tear excepted) consistent with current needs and
replace in accordance with prudent practices each Acquired Company's inoperable,
worn out, or obsolete assets with assets of good quality consistent with the
Ordinary Course of Business;

                  (e)      maintain the books, accounts, and records of each
Acquired Company in accordance with GAAP, consistent with the custom and
practice as used in the preparation of the Financial Statements;

                  (f)      as soon as available but in any event within thirty
(30) days after the end of each monthly accounting period in each fiscal year,
beginning with the monthly accounting period ending November 30, 2000, the
Seller shall use its best efforts to deliver to the Purchaser unaudited
consolidating and consolidated statements of income and cash flows of the
Company and its Subsidiaries for such monthly period and for the period from the
beginning of the fiscal year to the end of such month, and unaudited
consolidating and consolidated balance sheets of the Company and its
Subsidiaries as of the end of such monthly period, and all such statements shall
be prepared in accordance with GAAP, subject to the absence of footnote
disclosures and to normal year-end adjustments, and shall be certified by the
Company's chief financial officer;

                  (g)      generally encourage each Acquired Company's employees
to continue their employment with such Acquired Company after the Closing;

                  (h)      promptly (once the Parent obtains knowledge thereof)
inform the Purchaser in writing of any material variances from the
representations and warranties contained in Article V or any material breach of
any covenant hereunder by the Company, the Seller or the Parent;

                  (i)      to the extent reasonably required by the Purchaser's
lenders with respect to material Real Property Leases, use reasonable best
efforts to obtain and deliver to the Purchaser estoppel certificates and waivers
of landlord liens from the landlords, sublandlords or any other parties granting
rights to Acquired Companies under such Real Property Leases (which shall
contain such landlords', sublandlords' or other parties' consent to the
transactions contemplated herein if required under the applicable lease), in
form and substance reasonably satisfactory to the Purchaser's lenders;

                  (j)      cooperate with the Purchaser and use reasonable best
efforts to cause the conditions to the Purchaser's obligation to close to be
satisfied (including, without limitation, the execution and delivery of all
agreements contemplated hereunder to be so executed and delivered and the making
and obtaining of all third party and governmental notices, filings,
authorizations, approvals, consents, releases, and terminations);

                  (k)      cooperate with the Purchaser in the Purchaser's
investigation of the business and properties of the Acquired Companies, to
permit the Purchaser and its employees, agents, accounting, legal, and other
authorized representatives to (i) have full access to the premises, books,

                                       19
<PAGE>

and records of each Acquired Company at reasonable hours, (ii) visit and inspect
any of the properties of each Acquired Company, and (iii) discuss the affairs,
finances, and accounts of each Acquired Company with the directors, officers,
partners, key employees, key customers, key sales representatives, key
suppliers, and independent accountants of such Acquired Company, respectively;
and

                  (l)      promptly inform the Purchaser in writing of any
Acquired Company's receipt of any material inquiries, information requests,
notices of violation or complaints from any direct or indirect payor source,
either governmental or non-governmental, or any foreign, federal, state or local
governmental or regulatory authority.

         SECTION 4.2       NEGATIVE COVENANTS OF THE SELLER. Except as expressly
contemplated by this Agreement, between the date hereof and the Closing, unless
the Purchaser otherwise agrees in writing, the Seller shall cause each Acquired
Company not to:

                  (a)      make any loans or enter into any transaction with any
Insider other than transactions which may not be restricted under the Parent
Credit Agreement and other than transactions entered into in the Ordinary Course
of Business;

                  (b)      establish, amend or contribute to any pension,
retirement, profit sharing, or stock bonus plan or multiemployer plan covering
any of the employees of any Acquired Company, except as required by law or by
the terms of any such plan or in accordance with past practice;

                  (c)      take any action designed or intended to encourage
employees of the Acquired Companies to leave their employment or otherwise not
to continue employment with such Acquired Companies;

                  (d)      delay normal capital expenditures;

                  (e)      enter into any amendments, extensions, renewals or
other modifications with respect to any of the Real Property Leases other than
in the Ordinary Course of Business, or enter into any new lease, sublease,
license, concession or other agreement for the use or occupancy of real property
requiring rental and other payments in excess of $150,000 annually as averaged
over the term of such lease, sublease, license, concession or other agreement;
or

                  (f)      enter into any agreement or binding commitment to do
any of the foregoing.

         SECTION 4.3       EXCLUSIVITY. Until this Agreement is terminated by
its terms, the Seller Entities shall not, and the Seller Entities shall not
cause or permit any Affiliate, Insider or agent or any other Person acting on
their behalf to, discuss or negotiate with any other Person a possible sale
of all or part of any Acquired Company's securities or assets (except for
dispositions of assets in the Ordinary Course of Business), whether such
transaction takes the form of a sale of stock, merger, liquidation,
dissolution, reorganization, recapitalization, consolidation, sale of assets
or otherwise (an "ACQUISITION PROPOSAL"), or provide any information to any
other Person concerning any

                                       20
<PAGE>

Acquired Company (other than information which the Acquired Companies provide to
other Persons in the Ordinary Course of Business). The Seller Entities (a) do
not have any agreement, arrangement or understanding with respect to any
Acquisition Proposal (except this Agreement), (b) shall cease and cause to be
terminated any and all discussions with third parties regarding any Acquisition
Proposal, and (c) shall promptly notify the Purchaser if any Acquisition
Proposal, or any inquiry or contact with any person or entity with respect
thereto, is made.

         SECTION 4.4       COVENANTS OF PURCHASER. Between the date hereof and
the Closing, the Purchaser shall:

                  (a)      promptly (once it obtains knowledge thereof) inform
the Seller in writing of any material variances from the representations and
warranties contained in Article VI or any material breach of any covenant
hereunder by the Purchaser; and

                  (b)      cooperate with the Seller and use its reasonable best
efforts to cause the conditions to the Seller's obligation to close to be
satisfied (including, without limitation, the execution and delivery of all
agreements contemplated hereunder to be so executed and delivered and the making
and obtaining of all third party and governmental filings, authorizations,
approvals, consents, releases, and terminations).

         SECTION 4.5       INTERCOMPANY ACCOUNTS. Except to the extent treated
as Indebtedness for purposes of computing the Indebtedness Amount (which
treatment shall be at the Parent's option), the Parent will cause all
intercompany liabilities owing from any Acquired Company to the Parent or its
Affiliates (except other Acquired Companies) as of immediately prior to the
close of business on the day before the Closing Date to be reclassified to
capital of the Company (i.e., after the day before the Closing Date the Acquired
Companies shall not have any obligation to repay such intercompany liabilities).
The Acquired Companies will cause all intercompany liabilities owing from the
Parent or any of its Affiliates (other than the Acquired Companies) to any
Acquired Company as of the close of business on the day before the Closing Date
to be distributed to the Seller such that after the day before the Closing Date
neither the Parent nor any of its Affiliates shall have any obligation to repay
such intercompany liabilities to any Acquired Company.

         SECTION 4.6       FINANCIAL INFORMATION. The Seller and the Parent
agree to provide all necessary financial data for the offering materials and the
syndication materials related thereto to be prepared by the Purchaser for the
senior debt financing to be obtained by the Company in connection with the
transactions contemplated by this Agreement and agree to permit the Purchaser's
use of the information contained in such financial data and such syndication
materials.

         SECTION 4.7       ANTITRUST FILINGS.

                  (a)      As promptly as practicable after the date of this
Agreement, each of the Purchaser and the Parent will prepare and file (i) with
the United States Federal Trade Commission (the "FTC") and the Antitrust
Division of the United States Department of Justice (the "DOJ") Notification and
Report Forms relating to the transactions contemplated herein as required by the

                                       21
<PAGE>

HSR Act as agreed to by the parties (the "ANTITRUST FILINGS") and (ii) any other
filings required to be filed by it under any other federal, state or foreign
laws relating to the transactions contemplated by this Agreement (the "OTHER
FILINGS").

                  (b)      The Seller Entities and the Purchaser each shall
promptly supply the other with any information which may be required in order to
effectuate any filings pursuant to this Section 4.7. Each of the Seller Entities
and the Purchaser will notify the other promptly upon the receipt of any
comments from the FTC or DOJ or their respective staffs or any other government
officials in connection with any filing made pursuant hereto and of any request
by the FTC or DOJ or their respective staffs or any other government officials
for amendments or supplements to any Antitrust Filings or Other Filing or for
additional information and will supply the other with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the FTC, DOJ or their respective staffs or any other governmental
officials, on the other hand, with respect to any Antitrust Filing or Other
Filing. Each of the Seller Entities and the Purchaser will cause all documents
that it is responsible for filing with the FTC or DOJ or other regulatory
authorities under this Section 4.7 to comply in all material respects with all
applicable requirements of law and the rules and regulations promulgated
thereunder. Whenever any event occurs which is required to be set forth in an
amendment or supplement to any Antitrust Filing or Other Filing, as the case may
be, each party will promptly inform the other of such occurrence and cooperate
in filing with the FTC or DOJ or their respective staffs or any other government
officials such amendment or supplement.

                  (c)      The Purchaser shall resolve any objections that may
be asserted with respect to the transactions contemplated hereby under the HSR
Act or any other antitrust or trade regulatory laws or regulations of any
administrative or other governmental body or agency.

                  ARTICLE V -- REPRESENTATIONS AND WARRANTIES
                             OF THE SELLER ENTITIES

                  As a material inducement to the Purchaser to enter into this
Agreement, the Parent and the Seller hereby jointly and severally represent and
warrant that:

         SECTION 5.1       ORGANIZATION AND CORPORATE POWER.

                  (a)      The "ORGANIZATION SCHEDULE" attached hereto contains
a complete and accurate list for each Acquired Company of its name, its
jurisdiction of incorporation or organization, other jurisdictions in which it
is authorized to do business, and its capitalization (including the identity of
each stockholder or equity holder and the number of shares or other equity
interests held by each). Except as set forth on the ORGANIZATION SCHEDULE, no
Acquired Company owns or holds the right to acquire any Capital Stock in any
other Person.

                  (b)      Each Acquired Company is a corporation duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of organization, with full organizational power

                                       22
<PAGE>

and authority to conduct its business as it is now being conducted, to own or
use the properties and assets that it purports to own or use, and to perform all
its obligations under the contracts to which it is party. Each Acquired Company
is duly qualified to do business as a foreign organization and is in good
standing under the laws of each state or other jurisdiction in which either the
ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification, except where the
failure to be so duly qualified or licensed and in good standing would not
individually or in the aggregate have a Material Adverse Effect.

                  (c)      The Seller has delivered to the Purchaser correct and
complete copies of the certificate of incorporation and by-laws (or equivalent
governing documents) for each Acquired Company, which documents reflect all
amendments made thereto at any time before the Closing Date. Correct and
complete copies of the minute books containing the records of meetings of the
stockholders and board of directors (or equivalent parties), the stock
certificate books, and the stock record books of the Acquired Companies have
been furnished to the Purchaser. No Acquired Company is in default under or in
violation of any provision of its certificate of incorporation or by-laws (or
equivalent governing documents).

                  (d)      Each Seller Entity is a corporation duly organized,
validly existing, and in good standing under the laws of such Seller Entity's
jurisdiction of incorporation.

         SECTION 5.2       AUTHORIZATION OF TRANSACTIONS. The Company and the
Seller Entities have all requisite corporate power and authority to execute and
deliver the Transaction Documents to which they are a party and to consummate
the transactions contemplated hereby and thereby. The board of directors of each
of the Company and the Seller Entities have duly approved the Transaction
Documents to which they are a party and have duly authorized the execution and
delivery of the Transaction Documents to which they are a party and the
consummation of the transactions contemplated thereby. No other corporate
proceedings on the part of the Company or the Seller Entities are necessary to
approve and authorize the execution and delivery of the Transaction Documents to
which they are a party and the consummation of the transactions contemplated
thereby. All Transaction Documents to which the Company or any Seller Entity is
a party have been duly executed and delivered by the Company or such Seller
Entity and constitute the valid and binding agreements of the Company or such
Seller Entity, enforceable against the Company or such Seller Entity in
accordance with their terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights, and as limited by general principles
of equity that restrict the availability of equitable remedies.

         SECTION 5.3       ABSENCE OF CONFLICTS. Except as set forth on the
"CONFLICTS SCHEDULE" or on the REQUIRED CONSENTS SCHEDULE attached hereto, the
execution, delivery, and performance of the Transaction Documents and the
consummation of the transactions contemplated thereby by the Company and the
Seller Entities do not and shall not (a) conflict with or result in any breach
of any of the terms, conditions, or provisions of, (b) constitute a material
default under, (c) result in a material violation of, (d) give any third party
the right to modify, terminate, or accelerate any obligation under, (e) result
in the creation of any Lien upon the Capital Stock or assets of any of the

                                       23
<PAGE>

Acquired Companies under, or (f) require any authorization, consent, approval,
exemption, or other action by or notice or declaration to, or filing with, any
court or administrative or other governmental body or agency (except in
connection with the HSR Act) under, the provisions of the articles of
incorporation, by-laws or similar organizational document of either of the
Seller Entities or any Acquired Company or any material indenture, mortgage,
lease, loan agreement, or other material agreement or instrument to which either
of the Seller Entities, any Acquired Company or, to the knowledge of the
Company, any Contracted Nonprofit is bound or affected, or any material law,
statute, rule, or regulation to which either of the Seller Entities, any
Acquired Company or, to the knowledge of the Company, any Contracted Nonprofit
is subject (except in connection with the HSR Act) or any material judgment,
order, or decree to which either of the Seller Entities, any Acquired Company
or, to the knowledge of the Company, any Contracted Nonprofit is subject.

         SECTION 5.4       CAPITALIZATION. The authorized Capital Stock of the
Company consists of 100 shares of common stock, $1.00 par value per share, of
which 100 shares are issued and outstanding, and all of which are owned by the
Seller. All of the issued and outstanding Capital Stock of the Acquired
Companies have been duly authorized, are validly issued, fully paid, and
nonassessable, and are held of record and owned beneficially by the Persons and
in the manner described on the ORGANIZATION SCHEDULE, free and clear of all
Liens, except for Liens arising under the Parent Credit Agreement which shall be
released at Closing, and are not subject to, nor were they issued in violation
of, any preemptive rights or rights of first refusal. Except as set forth on the
ORGANIZATION SCHEDULE, there are no outstanding or authorized options, warrants,
rights, contracts, calls, puts, rights to subscribe, conversion rights, or other
agreements or commitments to which any Acquired Company is a party or which are
binding upon any Acquired Company providing for the issuance, disposition, or
acquisition of any Acquired Company's Capital Stock (other than this Agreement).
Other than as set forth on the ORGANIZATION SCHEDULE, there are no outstanding
or authorized stock appreciation, phantom stock, or similar rights with respect
to any Acquired Company. There are no voting trusts, proxies, or any other
agreements or understandings with respect to the voting of the Capital Stock of
any Acquired Company. No Acquired Company is subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of any Acquired Company's Capital Stock.

         SECTION 5.5       FINANCIAL STATEMENTS AND RELATED MATTERS.

                  (a)      FINANCIAL STATEMENTS. Attached hereto as the
"FINANCIAL STATEMENTS SCHEDULE" are the following financial statements: (i) the
unaudited consolidated balance sheets of the Company as of September 30, 1999
and 2000, and the related statements of income and cash flows (or the
equivalent) for the respective twelve-month periods then ended; and (ii) the
unaudited consolidated balance sheet of the Company as of October 31, 2000 (the
"LATEST BALANCE SHEET"), and the related statements of income and cash flows (or
the equivalent) for the one-month period then ended. Each of the foregoing
financial statements (the "FINANCIAL STATEMENTS") presents fairly the Company's
consolidated financial condition and results of operations and cash flows as of
the times and for the periods referred to therein, and has been prepared in
accordance with GAAP, subject in the case of unaudited consolidated financial
statements to the absence of footnote disclosure.

                                       24
<PAGE>

                  (b)      RECEIVABLES. All accounts receivable of the Acquired
Companies that are reflected on the Latest Balance Sheet or on the accounting
records of the Acquired Companies as of the Closing Date (collectively, the
"ACCOUNTS RECEIVABLE") represent or will represent valid obligations arising
from bona fide sales actually made or services actually performed in the
Ordinary Course of Business with unaffiliated third parties, and the goods and
services involved have been sold, delivered and performed to the account
obligors, and no further goods are required to be provided and no further
services are required to be rendered in order to complete the sales and fully
render the services and to entitle the Acquired Companies to collect such
accounts receivable in full. Such accounts receivable have not been assigned or
pledged to any other Person. The reserves for Accounts Receivable shown on the
Latest Balance Sheet are adequate in the Company's reasonable judgment and have
been calculated consistently in accordance with ordinary business practices. The
reserves for Accounts Receivable on the accounting records of the Acquired
Companies as of the Closing Date will be calculated consistent with ordinary and
prudent business practices.

         SECTION 5.6       ABSENCE OF UNDISCLOSED LIABILITIES. To the Seller's
knowledge, no Acquired Company has any material obligations or liabilities
(whether accrued, absolute, contingent, unliquidated, or otherwise, whether due
or to become due, and regardless of when asserted) arising out of or relating to
the operation of the Acquired Companies at or before the Closing, except (i)
obligations under contracts or commitments described on the CONTRACTS SCHEDULE
attached hereto or under contracts and commitments which are not required to be
disclosed thereon, (ii) liabilities reflected on the liabilities side of the
Latest Balance Sheet, (iii) liabilities which have arisen after the date of the
Latest Balance Sheet in the Ordinary Course of Business or otherwise in
accordance with the terms and conditions of this Agreement, and (iv) liabilities
disclosed as such elsewhere in this Agreement or the Schedules hereto.

         SECTION 5.7       ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth
on the attached "DEVELOPMENTS SCHEDULE" and except as expressly contemplated by
this Agreement, since September 30, 2000, the Acquired Companies, individually
or collectively, have not:

                  (a)      suffered any change that has had or could reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
or suffered any theft, damage, destruction, or casualty loss in excess of
$100,000, to their assets, whether or not covered by insurance, or suffered any
substantial destruction of books and records;

                  (b)      subjected any portion of their properties or assets
to any material Lien (other than Permitted Liens);

                  (c)      except in the Ordinary Course of Business, sold,
leased, assigned, or transferred (including, without limitation, transfers to
any Seller Entity or any Insider) a portion of their tangible assets, or
canceled without fair consideration any material debts or claims owing to or
held by them;

                  (d)      sold, assigned, licensed, or transferred (including,
without limitation, transfers to any Seller Entity or any Insider) any material
Proprietary Rights owned by, issued to, or licensed

                                       25
<PAGE>

to any Acquired Company other than in the Ordinary Course of Business or
disclosed any material confidential information (other than pursuant to
agreements requiring the disclosure to maintain the confidentiality of and
preserving all rights of any Acquired Company in such confidential information)
or received any material confidential information of any third party in
violation of any obligation of confidentiality;

                  (e)      suffered any extraordinary losses or waived any
rights of material value;

                  (f)      received any material inquiries, information
requests, notices of violation or complaints from any payor source, either
governmental or non-governmental, or any foreign, federal, state or local
governmental or regulatory authority;

                  (g)      entered into, amended, or terminated any material
lease, contract, agreement, or commitment, or taken any other action or entered
into any other transaction other than in the Ordinary Course of Business;

                  (h)      entered into any other material transaction, or
materially changed any business practice;

                  (i)      paid or increased any bonuses, salaries, or other
compensation to any stockholder, director, officer, or (except in the Ordinary
Course of Business) employee or entered into any employment, severance, change
in control, or similar contract or agreement with any director, officer, or
employee;

                  (j)      adopted, or materially increased the payments to or
benefits under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with any
employees of any Acquired Company;

                  (k)      conducted their cash management customs and practices
other than in the Ordinary Course of Business (including, without limitation,
with respect to collection of accounts receivable, purchases of supplies,
repairs and maintenance, payment of accounts payable and accrued expenses,
levels of capital expenditures and operation of cash management practices
generally);

                  (l)      made any capital expenditures or commitments for
capital expenditures except in the Ordinary Course of Business or failed to make
capital expenditures at levels at least comparable to and not materially
different from those previously planned to be made;

                  (m)      declared, paid, made, or otherwise effectuated any
dividends or distributions, redemptions, equity repurchases, or other
transactions involving any Acquired Company's Capital Stock or equity securities
or rights to control the same;

                  (n)     made a material change in their accounting methods; or

                                       26
<PAGE>

                  (o)     made or committed to make any payments or other
transfers in connection with, or in contemplation of, the transactions
contemplated by this Agreement or the other Transaction Documents.

         SECTION 5.8       REAL PROPERTY.

                  (a)      No Acquired Company owns any real property or is a
party to any agreement (whether oral or written) to purchase any real property.

                  (b)      The "REAL PROPERTY SCHEDULE" attached hereto sets
forth the address of each Leased Real Property and a list of all Real Property
Leases (including, without limitation, all amendments, extensions, renewals,
guaranties and other agreements with respect thereto) in each case for each
Leased Real Property which involves annual rent of $150,000 or more. The Seller
has delivered to the Purchaser a true and complete copy of each written Real
Property Lease, and in the case of any oral Real Property Leases, a written
summary of the basic terms thereof. Except as set forth on the REAL PROPERTY
SCHEDULE, with respect to each of the Real Property Leases: (i) the Real
Property Lease is in full force and effect; (ii) except as set forth in the REAL
PROPERTY SCHEDULE, the acquisition of stock and change in control of the
Acquired Companies (as the case may be) as contemplated under this Agreement
will not result in a breach of or default under the Real Property Lease or
otherwise cause the Real Property Lease to cease to be in full force and effect
on identical terms following the Closing; (iii) no Acquired Company nor, to the
Company's knowledge, any other party to the Real Property Lease is in material
breach or default under the Real Property Lease, and to the Company's knowledge,
no event has occurred or circumstance exists which, with the delivery of notice,
passage of time or both, would constitute such a material breach or default or
permit the termination, modification or acceleration of rent under the Real
Property Lease; (iv) no party to the Real Property Lease has repudiated any term
thereof, and there are no material disputes, oral agreements or forbearance
programs in effect with respect to the Real Property Lease; and (v) no Acquired
Company has assigned, subleased, mortgaged, deeded in trust or otherwise
transferred or encumbered the Real Property Lease or any interest therein,
except for Permitted Liens.

                  (c)      Subject to the terms of the Real Property Leases, the
Acquired Companies have good title to the Leasehold Improvements, which shall be
free and clear of all Liens as of the Closing Date, except Permitted Liens.

                  (d)      The Leased Real Property and Leasehold Improvements
(collectively, the "REAL PROPERTY") include all of the real property used by the
Acquired Companies in the operation of their businesses.

         SECTION 5.9       ASSETS.

                  (a)      Except as set forth on the "ASSETS SCHEDULE"
attached hereto, each Acquired Company owns good and marketable title to, or a
valid leasehold interest in, or license of, or right to use free and clear of
all Liens other than Permitted Liens, all of the properties and assets (whether
real, personal, or mixed and whether tangible or intangible) which are shown on
the Latest Balance

                                       27
<PAGE>

Sheet, or which are acquired thereafter, or which are located on the real
property identified on the REAL PROPERTY SCHEDULE, except for personal property
and assets sold since the date of the Latest Balance Sheet in the Ordinary
Course of Business. Except as set forth on the ASSETS SCHEDULE, neither the
Seller Entities nor their Subsidiaries (other than the Acquired Companies) own
any properties or assets (whether real, personal, or mixed and whether tangible
or intangible) which are used in the business of any of the Acquired Companies.

                  (b)      The buildings, machinery, equipment, personal
properties, vehicles, and other tangible assets of the Acquired Companies
located upon or used in connection with the Real Property are operated in
conformity in all material respects with all Applicable Laws, and are usable in
the Ordinary Course of Business. The Acquired Companies own or lease under valid
leases all buildings, machinery, equipment, and other tangible assets necessary
for the conduct of their business as currently conducted.

         SECTION 5.10      TAXES.

                  (a)      Each of the Acquired Companies has timely filed all
Tax Returns required to be filed by it, and each such Tax Return has been
prepared in compliance with all Applicable Laws and is true and correct in all
respects. All Taxes payable by the Acquired Companies (whether or not shown on
any Tax Return) have been paid, and each of the Acquired Companies has properly
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any shareholder, employee, creditor,
independent contractor, or other third party and all Forms W-2 and 1099 required
with respect thereto have been properly completed and timely filed.

                  (b)      Except as set forth on the "TAXES SCHEDULE" attached
hereto:

                           (i)      No action, suit, proceeding or audit or any
         written notice of inquiry of any of the foregoing is pending against
         or with respect to the Acquired Companies regarding Taxes, and no
         action, suit, proceeding or audit has, to the Acquired Companies'
         knowledge, been threatened against or with respect to the Acquired
         Companies regarding Taxes;

                           (ii)     None of the Acquired Companies is a party to
         or bound by any Tax allocation or Tax sharing agreement with any
         Person other than the Acquired Companies, and none of the Acquired
         Companies has any contractual obligation to indemnify any other Person
         with respect to Taxes;

                           (iii)    To the Acquired Companies' knowledge, none
         of the Acquired Companies (A) has been a member of an Affiliated Group
         filing a consolidated federal income Tax Return (other than a group
         the common parent of which was the Parent) or (B) has any liability
         for the Taxes of any Person (other than any of the Acquired Companies
         and the Parent Tax Group) under Treas. Reg. Section 1.1502-6 (or any
         similar provision of state, local, or foreign law), as a transferee or
         successor, by contract, or otherwise;

                                       28
<PAGE>

                           (iv)     Since January 27, 1995, no written claim has
         ever been made by a taxing authority in a jurisdiction where any of
         the Acquired Companies does not file Tax Returns that such Person is
         or may be subject to taxation by such jurisdiction;

                           (v)      Each of the Acquired Companies has provided
         to the Purchaser true, correct and complete copies of all federal,
         state and local income and franchise Tax Returns, examination reports,
         and statements of deficiencies assessed against or agreed to by any of
         the Acquired Companies for the taxable periods ending September 30,
         1995, September 30, 1996, September 30, 1997, September 30, 1998 and
         September 30, 1999;

                           (vi)     The statutory period for assessment of Taxes
         for taxable periods of the Acquired Companies ending on or before
         January 27, 1995 has expired. With respect to taxable periods of the
         Acquired Companies ending after January 27, 1995, none of the Acquired
         Companies has consented to extend the time, or is the beneficiary of
         any extension of time, in which any Tax may be assessed or collected
         by any taxing authority;

                           (vii)    None of the Acquired Companies will be
         required to include any item of income in, or exclude any item of
         deduction from, taxable income for any taxable period (or portion
         thereof) ending after the Closing Date as a result of any (A) change
         in method of accounting for a taxable period ending on or prior to the
         Closing Date under Code Section 481(c) (or any corresponding or
         similar provision of state, local or foreign income Tax law); (B)
         "closing agreement" as described in Code Section 7121 (or any
         corresponding or similar provision of state, local or foreign income
         Tax law); (C) installment sale made prior to the Closing Date; or (D)
         deferred intercompany gain described in Treasury Regulation Section
         1.1502-13 or any excess loss account described in Treasury Regulation
         Sections 1.1502-19 and 1.1502-32 (or any corresponding or similar
         provision of federal, state, local or foreign law) arising on or
         before the Closing Date;

                           (viii)   None of the Acquired Companies has been a
         United States real property holding corporation within the meaning of
         Code Section 897(c)(2) during the applicable period specified in Code
         Section 897(c)(1)(A)(ii);

                           (ix)     None of the Acquired Companies has filed a
         consent under Code Section 341(f) (or any similar provision of state,
         local or foreign law); and

                           (x)      None of the Acquired Companies is a party to
         any agreement, contract, arrangement or plan that has resulted or
         would result, separately or in the aggregate, in the payment of any
         "excess parachute payment" within the meaning of Code Section 280G (or
         any similar provision of state, local or foreign law).

                  (c)      As of the Closing Date, none of the Acquired
Companies will be a party to or bound by any Tax allocation or Tax sharing
agreement with any Person other than the Acquired

                                       29
<PAGE>

Companies, and none of the Acquired Companies will have any contractual
obligation to indemnify any other Person with respect to Taxes.

                  (d)      The TAXES SCHEDULE contains a list of states,
territories and jurisdictions (whether foreign or domestic) in which any of
Acquired Companies is required to file material Tax Returns relating to income
Taxes.

         SECTION 5.11      CONTRACTS AND COMMITMENTS.

                  (a)      Except as expressly contemplated by this Agreement
or as set forth on the attached "CONTRACTS SCHEDULE," no Acquired Company is a
party to or bound by any written or oral:

                           (i)      pension, profit sharing, stock option,
         employee stock purchase or other plan or arrangement providing for
         deferred or other compensation to employees or any other employee
         benefit plan or arrangement, or any collective bargaining agreement or
         any other contract with any labor union, or severance agreements,
         programs, policies or arrangements other than any such arrangements as
         are set forth in either the EMPLOYEES SCHEDULE or the BENEFIT PLANS
         SCHEDULE;

                           (ii)     contract with any Affiliate or contract
         with any Contracted Nonprofit;

                           (iii)    contract for the employment of any officer,
         individual employee or other Person on a full-time, part-time,
         consulting or other basis providing annual compensation in excess of
         $50,000, other than at-will contracts without severance obligations,
         or contract relating to loans to officers, directors or Affiliates;

                           (iv)     contract under which the Acquired Companies
         have advanced or loaned any other Person amounts in the aggregate
         exceeding $25,000, other than trade credit extended in the Ordinary
         Course of Business;

                           (v)      agreement or indenture relating to borrowed
         money or other Indebtedness or the mortgaging, pledging or otherwise
         placing a Lien on any asset or group of assets of the Acquired
         Companies other than Permitted Liens;

                           (vi)     guaranty of any obligation;

                           (vii)    lease or agreement under which any Acquired
         Company is the lessee of or holds or operates any property, real or
         personal, owned by any other party, except for any lease or agreement
         for real or personal property under which the aggregate annual
         payments do not exceed $150,000;

                           (viii)   lease or agreement under which any Acquired
         Company is the lessor of or permits any third party to hold or operate
         any property, real or personal, owned or controlled by any Acquired
         Company;

                                       30
<PAGE>

                           (ix)     contract or group of related contracts
         (excluding purchase orders issued or received in the Ordinary Course
         of Business) with the same party or group of affiliated parties the
         performance of which involves consideration in excess of $1,000,000;

                           (x)      assignment, license, indemnification, joint
         ownership or other agreement with respect to the intangible property
         (including, without limitation, any Proprietary Rights) of material
         value of any Acquired Company or of any third party;

                           (xi)     distribution or franchise agreement;

                           (xii)    contract or agreement prohibiting it from
         freely engaging in any business or competing anywhere in the world;

                           (xiii)   agreement relating to the subcontracting
         (other than to mentors) to another Person of any of the Acquired
         Companies' obligations under any agreement listed on the CONTRACTS
         SCHEDULE; or

                           (xiv)    any other agreement which is material to its
         operations and business prospects or involves a consideration in
         excess of $1,000,000 annually.

                  (b)      To the Company's knowledge, except as expressly
contemplated by this Agreement or as set forth on the CONTRACTS SCHEDULE, no
Contracted Nonprofit is a party to or bound by any written or oral contract
relating to the provision of services to state, county, local or other
governmental or quasi-governmental bodies (a "GOVERNMENT CONTRACT") for which a
Contracted Nonprofit has also contracted with an Acquired Company to provide
management or other services in support of such Government Contract. (1)

                  (c)      All of the contracts, agreements and instruments set
forth on the CONTRACTS SCHEDULE, as well as all contracts and agreements (or
purported contracts and agreements) involving consideration in excess of
$250,000 annually (collectively, "OTHER CONTRACTS") are valid, binding and
enforceable against the Acquired Companies (or, if applicable, and to the
knowledge of the Company, a Contracted Nonprofit) and, to the knowledge of the
Company, the other parties thereto, in accordance with their respective terms,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights and as limited by general principles of equity that restrict
the availability of equitable remedies. Each Acquired Company (and, if
applicable, to the Company's knowledge, each Contracted Nonprofit) has performed
all material obligations required to be performed by it and is not in material
default under or in breach of nor in receipt of any claim of default or breach
under any such contract or agreement (or purported contract or agreement) or
instrument. No event has occurred which with the passage of time or the giving
of notice or both would result in a material default, breach or event of
noncompliance by any of the Acquired Companies or, to the knowledge of the
Company, any other party under any such contract or agreement (or purported
contract or agreement) or instrument. Except as set forth on the CONTRACTS
SCHEDULE, with respect to each

                                       31
<PAGE>

contract, agreement, or instrument set forth on the Contracts Schedule as well
as each Other Contract: (x) the acquisition of the stock and change in control
of the Acquired Companies (as the case may be) as contemplated under this
Agreement will not result in a breach of or default under any such contract,
agreement, or instrument, or otherwise cause such contract, agreement, or
instrument to cease to be legal, valid, binding, enforceable and in full force
and effect on identical terms following the Closing; (y) no Seller Entity or
Acquired Company has received written notice of the intention of any party to
such contract, agreement, or instrument to cancel, terminate or renegotiate in
any material respect any such contract, agreement or instrument; and (z) to the
knowledge of the Company, there has not been any breach or anticipated breach by
any other party to such contract, agreement or instrument.

                  (d)      The Seller has provided the Purchaser with a true
and correct copy of all written contracts which are disclosed on the CONTRACTS
SCHEDULE (other than contracts for which an Acquired Company is not a party or
bound), in each case together with all amendments, waivers, or other changes
thereto (all of which are disclosed on the CONTRACTS SCHEDULE). The CONTRACTS
SCHEDULE contains an accurate and complete description of all material terms of
all oral contracts referred to therein.

         SECTION 5.12      PROPRIETARY RIGHTS.

                  (a)      The "PROPRIETARY RIGHTS SCHEDULE" attached hereto
contains a complete and accurate list of all registered Proprietary Rights owned
or used by the Acquired Companies and all applications for the registration of
other Proprietary Rights filed by the Acquired Companies. The PROPRIETARY RIGHTS
SCHEDULE also contains a complete and accurate list of all material unregistered
(i) trade names, trademarks, service marks, copyrights, proprietary information
systems and proprietary databases owned by the Acquired Companies (collectively,
the "UNREGISTERED PROPRIETARY RIGHTS"); and (ii) computer software owned and/or
used by the Acquired Companies other than commercially available "off-the-shelf"
software with a license fee of less than $50,000 in the aggregate for all copies
of a particular software application.

                  (b)      Except as set forth on the PROPRIETARY RIGHTS
SCHEDULE, (i) each Acquired Company owns and possesses free and clear of all
Liens (except Permitted Liens), all right, title, and interest in and to, or has
the right to use pursuant to a valid and enforceable license, the Proprietary
Rights used in or necessary for the operation of such Acquired Company's
business as currently conducted; (ii) no Acquired Company has received any
notice of invalidity, infringement, or misappropriation from any third party
with respect to any Proprietary Rights of any Acquired Company or of any third
party; (iii) to the knowledge of the Company, no Acquired Company has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with any
Proprietary Rights of any third parties; and (iv) to the knowledge of the
Company, no third party has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Proprietary Rights of any Acquired
Company.

         SECTION 5.13      LITIGATION; PROCEEDINGS. Except as set forth on the
"LITIGATION SCHEDULE" attached hereto, there are no actions, suits, proceedings,
orders, judgments, decrees, or, to the

                                       32
<PAGE>

knowledge of the Company, investigations pending or threatened against any
Acquired Company (or against any of their respective officers, directors,
agents, or employees (in each case, in their capacity as such)) at law or in
equity, or before or by any federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign. No Acquired Company is subject to any outstanding order, judgment, or
decree issued by any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or any arbitrator. The Litigation
Schedule sets forth accurately and reasonably completely the following
information with respect to each matter listed thereon: the name of and parties
to the proceeding, the date of the commencement of the proceeding, the status of
the proceeding (e.g., in settlement talks, discovery, trial, appeal, etc.), a
brief statement of the nature of the claim, the amount being claimed and/or the
nature of other relief sought, the amount of reserves taken, if any, on the
Latest Balance Sheet in respect of such proceeding. There is no claim, action,
suit, proceeding or, to the knowledge of the Seller Entities, governmental
investigation pending or threatened against the Seller Entities, by or before
any court, governmental or regulatory authority or by any third party which
challenges the validity of this Agreement or which would be reasonably likely to
adversely affect or restrict the Seller Entities' ability to consummate the
transactions contemplated hereby.

         SECTION 5.14      BROKERAGE. Except as set forth on the "BROKERAGE
SCHEDULE" attached hereto, there are no claims for brokerage commissions,
finders' fees, or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of any Acquired Company or the Seller Entities.

         SECTION 5.15      GOVERNMENTAL LICENSES AND PERMITS. The "LICENSE
SCHEDULE" attached hereto contains a complete listing and summary description of
all material Licenses owned or possessed by any Acquired Company or used by any
Acquired Company in the conduct of its business. Except as indicated on the
LICENSE SCHEDULE, each Acquired Company owns or possesses such right in and to
all Licenses which are necessary to conduct such Acquired Company's business as
presently conducted and shall use its reasonable efforts to maintain all such
Licenses. No loss or expiration of any License is pending or, to the Company's
knowledge, threatened or reasonably foreseeable (including, without limitation,
as a result of the transactions contemplated hereby except as noted on the
LICENSE SCHEDULE) other than expiration in accordance with the terms thereof.
The Acquired Companies have not received any notice of any alleged violation of
any License. To the knowledge of the Company, each Contracted Nonprofit has all
material Licenses required to conduct its business and operations as presently
conducted.

         SECTION 5.16      EMPLOYEES. Except as set forth on the "EMPLOYEES
SCHEDULE" attached hereto: (a) to the knowledge of the Company, no key executive
employee and no group of employees, mentors or independent contractors of any
Acquired Company has given notice that they intend to terminate his, her, or
their employment or relationship with any Acquired Company; (b) each Acquired
Company has complied in all material respects with all Applicable Laws relating
to the employment of personnel and labor; (c) no Acquired Company is a party to
or bound by any collective bargaining agreement, nor has any Acquired Company
experienced any material strikes, grievances, unfair labor practices claims, or
other material employee or labor disputes in the last five years; (d) no
Acquired Company has engaged in any unfair labor practice; and (e) the Company
has

                                       33
<PAGE>

no knowledge of any organizational effort presently being made or threatened by
or on behalf of any labor union with respect to employees of any Acquired
Company.

         SECTION 5.17      EMPLOYEE BENEFIT PLANS.

                  (a)      Other than benefit plans for which the Acquired
Companies have been indemnified pursuant to Section 8.2(a)(vi), the "BENEFIT
PLANS SCHEDULE" attached hereto lists all bonus, deferred or incentive
compensation, profit sharing, retirement, vacation, sick leave, hospitalization
or severance plans, "employee benefit plans" (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) and
material fringe benefit plans sponsored, maintained or contributed to by any
Acquired Company for the purpose of providing benefits to the employees of the
Acquired Companies or with respect to which any Acquired Company has any
liability (the "PLANS"). The BENEFIT PLANS SCHEDULE sets forth accurately a
summary description of all of the Acquired Companies' bonus plans and all
bonuses (whether performance, annual, stay, retention or otherwise) and all
deferred compensation and similar items (whether declared, undeclared or
accrued) owing to any employee of, or independent contractor to, any Acquired
Company (the "BONUSES"). The BENEFIT PLANS SCHEDULE sets forth, with respect to
each type of Bonus and with respect to each individual beneficiary thereof, the
following information: the amount accrued, the amount declared, and the obligor
thereon; provided, however, that to the extent that a bonus amount cannot be
reasonably estimated, no amount declared with respect to such bonus will be
listed on the BENEFIT PLANS SCHEDULE. None of the Plans are subject to Title IV
of ERISA nor provide for medical or life insurance benefits to retired or former
employees of any Acquired Company (other than as required under Code Section
4980B, or similar state law). Each Acquired Company is not a participating or
contributing employer in any "multiemployer plan" (as defined in Section 3(37)
of ERISA) with respect to employees of the Acquired Companies nor has any
Acquired Company have any actual or potential withdrawal liability with respect
to any multiemployer plan or any liability in connection with the termination or
reorganization of any multiemployer plan.

                  (b)      Except as set forth in the BENEFIT PLANS SCHEDULE,
each such Plan is in all material respects in compliance, and has been
administered in all material respects in accordance, with its terms and the
applicable provisions of ERISA and the Code and all other Applicable Laws,
including, but not limited to, medical continuation under Code Section 4980B.
Except as set forth in the BENEFIT PLANS SCHEDULE, no Acquired Company has (i)
engaged in any transaction prohibited by ERISA or the Code; (ii) breached any
fiduciary duty owed by it with respect to the Plans described above; or (iii)
failed to file and distribute timely and properly all reports and information
required to be filed or distributed in accordance with ERISA or the Code.

                  (c)      Without material exception, all contributions,
premiums or payments under or with respect to each Plan which are due on or
before the Closing Date have been paid, or to the extent such payments are not
yet due, have been accrued to the extent such accrual is required.

                  (d)      Except as set forth in the BENEFIT PLANS SCHEDULE,
each Plan which is intended to be qualified under section 401(a) of the Code (i)
has been amended to reflect all requirements of

                                       34
<PAGE>

the Tax Reform Act of 1986 and all subsequent legislation which is required to
be adopted prior to the end of the applicable remedial amendment period and (ii)
has received from the Internal Revenue Service a favorable determination letter
which considers the terms of the Plan as amended for such changes in law.

                  (e)      Except as set forth in the BENEFIT PLANS SCHEDULE
and except with respect to employer contributions obligations under the Plans,
each Acquired Company has not incurred and has no reason to expect that it will
incur, any liability to the Pension Benefit Guaranty Corporation (other than
non-delinquent premium payments) or otherwise under Title IV of ERISA (including
any withdrawal liability) or under the Code with respect to any employee pension
benefit plan that any Acquired Company or any other entity, that together with
any Acquired Company is treated as a single employer under Section 414 of the
Code, maintains or ever has maintained or to which any of them contributes, ever
has contributed, or ever has been required to contribute.

                  (f)      Each individual who has received compensation for
the performance of services on behalf of any Acquired Company has been properly
classified as an employee or independent contractor in accordance with
Applicable Laws.

         SECTION 5.18      INSURANCE. The attached "INSURANCE SCHEDULE"
contains a description of insurance coverages presently in force for the benefit
of the Acquired Companies with respect to their properties, assets and
businesses (specifying, with respect to each policy, the insurer, amount of
coverage, type of insurance, retroactive date, expiration date, risks insured
and any pending claims thereunder) and a list of all claims made under any
insurance policies and binders since January 1, 1998 (specifying the nature and
amount of the claim, current status and resolution, if any), and each such
policy will be in full force and effect as of the Closing. No Acquired Company
is in default in any material respect with respect to its obligations under any
insurance policy maintained by it, and no Acquired Company has been denied
insurance coverage. Except as set forth on the INSURANCE SCHEDULE, no Acquired
Company has any self-insurance or co-insurance programs, and the reserves set
forth on its Latest Balance Sheet are adequate to cover all anticipated
liabilities with respect to any such self-insurance or co-insurance programs.
Except as set forth on the Insurance Schedule, there are no outstanding unpaid
premiums or claims, and there are no provisions for retroactive or retrospective
premium adjustments. Except as set forth on the INSURANCE SCHEDULE, no notice of
cancellation or nonrenewal with respect to, or disallowance of any claim under,
any such policy or binder has been received by the Acquired Companies. The
INSURANCE SCHEDULE also contains a description of all outstanding bonds and
other surety arrangements issued or entered into in connection with the
businesses of the Acquired Companies.

         SECTION 5.19      OFFICERS AND DIRECTORS; BANK ACCOUNTS. The
"OFFICERS, DIRECTORS, AND BANK ACCOUNTS SCHEDULE" attached hereto lists all
officers and directors of each Acquired Company, and all bank accounts, safety
deposit boxes, and lock boxes (designating each authorized signatory with
respect thereto) for each Acquired Company.

         SECTION 5.20      AFFILIATE TRANSACTIONS. Except as disclosed on the
"AFFILIATED TRANSACTIONS SCHEDULE" attached hereto, no Insider is a party to any
material agreement, contract, commitment,

                                       35
<PAGE>

or transaction with any Acquired Company or which is pertaining to the business
of any Acquired Company or has any interest in any property, real or personal or
mixed, tangible or intangible, used in or pertaining to the business of any
Acquired Company.

         SECTION 5.21      COMPLIANCE WITH LAWS. Except as set forth on the
Schedules to this Agreement, each Acquired Company and, to the Company's
knowledge, each Contracted Nonprofit, and each of their respective officers,
directors, agents (in their capacity as such), and employees have complied in
all material respects with and are in material compliance with all Applicable
Laws which are applicable to the business, business practices, or any owned or
leased properties of any Acquired Company and to which any Acquired Company or
Contracted Nonprofit may be subject, and, except as set forth on the Schedules
to this Agreement, no material claims have been filed against any Acquired
Company or, to the Company's knowledge, Contracted Nonprofit alleging a
violation of any such laws or regulations, and none of the Acquired Company, the
Seller Entities or, to the Company's knowledge, the Contracted Nonprofits has
received notice of any such violations.

         SECTION 5.22      HEALTH CARE MATTERS. Except as set forth on the
"HEALTH CARE MATTERS SCHEDULE" attached hereto:

                  (a)      No action has been taken or recommended by any
governmental or regulatory official, body or authority, either to revoke,
withdraw or suspend any License to operate the Acquired Companies or to
terminate or decertify any participation of any of the Acquired Companies in the
Medicare, Medicaid or other state or federal programs, nor is there any decision
not to renew any provider agreement related to the Acquired Companies. To the
extent applicable to their respective businesses, the Acquired Companies have
met and do meet, without material exception, the conditions for participation in
the Medicare, Medicaid and other state and federal programs, and there is no
pending or, to the Company's knowledge, threatened proceeding or investigation
under such programs involving the Acquired Companies.

                  (b)      Each of the licensed health care providers employed
by the Acquired Companies and, to the knowledge of the Company, each of the
licensed health care providers and mentors retained by the Acquired Companies
are duly licensed to the extent required to practice their respective
professions in each of the jurisdictions in which he or she provides services.

                  (c)      The Acquired Companies have not claimed or received
reimbursements from the Medicare, Medicaid, any state or federal program or any
other third-party payor materially in excess of the amounts permitted by law,
except as and to the extent that liability for such overpayment has already been
satisfied or for which adequate provision has been made in the financial
statements.

                  (d)      None of the Acquired Companies nor any employee or,
to the Company's knowledge, agent of the Acquired Companies have engaged in any
activities which are prohibited under Federal Medicare and Medicaid statutes
(including without limitation 42 U.S.C. Sections 1320a-7, 1320a-7a, 1320a-7b,
1395nn and 1396b), the federal Civil False Claims Act (31 U.S.C. Section 3729 ET
SEQ.), the Federal TRICARE statute, Title IV-E of the Social Security Act
(including, without

                                       36
<PAGE>

limitation, 42 U.S.C. 670 ET SEQ.) or the regulations promulgated pursuant to
such statutes or related state or local statutes or regulations.

                  (e)      All cost reports ("COST REPORTS") required to be
filed by the Acquired Companies under the Social Security Act or any other
applicable governmental laws or regulations or private provider rules have been
prepared and filed in accordance in all material respects with applicable laws,
rules and regulations. Except for disputes between any of the Acquired Companies
and the intermediary which concern the payment of an individual claim (as
opposed to such disputes concerning the right of the Acquired Companies to
receive Medicare or Medicaid reimbursement generally or to participate in the
Medicare or Medicaid programs), there is no dispute between any of the Acquired
Companies and any governmental authorities or the Medicare fiscal intermediary
regarding such cost reports other than with respect to adjustments thereto made
in the ordinary course of business which do not involve amounts in excess of
$150,000 in the aggregate. None of the Acquired Companies is subject to any
pending but unassessed Medicare or Medicaid claim payment adjustments, except to
the extent the Acquired Companies has established adequate reserves for such
adjustments.

                  (f)      None of the Acquired Companies has any outstanding
obligation to repay any loans, grants, or loan guarantees, or to provide
uncompensated care in consideration thereof, pursuant to the Hill-Burton Act (42
U.S.C. Section 291a ET SEQ.).

                  (g)      The Acquired Companies and their respective
stockholders, employees, agents or persons who provide professional services
under agreements with the Acquired Companies have not engaged in any
activities in connection with the business of any Acquired Company which are
prohibited under the Federal Controlled Substances Act, 21 U.S.C. Section 801
ET SEQ. or the regulations promulgated pursuant to such statute or any
related state or local statutes or regulations concerning the dispensing and
sale of controlled substances.

         SECTION 5.23      ENVIRONMENTAL MATTERS.  Except as set forth on the
"ENVIRONMENTAL SCHEDULE" attached hereto:

                  (a)      Each Acquired Company has complied in all material
respects with and is currently in compliance in all material respects with all
Environmental and Safety Requirements, and neither any Acquired Company nor the
Seller Entities has received any oral or written notice, report, or information
regarding any liabilities (whether accrued, absolute, contingent, unliquidated,
or otherwise) or any corrective, investigatory, or remedial obligations arising
under Environmental and Safety Requirements which relate to any Acquired Company
or any of their respective properties or facilities.

                  (b)      Without limiting the generality of the foregoing,
each Acquired Company has obtained and complied in all material respects with,
and is currently in compliance in all material respects with, all permits,
licenses, and other authorizations that may be required pursuant to any
Environmental and Safety Requirements for the occupancy of such Acquired
Company's respective properties or facilities or the operation of such Acquired
Company's respective businesses. A list

                                       37
<PAGE>

of all such permits, licenses, and other authorizations which are material to
any Acquired Company is set forth on the ENVIRONMENTAL SCHEDULE.

                  (c)      Neither this Agreement, nor the other Transaction
Documents, nor the consummation of the transactions contemplated hereby and
thereby shall impose any obligations on any Acquired Company or otherwise for
site investigation or cleanup, or notification to or consent of any government
agencies or third parties under any Environmental and Safety Requirements
(including, without limitation, any so called "transaction-triggered" or
"responsible property transfer" laws and regulations).

                  (d)      None of the following exists at any property or
facility owned, occupied, or operated by any Acquired Company:
asbestos-containing material in any form or condition, other than in amounts
that would not be harmful to persons and would not under law be required to be
removed.

                  (e)      No Acquired Company has ever treated, stored,
disposed of, arranged for or permitted the disposal of, transported, handled, or
Released (as defined in CERCLA) any substance (including, without limitation,
any hazardous substance) except to the extent in compliance with Environmental
and Safety Requirements or owned, occupied, or operated any facility or
property, so as to give rise to liabilities of any Acquired Company for response
costs, natural resource damages, or attorneys' fees pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA") or any other Environmental and Safety Requirements.

                  (f)      Without limiting the generality of the foregoing, no
facts, events, or conditions relating to the past or present properties,
facilities, or operations of any Acquired Company shall give rise to any
material corrective, investigatory, or remedial obligations pursuant to
Environmental and Safety Requirements, or give rise to any other material
liabilities (whether accrued, absolute, contingent, unliquidated, or otherwise)
pursuant to Environmental and Safety Requirements, including, without
limitation, those liabilities relating to onsite or offsite Releases or
threatened Releases of hazardous materials, substances or wastes, personal
injury, property damage, or natural resources damage.

                  (g)      No Acquired Company has, either expressly or by
operation of law, assumed or undertaken any liability or corrective
investigatory or remedial obligation of any other Person relating to any
Environmental and Safety Requirements.

         SECTION 5.24      EARNOUT OBLIGATIONS. The "EARNOUT SCHEDULE" sets
forth, accurately and completely, the following information with respect to the
businesses acquired by the Acquired Companies prior to the Closing Date (the
"PREVIOUS ACQUISITIONS"):

                  (a)      the amount of the Earnout Obligations for each
Previous Acquisition;

                                       38
<PAGE>

                  (b)      the title, parties and date of the agreement
pursuant to which the Previous Acquisition was acquired by the Acquired
Companies including any material ancillary agreements related thereto and any
amendments thereto; and

                  (c)      the aggregate payments made by the Acquired
Companies in respect of such Earnout Obligations and the maximum remaining
liability after the date hereof (and the date(s) on which payment of such
liability would be due) with respect to such Previous Acquisition for the
deferred purchase price of stock, assets or other property acquired in such
acquisition, whether contingent or otherwise.

        SECTION 5.25       ABSENCE OF CERTAIN BUSINESS PRACTICES. The Acquired
Companies have not directly or indirectly given or agreed to give any gift or
similar benefit to any customer employee or representative, government employee,
or other Person who was or is in a possible position to help or hinder the
Acquired Companies, which gift or benefit: (i) could reasonably be expected to
subject any Person to damages or penalties in a criminal proceeding, (ii) could
reasonably be expected to cause a Material Adverse Effect if not given, or (iii)
could reasonably be expected to cause a Material Adverse Effect if not
continued.

         SECTION 5.26      CLIENT INCIDENTS. To the knowledge of the Company,
the Risk Database sets forth an accurate and complete list of each Incident
which has occurred since the Risk Database was implemented.

         SECTION 5.27      DISCLOSURE. To the knowledge of the Seller Entities,
neither this Agreement, the other Transaction Documents, nor any of the
schedules, attachments or exhibits hereto, contain any untrue statement of a
material fact or omit a material fact necessary to make each statement contained
herein or therein, not misleading.

         SECTION 5.28      SCHEDULE UPDATES. In the event that the Seller
becomes aware that the information contained in the representations and
warranties set forth in this Article V or in the schedules hereto is no longer
true and correct, it shall promptly notify the Purchaser in writing (each, a
"SCHEDULE UPDATE"). Each Schedule Update delivered to the Purchaser shall be
deemed to modify the representations and warranties herein for purposes of any
claims for indemnification pursuant to SECTION 8.2(a)(i) below, as long as such
Schedule Update discloses facts, events or circumstances which occurred after
the date hereof. No Schedule Update shall be deemed to modify the
representations and warranties herein for purposes of determining whether or not
the conditions to Closing set forth in Article III above have been satisfied.

                   ARTICLE VI -- REPRESENTATIONS AND WARRANTIES
                                OF THE PURCHASER

                  As a material inducement to the Seller Entities to enter into
this Agreement, the Purchaser hereby represents and warrants to the Seller that:

                                       39
<PAGE>

         SECTION 6.1       ORGANIZATION. The Purchaser is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware.

         SECTION 6.2       AUTHORIZATION OF TRANSACTIONS. The Purchaser has all
requisite organizational power and authority to execute and deliver the
Transaction Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby. The board of directors of the Purchaser has
duly approved the Transaction Documents to which it is a party and has duly
authorized the execution and delivery of the Transaction Documents to which it
is a party and the consummation of the transactions contemplated thereby. No
other corporate proceedings on the part of the Purchaser are necessary to
approve and authorize the execution and delivery of the Transaction Documents to
which it is a party and the consummation of the transactions contemplated
thereby. All Transaction Documents to which the Purchaser is a party have been
duly executed and delivered by the Purchaser and constitute the valid and
binding agreements of the Purchaser, enforceable against the Purchaser in
accordance with their terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights; and as limited by general principles
of equity that restrict the availability of equitable remedies.

         SECTION 6.3       ABSENCE OF CONFLICTS. The execution, delivery, and
performance of the Transaction Documents and the consummation of the
transactions contemplated thereby by the Purchaser do not and shall not (a)
conflict with or result in any breach of any of the terms, conditions, or
provisions of, (b) constitute a material default under, (c) result in a material
violation of, (d) give any third party the right to modify, terminate, or
accelerate any obligation under, or (e) require any authorization, consent,
approval, exemption, or other action by or notice or declaration to, or filing
with, any court or administrative or other governmental body or agency (except
in connection with the HSR Act), under the provisions of the charter or bylaws
of the Purchaser or any material indenture, mortgage, lease, loan agreement, or
other material agreement or instrument to which the Purchaser is bound or
affected, or any material law, statute, rule, or regulation to which the
Purchaser is subject (except in connection with the HSR Act) or any material
judgment, order, or decree to which the Purchaser is subject.

         SECTION 6.4       LITIGATION. There is no claim, action, suit,
proceeding or governmental investigation pending or, to the knowledge of the
Purchaser, threatened against the Purchaser, by or before any court,
governmental or regulatory authority or by any third party which challenges the
validity of this Agreement or which would be reasonably likely to adversely
affect or restrict the Purchaser's ability to consummate the transactions
contemplated hereby.

         SECTION 6.5       FINANCING. Attached hereto as EXHIBIT D is a true
and correct copy of (i) the senior debt financing commitment letter (the "SENIOR
DEBT COMMITMENT LETTER") issued to the Purchaser by Fleet National Bank on or
about the date of this Agreement and (ii) the commitment letter issued to the
Purchaser by Madison Dearborn Capital Partners III, L.P. on or about the date of
this Agreement, in each case, in order to consummate the transactions
contemplated hereby, and to fund the working capital requirements of the Company
after the Closing ((i) and (ii) collectively, the

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"COMMITMENT LETTERS"). Each of the Commitment Letters is in full force and
effect, and the Purchaser has not violated or breached any of the terms and
conditions of the Commitment Letters.

         SECTION 6.6       BROKERAGE. There are no claims for brokerage
commissions, finders' fees, or similar compensation in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of the Purchaser.

         SECTION 6.7       SCHEDULE UPDATES. In the event that the Purchaser
becomes aware that the information contained in the representations and
warranties set forth in this Article VI is no longer true and correct, it shall
promptly notify the Seller in writing.

         SECTION 6.8       PURCHASE FOR INVESTMENT. The Purchaser is purchasing
the Acquired Stock for investment for its own account and not with a view to, or
for sale in connection with, any distribution thereof. The Purchaser is an
"accredited investor" for purposes of applicable U.S. federal and state
securities laws and regulations.

                           ARTICLE VII -- TERMINATION

         SECTION 7.1       TERMINATION. This Agreement may be terminated at any
time before the Closing:

                  (a)      by mutual written consent of the Parent and the
Purchaser;

                  (b)      by the Seller or the Purchaser if there has been a
material misrepresentation or breach on the part of the other Party of the
representations, warranties, or covenants set forth in this Agreement or if
events have occurred which have made it impossible to satisfy a condition
precedent to the terminating Party's obligations to consummate the transactions
contemplated hereby unless, in either case, such terminating Party's willful or
knowing breach of this Agreement has caused the condition to be unsatisfied; or

                  (c)      by the Parent or the Purchaser if the Closing has not
occurred on or before April 15, 2001; provided, however, that neither the Parent
nor the Purchaser shall be entitled to terminate this Agreement pursuant to this
Section 7.1(c) if such Party's willful or knowing breach of this Agreement has
prevented the consummation of the transactions contemplated hereby at or before
such time; PROVIDED, FURTHER, that (i) the Purchaser may extend the above date
until May 15, 2001 if necessary to satisfy the conditions referred to in
Sections 3.1(c) or Section 3.1(f) if all other conditions are satisfied (or
would be capable of being satisfied if the conditions in Section 3.1(c) or
3.1(f) were satisfied) and (ii) the Seller may extend the above date until May
15, 2001, if necessary, to satisfy the conditions referred to in Sections 3.2(c)
or Section 3.2(d) if all other conditions are satisfied (or would be capable of
being satisfied if the conditions in Section 3.2(c) or 3.2(d) were satisfied).

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<PAGE>

         SECTION 7.2       EFFECT OF TERMINATION. In the event of termination
of this Agreement by either the Parent or the Purchaser as provided in Section
7.1, this Agreement shall forthwith become void and there shall be no liability
on the part of any Party to any other Party under this Agreement, except that
the provisions of this Section 7.2, Sections 9.1 and 9.4 and Article X shall
continue in full force and effect and except that nothing herein shall relieve
any Party from liability for any breach of this Agreement before such
termination.

               ARTICLE VIII -- INDEMNIFICATION AND RELATED MATTERS

         SECTION 8.1       SURVIVAL. All representations, warranties, covenants,
and agreements set forth in this Agreement or in any writing or certificate
delivered in connection with this Agreement shall survive the Closing Date and
the consummation of the transactions contemplated hereby and shall not be
affected by any examination made for or on behalf of any Party, the knowledge of
any of such Party's officers, directors, stockholders, employees, or agents, or
the acceptance of any certificate or opinion. Notwithstanding the foregoing, no
Party shall be entitled to recover for any Loss pursuant to Section 8.2(a)(i),
Section 8.2(a)(ii) (but only to the extent such Loss relates to the breach of a
covenant that by its terms does not continue after the Closing Date), Section
8.2(a)(iii) (but only to the extent such Loss relates to the breach of a
covenant that by its terms does not continue after the Closing Date), Section
8.2(c)(i) or Section 8.2(c)(ii) (but only to the extent such Loss relates to the
breach of a covenant that by its terms does not continue after the Closing Date)
unless written notice of a claim thereof is delivered to the other Party no
later than the Applicable Limitation Date. For purposes of this Agreement, the
term "APPLICABLE LIMITATION DATE" shall mean the date which is 24 months after
the Closing Date; provided that the Applicable Limitation Date with respect to
the following Losses shall be as follows: (i) with respect to any Loss arising
from or related to a breach of the representations and warranties of the Seller
set forth in Section 5.10 (Taxes), or Section 5.22 (Health Care Matters), the
Applicable Limitation Date shall be the date on which the statute of limitations
applicable to the statute, regulation or other authority which gave rise to such
Loss expires, and (ii) with respect to any Loss arising from or related to a
breach of the representations and warranties of the Seller set forth in Section
5.1 (Organization and Corporate Power), Section 5.2 (Authorization of
Transactions), Section 5.4 (Capitalization), Section 5.9(a) (Title to Assets) or
Section 5.14 (Brokerage) and with respect to any Loss arising from or related to
a breach of the representations and warranties of the Purchaser set forth in
Section 6.1 (Organization), Section 6.2 (Authorization of Transactions), or
Section 6.6 (Brokerage), there shall be no Applicable Limitation Date (i.e.,
such representations and warranties shall survive indefinitely). The
representations and warranties described in clause (ii) of the preceding
sentence are referred to as the "FUNDAMENTAL REPRESENTATIONS AND WARRANTIES."

         SECTION 8.2       INDEMNIFICATION.

                  (a)      INDEMNIFICATION BY THE SELLER AND THE PARENT. The
Seller and the Parent shall jointly and severally indemnify the Purchaser and
the Acquired Companies, and each of the Purchaser's and the Acquired Companies'
respective officers, directors, stockholders, employees, agents,
representatives, affiliates, successors, and assigns (collectively, the
"PURCHASER PARTIES") and hold each of them harmless from and against and pay on
behalf of or reimburse such Purchaser

                                       42
<PAGE>

Parties in respect of any Loss which any such Purchaser Party may suffer,
sustain, or become subject to, as a result of or relating to:

                           (i)      the breach of any representation or warranty
         made by the Company, the Seller or the Parent contained in this
         Agreement or in any certificate delivered by the Company, the Seller
         or the Parent with respect thereto in connection with the Closing (in
         each case, determined without regard to any qualifications therein
         referencing the terms "materiality," "Material Adverse Effect," or
         other terms of similar import or effect);

                           (ii)     the breach of any covenant or agreement
         made by the Company contained in this Agreement to be performed by the
         Company prior to or at the Closing;

                           (iii)    the breach of any covenant or agreement
         made by the Seller or the Parent contained in this Agreement;

                           (iv)     each of the matters set forth on the
         LITIGATION SCHEDULE, including, without limitation, any Schedule
         Updates thereto;

                           (v)      all Earnout Obligations including, without
         limitation, all payments required to be made with respect thereto
         other than amounts included in the Actual Indebtedness Amount or the
         Actual Net Working Capital Amount;

                           (vi)     any benefit plan sponsored, maintained or
         contributed to by any entity other than an Acquired Company, where
         such entity, together with an Acquired Company, is treated as a single
         employer under Section 414 of the Code;

                           (vii)    any improper exclusion of employees from
         participation under the Magellan Health Services, Inc. Cash
         Accumulation Plan for Mentor Employees including, without limitation,
         costs of any correction made by the Acquired Companies under the
         Internal Revenue Service Employee Plans Compliance Resolution System;

                           (viii)   any Guaranty Obligation of any Acquired
         Company (other than Guaranty Obligations in respect of Indebtedness of
         other Acquired Companies) including any Guaranty Obligation required
         to be listed on the CONTRACTS SCHEDULE but only if such Guaranty
         Obligation was in effect on or before the Closing Date;

                           (ix)     telephone services provided by AT&T or an
         Affiliate thereof to the Acquired Companies prior to January 1, 2000
         other than amounts included in the Actual Indebtedness Amount or the
         Actual Net Working Capital Amount;

                           (x)      cost reports or other similar reports filed
         by an Acquired Company with the State of Maryland or an agency or
         instrumentality thereof prior to the Closing Date, including, without
         limitation, Losses that are from decreases in payment or reimbursement

                                       43
<PAGE>

         rates or amounts for periods after the Closing Date directly as a
         result of such cost reports or other similar reports;

                           (xi)     any failure by an Acquired Company to file
         a Form 5500 annual report, including, without limitation, costs
         relating to the preparation and filing of any delinquent Form 5500
         annual report and taxes and penalties assessed by the Internal Revenue
         Service or Department of Labor; or

                           (xii)    each Incident occurring on or prior to the
         Closing Date.

The Seller and the Parent hereby acknowledge that they and their Affiliates will
have no claims or rights to contribution or indemnity from the Acquired
Companies or their officers and directors with respect to any amounts paid by
any of them pursuant to this Section 8.2(a); provided, however, that this
acknowledgment shall not affect the Seller's or the Parent's rights under
Section 8.2(b)(vi).

                  (b)      LIMITATIONS ON INDEMNIFICATION BY THE SELLER AND THE
PARENT. The indemnification provided for in Section 8.2(a) above is subject to
the following limitations:

                           (i)      The Seller and the Parent will be liable to
         the Purchaser Parties with respect to claims referred to in Section
         8.2(a)(i), Section 8.2(a)(ii) (but only to the extent the related Loss
         relates to the breach of a covenant that by its terms does not
         continue after the Closing Date) and Section 8.2(a)(iii) (but only to
         the extent the related Loss relates to the breach of a covenant that
         by its terms does not continue after the Closing Date) only if a
         Purchaser Party gives a Seller Entity written notice thereof no later
         than the Applicable Limitation Date; provided that so long as the
         Purchaser delivers written notice of a good faith claim to a Seller
         Entity no later than the Applicable Limitation Date, the Seller
         Entities shall be required to indemnify the Purchaser Parties for all
         Losses (subject to the other limitations contained herein) which the
         Purchaser Parties may incur in respect of the matters which are the
         subject of such claim, regardless of when incurred.

                           (ii)     The aggregate amount of all payments made
         by the Seller and the Parent in satisfaction of claims for
         indemnification pursuant to Section 8.2(a)(i), Section 8.2(a)(ii) (but
         only to the extent the related Loss relates to the breach of a
         covenant that by its terms does not continue after the Closing Date)
         and Section 8.2(a)(iii) (but only to the extent the related Loss
         relates to the breach of a covenant that by its terms does not
         continue after the Closing Date) shall not exceed $18,000,000 (the
         "CAP"); provided, however, that the Cap shall not apply with respect
         to any Losses resulting from or relating to breaches of any
         Fundamental Representations and Warranties and such Losses shall not
         count towards satisfaction of the Cap; provided further, however, that
         the liability of the Seller Entities pursuant to Section 8.2 for all
         Losses, including those relating to breaches of Fundamental
         Representations and Warranties, shall not exceed, in the aggregate the
         sum of the Purchase Price and the portion of the Actual Indebtedness
         Amount that was owed to the Seller or the Parent or their respective
         Affiliates as of the close of business on the day before the Closing
         Date. No party shall be liable to indemnify any other party for any
         consequential or punitive

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<PAGE>

          damages, other than those owing to third parties, if any. The
          aggregate amount of all payments made by the Seller and the Parent in
          satisfaction of claims for indemnification pursuant to Section
          8.2(a)(x) shall not exceed $636,000.

                           (iii)    The Seller and the Parent shall not be
          liable to indemnify any Purchaser Parties pursuant to Section
          8.2(a)(i), Section 8.2(a)(ii) (but only to the extent the related Loss
          relates to the breach of a covenant that by its terms does not
          continue after the Closing Date) and Section 8.2(a)(iii) (but only to
          the extent the related Loss relates to the breach of a covenant that
          by its terms does not continue after the Closing Date) unless and
          until the Purchaser Parties have collectively suffered Losses by such
          breaches or pursuant to such Section in excess of a $1,500,000
          aggregate basket ("BASKET") (at which point, subject to the other
          limitations herein, the Seller and the Parent will be liable to the
          Purchaser Parties for all Losses in excess of such Basket); provided,
          however, that the Basket shall not apply with respect to any Losses
          resulting from or relating to breaches of any Fundamental
          Representations and Warranties and such Losses shall not count towards
          satisfaction of the Basket.

                           (iv)     The Seller Entities' indemnification
          obligations under Section 8.2(a)(xii) shall be reduced as follows. To
          the extent the Seller Entities are not entitled to reimbursement
          pursuant to insurance policies (or loss portfolio transfer agreements,
          indemnification agreements or the like) in respect of Losses for which
          the Purchaser Parties would otherwise be entitled to indemnification
          from the Seller Entities under Section 8.2(a)(xii) but for the
          application of this clause (iv) (the "UNCOVERED INCIDENT CLAIMS"),
          then for the first $1.0 million of Uncovered Incident Claims, the
          Seller Entities and the Purchaser shall share responsibility, on an
          80% and 20% pro rata basis respectively, for the Losses in respect of
          such claims, after which point the Seller Entities shall be liable for
          100% of all further Uncovered Incident Claims. Nothing in this clause
          (iv) shall be deemed to limit or modify the parties' rights and
          obligations under Section 9.11.

                           (v)      If the Seller's or the Parent's
          indemnification obligation under this Section 8.2 arises in respect of
          any indemnifiable event (A) which a Purchaser Party receives
          indemnification from the Seller or the Parent and (B) which results in
          any Tax benefit to such Purchaser Party for any taxable period (or
          portion thereof) beginning and ending after the Closing Date which
          would not, but for such indemnifiable event, be available, such
          Purchaser Party shall pay, or shall cause to be paid, to the Seller or
          the Parent an amount equal to the actual Tax saving produced by such
          Tax benefit reduced by the amount of any Tax detriment to such
          Purchaser Party as a result of the receipt of such indemnification.
          Tax benefits and detriments shall be taken into account as and when
          actually realized. The amount of any such Tax saving for any taxable
          period shall be the amount of the reduction in Taxes payable to a Tax
          authority by such Purchaser Party with respect to such Tax period (net
          of any Tax detriment resulting from the receipt of the indemnity
          payment) as compared to the Taxes that would have been payable to a
          Tax authority by such Purchaser Party with respect to such Tax period
          in the absence of such Tax benefit. The Purchaser Party realizing such
          tax benefits shall notify the Seller or the Parent upon realizing such
          tax benefits.

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<PAGE>

                           (vi)    Any payment made by the Seller or the
         Parent to a Purchaser Party pursuant to this Section 8.2 in respect of
         any indemnifiable event shall be net of any insurance proceeds
         realized by and paid to such Purchaser Party in respect of such claim.
         Such Purchaser Party shall use its reasonable efforts to make
         insurance claims relating to any indemnifiable event for which it is
         seeking indemnification pursuant to this Section 8.2; provided that
         such Purchaser Party shall not be obligated to make such an insurance
         claim if the cost of pursuing such an insurance claim together with
         any corresponding increase in insurance premiums or other chargebacks
         to such Purchaser Party, as the case may be, would exceed the value of
         the claim for which such Purchaser Party is seeking indemnification.

                           (vii)    The indemnification rights provided
         hereunder shall be the exclusive remedy of the Purchaser Parties with
         respect to any dispute arising out of or related to this Agreement,
         except for the right to seek specific performance of any of the
         agreements contained herein.

Notwithstanding any implication to the contrary contained in this Agreement, the
limits on indemnification set forth in this Agreement shall not apply to claims
in the case of fraud by either of the Seller Entities.

                  (c)      INDEMNIFICATION BY THE PURCHASER. The Purchaser
shall indemnify the Seller Entities and hold the Seller Entities and the Seller
Entities' respective officers, directors, stockholders, employees, agents,
representatives, affiliates, successors, and assigns (collectively, the "SELLER
PARTIES") harmless from and against and pay on behalf of or reimburse such
Seller Parties in respect of any Loss which such Seller Party may suffer,
sustain, or become subject to, as a result of or relating to:

                           (i)      the breach of any representation or
         warranty made by the Purchaser contained in this Agreement or in any
         certificate delivered by the Purchaser with respect thereto in
         connection with the Closing (in each case, determined without regard
         to any qualifications therein referencing the terms "materiality,"
         "Material Adverse Effect," or other terms of similar import or
         effect); or

                           (ii)     the breach of any covenant or agreement
         made by the Purchaser contained in this Agreement.

                  (d)      LIMITATIONS ON INDEMNIFICATION BY THE PURCHASER. The
indemnification  provided for in SECTION 8.2(c) above is subject to the
following limitations:

                           (i)      The Purchaser will be liable to the Seller
         Parties with respect to claims referred to in SECTION 8.2(c)(i) and
         SECTION 8.2(c)(ii) (but only to the extent the related Loss relates to
         the breach of a covenant that by its terms does not continue after the
         Closing Date) only if the Seller gives the Purchaser written notice
         thereof within the Applicable Limitation Date; provided that so long
         as the Seller delivers written notice of a good faith claim to the

                                       47
<PAGE>

         Purchaser no later than the Applicable Limitation Date, the Purchaser
         shall be required to indemnify the Seller Parties for all Losses
         (subject to the other limitations contained herein) which the Seller
         Parties may incur in respect of the matters which are the subject of
         such claim, regardless of when incurred;

                           (ii)     If the Purchaser's indemnification
         obligation under this SECTION 8.2 arises in respect of any
         indemnifiable event (A) for which a Seller Party receives
         indemnification from the Purchaser and (B) which results in any Tax
         benefit to such Seller Party for any taxable period (or portion
         thereof) beginning and ending after the Closing Date which would not,
         but for such indemnifiable event, be available, such Seller Party
         shall pay, or shall cause to be paid, to the Purchaser an amount equal
         to the actual Tax saving produced by such Tax benefit reduced by the
         amount of any Tax detriment to such Seller Party as a result of the
         receipt of such indemnification. Tax benefits and detriments shall be
         taken into account as and when actually realized. The amount of any
         such Tax saving for any taxable period shall be the amount of the
         reduction in Taxes payable to a Tax authority by such Seller Party
         with respect to such Tax period (net of any Tax detriment resulting
         from the receipt of the indemnity payment) as compared to the Taxes
         that would have been payable to a Tax authority by such Seller Party
         with respect to such Tax period in the absence of such Tax benefit and
         the Seller Party realizing such Tax benefits shall notify the
         Purchaser upon realizing such Tax benefits;

                           (iii)    Any payment made by the Purchaser to a
         Seller Party pursuant to this SECTION 8.2 in respect of any
         indemnifiable event shall be net of any insurance proceeds realized by
         and paid to such Seller Party in respect of such claim. Such Seller
         Party shall use its reasonable efforts to make insurance claims
         relating to any indemnifiable event for which it is seeking
         indemnification pursuant to this SECTION 8.2; provided that such
         Seller Party shall not be obligated to make such an insurance claim if
         such Seller Party in its reasonable judgment believes the cost of
         pursuing such an insurance claim together with any corresponding
         increase in insurance premiums or other chargebacks to such Seller
         Party, as the case may be, would exceed the value of the claim for
         which such Seller Party is seeking indemnification; and

                           (iv)     The indemnification rights provided
         hereunder shall be the exclusive remedy of the Seller Parties with
         respect to any dispute arising out of or related to this Agreement,
         except for the right to seek specific performance of any of the
         agreements contained herein.

Notwithstanding any implication to the contrary contained in this Agreement, the
limits on indemnification set forth in this Agreement shall not apply to claims
in the case of fraud by the Purchaser.

In the event a Purchaser Party has a claim for indemnification pursuant to
Section 8.2(a) for which (A)(i) the Parent agrees in writing that the Purchaser
Party is entitled to indemnification or (ii) a final non-appealable order of a
court of competent jurisdiction is rendered in favor of the Purchaser Party

                                       48
<PAGE>

and (B) the Parent has failed to satisfy such claim in full within ten business
days of notice of the issuance of such final, non-appealable court order or the
date of the written agreement with respect thereto, then the Purchaser may, at
its option, cause the Parent and Seller to satisfy such indemnification
obligation by notifying the Seller that the Purchaser is reducing the amount
owing, without duplication, under either or both Seller Notes; provided,
however, that the Purchaser shall not reduce the amount owing under any Seller
Note at any time when such Seller Note is owned and held by a Person other than
the Seller Entities and their Affiliates; provided, however, that the Seller
shall (and shall cause its Affiliates to) give to the Purchaser not less than 30
days prior written notice before transferring any Seller Note to a Person other
than the Seller Entities and their Affiliates. This shall affect the timing and
amount of payments required under each Seller Note in the same manner as if the
Purchaser has made a permitted prepayment thereunder.

                  (e)      PROCEDURES. If a party hereto seeks indemnification
under this Article VIII, such party (the "INDEMNIFIED PARTY") shall promptly
give written notice to the other party (the "INDEMNIFYING PARTY") after
receiving written notice of any action, lawsuit, proceeding, investigation, or
other claim against it (if by a third party) or discovering the liability,
obligation, or facts giving rise to such claim for indemnification, describing
the claim, the amount thereof (if known and quantifiable), and the basis
thereof; provided that the failure to so notify the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations hereunder except to the extent
such failure shall have prejudiced the Indemnifying Party. In that regard, if
any action, lawsuit, proceeding, investigation, or other claim shall be brought
or asserted by any third party which, if adversely determined, would entitle the
Indemnified Party to indemnity pursuant to this Article VIII, the Indemnified
Party shall promptly notify the Indemnifying Party of the same in writing,
specifying in detail the basis of such claim and the facts pertaining thereto
and the Indemnifying Party shall be entitled to participate in the defense of
such action, lawsuit, proceeding, investigation, or other claim giving rise to
the Indemnified Party's claim for indemnification at the Indemnifying Party's
expense and option and (subject to the limitations set forth below) shall be
entitled to control and appoint lead counsel of such defense (including the
defense of a particular claim in a proceeding involving multi-party claims) with
reputable counsel reasonably acceptable to the Indemnified Party; provided that,
as a condition precedent to the Indemnifying Party's right to assume control of
such defense, it must first agree in writing to be fully responsible for all
Losses relating to such claims and to provide full indemnification to the
Indemnified Party for all Losses relating to such claim; and provided further
that the Indemnifying Party shall not have the right to assume control of such
defense (but shall have the right to participate) and shall pay the reasonable
fees and expenses of counsel reasonably acceptable to the Seller retained by the
Indemnified Party, if the claim which the Indemnifying Party seeks to assume
control (each, an "INDEMNIFIED PARTY CONTROLLED PROCEEDING") (i) involves or
relates to abuse, neglect, mistreatment or other misconduct relating to a client
managed or served, directly or indirectly, by any Acquired Company, (ii)
involves a claim to which the Indemnified Party reasonably believes could be
detrimental to or injure the Indemnified Party's reputation, customer or
supplier relations or future business prospects, (iii) seeks non-monetary relief
(except where non-monetary relief is merely incidental to a primary claim or
claims for monetary damages), (iv) involves criminal allegations, (v) is one in
which the Indemnifying Party is also a party and joint representation would be
inappropriate or there may be legal defenses available to the Indemnified Party
which are different from or additional to those available to the Indemnifying
Party, or (vi)

                                       48
<PAGE>

involves a claim which, upon petition by the Indemnified Party, the appropriate
court rules that the Indemnifying Party failed or is failing to vigorously
prosecute or defend. With respect to actions, lawsuits, proceedings and
investigations or other claims asserted by a third party which are outstanding
as of the Closing Date, if the Seller Entities are currently defending such
action, lawsuit, proceeding, investigation or other claim, the Seller Entities
shall have the right to control such defense subject to the right of the
Purchaser Parties to divest the Seller Entities of such right if such action,
lawsuit, proceeding, investigation or other claim would be an Indemnified Party
Controlled Proceeding hereunder. Similarly, notwithstanding anything herein to
the contrary, the Seller Entities shall have the right to control the
disposition of the matter referred to in Section 8.2(a)(vii). Notwithstanding
anything herein to the contrary, the Purchaser shall have the right to control
the disposition of the matter referred to in Section 8.2(a)(x); provided,
however, that the Purchaser shall use its reasonable efforts to mitigate the
amount of any Losses suffered by the Purchaser Parties in connection with such
matter.

                  If the Indemnifying Party is permitted to assume and control
the defense and elects to do so, the Indemnified Party shall have the right to
employ counsel separate from counsel employed by the Indemnifying Party in any
such action and to participate in the defense thereof, but the fees and expenses
of such counsel employed by the Indemnified Party shall be at the expense of the
Indemnified Party unless the employment thereof has been specifically authorized
by the Indemnifying Party in writing.

                  If the Indemnifying Party shall control the defense of any
such claim, the Indemnifying Party shall obtain the prior written consent of the
Indemnified Party (which shall not be unreasonably withheld) before entering
into any settlement of a claim or ceasing to defend such claim, if pursuant to
or as a result of such settlement or cessation, injunction, or other equitable
relief will be imposed against the Indemnified Party or if such settlement does
not expressly unconditionally release the Indemnified Party from all liabilities
and obligations with respect to such claim.

                  (f)      TAX  TREATMENT. Amounts paid to or on behalf of a
Seller Entity or the Purchaser as indemnification shall be treated as
adjustments to the Purchase Price for Tax purposes.

                      ARTICLE IX -- ADDITIONAL AGREEMENTS

         SECTION 9.1       PRESS RELEASES AND ANNOUNCEMENTS. Before the Closing
Date, no press releases related to this Agreement and the transactions
contemplated herein, or other announcements to the employees, customers, or
suppliers of any Acquired Company shall be issued by any Party without the
mutual approval of all Parties, except for any public disclosure which any Party
in good faith believes is required by law or regulation (in which case the
disclosure shall be prepared jointly by the Seller and the Purchaser). After the
Closing Date, no press releases related to this Agreement and the transactions
contemplated herein, or other announcements to the employees, customers, or
suppliers of any Acquired Company shall be issued by the Parent, the Seller or
their respective Affiliates without the prior approval of the Purchaser, except
for any public disclosure which the

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Seller in good faith believes is required by law or regulation (in which case
the disclosure shall be prepared jointly by the Seller and the Purchaser).

         SECTION 9.2       FURTHER TRANSFERS. Each Party shall execute and
deliver such further instruments of conveyance and transfer and take such
additional action as any other Party may reasonably request to effect,
consummate, confirm, or evidence the consummation of the transactions
contemplated hereby.

         SECTION 9.3       SPECIFIC PERFORMANCE. The Seller Entities
acknowledge that the Acquired Companies' businesses are unique and recognize and
affirm that in the event of a breach of this Agreement by the Seller Entities,
money damages may be inadequate and the Purchaser may have no adequate remedy at
law. Accordingly, the Seller Entities agree that the Purchaser shall have the
right, in addition to any other rights and remedies existing in its favor, to
enforce its rights and the Seller Entities' obligations hereunder not only by an
action or actions for damages but also by an action or actions for specific
performance, injunctive, and/or other equitable relief, in each case without the
requirement of posting a bond or proving actual damages.

         SECTION 9.4       EXPENSES. The Parties shall pay all of their own
fees, costs, and expenses (including, without limitation, fees, costs and
expenses of legal counsel, accountants, investment bankers, brokers, or other
representatives and consultants and appraisal fees, costs, and expenses)
incurred in connection with the negotiation of this Agreement and the other
agreements contemplated hereby, the performance of its obligations hereunder and
thereunder, and the consummation of the transactions contemplated hereby and
thereby (collectively, the "TRANSACTION EXPENSES"); it being understood that if
the transactions contemplated hereby are consummated, the Company shall
reimburse the Purchaser and its investors for all of their Transaction Expenses;
it being further understood that no such Transaction Expenses of the Purchaser
shall be recorded on the books of the Company prior to the Closing or taken into
account in the Cash Amount or the Net Working Capital Amount. At the request of
the Seller, the Transaction Expenses for which the Seller is liable pursuant to
this SECTION 9.4 may be deducted from the Purchase Price and paid directly to
the Seller's legal counsel, investment bankers and other agents and
representatives. To the extent that any Acquired Company pays or becomes liable
with respect to any Transaction Expenses of the Seller Entities or any Acquired
Company, the Purchase Price shall be reduced dollar-for-dollar.

         SECTION 9.5       NONCOMPETITION, NONSOLICITATION, AND CONFIDENTIALITY.
From and after the Closing:

                  (a)      NONCOMPETITION. In consideration of the mutual
covenants provided for herein to the Seller Entities at the Closing, during the
period beginning on the Closing Date and ending on the third anniversary of the
Closing Date (the "NONCOMPETE PERIOD"), the Seller Entities shall not, and the
Seller Entities shall cause their Affiliates to not, engage (whether as an
owner, operator, manager, employee, officer, director, consultant, advisor,
representative, or otherwise) directly or indirectly in any Acquired Company's
business as presently conducted which is the business that provides home or
community based services to (i) at-risk children and youth who are behaviorally

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and/or medically involved, (ii) individuals with mental retardation and/or
development disabilities, (iii) individuals with acquired brain injury or (iv)
the elderly, in each case, anywhere within the United States; provided, that
engaging in the existing business of the Seller Entities and their other
Affiliates (including, without limitation, participation in joint ventures) as
currently conducted on the date hereof shall not be deemed a violation of the
foregoing; provided further that ownership of less than 5% of the outstanding
stock of any publicly traded corporation shall not be deemed to be engaging
solely by reason thereof in any of its businesses. The Parties hereto agree that
the covenant set forth in this SECTION 9.5 is reasonable with respect to its
duration, geographical area, and scope. If the final judgment of a court of
competent jurisdiction declares that any term or provision of this SECTION 9.5
is invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.

                  (b)      NONSOLICITATION. The Seller Entities agree that,
during the Noncompete Period, they will not (and will cause their Affiliates to
not) directly or indirectly contact, approach, or solicit (other than a
generally public solicitation such as a newspaper advertisement) for the purpose
of offering employment to or hiring (whether as an employee, consultant, agent,
independent contractor, or otherwise) any Person employed by, or under contract
with, any Acquired Company, the Purchaser or any of their Affiliates, at any
time before the Closing Date or during the Noncompete Period, without the prior
written consent of the Purchaser.

                  (c)      CONFIDENTIALITY. The Seller Entities shall treat and
hold as confidential any information concerning the business and affairs of the
Acquired Companies (including, without limitation, all Proprietary Rights) that
is not already generally available to the public (the "CONFIDENTIAL
INFORMATION"), refrain from using or disclosing any of the Confidential
Information (i) except in connection with this Agreement or (ii) unless and only
to the extent that such disclosure (after making reasonable efforts to avoid
such disclosure and after advising and consulting with the Purchaser about
possibly making, and the proposed contents of, such disclosure) is, in the
opinion of the Seller Entities' legal counsel, required by applicable law, and
at any time upon the reasonable request of the Purchaser deliver promptly to the
Purchaser or destroy, at the request and option of the Purchaser, all tangible
embodiments (and all copies) of the Confidential Information which are in its
possession or under its control other than any information the Seller Entities
are required by law or regulation to maintain. In the event that either of the
Seller Entities is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, it shall notify the Purchaser promptly of the request or
requirement so that the Purchaser may seek an appropriate protective order or
waive compliance with the provisions of this SECTION 9.5(c).

                  (d)      TRADE NAMES. The Seller Entities shall not use or
permit any of their Affiliates to use the "National Mentor," "Mentor Network,"
or "Mentor" name (or any other

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trademarks, service marks, trade dress, trade names, logos or names used by any
Acquired Company) or any names or symbols likely to be confusingly similar
thereto in any manner anywhere in the world after Closing.

                  (e)      REMEDY FOR BREACH. Each Seller Entity acknowledges
and agrees that in the event of a breach of any of the provisions of this
SECTION 9.5, monetary damages shall not constitute a sufficient remedy.
Consequently, in the event of any such breach, the Company, the Purchaser,
and/or their respective successors or assigns may, in addition to other rights
and remedies existing in their favor, apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violations of the provisions hereof,
in each case without the requirement of posting a bond or proving actual
damages.

         SECTION 9.6       TAX MATTERS.

                  (a)      CERTAIN DEFINITIONS.  As used in this Agreement:

                           "PARENT TAX GROUP" means the Affiliated Group of
         which the Parent is the common parent.

                           "PRE-CLOSING PERIOD" means any taxable period
         beginning before and ending on or before the Closing Date.

                           "STRADDLE PERIOD" means any taxable period beginning
         before and ending after the Closing Date.

                  (b)      RETURN FILING, REFUNDS, CREDITS AND TRANSFER TAXES.

                           (i)      (A) The Seller Entities shall prepare, or
         cause to be prepared, all Tax Returns of or including each of the
         Acquired Companies for all Pre-Closing Periods (the "PRE-CLOSING
         PERIOD RETURNS"). The Seller Entities shall pay, or cause to be paid,
         all Taxes with respect to Pre-Closing Period Returns. The Seller
         Entities shall timely file, or cause to be timely filed, all such
         Pre-Closing Period Returns of or including the Acquired Companies that
         are due on or before the Closing Date (giving effect to any extensions
         thereto), and shall pay, or cause to be paid, all Taxes with respect
         to all such Pre-Closing Period Returns.

                                    (B) The Seller Entities shall prepare and
         provide the Purchaser with Pre-Closing Period Returns, other than
         Pre-Closing Period Returns that are described in Section 9.6(b)(ii),
         that are due after the Closing Date (giving effect to any extensions
         thereto) at least ten (10) business days prior to the due date
         thereof. In connection with the Seller Entities preparation of such
         Pre-Closing Period Returns, at the request of the Parent, the
         Consolidated Subsidiaries (as defined below) will timely furnish Tax
         information to the Parent for inclusion in such Tax Returns in
         accordance with the Consolidated Subsidiaries' past custom and
         practice. The Purchaser shall have the right to review and comment on
         such

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<PAGE>

         Tax Returns (including any amended returns) prior to filing, and the
         parties shall resolve in good faith, and make any appropriate changes
         to such Tax Returns with respect to, any issues arising as a result of
         such review and comment process. Promptly upon the finalization of
         such Tax Returns and in any case prior to the time such Tax Return is
         required to be filed, the Seller shall deliver to the Purchaser (i) an
         original of such Tax Return and (ii) a check payable to the
         appropriate taxing authority in the amount of any Taxes shown as due
         thereon. If the Seller timely delivers such Tax Return and check
         payable to the appropriate tax authority as provided in the previous
         sentence, the Purchaser shall cause such Pre-Closing Period Returns to
         be executed by the appropriate officer and shall file such Returns,
         together with the appropriate payment, on a timely basis.

                           (ii)     The Parent will include the income of each
         of the Acquired Companies which is a member of the Parent Tax Group
         (the "CONSOLIDATED SUBSIDIARIES") (including any deferred income
         triggered into income by Treasury Regulation Section 1.1502-13 and
         Treasury Regulation Section 1.1502-14 and any excess loss accounts
         taken into income under Treasury Regulation Section 1.1502-19 or any
         similar provisions of state, local or foreign law) on the Parent
         consolidated federal income Tax Returns and any consolidated,
         combined, or unitary (or similar) state, local or foreign income Tax
         Returns for all periods through the Closing Date in accordance with
         the Parent's and Consolidated Subsidiaries' past custom and practice
         and pay any income Taxes attributable to such income. At the request
         of the Parent, the Consolidated Subsidiaries will timely furnish Tax
         information to the Parent for inclusion in such Tax Returns in
         accordance with the Consolidated Subsidiaries' past custom and
         practice. The Parent will provide to Purchaser with copies of such Tax
         Returns at least ten (10) business days prior to the due date thereof
         (giving effect to any extensions thereto) and will allow the Purchaser
         an opportunity to review and comment upon such Tax Returns (including
         any amended returns) to the extent that they relate to the
         Consolidated Subsidiaries, and the parties shall resolve in good faith
         any issues arising as a result of such review. The income of the
         Consolidated Subsidiaries will be apportioned to the period up to and
         including the Closing Date and the period after the Closing Date by
         closing the books of the Consolidated Subsidiaries as of the end of
         the Closing Date.

                           (iii)    The Purchaser shall prepare, or cause to be
         prepared, and shall file, or cause to be filed, on a timely basis all
         Tax Returns of or including each Acquired Company for the Straddle
         Period (the "STRADDLE PERIOD RETURNS"). The Purchaser shall pay, or
         cause to be paid, all Taxes shown to be due on such Tax Returns.

                           (iv)     Any Tax refunds that are received by the
         Purchaser (or to the extent such refund is payable but not paid due to
         such refund being offset against other Taxes of the Purchaser, any
         amounts credited against Taxes of the Purchaser with respect to such
         refunds) arising from taxable periods of the Acquired Companies ending
         on or before the Closing Date shall be for the account of the Seller,
         and the Purchaser shall pay over to the Seller any such refund (or
         credit against, as the case may be) within 15 days after receipt
         thereof.

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<PAGE>

                           (v)      The Purchaser shall provide the Parent with
          copies of any Straddle Period Returns at least ten (10) business days
          prior to the due date thereof (giving effect to any extensions
          thereto), accompanied by a statement calculating in reasonable detail
          the Parent's indemnification obligation pursuant to SECTION 9.6(c)
          hereof (the "INDEMNIFICATION STATEMENT"). The Parent shall have the
          right to review such Straddle Period Returns and Indemnification
          Statement prior to the filing of such Straddle Period Returns. If the
          Parent disputes any amounts shown due on such Tax Returns or the
          amount calculated in the Indemnification Statement, the Parent and the
          Purchaser shall consult and resolve in good faith any issues arising
          as a result of the review of such Straddle Period Return and
          Indemnification Statement. If the Parent agrees to the Indemnification
          Statement amount, the Parent shall pay to the Purchaser an amount
          equal to the Taxes shown on the Indemnification Statement not later
          than three days before the due date (including any extensions thereof)
          for payment of Taxes with respect to such Straddle Period Return. If
          the Parties are unable to resolve any dispute within five (5) business
          days after the Parent's receipt of such Straddle Period Return and
          Indemnification Statement, the Purchaser and the Parent will jointly
          retain the Firm as selected pursuant to Section 2.4(a) to resolve any
          such disputes and the Firm shall resolve any such issues in dispute as
          promptly as practicable. If the Firm is unable to make a determination
          with respect to any disputed issue prior to the due date (including
          any extensions) for the filing of the Straddle Period Return in
          question, (A) the Purchaser shall file, or shall cause to be filed,
          such Straddle Period Return without such determination having been
          made and (B) the Parent shall pay to the Purchaser, not later than
          three days before the due date (including any extensions thereof) for
          the payment of Taxes with respect to such Straddle Period Return, an
          amount determined by the Parent as the proper amount chargeable to the
          Parent pursuant to this SECTION 9.6. Upon delivery to the Parent and
          the Purchaser by the Firm of its determination, appropriate
          adjustments shall be made to the amount paid by the Parent in
          accordance with the immediately preceding sentence in order to reflect
          the decision of the Firm. The determination by the Firm shall be
          final, conclusive and binding on the parties.

                           (vi)     If a notice of deficiency, proposed
          adjustment, assessment, audit, examination or other administrative or
          court proceeding, suit, dispute or other claim (a "TAX CLAIM") shall
          be delivered, sent, commenced, or initiated to or against Purchaser or
          any of the Acquired Companies by any Taxing authority with respect to
          Taxes that results in or may result in a loss for which
          indemnification may be claimed from the Seller Entities under this
          Agreement, Purchaser shall promptly (but in any event within 15 days
          after receipt of such Tax Claim) notify Parent of such Tax Claim.
          Parent shall have the sole right to represent the Acquired Companies'
          interests and to employ counsel of its choice at its expense with
          respect to any such Tax Claim; PROVIDED THAT in the case of any Tax
          Claim relating to any Tax for any Straddle Period Return which each of
          Purchaser and Parent may be liable, Purchaser and Parent shall each be
          entitled to participate at their own expense in such Tax Claim to the
          extent it relates to a Tax for which such party bears liability
          pursuant to this Section 9.6. No party may settle or otherwise dispose
          of any Tax Claim for which another party may have a liability under
          Section 9.6 without the prior written consent of such other party,
          which consent may not be unreasonably withheld.

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<PAGE>

                           (vii)    The Parent will not elect to retain any net
          operating loss carryovers or capital loss carryovers of the
          Consolidated Subsidiaries under Treasury Regulation Section
          1.1502-20(g). The Purchaser shall not carryback any post-acquisition
          Tax attribute of any of the Consolidated Subsidiaries into any of the
          Parent's consolidated, combined, or unitary (or similar) Tax Return.

                           (viii)   The Seller Entities and the Purchaser shall
          reasonably cooperate, and shall cause their respective Affiliates,
          officers, employees, agents, auditors and representatives reasonably
          to cooperate, in preparing and filing all Tax Returns (including
          amended returns and claims for refund), including maintaining and
          making available to each other employees and all records necessary in
          connection with Taxes and in resolving all disputes and audits with
          respect to all taxable periods relating to Taxes.

                           (ix)     Notwithstanding any other provisions of
          this Agreement to the contrary, all sales, use, transfer, gains,
          stamp, duties, recording and similar Taxes incurred in connection with
          the transactions contemplated by this Agreement shall be paid equally
          by the Seller and the Purchaser. The Seller shall file or cause to be
          filed all necessary Tax Returns and other documentation with respect
          to such Taxes and the Seller and the Purchaser shall share equally the
          expense of such filings. If required by applicable law, the Purchaser
          will join in the execution of any such Tax Returns or such other
          documentation.

                           (x)      All Tax allocation, Tax sharing or similar
          agreements to which any of the Acquired Companies are bound shall be
          terminated as of the time of the Closing and, after such time, neither
          of the Purchaser nor any of Acquired Companies shall be bound thereby
          or have any liability thereunder.

                  (c)      TAX INDEMNIFICATION.

                           (i)      From and after the Closing Date, the Seller
          Entities shall protect, defend, indemnify and hold harmless the
          Purchaser, the Acquired Companies and their Affiliates from any and
          all Taxes imposed on the Purchaser or any of the Acquired Companies
          and any Loss resulting from (A) for all taxable periods (or portions
          thereof) beginning before and ending on or prior to the Closing Date,
          including, without limitation, any Taxes imposed as a result of the
          Section 338(h)(10) Election, (B) the several liability of any of the
          Acquired Companies pursuant to Treas. Reg. Section 1.1502-6 or any
          analogous state, local or foreign law or regulation or by reason of
          its having been a member of any consolidated, combined or unitary
          group on or prior to the Closing Date, (C) its ceasing to be a member
          of the Parent Tax Group, (D) the breach of any of the Parent Tax
          Group's covenants set forth in this Section 9.6, (E) breaches of
          representations and warranties in Section 5.10, or (F) any Tax
          allocation or Tax sharing or similar agreement, as a transferee or
          successor, by contract or otherwise. The indemnification under this
          Section 9.6(c) and the indemnification for Taxes set forth elsewhere
          in Section 9.6 hereof shall not be subject to the indemnification
          Basket and Cap forth in Section 8.2(b).

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<PAGE>

                           (ii)     For purposes of SECTION 9.6(c)(i), in the
         case of any Taxes that are imposed on a periodic basis and are payable
         for a Straddle Period, the portion of such Tax which relates to the
         portion of such Tax period beginning before and ending on the Closing
         Date shall (A) in the case of any Taxes other than Taxes based upon or
         related to income or receipts, be deemed to be the amount of such Tax
         for the entire Tax period multiplied by a fraction, the numerator of
         which is the number of days in the Tax period ending on the Closing
         Date and the denominator of which is the number of days in the entire
         Tax period and (B) in the case of any Tax based upon or related to
         income or receipts, be deemed equal to the amount which would be
         payable if the relevant Tax period ended on the Closing Date.

                  (d)      SECTION 338(h)(10) ELECTION. The Parent, at the
request of the Purchaser, will join with the Purchaser in making a timely
election under Code Section 338(h)(10) (and any corresponding elections under
state, local, or foreign tax law) (collectively, the "SECTION 338(h)(10)
ELECTION") with respect to the purchase and sale or deemed purchase and sale of
the stock of any or all of the Acquired Companies hereunder. The Parent will pay
any Tax attributable to the making of the Section 338(h)(10) Election and will
indemnify the Purchaser and the Acquired Companies against any Losses arising
out of any failure to pay such Tax. The Purchaser shall prepare Internal Revenue
Service Form 8023 with respect to the Acquired Companies and such other forms
and schedules as are necessary or required to the make the Section 338(h)(10)
Election, and, subject to the Parent's approval, which shall not be unreasonably
withheld, the Parent and the Purchaser shall execute such Form 8023 and such
other forms and schedules, and shall take all such other acts as are necessary
to make or perfect such Section 338(h)(10) Election.

                  (e)      ALLOCATION OF PURCHASE PRICE. The Parties agree that
the purchase price for and the liabilities of the Consolidated Subsidiaries
(plus other relevant items) will be allocated to the assets of the Consolidated
Subsidiaries for all Tax purposes in accordance with Section 338 of the Code and
the regulations thereunder and the procedures set forth on the "ALLOCATION
SCHEDULE" attached hereto. The Purchaser, the Consolidated Subsidiaries, the
Parent and their Affiliates shall file all Tax Returns (including, but not
limited to Internal Revenue Service Form 8594 and any other corresponding state
and local forms) required by applicable law in connection with such allocation.

         SECTION 9.7       LEGEND FOR THE RESTRICTED SECURITIES.

                  (a)      Restricted Securities are transferable only pursuant
to (i) public offerings registered under the Securities Act, (ii) Rule 144 or
Rule 144A of the Securities and Exchange Commission (or any similar rule or
rules then in force) if such rule is available and (iii) subject to the
conditions specified in Section 9.7(b) below, any other legally available means
of transfer.

                  (b)      In connection with the transfer of any Restricted
Securities (other than a transfer described in clauses (i) or (ii) of Section
9.7(a) above), the holder thereof shall deliver written notice to the Purchaser
describing in reasonable detail the transfer or proposed transfer, together with
an opinion of counsel which (to the reasonable satisfaction of the Purchaser) is
knowledgeable in securities law matters to the effect that such transfer of
Restricted Securities may be

                                       56
<PAGE>

effected without registration of such Restricted Securities under the Securities
Act. In addition, if the holder of the Restricted Securities delivers to the
Purchaser an opinion of counsel that no subsequent transfer of such Restricted
Securities shall require registration under the Securities Act, the Purchaser
shall promptly upon such contemplated transfer deliver new certificates for such
Restricted Securities which do not bear the Securities Act legend set forth in
Section 9.7(d). If the Purchaser is not required to deliver new certificates for
such Restricted Securities not bearing such legend, the holder thereof shall not
transfer the same until the prospective transferee has confirmed to the
Purchaser in writing its agreement to be bound by the conditions contained in
this Section 9.7(b) and Section 9.7(d) below.

                  (c)      If any Restricted Securities become eligible for
sale pursuant to Rule 144(k), the Purchaser shall, upon the request of the
holder of such Restricted Securities, remove the legend set forth in
Section 9.7(d) below from the certificates for such Restricted Securities.

                  (d)      Each certificate or instrument representing
Restricted Securities shall be imprinted with a legend in substantially the
following form:

         "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
         REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE
         SECURITIES LAWS. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
         CERTIFICATE IS SUBJECT TO THE CONDITIONS RELATING TO SECURITIES LAWS
         SPECIFIED IN THE STOCK PURCHASE AGREEMENT, DATED AS OF JANUARY 18,
         2001, AS AMENDED AND MODIFIED FROM TIME TO TIME, BY AND AMONG THE
         ISSUER AND CERTAIN INVESTORS, AND THE ISSUER RESERVES THE RIGHT TO
         REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN
         FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH CONDITIONS
         SHALL BE FURNISHED BY THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN
         REQUEST AND WITHOUT CHARGE."

Notwithstanding any of the foregoing in this Section 9.7, the Purchaser
acknowledges and agrees that the Restricted Securities owned by the Seller
Entities will be pledged as collateral under the Parent Credit Agreement or any
replacements or refinancings thereof and that no further action, permission or
opinions are required to be given by the Seller Entities to the Purchaser to
pledge the Restricted Securities under the Parent Credit Agreement or any
replacements or refinancings thereof.

         SECTION 9.8       COMPANY EMPLOYEES. As of the Closing Date, the
Company shall continue to maintain the Company's group health plan for the
benefit of its employees. Employees of the Company who participate in such plan
will continue to be eligible to participate in such plan and all payments made
by such employees toward deductible, out-of-pocket and co-payment obligation
limits under such plan for the plan year which includes the Closing Date will
continue to be recognized under such plan. The Company will also recognize past
service with the Company for eligibility and vesting purposes under the
Company's benefit plans.

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<PAGE>

         SECTION 9.9       SELLER NOTE MATTERS. If (i) the Seller Note B Amount
is greater than zero and (ii) the Senior Credit Facility is further syndicated
during the twelve month period following the Closing Date such that the Senior
Debt Financing Amount after such further syndication exceeds the Senior Debt
Financing Amount on the Closing Date, then the Company shall make a prepayment
on the Seller Note B (such prepayment to be applied first in payment of accrued
and unpaid interest and second in repayment of outstanding principal) in an
amount equal to the lesser of (A) the outstanding principal balance and accrued
and unpaid interest on the Seller Note B and (B) the product of (i) the Senior
Debt Financing Amount after such further syndication MINUS the Senior Debt
Financing Amount on the Closing Date and (ii) the quotient of five divided by
nine; provided, however, that the Company shall not be obligated to make such
prepayment at any time when the Company is in default under the Senior Credit
Facility or any replacement thereof. Any repayment of a Seller Note required to
be made by the Company pursuant to this Section 9.9 shall be made within three
business days of the time when the Company has increased the Senior Credit
Facility as contemplated above in an amount to make such payment.
Notwithstanding any rights the Seller (or other holders of the Seller Notes) may
have to receive payments in priority over the Purchaser's other subordinated
lenders and investors, the Seller hereby agrees that the Company may grant to
its other investors and subordinated lenders the right to be paid the portion of
any increase in the Senior Debt Financing Amount referred to above that is not
required to be paid to the holder of the Seller Note B pursuant to this SECTION
9.9; provided, however, that the Seller (or other holders of the Seller Note B)
shall be paid pursuant to this Section on a pari passu basis with such other
investors and subordinated lenders.

         SECTION 9.10      USE OF MAGELLAN NAME. The Purchaser agrees and
acknowledges that the Acquired Companies have no rights to use the "Magellan"
name. From and after the Closing, the Purchaser shall not use or permit any of
the Acquired Companies to use in any manner whatsoever the "Magellan" name (or
any variation thereof) and shall promptly remove all trade dress, physical
characteristics, color combinations and other indications of operation under the
Magellan name, including, without limitation, signage, from any premises from or
at which the businesses of the Acquired Companies are operated.

         SECTION 9.11      INSURANCE MATTERS. The Seller Entities covenant and
agree as follows:

                  (a)      the Seller Entities will continue to maintain the
insurance policies that are required to be set forth on the INSURANCE SCHEDULE
(the "INSURANCE POLICIES") (or if such policies are terminated, substantially
equivalent policies) for the benefit of the Acquired Companies, with respect to
occurrences prior to the Closing Date, regardless of whether claims are brought
prior to or after the Closing Date;

                  (b)      except to the extent after the Closing that the
Acquired Companies do not comply with the terms of the Insurance Policies which
are applicable to them, the Acquired Companies will continue to enjoy
substantially the same rights and benefits under the Insurance Policies after
the Closing, with respect to occurrences prior to the Closing, regardless of
whether claims are brought prior to or after the Closing;

                                       58
<PAGE>

                  (c)      except to the extent after the Closing that the
Acquired Companies do not comply with the terms of the Insurance Policies which
are applicable to them, the Acquired Companies will have the right to tender all
claims for all occurrences that occur prior to the Closing Date to the Insurance
Policies regardless of when the claim is brought;

                  (d)      the Seller Entities will use their reasonable best
efforts to assist the Acquired Companies in tendering claims to the applicable
insurers under the Insurance Policies and to provide the Acquired Companies with
proceeds in a timely fashion of all claims made by or with respect to the
Acquired Companies under the Insurance Policies;

                  (e)      the Acquired Companies will use their reasonable
best efforts to assist the Seller Entities in tendering claims to the applicable
insurers under the Insurance Policies;

                  (f)      the Seller Entities will be responsible for
satisfying any deductibles, retentions and other retained amounts on insurance
coverage with respect to all claims made under the Insurance Policies; and

                  (g)      the Parent shall purchase, at its own cost and
expense, prior to the Closing Date, for the benefit of the Acquired Companies,
an insurance policy (or an extension of an existing policy) that has the effect
of making the general and professional liability insurance of the Acquired
Companies an occurrence based policy for all dates prior to the Closing Date
(e.g., the Parent shall purchase a "tail" to the claims made based professional
liability policy that began in June 2000) and the Acquired Companies shall have
the right to make claims under such newly purchased insurance policy as provided
in this Section 9.11 as if such insurance policy were an Insurance Policy for
purposes of this Section 9.11.

                           ARTICLE X -- MISCELLANEOUS

         SECTION 10.1      AMENDMENT AND WAIVER. This Agreement may be amended
and any provision of this Agreement may be waived, provided that any such
amendment or waiver shall be binding upon a Party only if such amendment or
waiver is set forth in a writing executed by the Purchaser and the Seller. No
course of dealing between or among any Persons having any interest in this
Agreement shall be deemed effective to modify, amend, or discharge any part of
this Agreement or any rights or obligations of any Party under or by reason of
this Agreement.

         SECTION 10.2      NOTICES. All notices, demands, and other
communications given or delivered under this Agreement shall be in writing and
shall be deemed to have been given, (i) when received if given in person, (ii)
on the date of electronic confirmation of receipt if sent by telex, facsimile or
other wire transmission, (iii) three days after being deposited in the U.S.
mail, certified or registered mail, postage prepaid, or (iv) one day after being
deposited with a reputable overnight courier. Notices, demands, and
communications to the Parties shall, unless another address is specified in
writing, be sent to the address or telecopy number indicated below:

                                       59
<PAGE>

<TABLE>

NOTICES TO THE PARENT OR THE SELLER
OR, BEFORE THE CLOSING, NOTICES TO THE COMPANY:      WITH A COPY TO
----------------------------------------------       --------------
<S>                                                  <C>
c/o Magellan Health Services, Inc.                   Dow, Lohnes & Albertson, PLLC
6950 Columbia Gateway Drive                          One Ravinia Drive
Suite 400                                            Suite 1600
Columbia,  M.D.  21046                               Atlanta, GA 30346
Attention:  Mark S. Demilio                          Attention:  John W. McNamara, Esq.
Fax No. (410) 953-5200                               Fax No. (770) 901-8874

NOTICES TO THE PURCHASER
OR, AFTER THE CLOSING, NOTICES TO THE COMPANY:       WITH A COPY TO:
---------------------------------------------        --------------

c/o Madison Dearborn Partners                        Kirkland & Ellis
Three First National Plaza, Suite 3800               200 East Randolph
Chicago, Illinois 60602                              Chicago, Illinois 60601
Attention: Timothy Sullivan                          Attention:  Sanford E. Perl, Esq.
Fax No. (312) 895-1001                               Fax No. (312) 861-2200

</TABLE>

         SECTION 10.3      BINDING AGREEMENT; ASSIGNMENT. This Agreement and
all of the provisions hereof shall be binding upon and inure to the benefit of
the Parties and their respective successors and permitted assigns; provided that
neither this Agreement nor any of the rights, interests, or obligations
hereunder may be assigned by any Party without the prior written consent of the
other Parties; provided that

                  (a)      the Purchaser may assign, in whole or in part, its
rights and obligations pursuant to this Agreement to one or more of its
Affiliates; provided that the Purchaser will nonetheless remain liable for all
of its obligations hereunder;

                  (b)      the Purchaser and the Company may each assign its
rights under this Agreement for collateral security purposes to any lender
providing financing to the Purchaser, the Company, or any of their Affiliates
and any such lender may exercise all of the rights and remedies of the Purchaser
and the Company hereunder; and

                  (c)      the Purchaser and the Company may assign its rights
under this Agreement, in whole or in part, to any subsequent purchaser of the
Purchaser or any Acquired Company or any material portion of its assets (whether
such sale is structured as a sale of stock, a sales of assets, a merger, or
otherwise); provided that the Purchaser and the Company will nonetheless remain
liable for all of its obligations hereunder.

         SECTION 10.4      SEVERABILITY. Except as otherwise provided in
SECTION 9.5(a), whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under Applicable Law,
but if any provision of this Agreement is held to be prohibited by or invalid
under Applicable Law, such provision shall be ineffective only to the extent of
such

                                       60
<PAGE>

prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Agreement.

         SECTION 10.5      NO STRICT CONSTRUCTION. The language used in this
Agreement shall be deemed to be the language chosen by the Parties to express
their mutual intent, and no rule of strict construction shall be applied against
any Person. The Parties hereto have participated jointly in the negotiation and
drafting of this Agreement. In the event of an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties hereto, and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement.

         SECTION 10.6      CAPTIONS. The captions used in this Agreement are
for convenience of reference only and do not constitute a part of this Agreement
and shall not be deemed to limit, characterize, or in any way affect any
provision of this Agreement, and all provisions of this Agreement shall be
enforced and construed as if no caption had been used in this Agreement.

         SECTION 10.7      ENTIRE AGREEMENT. This Agreement and the documents
referred to herein contain the entire agreement between the Parties and
supersede any prior understandings, agreements, or representations by or between
the Parties, written or oral, which may have related to the subject matter
hereof in any way.

         SECTION 10.8      COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original but all of
which taken together shall constitute one and the same instrument.

         SECTION 10.9      GOVERNING LAW. All questions concerning the
construction, validity, and interpretation of this Agreement shall be governed
by and construed in accordance with the domestic laws of the State of Illinois,
without giving effect to any choice of law or conflict of law provision (whether
of the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the Illinois.

         SECTION 10.10     JURISDICTION AND CONSENT TO SERVICE. Without
limiting the jurisdiction or venue of any other court, each of Parties (a)
agrees that any suit, action or proceeding arising out of or relating to this
Agreement may be brought solely in the state or federal courts of Illinois; (b)
consents to the exclusive jurisdiction of each such court in any suit, action or
proceeding relating to or arising out of this Agreement; (c) waives any
objection which it may have to the laying of venue in any such suit, action or
proceeding in any such court; and (d) agrees that service of any court paper may
be made in such manner as may be provided under applicable laws or court rules
governing service of process.

         SECTION 10.11     PARTIES IN INTEREST. Nothing in this Agreement,
express or implied, is intended to confer on any Person, other than the Parties
and their respective successors and assigns, any rights or remedies under or by
virtue of this Agreement.

                                  *  *  *  *  *

                                       61
<PAGE>

                  IN WITNESS WHEREOF, the Parties have executed this Stock
Purchase Agreement as of the date first written above.

                                  NATIONAL MENTOR, INC.

                                  By:    /s/ Greg Torres
                                         -------------------------------------
                                  Its:   President
                                         -------------------------------------

                                  MAGELLAN HEALTH SERVICES, INC.

                                  By:    /s/ Mark S. Demilio
                                         -------------------------------------
                                  Its:   EVP, Finance & Legal
                                         -------------------------------------

                                  MAGELLAN PUBLIC NETWORK, INC.

                                  By:    /s/ Mark S. Demilio
                                         -------------------------------------
                                  Its:   VP & Asst. Secretary
                                         -------------------------------------

                                  NATIONAL MENTOR HOLDINGS, INC.

                                  By:    /s/ Timothy Sullivan
                                         -------------------------------------
                                  Its:   President
                                         -------------------------------------<PAGE>

                                                                     EXHIBIT 4.1

                            LOWE'S COMPANIES, INC.

                                      AND

                  THE FIRST NATIONAL BANK OF CHICAGO, Trustee

                        Amended and Restated Indenture

                         Dated as of December 1, 1995

<PAGE>

                        Reconciliation and tie between
                        the Trust Indenture Act of 1939
                      and Amended and Restated Indenture,
                         dated as of December 1, 1995*

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

Section 310(a)(1)........................................................609
     (a)(2)..............................................................609
     (a)(3)...................................................Not Applicable
     (a)(4)...................................................Not Applicable
     (a)(5).........................................................608, 610
     (b)............................................................608, 610
     (c)......................................................Not Applicable
Section 311(a)...........................................................613
     (b).................................................................613
Section 312(a)......................................................701, 702(a)
     (b).................................................................702(b)
     (c).................................................................703
Section 313(a)...........................................................703
     (b).................................................................703
     (c).................................................................703
     (d).................................................................703
Section 314(a).....................................................704, 1005
     (b)......................................................Not Applicable
     (c)(1)..............................................................102
     (c)(2)..............................................................102
     (c)(3)...................................................Not Applicable
     (d)......................................................Not Applicable
     (e).................................................................102
     (f)......................................................Not Applicable
Section 315(a)...........................................................601
     (b).................................................................602
     (c).................................................................601
     (d).................................................................601
     (e).................................................................514
Section 316(a)...........................................................101
     (a)(1)(A)...........................................................512
     (a)(1)(B)...........................................................513
     (a)(2)...................................................Not Applicable
     (b).................................................................508
Section 317(a)(1)........................................................503
     (a)(2)..............................................................504
     (b)................................................................1003
Section 318(a)...........................................................107
     (c).................................................................107
------------------
*    This table shall not, for any purpose, be deemed to be a part of the
Indenture.
<PAGE>

                               TABLE OF CONTENTS

ARTICLE ONE -- DEFINITIONS AND OTHER PROVISIONS OF GENERAL
     APPLICATION...........................................................  1
     Section 101.  Definitions.............................................  1
     Section 102.  Compliance Certificates and Opinions....................  8
     Section 103.  Form of Documents Delivered to Trustee..................  8
     Section 104.  Acts of Holders; Record Dates...........................  9
     Section 105.  Notices, Etc., to Trustee and Company................... 10
     Section 106.  Notice to Holders; Waiver............................... 11
     Section 107.  Conflict with Trust Indenture Act....................... 11
     Section 108.  Effect of Headings and Table of Contents................ 11
     Section 109.  Successors and Assigns.................................. 11
     Section 110.  Separability Clause..................................... 12
     Section 111.  Benefits of Indenture................................... 12
     Section 112.  Governing Law........................................... 12
     Section 113.  Legal Holidays.......................................... 12

ARTICLE TWO -- SECURITY FORMS.............................................. 12
     Section 201.  Forms of Securities..................................... 12
     Section 202.  Form of Trustee's Certificate of Authentication......... 13
     Section 203.  Securities in Global Form............................... 13

ARTICLE THREE -- THE SECURITIES............................................ 13
     Section 301.  Amount Unlimited; Issuable in Series.................... 13
     Section 302.  Denominations........................................... 15
     Section 303.  Execution, Authentication, Delivery and Dating.......... 15
     Section 304.  Temporary Securities.................................... 17
     Section 305.  Registration, Registration of Transfer and Exchange and
                   Book-Entry Securities................................... 18
     Section 306.  Mutilated, Destroyed, Lost and Stolen Securities........ 20
     Section 307.  Payment of Interest; Interest Rights Preserved.......... 21
     Section 308.  Persons Deemed Owners................................... 22
     Section 309.  Cancellation............................................ 22
     Section 310.  Computation of Interest................................. 23

ARTICLE FOUR -- SATISFACTION AND DISCHARGE................................. 23
     Section 401.  Satisfaction and Discharge of Indenture................. 23
     Section 402.  Application of Trust Money.............................. 24

ARTICLE FIVE -- REMEDIES................................................... 24
     Section 501.  Events of Default....................................... 24
     Section 502.  Acceleration of Maturity; Rescission and Annulment...... 27
     Section 503.  Collection of Indebtedness and Suits for Enforcement by
                   Trustee................................................. 28

                                      -i-
<PAGE>

     Section 504.  Trustee May File Proofs of Claim........................ 29
     Section 505.  Trustee May Enforce Claims Without Possession of
                   Securities.............................................. 30
     Section 506.  Application of Money Collected.......................... 30
     Section 507.  Limitation on Suits..................................... 30
     Section 508.  Unconditional Right of Holders to Receive Principal,
                   Premium and Interest.................................... 31
     Section 509.  Restoration of Rights and Remedies...................... 31
     Section 510.  Rights and Remedies Cumulative.......................... 31
     Section 511.  Delay or Omission Not Waiver............................ 32
     Section 512.  Control by Holders...................................... 32
     Section 513.  Waiver of Past Defaults................................. 33
     Section 514.  Undertaking for Costs................................... 33
     Section 515.  Waiver of Stay or Extension Laws........................ 34

ARTICLE SIX -- THE TRUSTEE................................................. 34
     Section 601.  Certain Duties and Responsibilities..................... 34
     Section 602.  Notice of Defaults...................................... 35
     Section 603.  Certain Rights of Trustee............................... 35
     Section 604.  Not Responsible for Recitals or Issuance of Securities.. 37
     Section 605.  May Hold Securities..................................... 37
     Section 606.  Money Held in Trust..................................... 37
     Section 607.  Compensation and Reimbursement.......................... 37
     Section 608.  Disqualification; Conflicting Interests................. 38
     Section 609.  Corporate Trustee Required; Eligibility................. 38
     Section 610.  Resignation and Removal; Appointment of Successor....... 38
     Section 611.  Acceptance of Appointment by Successor.................. 40
     Section 612.  Merger, Conversion, Consolidation or Succession to
                   Business................................................ 41
     Section 613.  Preferential Collection of Claims Against Company....... 41
     Section 614.  Appointment of Authenticating Agent..................... 41

ARTICLE SEVEN -- HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY......... 43
     Section 701.  Company to Furnish Trustee Names and Addresses of
                   Holders................................................. 43
     Section 702.  Preservation of Information; Communications to Holders.. 43
     Section 703.  Reports by Trustee...................................... 44
     Section 704.  Reports by Company...................................... 44
     Section 705.  Holders' Meetings....................................... 44

ARTICLE EIGHT -- CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE...... 46
     Section 801.  Company May Consolidate, Etc., Only on Certain Terms.... 46
     Section 802.  Successor Substituted................................... 47

ARTICLE NINE -- SUPPLEMENTAL INDENTURES.................................... 48
     Section 901.  Supplemental Indentures Without Consent of Holders...... 48

                                     -ii-
<PAGE>

     Section 902.  Supplemental Indentures With Consent of Holders......... 49
     Section 903.  Execution of Supplemental Indentures.................... 50
     Section 904.  Effect of Supplemental Indentures....................... 51
     Section 905.  Conformity with Trust Indenture Act..................... 51
     Section 906.  Reference in Securities to Supplemental Indentures...... 51
     Section 907.  Notice of Supplemental Indenture........................ 51

ARTICLE TEN -- COVENANTS................................................... 51
     Section 1001.  Payment of Principal, Premium and Interest............. 51
     Section 1002.  Maintenance of Office or Agency........................ 51
     Section 1003.  Money for Securities Payments to Be Held in Trust...... 52
     Section 1004.  Corporate Existence.................................... 53
     Section 1005.  Statement by Officers as to Default.................... 53
     Section 1006.  Maintenance of Properties.............................. 54
     Section 1007.  Payment of Taxes and Other Claims...................... 54
     Section 1008.  Restrictions on Debt................................... 54
     Section 1009.  Restrictions on Sales and Leasebacks................... 56
     Section 1010.  Waiver of Certain Covenants............................ 57

ARTICLE ELEVEN -- REDEMPTION OF SECURITIES................................. 57
     Section 1101.  Applicability of Article............................... 57
     Section 1102.  Election to Redeem; Notice to Trustee.................. 57
     Section 1103.  Selection by Trustee of Securities to Be Redeemed...... 57
     Section 1104.  Notice of Redemption................................... 58
     Section 1105.  Deposit of Redemption Price............................ 59
     Section 1106.  Securities Payable on Redemption Date.................. 59
     Section 1107.  Securities Redeemed in Part............................ 59

ARTICLE TWELVE -- SINKING FUNDS............................................ 60
     Section 1201.  Applicability of Article............................... 60
     Section 1202.  Satisfaction of Sinking Fund Payments with Securities.. 60
     Section 1203.  Redemption of Securities for Sinking Fund.............. 60

ARTICLE THIRTEEN -- REPAYMENT OF SECURITIES AT OPTION OF HOLDERS........... 61
     Section 1301.  Applicability of Article............................... 61
     Section 1302.  Notice of Repayment Date............................... 61
     Section 1303.  Deposit of Repayment Price............................. 61
     Section 1304.  Securities Payable on Repayment Date................... 62
     Section 1305.  Securities Repaid in Part.............................. 62

ARTICLE FOURTEEN -- CONVERSION OF SECURITIES............................... 62
     Section 1401.  General................................................ 62
     Section 1402.  Right to Convert....................................... 63

                                     -iii-
<PAGE>

   Section 1403.  Manner of Exercise of Conversion Privilege; Delivery
                  of Common Stock; No Adjustment for Interest or Dividends.. 63
   Section 1404.  Cash Payments in Lieu of Fractional Shares................ 64
   Section 1405.  Conversion Price Adjustments; Effect of
                  Reclassification, Mergers, Consolidations and Sales of
                  Assets.................................................... 65
   Section 1406.  Taxes on Shares Issued.................................... 69
   Section 1407.  Shares to be Fully Paid; Compliance with Governmental
                  Requirements; Listing of Common Stock..................... 69
   Section 1408.  Responsibility of Trustee................................. 69
   Section 1409.  Covenant to Reserve Shares................................ 70
   Section 1410.  Other Conversions......................................... 70

ARTICLE FIFTEEN -- DEFEASANCE AND COVENANT DEFEASANCE....................... 70
   Section 1501.  Applicability of Article; Company's Option to Effect
                  Defeasance or Covenant Defeasance......................... 70
   Section 1502.  Defeasance and Discharge.................................. 70
   Section 1503.  Covenant Defeasance....................................... 71
   Section 1504.  Conditions to Defeasance or Covenant Defeasance........... 71
   Section 1505.  Deposited Money and U.S. Government Obligations to be
                  Held in Trust; Other Miscellaneous Provisions............. 73
   Section 1506.  Reinstatement............................................. 74

ARTICLE SIXTEEN -- IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
                   AND DIRECTORS............................................ 74
   Section 1601.  Immunity of Incorporators, Stockholders, Officers and
                  Directors................................................. 74

                                     -iv-
<PAGE>

     INDENTURE, dated as of December 1, 1995, between LOWE'S COMPANIES, INC., a
corporation duly organized and existing under the laws of the State of North
Carolina (herein called the "Company"), having its principal office at Highway
268 East, North Wilkesboro, North Carolina 28656, and THE FIRST NATIONAL BANK OF
CHICAGO, a national banking association duly organized and existing under the
laws of the United States, as Trustee (herein called the "Trustee").

                            RECITALS OF THE COMPANY

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

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

                  NOW, THEREFORE, THIS INDENTURE WITNESSETH:

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

                                ARTICLE ONE --
                             DEFINITIONS AND OTHER
                       PROVISIONS OF GENERAL APPLICATION

Section 101.  Definitions.

     For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:

          (1)  the terms defined in this Article have the meanings assigned to
     them in this Article and include the plural as well as the singular;

          (2)  all other terms used herein which are defined in the Trust
     Indenture Act, either directly or by reference therein, have the meanings
     assigned to them therein;

          (3)  all accounting terms not otherwise defined herein have the
     meanings assigned to them in accordance with generally accepted accounting
     principles, and, except as otherwise herein expressly provided, the term
     "generally accepted accounting principles" with respect to any computation
     required or permitted hereunder shall mean such accounting principles as
     are generally accepted at the date of such computation; and
<PAGE>

          (4)  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.

     Certain terms, used principally in Article Six, are defined in that
Article.

     "Act", when used with respect to any Holder, has the meaning specified in
Section 104.

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

     "Attributable Debt" means, as to any particular lease under which any
Person is at the time liable, at any date as of which the amount thereof is to
be determined, the total net amount of rent required to be paid by such Person
under such lease during the remaining term thereof (excluding any subsequent
renewal or other extension options held by the lessee), discounted from the
respective due dates thereof to such date at the rate of 10% per annum
compounded annually.  The net amount of rent required to be paid under any such
lease for any such period shall be the amount of the rent payable by the lessee
with respect to such period, after excluding amounts required to be paid on
account of maintenance and repairs, insurance, taxes, assessments, water rates
and similar charges and contingent rents (such as those based on sales).  In the
case of any lease which is terminable the lessee upon the payment of a penalty,
such net amount shall also include the amount of such penalty, but no rent shall
be considered as required to be paid under such lease subsequent to the first
date upon which it may be so terminated.

     "Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 614 to act on behalf of the Trustee to authenticate Securities of one
or more series.

     "Authorized Newspaper" means a newspaper of general circulation in the
relevant area, printed in the English language and customarily published on each
Business Day therein.

     "Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board or any director or directors and/or
officer or officers of the Company to whom that board or committee shall have
duly delegated its authority.

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

     "Business Day", when used with respect to any Place of Payment, means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
or executive order to close.

                                      -2-
<PAGE>

     "Capital Stock", as applied to the stock of any corporation, means the
capital stock of every class whether now or hereafter authorized, regardless of
whether such capital stock shall be limited to a fixed sum or percentage with
respect to the rights of the holders thereof to participate in dividends and in
the distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of such corporation.

     "Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, as amended
or, if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.

     "Common Stock" means any stock of any class of the Company which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company.

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

     "Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its President or
a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary, and delivered to the Trustee.

     "Consolidated Net Tangible Assets" means the aggregate amount of assets
(less applicable reserves and other properly deductible items) after deducting
therefrom (i) all current liabilities, and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as set forth on the most recent balance sheet of the Company
and its consolidated subsidiaries and computed in accordance with generally
accepted accounting principles.

     "Conversion Price" means with respect to any series of Securities which are
convertible into Common Stock, the price per share of Common Stock at which the
Securities of such series are so convertible as set forth in the Board
Resolution with respect to such series (or in any supplemental indenture entered
into pursuant to Section 901((9)) with respect to such series), as the same may
be adjusted from time to time in accordance with Section 1405 (or such
supplemental indenture pursuant to Section 1401).

     "Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of execution of this Indenture is located at One First
National Plaza, Suite 0126, Chicago, Illinois 60670-0126, Attention:  Corporate
Trust Administration.

     "Corporation" includes corporations, associations, companies and business
trusts.

                                      -3-
<PAGE>

     "Defaulted Interest" has the meaning specified in Section 307.

     "Depositary" means, with respect to the Securities of any series issuable
or issued in the form of a Global Security, a clearing agency registered under
the Securities Exchange Act of 1934, as amended, or any successor thereto, which
shall in either case be designated by the Company pursuant to Section 301 or 305
until a successor Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Depositary" shall mean or include
each Person who is then a Depositary hereunder, and if at any time there is more
than one such Person, "Depositary" as used with respect to the Securities of any
such series shall mean the Depositary with respect to the Securities of that
series.

     "Event of Default" has the meaning specified in Section 501.

     "Funded Debt" means all indebtedness for money borrowed having a maturity
of more than 12 months from the date as of which the amount thereof is to be
determined or having a maturity of less than 12 months but by its terms being
renewable or extendible beyond 12 months from such date at the option of the
borrower.

     "Global Security or Securities" means one or more fully registered
Securities in global form evidencing all or a part of a series of Securities
issued to the Depositary for such series or its nominee or registered in the
name of the Depositary or its nominee.

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

     "Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof and shall
include the terms of particular series of Securities established as contemplated
by Section 301.

     "interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.

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

     "Maturity", when used with respect to any Security, means the date on which
the principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or by repayment or otherwise.

     "Mortgage" means and includes any mortgage, pledge, lien, security
interest, conditional sale or other title retention agreement or other similar
encumbrance.

     "Officers' Certificate" means a certificate signed by at least two officers
of the Company, one signature being that of the Chairman of the Board, the
President or a Vice President, and the

                                      -4-
<PAGE>

other signature being that of the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary, of the Company, and delivered to the
Trustee.

     "Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, and who shall be acceptable to the Trustee.

     "Original Issue Discount Security" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.

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

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

          (ii)  Securities for whose payment or redemption money in the
     necessary amount has been theretofore deposited with the Trustee or any
     Paying Agent (other than the Company) in trust or set aside and segregated
     in trust by the Company (if the Company shall act as its own Paying Agent)
     for the Holders of such Securities; provided that, if such Securities are
     to be redeemed, notice of such redemption has been duly given pursuant to
     this Indenture or provision therefor satisfactory to the Trustee has been
     made;

          (iii) Securities which have been paid pursuant to Section 306 or in
     exchange for or in lieu of which other Securities have been authenticated
     and delivered pursuant to this Indenture, other than any such Securities in
     respect of which there shall have been presented to the Trustee proof
     satisfactory to it that such Securities are held by a bona fide purchaser
     in whose hands such Securities are valid obligations of the Company; and

          (iv) Securities with respect to which the Company has effected
     defeasance as provided in Article Fifteen;

provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (a) the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon a declaration of acceleration
of the Maturity thereof pursuant to Section 502, and (b) Securities owned by the
Company or any other obligor upon the Securities or any Affiliate of the Company
or of such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Securities which the Trustee knows to be so owned shall be so
disregarded.  Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.

                                      -5-
<PAGE>

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

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

     "Place of Payment", when used with respect to the Securities of any series,
means the place or places where the principal of (and premium, if any) and
interest on the Securities of that series are payable as specified as
contemplated by Section 301.

     "Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.

     "Preferred Stock" means any stock of any class of the Company which has a
preference over Common Stock in respect of dividends or of amounts payable in
the event of any voluntary or involuntary liquidation, dissolution or winding up
of the Company and which is not mandatorily redeemable or repayable, or
redeemable or repayable at the option of the Holder, otherwise than in shares of
Common Stock or Preferred Stock of another class or series or with the proceeds
of the sale of Common Stock or Preferred Stock.

     "Principal Property" means any building, structure or other facility,
together with the land upon which it is erected and fixtures comprising a part
thereof, used primarily for selling home improvement products or the
manufacturing, warehousing or distributing of such products, owned or leased by
the Company or any Subsidiary of the Company.

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

     "Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.

     "Regular Record Date" for the interest payable on any Interest Payment Date
on the Securities of any series means the date specified for that purpose as
contemplated by Section 301.

     "Repayment Date" means, when used with respect to any Security to be repaid
at the option of the Holder, the date fixed for such repayment by or pursuant to
this Indenture.

     "Repayment Price" means, when used with respect to any Security to be
repaid at the option of the Holder, the price at which it is to be repaid by or
pursuant to this Indenture.

                                      -6-
<PAGE>

     "Responsible Officer", when used with respect to the Trustee, means any
officer of the Trustee customarily performing corporate trust functions.

     "Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.

     "Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.

     "Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.

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

     "Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.

     "Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.

     "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.

     "United States" means the United States of America.

     "U.S. Government Obligations" has the meaning specified in Section 1504.

     "Vice President", when used with respect to the Company, means any vice
president, whether or not designated by a number or a word or words added before
or after the title "vice president".

                                      -7-
<PAGE>

Section 102.  Compliance Certificates and Opinions.

     Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, 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 (other than the certificate provided for
in Section 1005) shall include:

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

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

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

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

Section 103.  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 of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion are 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 of the Company stating that the
information with respect to such factual matters is in the possession of

                                      -8-
<PAGE>

the Company, unless such counsel knows, or in the exercise of reasonable care
should know, 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.

Section 104.  Acts of Holders; 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 an 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 601) conclusive in favor of the Trustee and the Company,
if made in the manner provided in this Section.

     (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 a certificate of a 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 a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his 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 which the Trustee deems sufficient.

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

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

     (e)  The Company may, in the circumstances permitted by the Trust Indenture
Act, fix any day as the record date for the purpose of determining the Holders
of Securities of any series entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote on
any action, authorized or permitted to be given or taken by Holders of
Securities of such series. If not set by the Company prior to the first
solicitation of a Holder of Securities of such series made by any Person in
respect of any such action, or in the case of any such vote, prior to such vote,
the record date for any such action or vote shall be the 30th day (or, if later,
the date of the most recent list of Holders required to be provided pursuant to
Section

                                      -9-
<PAGE>

701) prior to such first solicitation or vote, as the case may be. With regard
to any record date for action to be taken by the Holders of one or more series
of Securities, only the Holders of Securities of such series on such date (or
their duly designated proxies) shall be entitled to give or take, or vote on,
the relevant action.

     (f)  Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security 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. Any notice given or
action taken by a Holder or its agents with regard to different parts of such
principal amount pursuant to this paragraph shall have the same effect as if
given or taken by separate Holders of each such different part.

     (g)  Without limiting the generality of the foregoing, unless otherwise
specified pursuant to Section 301 or pursuant to one or more indentures
supplemental hereto, a Holder, including a Depositary that is the Holder of a
Global Security, may make, give or take, by a proxy or proxies duly appointed in
writing, any request, demand, authorization, direction, notice, consent, waiver
or other action provided in this Indenture to be made, given or taken by
Holders, and a Depositary that is the Holder of a Global Security may provide
its proxy or proxies to the beneficial owners of interests in any such Global
Security through such Depositary's standing instructions and customary
practices.

     (h)  The Trustee shall fix a record date for the purpose of determining the
Persons who are beneficial owners of interests in any Global Security held by a
Depositary entitled under the procedures of such Depositary to make, give or
take, by a proxy or proxies duly appointed in writing, any request, demand,
authorization, direction, notice, consent, waiver or other action provided in
this Indenture to be made, given or taken by Holders. If such a record date is
fixed, the Holders on such record date or their duly appointed proxy or proxies,
and only such Persons, shall be entitled to make, give or take such request,
demand, authorization, direction, notice, consent, waiver or other action,
whether or not such Holders remain Holders after such record date. No such
request, demand, authorization, direction, notice, consent, waiver or other
action shall be valid or effective if made, given or taken more than 90 days
after such record date.

Section 105.  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,

     (1)  the Trustee by any Holder or by the Company shall be sufficient for
     every purpose hereunder if made, given, furnished or filed in writing to or
     with the Trustee at its Corporate Trust Office, Attention: Corporate Trust
     Administration, or

     (2)  the Company by the Trustee or by any Holder shall be sufficient for
     every purpose hereunder (unless otherwise herein expressly provided) if in
     writing and mailed, first-class postage prepaid, to the Company addressed
     to it at the address of its principal

                                      -10-
<PAGE>

     office specified in the first paragraph of this instrument, Attention:
     Secretary, or at any other address previously furnished in writing to the
     Trustee by the Company.

Section 106.  Notice to Holders; Waiver.

     Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed 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.  Any notice to a Holder which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given, whether
or not such Holder receives such notice.  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 or irregularities in regular mail
service or by reason of any other cause, it shall be impracticable to give
notice of any event to Holders by mail when such notice is required to be given
pursuant to any provision of this Indenture, then such notification as shall be
made with the approval of the Trustee shall constitute a sufficient notification
for every purpose hereunder.

Section 107.  Conflict with Trust Indenture Act.

     If any provision hereof limits, qualifies or conflicts with the duties
imposed by any of Sections 310 through 317, inclusive, of the Trust Indenture
Act through the operation of Section 318(c) thereof, such imposed duties shall
control.  If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or shall be
deemed to be so excluded, as the case may be.

Section 108.  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 109.  Successors and Assigns.

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

                                      -11-
<PAGE>

Section 110.  Separability Clause.

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

Section 111.  Benefits of Indenture.

     Nothing in this Indenture or in the Securities, 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; provided that this
Section 111 shall not limit the rights of any Holder of a Global Security to
give any notice or take any action, or appoint any agents, with regard to any
part or different parts of the principal amount of such Global Security pursuant
to Section 104.

Section 112.  Governing Law.

     This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of New York and for all purposes shall be
governed by and construed in accordance with the laws of said state without
regard to the conflicts of laws and rules of said state.

Section 113.  Legal Holidays.

     In any case where any Interest Payment Date, Redemption Date, Repayment
Date, sinking fund payment date or Stated Maturity of any Security shall not be
a Business Day at any Place of Payment, then (notwithstanding any other
provision of this Indenture or of the Securities) payment of interest or
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, Redemption Date, Repayment Date, sinking fund payment
date or at the Stated Maturity, provided that no interest shall accrue for the
period from and after such Interest Payment Date, Redemption Date, Repayment
Date, sinking fund payment date or Stated Maturity, as the case may be.

                                ARTICLE TWO --
                                SECURITY FORMS

Section 201.  Forms of Securities.

     The Securities of each series shall be in such form or forms (including
global form) as shall be established by or pursuant to a Board Resolution or in
one or more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with any law or with any rules made pursuant thereto or the
rules of any securities exchange or as may, consistently herewith, be determined
by the officers executing

                                      -12-
<PAGE>

such Securities, as evidenced by their execution of such Securities. If the form
of Securities of any series is established by action taken pursuant to a Board
Resolution, a copy of an appropriate record of such action shall be certified by
the Secretary or an Assistant Secretary of the Company and delivered to the
Trustee at or prior to the delivery of the Company Order contemplated by Section
303 for the authentication and delivery of such Securities.

     The Trustee's certificates of authentication shall be in substantially the
form set forth in this Article.

     The definitive Securities shall be printed, lithographed or engraved or may
be produced in any other manner permitted by the rules of any securities
exchange upon which the Securities may be listed and (with respect to Global
Securities of any Series) the rules of the Depositary, all as determined by the
officers executing such Securities, as evidenced by their execution of such
Securities.

Section 202.  Form of Trustee's Certificate of Authentication.

     This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.

                              The First National Bank of Chicago, as Trustee

                              By
                                 --------------------------------------------
                                             Authorized Officer

Section 203.  Securities in Global Form.

     If any Security of a series is issuable in global form, such Security may
provide that it shall represent the aggregate amount of Outstanding Securities
from time to time endorsed thereon and also may provide that the aggregate
amount of Outstanding Securities represented thereby may from time to time be
reduced to reflect exchanges.  Any endorsement of a Security in global form to
reflect the amount, or any increase or decrease in the amount, of Outstanding
Securities represented thereby shall be made by the Trustee and in such manner
as shall be specified in such Security. Any instructions by the Company with
respect to a Security in global form, after its initial issuance, shall be in
writing but need not comply with Section 102.

                               ARTICLE THREE --
                                THE SECURITIES

Section 301.  Amount Unlimited; Issuable in Series.

     The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.

                                      -13-
<PAGE>

     The Securities may be issued in one or more series.  All Securities of each
series issued under this Indenture shall in all respects be equally and ratably
entitled to the benefits hereof with respect to such series without preference,
priority or distinction on account of the actual time of the authentication and
delivery or Maturity of the Securities of such series.  There shall be
established in or pursuant to a Board Resolution, and, to the extent not set
forth therein, set forth in an Officers' Certificate, or established in one or
more indentures supplemental hereto, prior to the issuance of Securities of any
series:

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

          (2)  any limit upon the aggregate principal amount of the Securities
     of the series which may be authenticated and delivered under this Indenture
     (except for Securities authenticated and delivered upon registration of
     transfer of, or in exchange for, or in lieu of, other Securities of that
     series pursuant to Section 304, 305, 306, 906, 1107, 1305 or 1403);

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

          (4)  the rate or rates, or the method of determination thereof, at
     which the Securities of the series shall bear interest, if any, the date or
     dates from which such interest shall accrue, the Interest Payment Dates on
     which such interest shall be payable and the Regular Record Date for the
     interest payable on any Interest Payment Date;

          (5)  if other than the Corporate Trust Office, the place or places
     where the principal of (and premium, if any) and interest on Securities of
     the series shall be payable;

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

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

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

          (9)  if other than the principal amount thereof, the portion of the
     principal amount of Securities of the series which shall be payable upon
     declaration of acceleration of the Maturity thereof pursuant to Section
     502;

                                      -14-
<PAGE>

          (10) if the Securities of the series shall be issued in whole or in
     part in the form of a Global Security or Securities, the Depositary for
     such Global Security or Securities;

          (11) any addition to or change in the Events of Default which applies
     to any Securities of the series;

          (12) any addition to or change in the covenants set forth in Article
     Ten which applies to Securities of the series;

          (13) if the Securities of the series are convertible into Common
     Stock, the Conversion Price therefor, the period during which such
     Securities are convertible and any terms and conditions for the conversion
     of such Securities which differ from Article Fourteen;

          (14) the application, if any, of Section 1502 or 1503 to the
     Securities of the series and any provisions in modification of, in addition
     to or in lieu of any of the provisions of Article Fifteen; and

          (15) any other terms of the series (which terms shall not be
     inconsistent with the provisions of this Indenture).

     All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to such
Board Resolution and set forth in such Officers' Certificate, to the extent
applicable, or in any such indenture supplemental hereto.  All Securities of any
one series need not be issued at the same time and, unless otherwise provided, a
series may be reopened, without the consent of the Holders, for issuance of
additional Securities of such series.

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

Section 302.  Denominations.

     The Securities of each series shall be issuable in registered form without
coupons in such denominations as shall be specified as contemplated by Section
301.  In the absence of any such provisions with respect to the Securities of
any series, the Securities of such series shall be issuable in denominations of
$1,000 and any integral multiple thereof.

Section 303.  Execution, Authentication, Delivery and Dating.

     The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its President or one of its Vice Presidents and attested by its
Secretary or one of its Assistant Secretaries.  The signature of any of these
officers on the Securities may be manual or facsimile.

                                      -15-
<PAGE>

     Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.

     At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, and the Trustee shall authenticate
and deliver such Securities upon Company Order.  If all the Securities of any
one series are not to be originally issued at one time and if a Board Resolution
relating to such Securities shall so permit, such Company Order may set forth
procedures (acceptable to the Trustee) for the issuance and authentication of
such Securities.

     If the form or terms of the Securities of the series have been established
in or pursuant to one or more Board Resolutions as permitted by Sections 201 and
301, in authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 601) shall be
fully protected in relying upon, an Opinion of Counsel stating:

          (a)  if the form of such Securities has been established by or
     pursuant to Board Resolution as permitted by Section 201, that such form
     has been established in conformity with the provisions of this Indenture;

          (b)  if the terms of such Securities have been established by or
     pursuant to Board Resolution as permitted by Section 301, that such terms
     have been established in conformity with the provisions of this Indenture;
     and

          (c)  that such Securities, when authenticated and delivered by the
     Trustee and issued by the Company in the manner and subject to any
     conditions specified in such Opinion of Counsel, will constitute valid and
     legally binding obligations of the Company enforceable in accordance with
     their terms, subject to bankruptcy, insolvency, fraudulent transfer,
     reorganization, moratorium and similar laws of general applicability
     relating to or affecting creditors' rights and to general equity
     principles.

If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.

     Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Board Resolution or Officers'
Certificate otherwise required pursuant to Section 301 or the Company Order and
Opinion of Counsel otherwise required pursuant to this Section 303 or prior to
the time of authentication of each Security of such series if such documents are
delivered at or prior to the authentication upon original issuance of the first
Security of such series to be issued and such documents reasonably contemplate
the issuance of all Securities of such series.

                                      -16-
<PAGE>

     Unless otherwise provided in the form of Security for any series, each
Security shall be dated the date of its authentication.

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

     If the Company shall establish pursuant to Section 301 that the Securities
of a series are to be issued in the form of one or more Global Securities, then
the Company shall execute and the Trustee shall, in accordance with this Section
and the Company Order with respect to such series, authenticate and deliver one
or more Global Securities that (i) shall represent and shall be denominated in
an amount equal to the aggregate principal amount of all of the Securities of
such series having the same terms issued and not yet canceled, (ii) shall be
registered in the name of the Depositary for such Global Security or Securities
or the nominee of such Depositary, (iii) shall be delivered by the Trustee to
such Depositary or pursuant to such Depositary's instructions and (iv) shall
bear a legend substantially to the following effect:  "Unless and until it is
exchanged in whole or in part for Securities in definitive registered form, this
Security may not be transferred except as a whole by the Depositary to the
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary."

Section 304.  Temporary Securities.

     Pending the preparation of definitive Securities of any series, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.  Every such temporary Security shall be executed
by the Company and shall be authenticated and delivered by the Trustee upon the
same conditions and in substantially the same manner, and with the same effect,
as the definitive Security in lieu of which it is issued.

     If temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of
such series upon surrender of the temporary Securities of such series at the
office or agency of the Company in a Place of Payment for that series, without
charge to the Holder.  Upon surrender for cancellation of any one or more
temporary Securities of any series the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of the same series of authorized

                                      -17-
<PAGE>

denominations. Until so exchanged the temporary Securities of any series shall
in all respects be entitled to the same benefits under this Indenture as
definitive Securities of such series.

Section 305.  Registration, Registration of Transfer and Exchange and
Book-Entry Securities.

     The Company shall cause to be kept at one of its offices or agencies
maintained pursuant to Section 1002 a register (the register maintained in such
office being herein sometimes referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Securities and of transfers of Securities.  The
Person responsible for the maintenance of the Security Register is referred to
herein as the "Security Registrar."  The Trustee is hereby initially appointed
Security Registrar for the purpose of registering Securities and transfers of
Securities as herein provided.

     Upon surrender for registration of transfer of any Security of any series
at the office or agency in a Place of Payment for that series, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of the same
series, of any authorized denominations and of a like aggregate principal
amount.

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

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

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

     No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906, 1107, 1305 or 1403 not involving any
transfer.

     The Company shall not be required (i) to issue, register the transfer of or
exchange Securities of any series during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities of that series selected for redemption under Section 1103 and ending
at the close of business on the day of such mailing, or (ii) to

                                      -18-
<PAGE>

register the transfer of or exchange any Security so selected for redemption in
whole or in part, except the unredeemed portion of any Security being redeemed
in part.

     Notwithstanding any other provision of this Section 305, unless and until
it is exchanged in whole or in part for Securities in definitive registered
form, a Global Security representing all or a portion of the Securities of a
series may not be transferred except as a whole by the Depositary for such
series to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by such Depositary or
any such nominee to a successor Depositary for such series or a nominee of such
successor Depositary.

     If at any time the Depositary for the Securities of a series notifies the
Company that it is unwilling or unable to continue as Depositary for the
Securities of such series or if at any time the Depositary for the Securities of
a series shall no longer be registered or in good standing under the Securities
Exchange Act of 1934, as amended, or other applicable statute or regulation, the
Company shall appoint a successor Depositary with respect to the Securities of
such series.  If a successor Depositary for the Securities of such series is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such condition, the Company shall execute, and the Trustee,
upon receipt of a Company Order for the authentication and delivery of
definitive Securities of such series, shall authenticate and deliver Securities
of such series in definitive form in an aggregate principal amount equal to the
principal amount of the Global Security or Securities representing such series
in exchange for such Global Security or Securities.

     The Company may at any time and in its sole discretion determine that the
Securities of any series issued in the form of one or more Global Securities
shall no longer be represented by a Global Security or Securities.  In such
event the Company shall execute, and the Trustee, upon receipt of a Company
Order for the authentication and delivery of definitive Securities of such
series, shall authenticate and deliver, Securities of such series in definitive
registered form without coupons, in any authorized denominations, in an
aggregate principal amount equal to the principal amount of the Global Security
or Securities representing such series, in exchange for such Global Security or
Securities.

     If specified by the Company pursuant to Section 301 with respect to a
series of Securities, the Depositary for such series of Securities may surrender
a Global Security for such series of Securities in exchange in whole or in part
for Securities of such series in definitive registered form on such terms as are
acceptable to the Company and such Depositary.  Thereupon, the Company shall
execute, and the Trustee shall authenticate and deliver, without service charge,

          (i)  to the Person specified by such Depositary a new Security or
     Securities of the same series, of any authorized denomination as requested
     by such Person, in an aggregate principal amount equal to and in exchange
     for such Person's beneficial interest in the Global Security; and

          (ii) to such Depositary a new Global Security in a denomination equal
     to the difference, if any, between the principal amount of the surrendered
     Global Security and

                                      -19-
<PAGE>

     the aggregate principal amount of Securities authenticated and delivered
     pursuant to Clause (i) above.

     Upon the exchange of a Global Security for Securities in definitive
registered form, in authorized denominations, such Global Security shall be
canceled by the Trustee.  Securities in definitive registered form issued in
exchange for a Global Security pursuant to this Section 305 shall be registered
in such names and in such authorized denominations as the Depositary for such
Global Security, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee.  The Trustee shall not be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions.  The Trustee shall,
at Company expense, deliver such Securities to or as directed by the Persons in
whose names such Securities are so registered.

Section 306.  Mutilated, Destroyed, Lost and Stolen Securities.

     If any mutilated Security is surrendered to the Trustee, together with such
other security or indemnity as may be reasonably required by the Trustee to save
it harmless, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a new Security of the same series and of like tenor
and principal amount and bearing a number not contemporaneously outstanding.

     If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.

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

     Upon the issuance of any new Security under this Section, 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.

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

                                      -20-
<PAGE>

     The provisions of this Section 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 Securities.

Section 307.  Payment of Interest; Interest Rights Preserved.

     Except as otherwise provided as contemplated by Section 301 with respect to
any series of Securities, interest on any Security which 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 Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.  The Company and the Trustee understand that interest on any
Global Security will be disbursed or credited by the Depositary to the Persons
having ownership thereof pursuant to a book entry or other system maintained by
the Depositary.

     Any interest on any Security of any series which 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 Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause ((1)) or Clause ((2)) below:

          (1)  The Company may elect to make payment of any Defaulted Interest
     to the Persons in whose names the Securities of such series (or their
     respective Predecessor Securities) are registered at the close of business
     on a Special Record Date for the payment of such Defaulted Interest, which
     shall be fixed in the following manner. The Company shall notify the
     Trustee in writing of the amount of Defaulted Interest proposed to be paid
     on each Security of such series and the date of the proposed payment, and
     at the same time the Company shall deposit with the Trustee an amount of
     money equal to the aggregate amount proposed to be paid in respect of such
     Defaulted Interest or shall make arrangements satisfactory to the Trustee
     for such deposit prior to the date of the proposed payment, such money when
     deposited to be held in trust for the benefit of the Persons entitled to
     such Defaulted Interest as in this Clause provided. Thereupon the Trustee
     shall fix a Special Record Date for the payment of such Defaulted Interest
     which shall be not more than 15 days and not less than 10 days prior to the
     date of the proposed payment and not less than 10 days after the receipt by
     the Trustee of the notice of the proposed payment. The Trustee shall
     promptly notify the Company of such Special Record Date and, in the name
     and at the expense of the Company, shall cause notice of the proposed
     payment of such Defaulted Interest and the Special Record Date therefor to
     be mailed, first-class postage prepaid, to each Holder of Securities of
     such series at his address as it appears in the Security 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 Securities of such series (or their respective
     Predecessor Securities) are registered at the close of business on such
     Special Record Date and shall no longer be payable pursuant to the
     following Clause (2).

                                      -21-
<PAGE>

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

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

Section 308.  Persons Deemed Owners.

     The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of (and premium, if
any) and (subject to Section 307) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.

     None of the Company, the Trustee, any Paying Agent or the Security
Registrar will 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 Security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.

Section 309.  Cancellation.

     Unless otherwise specified pursuant to Section 301((7)) for Securities of
any series all Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Securities so delivered shall be promptly canceled by the Trustee, except that
if a Global Security is so surrendered, the Company shall execute and the
Trustee shall authenticate and deliver to the Depositary for such Global
Security, without service charge, a new Global Security or Securities in a
denomination equal to and in exchange for the portion of the Global Security so
surrendered not to be paid, redeemed, repaid or registered for transfer or
exchange or for credit. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be disposed of in accordance with its customary procedures and a
certificate of disposition shall be delivered to the Company, unless, by a
Company Order, the Company shall direct the canceled Securities be returned to
it.

                                      -22-
<PAGE>

Section 310.  Computation of Interest.

     Except as otherwise specified as contemplated by Section 301 for Securities
of any series, interest on the Securities of each series shall be computed on
the basis of a 360-day year of twelve 30-day months.

                                ARTICLE FOUR --
                          SATISFACTION AND DISCHARGE

Section 401.  Satisfaction and Discharge of Indenture.

     Upon Company Request, this Indenture shall cease to be of further effect
with respect to the Securities of a particular series (except as to any
surviving rights to convert Securities into Common Stock, or rights of
registration of transfer or exchange of Securities herein expressly provided
for), and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture as to
such Securities, when:

          (1)  either:

               (A)  all Securities of such series theretofore authenticated and
          delivered (other than (i) Securities which have been destroyed, lost
          or stolen and which have been replaced or paid as provided in Section
          306 and (ii) Securities 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 1003) have been delivered to the Trustee for
          cancellation; or

               (B)  all Securities of such series not theretofore delivered to
          the Trustee for cancellation

                    (i)   have become due and payable, or

                    (ii)  will become due and payable at their Stated Maturity
               wi thin one year, or

                    (iii) are to be called for redemption within one year, under
               arrangements satisfactory to the Trustee for the giving of notice
               of redemption by the Trustee in the name, and at the expense, of
               the Company,

          and the Company, in the case of (i), (ii) or (iii) above, has
          irrevocably deposited or caused to be irrevocably deposited with the
          Trustee as trust funds in trust for the purpose sums sufficient to pay
          and discharge the entire indebtedness on such Securities not
          theretofore delivered to the Trustee for cancellation, for principal
          (and premium, if any) and interest to the date of such deposit (in the
          case of

                                      -23-
<PAGE>

          Securities which have become due and payable) or to the Stated
          Maturity or Redemption Date, as the case may be; and

          (2)  the Company has paid or caused to be paid all other sums payable
     hereunder by the Company with respect to such Securities; and

          (3)  the Company has delivered to the Trustee an Officers' Certificate
     and an Opinion of Counsel, each stating that all conditions precedent
     herein provided for relating to the satisfaction and discharge of this
     Indenture with respect to the Securities of such series have been complied
     with.

Notwithstanding the satisfaction and discharge of this Indenture with respect to
the Securities of a particular series, the obligations of the Company to the
Trustee under Section 607, the obligations, if any, of the Trustee to any
Authenticating Agent under Section 614 and, if money shall have been deposited
with the Trustee pursuant to subclause ((B)) of clause ((1)) of this Section,
the obligations of the Trustee under Section 402 and the last paragraph of
Section 1003, in each case with respect to such Securities, shall survive.

Notwithstanding the cessation, termination and discharge of all obligations,
covenants and agreements of the Company under this Indenture with respect to any
series of Securities, the obligations of the Company to the Trustee under
Section 607, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive with respect to such series of
Securities.

Section 402.  Application of Trust Money.

     Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities 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 for whose payment such money has been deposited with the
Trustee.  All money deposited with the Trustee pursuant to Section 401 (and held
by it or any Paying Agent) for the payment of Securities subsequently converted
into Common Stock shall be returned to the Company upon Company Request.

                                ARTICLE FIVE --
                                   REMEDIES

Section 501.  Events of Default.

     "Event of Default", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

                                      -24-
<PAGE>

          (1)  default in the payment of any interest upon any Security of that
     series when it becomes due and payable, and continuance of such default for
     a period of 30 days; or

          (2)  default in the payment of the principal of (or premium, if any,
     on) any Security of that series at its Maturity; or

          (3)  default in the deposit of any sinking fund payment, when and as
     due by the terms of a Security of that series; or

          (4)  default in the performance, or breach, of any covenant or
     warranty of the Company in this Indenture (other than a covenant or
     warranty a default in whose performance or whose breach is elsewhere in
     this Section specifically dealt with or which has expressly been included
     in this Indenture solely for the benefit of series of Securities other than
     that series), and continuance of such default or breach for a period of 60
     days after there has been given, by registered or certified mail, to the
     Company by the Trustee or to the Company and the Trustee by the Holders of
     at least 25% in principal amount of the Outstanding Securities of that
     series a written notice specifying such default or breach and requiring it
     to be remedied and stating that such notice is a "Notice of Default"
     hereunder; or

          (5)  a default under any bond, debenture, note or other evidence of
     indebtedness for money borrowed by the Company or any Subsidiary (including
     a default with respect to Securities of any series other than that series)
     or under any mortgage, indenture (including this 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
     Subsidiary (each such bond, debenture, note, evidence of indebtedness,
     mortgage, indenture or instrument being referred to as a "Loan Document"),
     whether such indebtedness now exists or shall hereafter be created, which
     default shall constitute a failure to pay any portion of the principal of
     such indebtedness when due and payable after the expiration of any
     applicable grace period with respect thereto or shall have resulted in such
     indebtedness becoming or being declared due and payable prior to the date
     on which it would otherwise have become due and payable, without such
     indebtedness having been discharged or such acceleration having been
     rescinded or annulled within a period of 10 days after there shall have
     been given, by registered or certified mail, to the Company by the Trustee
     or to the Company and the Trustee by the Holders of at least 25% in
     principal amount of the Outstanding Securities of that series a written
     notice specifying such default and requiring the Company to cause such
     indebtedness to be discharged or such acceleration to be rescinded or
     annulled and stating that such notice is a "Notice of Default" hereunder,
     if the aggregate outstanding principal amount of indebtedness under the
     Loan Document with respect to which such default or acceleration has
     occurred exceeds $10 million; provided, however, that if such default under
     such Loan Document shall be cured by the Company or be waived by the
     holders of such indebtedness or if such acceleration shall be rescinded or
     annulled, in each case as may be permitted by such Loan Document, then the
     Event of Default hereunder by reason

                                      -25-
<PAGE>

     of such default shall be deemed likewise to have been thereupon cured or
     waived; and provided, further, that, subject to the provisions of Sections
     601 and 602, the Trustee shall not be deemed to have knowledge of such
     default or acceleration unless either (A) a Responsible Officer of the
     Trustee shall have actual knowledge of such default or acceleration or (B)
     the Trustee shall have received written notice thereof from the Company,
     from any Holder, from the holder of any such indebtedness or from the
     trustee under any such mortgage, indenture or other instrument; or

          (6)  the entry by a court having jurisdiction in the premises of (A) a
     decree or order for relief in respect of the Company or any Subsidiary in
     an involuntary case or proceeding under any applicable Federal or State
     bankruptcy, insolvency, reorganization or other similar law or (B) a decree
     or order adjudging the Company or any Subsidiary a bankrupt or insolvent,
     or approving as properly filed a petition seeking reorganization,
     arrangement, adjustment or composition of or in respect of the Company or
     any Subsidiary under any applicable Federal or State law, or appointing a
     custodian, receiver, liquidator, assignee, trustee, sequestrator or other
     similar official of the Company or any Subsidiary or of any substantial
     part of its property, or ordering the winding up or liquidation of its
     affairs, and the continuance of any such decree or order for relief or any
     such other decree or order unstayed and in effect for a period of 60
     consecutive days; or

          (7)  the commencement by the Company or any Subsidiary of a voluntary
     case or proceeding under any applicable Federal or State bankruptcy,
     insolvency, reorganization or other similar law or of any other case or
     proceeding to be adjudicated a bankrupt or insolvent, or the consent by it
     to the entry of a decree or order for relief in respect of the Company or
     any Subsidiary in an involuntary case or proceeding under any applicable
     Federal or State bankruptcy, insolvency, reorganization or other similar
     law or to the commencement of any bankruptcy or insolvency case or
     proceeding against it, or the filing by it of a petition or answer or
     consent seeking reorganization or relief under any applicable Federal or
     State law, or the consent by it to the filing of such petition or to the
     appointment of or taking possession by a custodian, receiver, liquidator,
     assignee, trustee, sequestrator or other similar official of the Company or
     any Subsidiary or of any substantial part of its property, or the making by
     it of an assignment for the benefit of creditors, or the admission by it in
     writing of its inability to pay its debts generally as they become due, or
     the taking of corporate action by the Company or any Subsidiary in
     furtherance of any such action; or

          (8)  any other Event of Default provided with respect to Securities of
     that series.

     Upon receipt by the Trustee of any proposed Notice of Default from any
Holder with respect to Securities of a series all or part of which is
represented by a Global Security, a record date shall be established for
determining Holders of Outstanding Securities of such series entitled to join in
such proposed Notice of Default, which record date shall be at the close of
business on the day the Trustee receives such proposed Notice of Default.  The
Holders on such record date, or their duly designated proxies, and only such
Persons, shall be entitled to join in such proposed

                                      -26-
<PAGE>

Notice of Default, whether or not such Holders remain Holders after such record
date; provided, that unless Holders of at least 25% in principal amount of the
Outstanding Securities of such series, or their proxies, shall have joined in
such proposed Notice of Default prior to the day which is 90 days after such
record date, such proposed Notice of Default shall automatically and without
further action by any Holder be canceled and of no further effect. Nothing in
this paragraph shall prevent a Holder, or a proxy of a Holder, from giving (i)
after expiration of such 90-day period, a new proposed Notice of Default
identical to a proposed Notice of Default which has been canceled pursuant to
the proviso to the preceding sentence, or (ii) during any such 90-day period, an
additional proposed Notice of Default with respect to any new or different fact
or circumstance permitting the giving of a proposed Notice of Default with
respect to Securities of such series, in either of which events a new record
date shall be established pursuant to the provisions of this Section 501. Any
such proposed Notice of Default shall be considered a Notice of Default
hereunder at such time, if any, that Holders of at least 25% in principal amount
of the Outstanding Securities shall have joined in such proposed Notice of
Default by giving timely notice to the Trustee hereunder.

Section 502.  Acceleration of Maturity; Rescission and Annulment.

     If an Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case, the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if any of the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount of such Securities as may be specified in the terms
thereof) of all of the Securities of that series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal amount (or specified
amount) shall become immediately due and payable.  Upon payment of said amounts,
all obligations of the Company in respect of payment of principal of the
Securities of such series shall terminate.

     At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if

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

               (A)  all overdue interest on all Securities of that series,

               (B)  the principal of (and premium, if any, on) any Securities of
          that series which have become due otherwise than by such declaration
          of acceleration and any interest thereon at the rate or rates
          prescribed therefor in such Securities,

               (C)  to the extent that payment of such interest is lawful,
          interest upon overdue interest at the rate or rates prescribed
          therefor in such Securities, and

                                      -27-
<PAGE>

               (D)  all sums paid or advanced by the Trustee hereunder and the
          reasonable compensation, expenses, disbursements and advances of the
          Trustee, its agents and counsel;

     and

          (2)  all Events of Default with respect to Securities of that series,
     other than the non-payment of the principal of Securities of that series
     which have become due solely by such declaration of acceleration, have been
     cured or waived as provided in Section 513.

No such rescission shall affect any subsequent default or impair any right
consequent thereon.

     Upon receipt by the Trustee of written notice declaring such an
acceleration, or rescission and annulment thereof, with respect to Securities of
a series all or part of which is represented by a Global Security, a record date
shall be established for determining Holders of Outstanding Securities of such
series entitled to join in such notice, which record date shall be at the close
of business on the day the Trustee receives such notice.  The Holders on such
record date, or their duly designated proxies, and only such Persons, shall be
entitled to join in such notice, whether or not such Holders remain Holders
after such record date; provided, that unless such declaration of acceleration,
or rescission and annulment, as the case may be, shall have become effective by
virtue of the requisite percentage having joined in such notice prior to the day
which is 90 days after such record date, such notice of declaration of
acceleration, or rescission and annulment, as the case may be, shall
automatically and without further action by any Holder be canceled and of no
further effect.  Nothing in this paragraph shall prevent a Holder, or a proxy of
a Holder, from giving, (i) after expiration of such 90-day period, a new written
notice of declaration of acceleration or rescission and annulment thereof, as
the case may be, that is identical to a written notice which has been canceled
pursuant to the proviso to the preceding sentence, or (ii) during any such 90-
day period, an additional written notice of declaration of acceleration with
respect to Securities of such series, or an additional written notice of
rescission and annulment of any declaration of acceleration with respect to any
other Event of Default with respect to Securities of such series, in either of
which events a new record date shall be established pursuant to the provisions
of this Section 502.

Section 503.  Collection of Indebtedness and Suits for Enforcement by Trustee.

     The Company covenants that if

          (1)  default is made in the payment of any interest on any Security
     when such interest becomes due and payable and such default continues for a
     period of 30 days, or

          (2)  default is made in the payment of the principal of (or premium,
     if any, on) any Security at the Maturity thereof,

          (3)  default is made in the making or satisfaction of any sinking fund
     payment when it becomes due pursuant to the terms of the securities of any
     series,

                                      -28-
<PAGE>

the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
or rates prescribed therefor in such Securities and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.

     If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may, but shall not
be obligated to, institute a judicial proceeding for the collection of the sums
so due and unpaid, may prosecute such proceeding to judgment or final decree,
and may enforce the same against the Company or any other obligor upon such
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon such Securities, wherever situated.

     If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.

Section 504.  Trustee May File Proofs of Claim.

     In case of any judicial proceeding relative to the Company (or any other
obligor upon the Securities), its property or its creditors, the Trustee shall
be entitled and empowered, by intervention in such proceeding or otherwise, to
take any and all actions authorized under the Trust Indenture Act in order to
have claims of the Holders and the Trustee allowed in any such proceeding.  In
particular, the Trustee shall be authorized to file and prove a claim for the
whole amount of principal, premium and interest owing and unpaid in respect of
the Securities and to file such other papers or documents as may be necessary or
advisable in order to have claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements, and advances of the Trustee,
its agents and counsel) and of the Holders allowed in such judicial proceeding,
and to collect and receive any moneys or other property payable or deliverable
on any such claims and to distribute the same; and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official 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 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 607.

                                      -29-
<PAGE>

     No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
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 505.  Trustee May Enforce Claims Without Possession of Securities.

     All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.

Section 506.  Application of Money Collected.

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

          FIRST:  To the payment of all amounts due the Trustee under Section
     607;

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

          THIRD:  The balance, if any, to the Company or to whomsoever may be
     lawfully entitled to receive the same as a court of competent jurisdiction
     may direct.

Section 507.  Limitation on Suits.

     No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless:

          (1)  such Holder has previously given written notice to the Trustee of
     a continuing Event of Default with respect to the Securities of that
     series;

          (2)  the Holders of not less than 25% in principal amount of the
     Outstanding Securities of that series shall have made written request to
     the Trustee to institute proceedings in respect of such Event of Default in
     its own name as Trustee hereunder;

                                      -30-
<PAGE>

          (3)  such Holder or Holders have offered to the Trustee reasonable
     indemnity against the costs, expenses and liabilities to be incurred in
     compliance with such request;

          (4)  the Trustee for 60 days after its receipt of such notice, request
     and offer of indemnity has failed to institute any such proceeding; and

          (5)  no direction inconsistent with such written request has been
     given to the Trustee during such 60-day period by the Holders of a majority
     in principal amount of the Outstanding Securities of that series;

it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or of the Holders of Outstanding Securities of any other series,
or to obtain or to seek to obtain priority or preference over any other of such
Holders or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all of such Holders.

Section 508.  Unconditional Right of Holders to Receive Principal, Premium and
Interest.

     Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of (and premium, if any) and (subject to Section 307)
interest on such Security on the Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption or repayment at the option of the
Holder, on the Redemption Date or the Repayment Date, as the case may be) and
(if the terms of such Security so provide) to have such Security converted into
Common Stock pursuant to Article Fourteen and to institute suit for the
enforcement of any such payment or conversion, and such rights shall not be
impaired without the consent of such Holder.

Section 509.  Restoration of Rights and Remedies.

     If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture 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, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall 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 510.  Rights and Remedies Cumulative.

     Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, 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

                                      -31-
<PAGE>

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 511.  Delay or Omission Not Waiver.

     No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.

Section 512.  Control by Holders.

     The Holders of at least a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, provided that

          (1)  such direction shall not be in conflict with any rule of law or
     with this Indenture, expose the Trustee to personal liability or be unduly
     prejudicial to Holders not joining therein, and

          (2)  the Trustee may take any other action deemed proper by the
     Trustee which is not inconsistent with such direction.

     Upon receipt by the Trustee of any such direction with respect to
Securities of a series all or part of which is represented by a Global Security,
a record date shall be established for determining Holders of Outstanding
Securities of such series entitled to join in such direction, which record date
shall be determined in accordance with Section 104((e)).  The Holders on such
record date, or their duly designated proxies, and only such Persons, shall be
entitled to join in such direction, whether or not such Holders remain Holders
after such record date; provided, that unless Holders of at least a majority in
principal amount of the outstanding Securities of such series, or their proxies,
shall have been joined in such direction prior to the day which is 90 days after
such record date, such direction shall automatically and without further action
by any Holder be canceled and of no further effect.  Nothing in this paragraph
shall prevent a Holder, or a proxy of a Holder, from giving, (i) after
expiration of such 90-day period, a new direction identical to a direction which
has been canceled pursuant to the provisions to the preceding sentence or (ii)
during any such 90-day period a new direction contrary to or different from such
direction, in either of which events a new record date shall be established
pursuant to the provisions of this Section 512.

                                      -32-
<PAGE>

Section 513.   Waiver of Past Defaults.

     By Act delivered to the Company and the Trustee, the Holders of not less
than a majority in principal amount of the Outstanding Securities of any
affected series may on behalf of the Holders of all the Securities of such
series waive any past default hereunder with respect to such series and its
consequences, except a default

          (1)  in the payment of the principal of (or premium, if any) or
     interest on any Security of such series or in the payment of any sinking
                                                                      -------
     fund installment with respect to the Securities of such series, or
     ----
          (2)  in respect of a covenant or provision hereof which under Article
     Nine cannot be modified or amended without the consent of the Holder of
     each Outstanding Security of such series affected.

     The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Persons entitled to waive any past default hereunder.
If a record date is fixed, the Holders on such record date, or their duly
designated proxies, and only such Persons, shall be entitled to waive any
default hereunder, whether or not such Holders remain Holders after such record
date; provided, that unless such majority in principal amount shall have been
obtained prior to the date which is 90 days after such record date, any such
waiver previously given shall automatically and without further action by any
Holder be canceled and of no further effect.

     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.

Section 514.   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, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Trustee, by any Holder, or
group of Holders, holding in the aggregate more than 10% in principal amount of
the Outstanding Securities of any series, or by any Holder for the enforcement
of the payment of the principal of (or premium, if any) or interest on any
Security on or after the Stated Maturity expressed in such Security (or, in the
case of redemption or repayment at the option of the Holder, on or after the
Redemption Date or Repayment Date, as the case may be, and (if the terms of such
Security so provide) to have such Security converted into Common Stock pursuant
to Article Fourteen).

                                      -33-
<PAGE>

Section 515.  Waiver of Stay or Extension 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 wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it 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 SIX --
                                  THE TRUSTEE

Section 601.   Certain Duties and Responsibilities.

     (a)  Except during the continuance of an Event of Default

          (1)  the Trustee undertakes to perform such duties and only such
     duties as are specifically set forth in this Indenture, and no implied
     covenants or obligations shall be read into this Indenture against the
     Trustee; and

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

     (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 man would exercise or use under the circumstances in the conduct of his
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

          (1)  this Subsection shall not be construed to limit the effect of
     Subsection ((a)) of this Section;

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

                                      -34-
<PAGE>

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

          (4)  no provision of this Indenture shall require the Trustee to
     expend or risk its own funds or otherwise incur any financial liability in
     the performance of any of its duties hereunder, or in the exercise of any
     of its rights or powers, if it shall have reasonable grounds for believing
     that repayment of such funds or adequate indemnity against such risk or
     liability is not reasonably assured to it.

     (d)  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 this Section.

Section 602.   Notice of Defaults.

     Within 90 days after the occurrence of any default hereunder with respect
to Securities of any series, the Trustee shall transmit by mail to all Holders
of Securities of such series, as their names and addresses appear in the
Security Register, notice of such default hereunder 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, premium or interest on
any Security of such series or in the payment of any sinking fund installment
with respect to the Securities of such series, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee of the board of directors and/or Responsible Officers of the Trustee
in good faith determine that the withholding of such notice is in the interests
of the Holders of the Securities of such series; and provided, further, that in
the case of any default of the character specified in Section 501((4)) with
respect to the Securities of such series no such notice to Holders shall be
given until at least 60 days after the occurrence thereof. For the purpose of
this Section, the term "default" means any event which is, or after notice or
lapse of time or both would become, an Event of Default.

Section 603.   Certain Rights of Trustee.

     Subject to the provisions of Section 601:

          (a)  the Trustee may rely and shall be protected in acting or
     refraining from acting upon any resolution, certificate, statement,
     instrument, opinion, report, notice, request, direction, consent, order,
     bond, debenture, 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;

                                      -35-
<PAGE>

          (b)  any request or direction of the Company mentioned herein shall be
     sufficiently evidenced by a Company Request or Company Order and any
     resolution of the Board of Directors may be sufficiently evidenced by a
     Board Resolution;

          (c)  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 an Officers' Certificate;

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

          (e)  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 reasonable security or indemnity against the
     costs, expenses and liabilities which might be incurred by it in compliance
     with such request or direction;

          (f)  the Trustee shall not be bound to make any investigation into the
     facts or matters stated in any resolution, certificate, statement,
     instrument, opinion, report, notice, request, direction, consent, order,
     bond, debenture, note, other evidence of indebtedness or other paper or
     document, but the Trustee, in its discretion, may make such further inquiry
     or investigation into such facts or matters as it may see fit, and, if the
     Trustee shall determine to make such further inquiry or investigation, it
     shall be entitled to examine the books, records and premises of the
     Company, personally or by agent or attorney;

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

          (h)  the Trustee shall not be required to take notice or be deemed to
     have notice of any default hereunder (except failure by the Company to pay
     principal of or interest on any series of Securities so long as the Trustee
     is also acting as Paying Agent for such series of Securities) unless the
     Trustee shall be specifically notified in writing of such default by the
     Company by the Holders of at least a 10% in aggregate principal amount of
     all Outstanding Securities, and all such notices or other instruments
     required by this Indenture to be delivered to the Trustee must, in order to
     be effective, be delivered at the principal Corporate Trust Office of the
     Trustee, and in the absence of such notice the Trustee may conclusively
     assume there is no default except as aforesaid.

                                      -36-
<PAGE>

Section 604.   Not Responsible for Recitals or Issuance of Securities.

     The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee or any Authenticating Agent assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. The Trustee or any
Authenticating Agent shall not be accountable for the use or application by the
Company of Securities or the proceeds thereof. The Trustee shall not be deemed
to have knowledge of the identity of any Subsidiary unless either (A) a
Responsible Officer of the Trustee shall have actual knowledge thereof or (B)
the Trustee shall have received written notice thereof from the Company or any
Holder.

Section 605.   May Hold Securities.

     The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.

Section 606.   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 with the Company.

Section 607.   Compensation and Reimbursement.

     The Company agrees:

          (1)  to pay to the Trustee from time to time reasonable compensation
     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);

          (2)  except as otherwise expressly provided herein, 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
     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

          (3)  to indemnify the Trustee for, and to hold it harmless against,
     any loss, liability or expense incurred without negligence or bad faith on
     its part, arising out of or in connection with the acceptance or
     administration of the trust or trusts hereunder, including the costs and
     expenses of defending itself against any claim or liability in connection
     with the exercise or performance of any of its powers or duties hereunder.

                                      -37-
<PAGE>

     As security for the performance of the obligations of the Company under
this Section, the Trustee shall have a lien prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the benefit of the Holders of particular Securities.

Section 608.   Disqualification; Conflicting Interests.

     If the Trustee has or shall acquire a conflicting interest within the
meaning of Section 310 of the Trust Indenture Act, the Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Indenture. To
the extent permitted by the Trust Indenture Act, the Trustee shall not be deemed
to have a conflicting interest with respect to the Securities of any series by
virtue of being Trustee with respect to the Securities of any particular series
of Securities other than that series or by virtue of being trustee under the
Indenture, dated as of April 15, 1992, between the Company and the Trustee.

Section 609.   Corporate Trustee Required; Eligibility.

     There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus of at least $50,000,000. If such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of Federal, State, Territorial or District of Columbia supervising or examining
authority, then for the purposes of this Section, 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, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.

Section 610.   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 611.

     (b)  The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 611 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 with respect to the
Securities of such series.

     (c)  The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company.

                                      -38-
<PAGE>

     (d)  If at any time:

          (1)  the Trustee shall fail to comply with Section 608 after written
     request therefor by the Company or by any Holder who has been a bona fide
     Holder of a Security for at least six months, or

          (2)  the Trustee shall cease to be eligible under Section 609 and
     shall fail to resign after written request therefor by the Company or by
     any such Holder, or

          (3)  the Trustee shall become incapable of acting or shall be adjudged
     a 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, (i) the Company by a Board Resolution may remove the
Trustee with respect to any or all Securities, or (ii) subject to Section 514,
any Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to any or
all Securities and the appointment of a successor Trustee or Trustees with
respect to such series.

     (e)  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, with respect
to the Securities of one or more series, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee with respect to
the Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of that or those series shall be appointed by Act of
the Holders of a majority in principal amount of the Outstanding Securities of
such series 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 611, become the successor
Trustee with respect to the Securities of such series and to that extent
supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Securities of any series shall have been so
appointed by the Company or the Holders and accepted appointment in the manner
required by Section 611, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.

     (f)  The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series to all Holders
of Securities of such series in the manner provided in Section 106. Each notice
of appointment shall include the name of the

                                      -39-
<PAGE>

successor Trustee with respect to the Securities of such series and the address
of its Corporate Trust Office.

Section 611.   Acceptance of Appointment by Successor.

     (a)  In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder, subject nevertheless to its
lien, if any, provided for in Section 607.

     (b)  In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.

     (c)  Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee

                                      -40-
<PAGE>

all such rights, powers and trusts referred to in paragraph ((a)) or ((b)) of
this Section, as the case may be.

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

Section 612.   Merger, Conversion, Consolidation or Succession to Business.

     Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to 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,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities. In case
any Securities shall not have been authenticated by such predecessor Trustee,
any such successor Trustee may authenticate and deliver such Debt Securities, in
either its own name or that of its predecessor Trustee, with the full force and
effect which this Indenture provides for the certificate of authentication of
the Trustee.

Section 613.   Preferential Collection of Claims Against Company.

     If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of Section 311 of the Trust Indenture Act regarding the collection of
such claims against the Company (or any such other obligor). A Trustee that has
resigned or been removed shall be subject to and comply with said Section 311 to
the extent required thereby.

Section 614.   Appointment of Authenticating Agent.

     The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities (which may be an Affiliate of the Company)
which shall be authorized to act on behalf of the Trustee to authenticate
Securities issued upon registration of transfer or partial redemption or
repayment thereof or pursuant to Section 306, and Securities so authenticated
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee hereunder.
Wherever reference is made in this Indenture to the authentication and delivery
of Securities by the Trustee or the Trustee's certificate of authentication,
such reference shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Company and shall at all times
be a corporation organized and doing business and in good standing under the
laws of the United States of America, any State or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and

                                      -41-
<PAGE>

surplus of no less than $50,000,000 and subject to supervision or examination by
Federal or State authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Authenticating Agent 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 an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section.

     Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.

     An Authenticating Agent for any series of Securities may resign at any time
by giving written notice thereof to the Trustee for such series and to the
Company. The Trustee for any series of Securities may at any time terminate the
agency of an Authenticating Agent for such series by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee of such series may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall mail
written notice of such appointment by first-class mail, postage prepaid, to all
Holders of Securities of the series with respect to which such Authenticating
Agent will serve, as their names and addresses appear in the Security Register.
Any successor Authenticating Agent upon acceptance of its appointment thereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.

     Except with respect to an Authenticating Agent appointed at the request of
the Company, the Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, pursuant to the
provisions of Section 607.

     If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:

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

                              The First National Bank of Chicago, as Trustee

                                      -42-
<PAGE>

                              By
                                 ------------------------------
                                    As Authenticating Agent

                              By
                                 ------------------------------
                                    As Authenticating Agent

                               ARTICLE SEVEN --
                          HOLDERS' LISTS AND REPORTS
                            BY TRUSTEE AND COMPANY

Section 701.   Company to Furnish Trustee Names and Addresses of Holders.

     With respect to each series of Securities, the Company will furnish or
cause to be furnished to the Trustee for the Securities of such Series

          (a)  semiannually, not more than 15 days after each Regular Record
     Date relating to that series (or, if there is no Regular Record Date
     relating to that series, on June 30 and December 31), a list, in such form
     as such Trustee may reasonably require, of the names and addresses of the
     Holders of that series as of such date,

     and

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

provided, however, that if and so long as the Trustee is Security Registrar with
respect to Securities of a particular series no such list shall be required with
respect to the Securities of such series.

Section 702.   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 furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 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 Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
Trust Indenture Act.

     (c)  Every Holder of Securities, 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

                                      -43-
<PAGE>

them shall be held accountable by reason of the disclosure of information as to
the names and addresses of the Holders made pursuant to the Trust Indenture Act.

Section 703.   Reports by Trustee.

     (a)  Within 60 days after May 15 of each year commencing with the year
1996, the Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act if and to the extent and in the manner provided pursuant thereto.

     (b)  A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.

Section 704.   Reports by Company.

     The Company shall file with the Trustee and the Commission, and transmit to
Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to such Act; provided that any such information,
documents or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, shall be
filed with the Trustee within 15 days after the same is so required to be filed
with the Commission. Delivery of such reports to the Trustee is for
informational purposes only and the Trustee's receipt of such reports shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).

Section 705.   Holders' Meetings.

     (a)  A meeting of Holders of any or all series may be called at any time
and from time to time pursuant to the provisions of this Section 705 for any of
the following purposes:

          (1)  to give any notice to the Company or to the Trustee for such
     series, or to give any directions to the Trustee for such series, or to
     consent to the waiving of any default hereunder and its consequences, or to
     take any other action authorized to be taken by Holders pursuant to any of
     the provisions of Article Five;

          (2)  to remove the Trustee for such series and appoint a successor
     Trustee pursuant to the provisions of Article Six;

          (3)  to consent to the execution of an indenture or supplemental
     indentures hereto pursuant to the provisions of Section 902;

                                      -44-
<PAGE>

          (4)  to take any other action authorized to be taken by or on behalf
     of the Holders of any specified aggregate principal amount of the
     Outstanding Securities of any one or more or all series, as the case may
     be, under any other provision of this Indenture or under applicable law.

     (b)  The Trustee for any series may at any time call a meeting of Holders
of such series to take any action specified in paragraph ((a)) of this Section
705, to be held at such time or times and at such place or places as the Trustee
for such series shall determine. Notice of every meeting of the Holders of any
series, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting, shall be given to Holders
of such series in the manner and to the extent provided in Section 105. Such
notice shall be given not less than 20 days nor more than 90 days prior to the
date fixed for the meeting.

     (c)  In case at any time the company, pursuant to a Board Resolution, or
the Holders of at least 10% in aggregate principal amount of the Outstanding
Securities of a series or of all series, as the case may be, shall have
requested the Trustee for such series to call a meeting of Holders of any or all
such series by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have given the
notice of such meeting within 20 days after the receipt of such request, then
the Company or such Holders may determine the time or times and the place or
places for such meetings and may call such meetings to take any action
authorized by giving notice thereof as provided in the preceding paragraph.

     (d)  to be entitled to vote at any meeting of Holders a Person shall be (a)
a Holder of a Security of the series with respect to which such meeting is being
held or (b) a Person appointed by an instrument in writing as agent or proxy by
such Holder. The only Persons who shall be entitled to be present or to speak at
any meeting of Holders shall be the Persons entitled to vote at such meeting and
their counsel and any representatives of the Trustee for the series with respect
to which such meeting is being held and its counsel and any representatives of
the Company and its counsel.

     (e)  Notwithstanding any other provisions of this Indenture, the Trustee
for any series may make such reasonable regulations as it may deem advisable for
any meeting of Holders of such series, in regard to proof of the holding of
Securities of such series and of the appointment of proxies, and in regard to
the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as it shall deem
appropriate.

     The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders of such series as provided in paragraph ((c)) of this
Section 705, in which case the Company or the Holders calling the meeting, as
the case may be, shall in like manner appoint a temporary chairman. A permanent
chairman and a permanent secretary of the meeting shall be elected by a majority
vote of the meeting.

     Subject to the provisos in the definition of "Outstanding," at any meeting
each Holder of a Debt Security of the series with respect to which such meeting
is being held or proxy therefor

                                      -45-
<PAGE>

shall be entitled to one vote for each $1,000 principal amount (or such other
amount as shall be specified as contemplated by Section 301) of Securities of
such series held or represented by him; provided, however, that no vote shall be
cast or counted at any meeting in respect of any Security challenged as not
Outstanding and ruled by the chairman of the meeting to be not Outstanding. The
chairman of the meeting shall have no right to vote other than by virtue of
Outstanding Securities of such series held by him or instruments in writing duly
designating him as the person to vote on behalf of Holders of Debt Securities of
such series. Any meeting of Holders with respect to which a meeting was duly
called pursuant to the provisions of paragraph ((b)) or ((c)) of this Section
705 may be adjourned from time to time by a majority of such Holders present and
the meeting may be held as so adjourned without further notice.

     (f)  Voting. The vote upon any resolution submitted to any meeting of
          ------
Holders with respect to which such meeting is being held shall be by written
ballots on which shall be subscribed the signatures of such Holders or of their
representatives by proxy and the serial number or numbers of the Securities held
or represented by them. The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting for or against
any resolution and who shall make and file with the secretary of the meeting
their verified written reports in duplicate of all votes cast at the meeting. A
record in duplicate of the proceedings of each meeting of Holders shall be
prepared by the secretary of the meeting and there shall be attached to said
record the original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more persons having knowledge of the
facts setting forth a copy of the notice of the meeting and showing that said
notice was transmitted as provided in paragraph ((b)) of this Section 705. The
record shall show the serial numbers of the Securities voting in favor of or
against any resolution. The record shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one of the
duplicates shall be delivered to the Company and the other to the Trustee to be
preserved by the Trustee.

     Any record so signed and verified shall be conclusive evidence of the
matters therein stated.

     (g)  Nothing contained in this Section 705 shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Holders or any rights
expressly or impliedly conferred hereunder to make such call, any hindrance or
delay in the exercise of any right or rights conferred upon or reserved to the
Trustee or to any Holder under any of the provisions of this Indenture or of the
Securities of any series.

                               ARTICLE EIGHT --
                            CONSOLIDATION, MERGER,
                         CONVEYANCE, TRANSFER OR LEASE

Section 801.   Company May Consolidate, Etc., Only on Certain Terms.

     The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and the Company shall not permit any Person to consolidate with
or merge into the Company, unless:

                                      -46-
<PAGE>

          (1)  in case the Company shall consolidate with or merge into another
     Person or convey, transfer or lease its properties and assets substantially
     as an entirety to any Person, the Person formed by such consolidation or
     into which the Company is merged or the Person which acquires by conveyance
     or transfer, or which leases, the properties and assets of the Company
     substantially as an entirety shall be a corporation, partnership or trust,
     shall be organized and validly existing under the laws of the United States
     of America, any State thereof or the District of Columbia and shall
     expressly assume, by an indenture supplemental hereto, executed and
     delivered to the Trustee the due and punctual payment of the principal of
     and any premium and interest on all the Securities and the performance or
     observance of every covenant of this Indenture on the part of the Company
     to be performed or observed;

          (2)  immediately after giving effect to such transaction, and treating
     any indebtedness which becomes an obligation of the Company or a Subsidiary
     as a result of such transaction as having been incurred by the Company or
     such Subsidiary at the time of such transaction, no Event of Default, and
     no event which, after notice or lapse of time or both, would become an
     Event of Default, shall have happened and be continuing;

          (3)  if, as a result of any such consolidation or merger or such
     conveyance, transfer or lease, properties or assets of the company could
     become subject to a Mortgage which would not be permitted by this
     Indenture, the Company or such successor Person, as the case may be, shall
     prior to or contemporaneously with such consolidation, merger, conveyance
     transfer or lease, take such steps as shall be necessary effectively to
     secure the Securities equally and ratably with (or prior to) all
     indebtedness secured thereby; and

          (4)  the Company has delivered to the Trustee an Officers' Certificate
     and an Opinion of Counsel, each stating that such consolidation, merger,
     conveyance, transfer or lease and, if a supplemental indenture is required
     in connection with such transaction, such supplemental indenture comply
     with this Article and that all conditions precedent herein provided for
     relating to such transaction have been complied with.

Section 802.   Successor Substituted.

     Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section
801, the successor Person formed by such consolidation or into which the Company
is merged or to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, 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 thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and covenants
under this Indenture and the Securities. In the case of a lease, the predecessor
Person shall not be released from its obligations to pay the principal of,
premium, if any, and interest on the Securities. All Securities issued by the
successor Person shall in all respects have the same legal priority as the
Securities theretofore or thereafter authenticated, issued and delivered in
accordance with the terms of this Indenture.

                                      -47-
<PAGE>

                                ARTICLE NINE --
                            SUPPLEMENTAL INDENTURES

Section 901.   Supplemental Indentures Without Consent of Holders.

     Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:

          (1)  to evidence the succession of another Person to the Company and
     the assumption by any such successor of the covenants of the Company herein
     and in the Securities; or

          (2)  to add to the covenants of the Company for the benefit of the
     Holders of all or any series of Securities (and if such covenants are to be
     for the benefit of less than all series of Securities, stating that such
     covenants are expressly being included solely for the benefit of such
     series) or to surrender any right or power herein conferred upon the
     Company; or

          (3)  to add any additional Events of Default for the benefit of the
     Holders of all or any series of Securities (and if such Events of Default
     are to be for the benefit of less than all series of Securities, stating
     that such Events of Default are expressly being included solely for the
     benefit of such series); or

          (4)  to add to or change any of the provisions of this Indenture to
     such extent as shall be necessary to permit or facilitate the issuance of
     Securities in bearer form, registrable or not registrable as to principal
     and with or without interest coupons, or to permit or facilitate the
     issuance of Securities in uncertificated form; or

          (5)  to add to, change or eliminate any of the provisions of this
     Indenture in respect of one or more series of Securities, provided that any
     such addition, change or elimination (i) shall neither (A) apply to any
     Security of any series created prior to the execution of such supplemental
     indenture and entitled to the benefit of such provision nor (B) modify the
     rights of the Holder of any such Security with respect to such provision or
     (ii) shall become effective only when there is no such Security
     Outstanding; or

          (6)  to secure the Securities pursuant to Sections 801 or 1008 or
     otherwise; or

          (7)  to establish the form or terms of Securities of any series as
     permitted by Sections 201 and 301; or

          (8)  to evidence and provide for the acceptance of appointment
     hereunder by a successor Trustee with respect to the Securities of one or
     more series and to add to or change any of the provisions of this Indenture
     as shall be necessary to provide for or

                                      -48-
<PAGE>

     facilitate the administration of the trusts hereunder by more than one
     Trustee, pursuant to the requirements of Section 611((b)); or

          (9)  to add to or change any provisions of this Indenture to such
     extent as shall be necessary to permit or facilitate the issuance of
     Securities convertible into other securities; or

          (10) to effectuate the provisions of Section 1405((b)); or

          (11) to supplement any of the provisions of this Indenture to such
     extent as shall be necessary to permit or facilitate the defeasance and
     discharge and covenant defeasance with respect to any series of Securities
     pursuant to Sections 1502 or 1503; provided, however, that any such action
     shall not adversely affect the interests of the Holders of Securities of
     such series or any other series of Securities in any material respect; or

          (12) to add or change or eliminate any provisions of this Indenture as
     shall be necessary or desirable in accordance with any amendments to the
     Trust Indenture Act; or

          (13) to cure any ambiguity, to correct or supplement any provision
     herein which may be defective or inconsistent with any other provision
     herein, or to make any other provisions with respect to matters or
     questions arising under this Indenture, provided that such action pursuant
     to this Clause ((13)) shall not adversely affect the interests of the
     Holders of Securities of any series in any material respect.

          (14) to change any place or places where (1) the principal of and
     premium, if any, and interest, if any, on all or any series of Securities
     shall be payable, (2) all or any series of Securities may be surrendered
     for registration or transfer, (3) all or any series of Securities may be
     surrendered for exchange, and (4) notices and demands to or upon the
     Company in respect of all or any series of Securities and this Indenture
     may be served.

Section 902.   Supplemental Indentures With Consent of Holders.

     With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,

          (1)  change the Stated Maturity of the principal of, or any
     installment of principal of, premium, if any, or interest on, any Security,
     or reduce the principal amount thereof or the rate of interest thereon or
     any premium payable upon the redemption thereof, change the method of
     determination of interest thereon, or reduce the amount of

                                      -49-
<PAGE>

     the principal of an Original Issue Discount Security that would be due and
     payable upon a declaration of acceleration of the Maturity thereof pursuant
     to Section 502, or adversely affect any right of repayment at the option of
     the Holder of any Security, or change any Place of Payment where, or the
     coin or currency in which, any Security or any premium or the interest
     thereon is payable or impair the right of any Holders of Securities of a
     Series entitled to the conversion rights set forth in Article Fourteen to
     receive securities upon the exercise of such conversion rights, or impair
     the right to institute suit for the enforcement of any such payment or
     delivery of Common Stock for Securities converted pursuant to Article
     Fourteen on or after the Stated Maturity thereof (or, in the case of
     redemption or repayment at the option of the Holder, on or after the
     Redemption Date or Repayment Date, as the case may be, or in the case of
     such conversion, on or after the date of conversion), or

          (2)  reduce the percentage in principal amount of the Outstanding
     Securities of any series, the consent of whose Holders is required for any
     such supplemental indenture, or the consent of whose Holders is required
     for any waiver (of compliance with certain provisions of this Indenture or
     certain defaults hereunder and their consequences) provided for in this
     Indenture, or

          (3)  modify any of the provisions of this Section, Section 513 or
     Section 1010, except to increase any such percentage or to provide that
     certain other provisions of this Indenture cannot be modified or waived
     without the consent of the Holder of each Outstanding Security affected
     thereby; provided, however, that this clause shall not be deemed to require
     the consent of any Holder with respect to changes in the references to "the
     Trustee" and concomitant changes in this Section and Section 1010, or the
     deletion of this proviso, in accordance with the requirements of Sections
     611((b)) and 901((8)).

A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.

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

Section 903.   Execution of Supplemental Indentures.

     In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.

                                      -50-
<PAGE>

Section 904.   Effect of Supplemental Indentures.

     Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.

Section 905.   Conformity with Trust Indenture Act.

     Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.

Section 906.   Reference in Securities to Supplemental Indentures.

     Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.

Section 907.   Notice of Supplemental Indenture.

     Promptly after the execution by the Company and the appropriate Trustee of
any supplemental indenture, the Company shall transmit, as provided herein, to
all Holders of any series of the Debt Securities affected thereby, a notice
setting forth in general terms the substance of such supplemental indenture.

                                ARTICLE TEN --
                                   COVENANTS

Section 1001.       Payment of Principal, Premium and Interest.

     The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities of that series in accordance with the
terms of the Securities and this Indenture.

Section 1002.       Maintenance of Office or Agency.

     The Company will maintain in each Place of Payment an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer, conversion or exchange and
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served. The Company will give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company terminates the appointment of a Paying Agent
or Security Registrar or conversion agent or otherwise shall fail to maintain
any such required office

                                      -51-
<PAGE>

or agency, the Company shall use its reasonable best efforts to appoint a
successor Paying Agent or Security Registrar or conversion agent reasonably
acceptable to the Trustee. If the Company fails to maintain a Paying Agent or
Security Registrar or conversion agent, the Trustee will act as such, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.

     The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in each Place of
Payment for such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.

Section 1003.       Money for Securities Payments to Be Held in Trust.

     If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of that
series, 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 in writing
of its action or failure so to act.

     Whenever the Company shall have one or more Paying Agents for any series of
Securities, it will, prior to each due date of the principal of (and premium, if
any) or interest on any Securities of that series, deposit with 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 in writing of its
action or failure so to act.

     The Company will cause each Paying Agent for any series of Securities 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, that such Paying Agent will:

          (1)  hold all sums held by it for the payment of the principal of (and
     premium, if any) or interest on Securities of that series 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;

          (2)  give the Trustee written notice of any default by the Company (or
     any other obligor upon the Securities of that series) in the making of any
     payment of principal (and premium, if any) or interest on the Securities of
     that series; and

          (3)  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.

                                      -52-
<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 Security of any series and remaining unclaimed for two years
after such principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
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, may at the
expense of the Company cause to be published once, in an Authorized Newspaper in
the Borough of Manhattan, The City of New York, 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 publication, any unclaimed balance of such money
then remaining will be repaid to the Company.

Section 1004.       Corporate Existence.

     Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and that of each Subsidiary and the rights (charter and statutory) and
franchises of the Company and its Subsidiaries; provided, however, that the
Company shall not be required to preserve any such right or franchise if in the
judgment of the Company it shall be necessary, advisable or in the interest of
the Company to discontinue the same.

Section 1005.       Statement by Officers as to Default.

     Pursuant to Section 314(a) of the Trust Indenture Act, the Company will
deliver to the Trustee, within 120 days after the end of each fiscal year of the
Company ending after the date hereof, a certificate signed by the principal
executive, financial or accounting officer of the Company, stating whether or
not to the best knowledge of the signer thereof the Company is in default in the
performance and observance of any of the terms, provisions, covenants and
conditions of this Indenture (without regard to any period of grace or
requirement of notice provided, hereunder) and, if the Company shall be in
default, specifying all such defaults and the nature and status thereof of which
they may have knowledge.

                                      -53-
<PAGE>

Section 1006.       Maintenance of Properties.

     The Company will cause all properties used or useful in the conduct of its
business or the business of any Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties if such discontinuance is, in
the judgment of the Company, desirable in the conduct of its business or the
business of any Subsidiary.

Section 1007.       Payment of Taxes and Other Claims.

     The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (1) all taxes, assessments and governmental
charges levied or imposed upon the Company or any Subsidiary or upon the income,
profits or property of the Company or any Subsidiary, and (2) all lawful claims
for labor, materials and supplies which, if unpaid, might by law become a lien
upon the property of the Company or any Subsidiary; provided, however, that the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings.

Section 1008.       Restrictions on Debt.

     The Company will not itself, and will not permit any Subsidiary to, incur,
issue, assume or guarantee any loans, whether or not evidenced by negotiable
instruments or securities, or any notes, bonds, debentures or other similar
evidences of indebtedness for money borrowed (loans, notes, bonds, debentures or
other similar evidences of indebtedness for money borrowed being hereinafter in
this Article called "Debt"), secured by a Mortgage on any Principal Property of
the Company or any Subsidiary, or any shares of Capital Stock or Debt of any
Subsidiary, without effectively providing that the Securities of each series
then Outstanding (together with, if the Company shall so determine, any other
Debt of the Company or such Subsidiary then existing or thereafter created which
is not subordinate to the Securities of each series then Outstanding) shall be
secured equally and ratably with (or, at the option of the Company, prior to)
such secured Debt, so long as such secured Debt shall be so secured, and the
Company will not permit any Subsidiary to incur, issue, assume or guarantee any
unsecured Debt or to issue any Preferred Stock in each instance unless the
aggregate amount of (A) all such Debt, (B) the aggregate preferential amount to
which such Preferred Stock would be entitled on any involuntary distribution of
assets and (C) Attributable Debt of the Company and its Subsidiaries in respect
of sale and leaseback transactions (as defined in Section 1009) would not exceed
10% of Consolidated Net Tangible Assets; provided, however, that this Section
1008 shall not apply to, and there shall be excluded from Debt in any
computation under this Section 1008:

          (1)  Debt secured by Mortgages on any property acquired, constructed
     or improved by the Company or any Subsidiary after the first date on which
     a Security is

                                      -54-
<PAGE>

     authenticated by the Trustee under this Indenture which Mortgages are
     created or assumed contemporaneously with, or within 30 months after, such
     acquisition, or completion of such construction or improvement, or within
     six months thereafter pursuant to a firm commitment for financing arranged
     with a lender or investor within such 30-month period, to secure or provide
     for the payment of all or any part of the purchase price of such property
     or the cost of such construction or improvement incurred after the first
     date on which a Security is authenticated by the Trustee under this
     Indenture, or, in addition to Mortgages contemplated by paragraphs 2 and 3
     below, Mortgages on any property existing at the time of acquisition
     thereof, provided that any such Mortgage shall not apply to any property
     theretofore owned by the Company or any Subsidiary other than, in the case
     of any such construction or improvement, any theretofore unimproved real
     property on which the property so constructed, or the improvement, is
     located;

          (2)  Debt of any corporation existing at the time such corporation is
     merged with or into the Company or a Subsidiary;

          (3)  Debt of any corporation existing at the time such corporation
     becomes a Subsidiary;

          (4)  Debt of a Subsidiary to the Company or to another Subsidiary;

          (5)  Debt secured by Mortgages securing obligations issued by a state,
     territory or possession of the United States, or any political subdivision
     of any of the foregoing, or the District of Columbia, to finance the
     acquisition of or construction on property, and on which the interest is
     not, in the opinion of tax counsel of recognized standing or in accordance
     with a ruling issued by the Internal Revenue Service, includable in gross
     income of the holder by reason of Section 103(A)(1) of the Internal Revenue
     Code (or any successor to such provision) as in effect at the time of the
     issuance of such obligations; and

          (6)  any extension, renewal or replacement (or successive extensions,
     renewals or replacements), as a whole or in part, of any Debt referred to
     in the foregoing clauses ((1)) to ((5)), inclusive; provided, that the
     principal amount of the Debt being extended, renewed or replaced shall not
     be increased and such extension, renewal or replacement, in the case of
     Debt secured by a Mortgage, shall be limited to all or a part of the same
     property, shares of Capital Stock or Debt that secured the Mortgage
     extended, renewed or replaced (plus improvements on such property); and
     provided, further, that this Section 1008 shall not apply to any issuance
     of Preferred Stock by a Subsidiary to the Company or another Subsidiary,
     provided that such Preferred Stock shall not thereafter be transferable to
     any Person other than the Company or a Subsidiary.

The Trustee shall have no duty or liability in monitoring or enforcing the
provisions of this Section, except as otherwise expressly provided in this
Indenture.

                                      -55-
<PAGE>

Section 1009.       Restrictions on Sales and Leasebacks.

     The Company will not itself, and will not permit any Subsidiary to, enter
into any transaction after the first date on which a Security is authenticated
by the Trustee under this Indenture with any bank, insurance company, lender or
other investor, or to which any such bank, insurance company, lender or investor
is a party, providing for the leasing by the Company or a Subsidiary of any
Principal Property which has been or is to be sold or transferred by the Company
or such Subsidiary to such bank, insurance company, lender or investor, or to
any Person to whom funds have been or are to be advanced by such bank, insurance
company, lender or investor on the security of such Principal Property (herein
referred to as a "sale and leaseback transaction") unless, after giving effect
thereto, the aggregate amount of all Attributable Debt with respect to such
transactions plus all Debt to which Section 1008 is applicable would not exceed
10% of Consolidated Net Tangible Assets. This covenant shall not apply to, and
there shall be excluded from Attributable Debt in any computation under this
Section 1009, Attributable Debt with respect to any sale and leaseback
transaction if:

          (1)  the lease in such sale and leaseback transaction is for a period,
     including renewal rights, of not in excess of three years, or

          (2)  the Company or a Subsidiary, within 180 days after the sale or
     transfer shall have been made by the Company or by a Subsidiary, applies an
     amount not less than the greater of the net proceeds of the sale of the
     Principal Property leased pursuant to such arrangement or the fair market
     value of the Principal Property so leased at the time of entering into such
     arrangement (as determined in any manner approved by the Board of
     Directors) to the retirement of Funded Debt of the Company ranking on a
     parity with or senior to the Securities or the retirement of Funded Debt of
     a Subsidiary; provided, however, that the amount to be applied to the
     retirement of such debt of the Company or a Subsidiary shall be reduced by
     (x) the principal amount of any Securities (or other notes or debentures
     constituting Funded Debt) delivered within such 180-day period to the
     Trustee or other applicable trustee for retirement and cancellation and (y)
     the principal amount of such Funded Debt, other than items referred to in
     the preceding clause (x), voluntarily retired by the Company or a
     Subsidiary within 180 days after such sale; and provided, further, that,
     notwithstanding the foregoing, no such retirement may be effected by
     payment at maturity or pursuant to any mandatory sinking fund payment or
     any mandatory prepayment provision, or

          (3)  such sale and leaseback transaction is entered into prior to, at
     the time of, or within 30 months after the later of the acquisition of the
     Principal Property or the completion of construction thereon, or

          (4)  the lease in such sale and leaseback transaction secures or
     relates to obligations issued by a state, territory or possession of the
     United States, or any political subdivision of any of the foregoing, or the
     District of Columbia, to finance the acquisition of or construction on
     property, and on which the interest is not, in the opinion tax counsel of
     recognized standing or in accordance with a ruling issued by the Internal
     Revenue

                                      -56-
<PAGE>

     Service, includable in gross income of the holder by reason of Section
     103(a)(1) of the Internal Revenue Code (or any successor to such provision)
     as in effect at the time of the issuance of such obligations, or

          (5)  such sale and leaseback transaction is entered into between the
     Company and a Subsidiary or between Subsidiaries. The Trustee shall have no
     duty or liability in monitoring or enforcing the provisions of this
     Section, except as otherwise expressly provided in this Indenture.

Section 1010.  Waiver of Certain Covenants.

     The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Section 801((3)) and in Section 1004 and
Sections 1006 to 1009, inclusive, with respect to the Securities of any series
if before the time for such compliance the Holders of at least a majority in
principal amount of the Outstanding Securities of such series shall, by Act of
such Holders, either waive compliance in such instance or generally waive
compliance with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Company and the duties of the Trustee in respect of any such term,
provision or condition shall remain in full force and effect.

                               ARTICLE ELEVEN --
                           REDEMPTION OF SECURITIES

Section 1101.  Applicability of Article.

     Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated in Section 301 for Securities of any series) in
accordance with this Article.

Section 1102.  Election to Redeem; Notice to Trustee.

     The election of the Company to redeem any Securities shall be evidenced by
a Board Resolution. In case of any redemption at the election of the Company of
less than all the Securities of any series, the Company shall, at least 60 days
prior to the Redemption Date fixed by the Company (unless a shorter notice shall
be satisfactory to the Trustee), notify the Trustee of such Redemption Date, of
the principal amount of Securities of such series to be redeemed and, if
applicable, of the tenor of the Securities to be redeemed. In the case of any
redemption of Securities prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction.

Section 1103.  Selection by Trustee of Securities to Be Redeemed.

     If less than all the Securities of any series are to be redeemed (unless
all of the Securities of such series and of a specified tenor are to be
redeemed), the particular Securities to be

                                      -57-
<PAGE>

redeemed shall be selected not more than 60 days prior to the Redemption Date by
the Trustee, from the Outstanding Securities of such series not previously
called for redemption, in a manner which the Trustee deems fair and appropriate,
which may provide for the selection for redemption of portions (equal to the
minimum authorized denomination for Securities of that series or any integral
multiple thereof) of the principal amount of Securities of such series of a
denomination larger than the minimum authorized denomination for Securities of
that series. If the Company shall so specify and identify the appropriate
Securities, Securities owned of record and beneficially by the Company or any
Subsidiary shall not be included in the Securities selected for redemption.

     The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.

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

Section 1104.  Notice of Redemption.

     Notice of redemption shall, unless otherwise specified by the terms of the
Securities to be redeemed, be given not less than 30 nor more than 60 days prior
to the Redemption Date, to each Holder of Securities to be redeemed, in
accordance with Section 106.

     All notices of redemption shall state:

          (1)  the Redemption Date,

          (2)  the Redemption Price,

          (3)  that Debt Securities of such series are being redeemed by the
     Company pursuant to provisions contained in this Indenture or the terms of
     the Securities of such series or a supplemental indenture establishing such
     series, if such be the case, together with a brief statement of facts
     permitting such redemption,

          (4)  if less than all the Outstanding Securities of any series are to
     be redeemed (unless all the Securities of such series of a specified tenor
     are to be redeemed), the identification (and, in the case of partial
     redemption of any Securities, the principal amounts) of the particular
     Securities to be redeemed,

          (5)  that on the Redemption Date the Redemption Price will become due
     and payable upon each such Security to be redeemed and, if applicable, that
     interest thereon will cease to accrue on and after said date,

                                      -58-
<PAGE>

          (6)  the place or places where such Securities are to be surrendered
     for payment of the Redemption Price, which shall be the office or agency of
     the Company in each Place of Payment, and

          (7)  that the redemption is for a sinking fund, if such is the case.

     Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.

Section 1105.  Deposit of Redemption Price.

     Prior to 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,
segregate and hold in trust as provided in Section 1003) an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities which
are to be redeemed on that date.

Section 1106.  Securities Payable on Redemption Date.

     Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 301, installments of interest whose Stated Maturity is
on or prior to the Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.

     If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.

Section 1107.  Securities Redeemed in Part.

     Any Security which is to be redeemed only in part shall be surrendered at a
Place of Payment therefor (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 his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series and of like tenor, of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to

                                      -59-
<PAGE>

and in exchange for the unredeemed portion of the principal of the Security so
surrendered. If a Global Security is so surrendered, such new Security so issued
shall be a new Global Security.

                               ARTICLE TWELVE --
                                 SINKING FUNDS

Section 1201.  Applicability of Article.

     The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.

     The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment." If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 1202. Each sinking fund payment shall be applied to the redemption of
Securities of any series as provided for by the terms of Securities of such
series.

Section 1202.  Satisfaction of Sinking Fund Payments with Securities.

     The Company (1) may deliver Outstanding Securities of a series (other than
any previously called for redemption) and (2) may apply as a credit Securities
of a series which have been redeemed either at the election of the Company
pursuant to the terms of such Securities or through the application of permitted
optional sinking fund payments pursuant to the terms of such Securities, in each
case in satisfaction of all or any part of any sinking fund payment with respect
to the Securities of such series required to be made pursuant to the terms of
such Securities as provided for by the terms of such series; provided that such
Securities have not been previously so credited. Such Securities shall be
received and credited for such purpose by the Trustee at the Redemption Price
specified in such Securities for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.

Section 1203.  Redemption of Securities for Sinking Fund.

     Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1202 and the basis for such credit and will also deliver to
the Trustee any Securities to be so delivered which have not theretofore been
delivered to the Trustee. Not less than 30 days before each such sinking fund
payment date, the Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 1103 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Company in the manner

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provided in Section 1104. Such notice having been duly given, the redemption of
such Securities shall be made upon the terms and in the manner stated in
Sections 1105, 1106 and 1107.

                              ARTICLE THIRTEEN --
                            REPAYMENT OF SECURITIES
                             AT OPTION OF HOLDERS

Section 1301.  Applicability of Article.

     Securities of any series that are repayable before their Stated Maturity at
the option of the Holders shall be repaid in accordance with their terms and
(except as otherwise specified as contemplated by Section 301 for Securities of
any series) in accordance with this Article.

Section 1302.  Notice of Repayment Date.

     Notice of any Repayment Date with respect to Securities of any series
shall, unless otherwise specified by the terms of the Securities of such series,
be given by the Company not less than 45 nor more than 60 days prior to such
Repayment Date, to the Trustee and to each Holder of Securities of such series
in accordance with Sections 105 and 106, respectively.

     The notice as to Repayment Date shall state:

          (1)  the Repayment Date;

          (2)  the Repayment Price;

          (3)  the place or places where such Securities are to be surrendered
     for payment of the Repayment Price, which shall be the office or agency of
     the Company in each Place of Payment, and the date by which Securities must
     be so surrendered in order to be repaid;

          (4)  a description of the procedure which a Holder must follow to
     exercise a repayment right; and

          (5)  that exercise of the option to elect repayment is irrevocable.

     No failure of the Company to give the foregoing notice shall limit any
Holder's right to exercise a repayment right.

Section 1303.  Deposit of Repayment Price.

     On or prior to any Repayment Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Repayment Price of and (except if the Repayment Date
shall be an Interest Payment Date) accrued interest on, all the Securities of
such series which are to be repaid on that date.

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Section 1304.  Securities Payable on Repayment Date.

     The form of option to elect repayment having been delivered as specified in
the form of Security for such series as provided in Section 201, the Securities
so to be repaid shall, on the Repayment Date, become due and payable at the
Repayment Price applicable thereto, and from and after such date (unless the
Company shall default in the payment of the Repayment Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for repayment in accordance with said notice, such Security shall
be paid by the Company at the Repayment Price, together with accrued interest to
the Repayment Date; provided, however, that, unless otherwise specified as
contemplated by Section 301, installments of interest whose Stated Maturity is
on or prior to such Repayment Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Date according to their terms and the
provisions of Section 307.

     If any Security to be repaid shall not be so paid upon surrender thereof
for repayment, the principal shall, until paid, bear interest from the Repayment
Date at the rate prescribed in the Security.

Section 1305.  Securities Repaid in Part.

     Any Security which by its terms may be repaid in part at the option of the
Holder and which is to be repaid only in part shall be surrendered at any office
or agency of the Company designated for that purpose pursuant to Section 1002
(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 his attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Security, without service charge, a new Security
or Securities of the same series and of like tenor, of any authorized
denomination as requested by such Holder, in aggregate principal amount equal to
and in exchange for the unrepaid portion of the principal of the Security so
surrendered. If a Global Security is so surrendered, such new Security so issued
shall be a new Global Security.

                              ARTICLE FOURTEEN --
                           CONVERSION OF SECURITIES

Section 1401.  General.

     If so provided in the terms of the Securities of any series established in
accordance with Section 301, the principal amount of the Securities of such
series shall be convertible into shares of Common Stock in accordance with this
Article Fourteen and the terms of such series of Securities if such terms differ
from this Article Fourteen; provided, however, that if any of the terms by which
any such Security shall be convertible into Common Stock are set forth in a
supplemental indenture entered into with respect thereto pursuant to Section
901((9)) hereof, the terms of such supplemental indenture shall govern.

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<PAGE>

Section 1402.  Right to Convert.

     Subject to and upon compliance with the provisions of this Article, the
Holder of any Security that is convertible into Common Stock shall have the
right, at such Holder's option, at any time on or after the date of original
issue of such Security or such other date specified in the applicable Board
Resolution delivered pursuant to Section 301 and prior to the close of business
on the date set forth in such Board Resolution (or if such Security is called
for redemption, then in respect of such Security to and including but not after
the close of business on the date of redemption unless the Company shall default
in the payment due on such date) to convert the principal amount of any such
Security of any authorized denomination, or, in the case of any Security to be
converted of a denomination greater than the minimum denomination for Securities
of the applicable series, any portion of such principal which is an authorized
denomination or an integral multiple thereof, into that number of fully paid and
nonassessable shares of Common Stock obtained by dividing the principal amount
of such Security or portion thereof surrendered for conversion by the Conversion
Price therefor by surrender of the Security so to be converted in whole or in
part in the manner provided in Section 1403. Such conversion shall be effected
by the Company in accordance with the provisions of this Article and the terms
of the Securities, if such terms differ from this Article.

Section 1403.  Manner of Exercise of Conversion Privilege; Delivery of Common
Stock; No Adjustment for Interest or Dividends.

     In order to effect a conversion, the holder of any Security to be
converted, in whole or in part, shall surrender such Security at the office or
agency maintained by the Company for such purpose, as provided in Section 1002
and shall give written notice of conversion to the Company at such office or
agency that the Holder elects to convert such Security or the portion thereof
specified in said notice. The notice shall state the name or names (with
address), and taxpayer identification number, in which the certificate or
certificates for shares of Common Stock which shall be deliverable on such
conversion shall be registered, and shall be accompanied by payments in respect
of transfer taxes, if required pursuant to Section 1406. Each Security
surrendered for conversion shall, unless the shares of Common Stock deliverable
on conversion are to be issued in the same name as the registration of such
Security, be duly endorsed by or be accompanied by instruments of transfer, in
form satisfactory to the Company, duly executed by the Holder or such Holder's
duly authorized attorney, and by any payment required pursuant to this Section
1403. As promptly as practicable after the surrender of such Security and
notice, as aforesaid, the Company shall deliver or cause to be delivered at such
office or agency to such Holder, or on such Holder's written order, a
certificate or certificates for the number of full shares of Common Stock
deliverable upon the conversion of such Security or portion thereof in
accordance with the provisions of this Article and a check or cash in respect of
any fractional interest in respect of a share of Common Stock arising upon such
conversion as provided in Section 1404. In case any Security of a denomination
greater than the minimum denomination for Securities of the applicable series
shall be surrendered for partial conversion, the Company shall execute and
register and the Trustee shall authenticate and deliver to or upon the written
order of the Company and the Holder of the Security so surrendered, without
charge to such Holder, a new Security or Securities of the same series in
authorized denominations in an

                                      -63-
<PAGE>

aggregate principal amount equal to the unconverted portion of the surrendered
Security. Each conversion shall be deemed to have been effected as of the date
on which such Security shall have been surrendered (accompanied by the funds, if
any, required by the last paragraph of this Section) and such notice received by
the Company, as aforesaid, and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock shall be registrable upon
such conversion shall become on said date the Holder of record of the shares
represented thereby, provided, however, that any such surrender on any date when
the stock transfer books of the Company shall be closed shall constitute the
person in whose name the certificates are to be registered as the record holder
thereof for all purposes 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 Security shall have been so surrendered.

     Any Security or portion thereof surrendered for conversion during the
period from the close of business on the Regular Record Date for any Interest
Payment Date to the opening of business on such Interest Payment Date shall
(unless such Security or portion thereof being converted shall have been called
for redemption or submitted for repayment on a date during such period) be
accompanied by payment, in legal tender or other funds acceptable to the
Company, of an amount equal to the interest otherwise payable on such Interest
Payment Date on the principal amount being converted; provided, however, that no
such payment need be made if there shall exist at the time of conversion a
default in the payment of interest on the applicable series of Securities. An
amount equal to such payment shall be paid by the Company on such Interest
Payment Date to the Holder of such Security on such Regular Record Date;
provided, however, that if the Company shall default in the payment of interest
on such Interest Payment Date, such amount shall be paid to the person who made
such required payment. Except as provided above in this Section, no adjustment
shall be made for interest accrued on any Security converted or for dividends on
any shares issued upon the conversion of such Security as provided in this
Article.

Section 1404.  Cash Payments in Lieu of Fractional Shares.

     No fractional shares of Common Stock or scrip representing fractional
shares of Common Stock shall be delivered upon conversion of Securities. If more
than one Security shall be surrendered for conversion at one time by the same
Holder, the number of full shares of Common Stock which shall be deliverable
upon conversion shall be computed on the basis of the aggregate principal amount
of the Securities (or specified portions thereof to the extent permitted hereby)
so surrendered. Instead of any fraction of a share of Common Stock which would
otherwise be deliverable upon the conversion of any Security, the Company shall
pay to the Holder of such Security an amount in cash (computed to the nearest
cent, with one-half cent being rounded upward) equal to the same fraction of the
closing price (determined in the manner provided in Section 1405((a))((v)) of
the Common Stock on the Trading Day (as defined in Section 1405((a))((v)) next
preceding the date of conversion.

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<PAGE>

Section 1405.  Conversion Price Adjustments; Effect of Reclassification,
Mergers, Consolidations and Sales of Assets.

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

          (i)       In case the Company shall (x) pay a dividend or make a
     distribution on the Common Stock in shares of Common Stock, (y) subdivide
     the outstanding Common Stock into a greater number of shares or (z) combine
     the outstanding Common Stock into a smaller number of shares, the
     Conversion Price shall be adjusted so that the Holder of any Security
     thereafter surrendered for conversion shall be entitled to receive the
     number of shares of Common Stock of the Company which such holder would
     have owned or have been entitled to receive after the happening of any of
     the events described above had such Security been converted immediately
     prior to the record date in the case of a dividend or the effective date in
     the case of subdivision or combination. An adjustment made pursuant to this
     subparagraph ((i)) shall become effective immediately after the record date
     in the case of a dividend, except as provided in subparagraph ((vii))
     below, and shall become effective immediately after the effective date in
     the case of a subdivision or combination.

          (ii)      In case the Company shall issue rights or warrants to all
     holders of shares of Common Stock 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 of Common Stock (as defined for purposes of this
     subparagraph ((ii)) in subparagraph ((v)) below), the Conversion Price in
     effect after the record date for the determination of stockholders entitled
     to receive such rights or warrants shall be determined by multiplying the
     Conversion Price in effect immediately prior to such record date by a
     fraction, the numerator of which shall be the number of shares of Common
     Stock outstanding on such record date plus the number of shares of Common
     Stock which the aggregate offering price of the total number of shares of
     Common Stock so offered would purchase at such current market price, and
     the denominator of which shall be the number of shares of Common Stock
     outstanding on the record date for issuance of such rights or warrants plus
     the number of additional shares of Common Stock receivable upon exercise of
     such rights or warrants. Such adjustment shall be made successively
     whenever any such rights or warrants are issued, and shall become effective
     immediately, except as provided in subparagraph ((vii)) below, after such
     record date.

          (iii)     In case the Company shall distribute to all holders of
     Common Stock any shares of capital stock of the Company (other than Common
     Stock) or evidences of its indebtedness or assets (excluding cash dividends
     or distributions paid from retained earnings of the Company or dividends
     payable in Common Stock) or rights or warrants to subscribe for or purchase
     any of its securities (excluding those rights or warrants referred to in
     subparagraph ((ii)) above) (any of the foregoing being hereinafter in this
     subparagraph ((iii)) called the "Assets"), then, in each such case, the
     Conversion Price shall be adjusted so that the same shall equal the price
     determined by multiplying the

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<PAGE>

     Conversion Price in effect immediately prior to the record date for
     determination of stockholders entitled to receive such distribution by a
     fraction the numerator of which shall be the current market price per share
     (as defined for purposes of this subparagraph ((iii)) in subparagraph ((v))
     below) of the Common Stock at such record date for determination of
     stockholders entitled to receive such distribution less the then fair
     market value (as determined by the Board of Directors, whose determination
     shall be conclusive) of the portion of the Assets so distributed applicable
     to one share of Common Stock, and the denominator of which shall be the
     current market price per share (as defined in subparagraph ((v)) below) of
     the Common Stock at such record date. Such adjustment shall become
     effective immediately, except as provided in subparagraph ((vii)) below,
     after the record date for the determination of stockholders entitled to
     receive such distribution.

          (iv)      If, pursuant to subparagraph ((ii)) or ((iii)) above, the
     number of shares of Common Stock into which a Security is convertible shall
     have been adjusted because the Company has declared a dividend, or made a
     distribution, on the outstanding shares of Common Stock in the form of any
     right or warrant to purchase securities of the Company, or the Company has
     issued any such right or warrant, then, upon the expiration of any such
     unexercised right or unexercised warrant, the Conversion Price shall
     forthwith be adjusted to equal the Conversion Price that would have applied
     had such right or warrant never been declared, distributed or issued.

          (v)       For the purpose of any computation under subparagraphs
     ((ii)) or ((iii)) above, the current market price per share of Common Stock
     on any date shall be deemed to be the average of the daily closing prices
     of the Common Stock for the shorter of (i) 30 consecutive Trading Days
     ending on the last full Trading Day on the exchange or market specified in
     the second following sentence prior to the Time of Determination or (ii)
     the period commencing on the date next succeeding the first public
     announcement of the issuance of such rights or warrants or such
     distribution through such last full Trading Day prior to the Time of
     Determination. The term "Time of Determination" as used herein shall be the
     time and date of the earlier of (x) the determination of stockholders
     entitled to receive such rights, warrants, or distributions or (y) the
     commencement of "ex-dividend" trading in the Common Stock on the exchange
     or market specified in the following sentence. The closing price for each
     day shall be the reported last sales price, regular way, or, in case no
     sale takes place on such day, the average of the reported closing bid and
     asked prices, regular way, in either case as reported on the New York Stock
     Exchange Composite Tape or, if the Common Stock is not listed or admitted
     to trading on the New York Stock Exchange at such time, on the principal
     national securities exchange on which the Common Stock is listed or
     admitted to trading or, if not listed or admitted to trading on any
     national securities exchange, on the Nasdaq National Market ("NNM") or, if
     the Common Stock is not quoted on the average of the closing bid and asked
     prices on such day in the over-the-counter market as reported by NNM or, if
     bid and asked prices for the Common Stock on each such day shall not have
     been reported through NNM, the average of the bid and asked prices for such
     date as furnished by any New York Stock Exchange member firm regularly
     making a market in the Common Stock selected for

                                      -66-
<PAGE>

     such purpose by the Company or, if no such quotations are available, the
     fair market value of the Common Stock as determined by a New York Stock
     Exchange member firm regularly making a market in the Common Stock selected
     for such purpose by the Company. As used herein, the term "Trading Day"
     with respect to Common Stock means (x) if the Common Stock is listed or
     admitted for trading on the New York Stock Exchange or another national
     securities exchange, a day on which the New York Stock Exchange or such
     other national securities exchange, as the case may be, is open for
     business or (y) if the Common Stock is quoted on NNM, a day on which trades
     may be made on NNM or (z) otherwise, any day other than a Saturday or
     Sunday or a day on which banking institutions in the State of New York are
     authorized or obligated by law or executive order to close.

          (vi)      No adjustment in the Conversion Price shall be required
     unless such adjustment would require an increase or decrease of at least 1%
     in such price; provided, however, that any adjustments which by reason of
     this subparagraph ((vi)) are not required to be made shall be carried
     forward and taken into account in any subsequent adjustment. All
     calculations under this Section 1405((a)) shall be made to the nearest cent
     or to the nearest .01 of a share, as the case may be, with one-half cent
     and .005 of a share, respectively, being rounded upward. Anything in this
     Section 1405((a)) to the contrary notwithstanding, the Company shall be
     entitled to make such reductions in the Conversion Price, in addition to
     those required by this Section 1405((a)), as it in its discretion shall
     determine to be advisable in order that any stock dividend, subdivision of
     shares, distribution of rights or warrants to purchase stock or securities,
     or distribution of other assets (other than cash dividends) hereafter made
     by the Company to its stockholders shall not be taxable.

          (vii)     In any case in which this Section 1405((a)) provides that an
     adjustment shall become effective immediately after a record date for an
     event, the Company may defer until the occurrence of such event (x) issuing
     to the holder of any Security converted after such record date and before
     the occurrence of such event the additional shares of Common Stock issuable
     upon such conversion by reason of the adjustment required by such event
     over and above the Common Stock issuable upon such conversion before giving
     effect to such adjustment and (y) paying to such holder any amount of cash
     in lieu of any fractional share of Common Stock pursuant to Section 1404.

          (viii)    Whenever the Conversion Price is adjusted as herein
     provided, the Company shall file with the Trustee an Officers' Certificate,
     setting forth the Conversion Price after such adjustment and setting forth
     a brief statement of the facts requiring such adjustment, which certificate
     shall be conclusive evidence of the correctness of such adjustment;
     provided, however, that the failure of the Company to file such Officers'
     Certificate shall not affect the legality or validity of any corporate
     action by the Company.

          (ix)      Whenever the Conversion Price for any series of Securities
     is adjusted as provided in this Section 1405((a)), the Company shall cause
     to be mailed to each holder

                                      -67-
<PAGE>

     of Securities of such series at its then registered address by first-class
     mail, postage prepaid, a notice of such adjustment of the Conversion Price
     setting forth such adjusted Conversion Price and the effective date of such
     adjusted Conversion Price; provided, however, that the failure of the
     Company to give such notice shall not affect the legality or validity of
     any corporate action by the Company.

     (b)  (i)       Notwithstanding any other provision herein to the contrary,
     if any of the following events occur, namely (x) any reclassification or
     change of outstanding shares of Common Stock (other than a change in par
     value, or from par value to no par value, or from no par value to par
     value, or as a result of a subdivision or combination of the Common Stock),
     (y) any consolidation, merger or combination of the Company with or into
     another corporation as a result of which holders of Common Stock shall be
     entitled to receive stock, securities or other property or assets
     (including cash) with respect to or in exchange for such Common Stock, or
     (z) any sale or conveyance of all or substantially all of the assets of the
     Company to any other entity as a result of which holders of Common Stock
     shall be entitled to receive stock, securities or other property or assets
     (including cash) with respect to or in exchange for such Common Stock, then
     appropriate provision shall be made by supplemental indenture so that (A)
     the holder of any outstanding Security that is convertible into Common
     Stock shall have the right to convert such Security into the kind and
     amount of the shares of stock and securities or other property or assets
     (including cash) that would have been receivable upon such
     reclassification, change, consolidation, merger, combination, sale, or
     conveyance by a holder of the number of shares of Common Stock issuable
     upon conversion of such Security immediately prior to such
     reclassification, change, consolidation, merger, combination, sale or
     conveyance and (B) the number of shares of any such other stock or
     securities into which such Security shall thereafter be convertible shall
     be subject to adjustment from time to time in a manner and on terms as
     nearly equivalent as practicable to the terms of adjustment provided for in
     this Section, and Sections 1402, 1403, 1404, 1406, 1407, 1408 and 1409
     shall apply on like terms to any such other stock or securities.

          (ii)      In case of any reclassification or change of the Common
     Stock (other than a subdivision or combination of its outstanding Common
     Stock, or a change in par value, or from par value to no par value, or from
     no par value to par value), or of any consolidation, merger or combination
     of the Company with or into another corporation or of the sale or
     conveyance of all or substantially all of the assets of the Company, the
     Company shall cause to be filed with the Trustee and to be mailed to each
     holder of Securities that are convertible into shares of Common Stock at
     such holder's registered address, the date on which such reclassification,
     change, consolidation, merger, combination, sale or conveyance is expected
     to become effective, and the date as of which it is expected that holders
     of Common Stock shall be entitled to exchange their Common Stock for stock,
     securities or other property deliverable upon such reclassification,
     change, consolidation, merger, combination, sale or conveyance.

                                      -68-
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Section 1406.  Taxes on Shares Issued.

     The delivery of stock certificates upon conversions of Securities shall be
made without charge to the holder converting a Security for any tax in respect
of the issue thereof. The Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the delivery of
stock registered in any name other than of the holder of any Security converted,
and the Company shall not be required to deliver any such stock certificate
unless and until the person or persons requesting the delivery thereof shall
have paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.

Section 1407.  Shares to be Fully Paid; Compliance with Governmental
Requirements; Listing of Common Stock.

     The Company covenants that all shares of Common Stock which may be
delivered upon conversion of Securities of any series which are convertible into
Common Stock will upon delivery be fully paid and nonassessable by the Company
and free from all taxes, liens and charges with respect to the issue thereof.

     The Company covenants that if any shares of Common Stock to be provided for
the purpose of conversion of Securities hereunder require registration with or
approval of any governmental authority under any Federal or state law before
such shares may be validly delivered upon conversion, the Company will in good
faith and as expeditiously as possible endeavor to secure such registration or
approval, as the case may be.

     The Company further covenants that it will, if permitted by the rules of
the New York Stock Exchange or such other national stock exchange on which the
Common Stock is listed or admitted to trading or if permitted by the rules of
NASDAQ if the Common Stock is approved by it for listing or quotation, list and
keep listed for so long as the Common Stock shall be so listed on such exchange,
upon official notice of issuance, all Common Stock deliverable upon conversion
of Securities of any series which are convertible into Common Stock.

Section 1408.  Responsibility of Trustee.

     Neither the Trustee nor any conversion agent shall at any time be under any
duty or responsibility to any Holder of Securities to determine whether any
facts exist which may require any adjustment of the Conversion Price applicable
to such Securities, or with respect to the nature or extent of any such
adjustment when made, or with respect to the method employed, or herein or in
any supplemental indenture provided to be employed, in making the same. Neither
the Trustee nor any conversion agent shall be accountable with respect to the
validity or value (or the kind or amount) of any shares of Common Stock, or of
any securities or property, which may at any time be delivered upon the
conversion of any Security; and neither the Trustee nor any conversion agent
makes any representation with respect thereto. Neither the Trustee nor any
conversion agent shall be responsible for any failure of the Company to deliver
any shares of Common Stock or stock certificates or other securities or property
or cash upon the surrender of

                                      -69-
<PAGE>

any Security for the purpose of conversion or for any failure of the Company to
comply with any of the covenants of the Company contained in this Article
Fourteen.

Section 1409.  Covenant to Reserve Shares.

     The Company covenants that it will at all times reserve and keep available,
free from pre-emptive rights, out of its authorized but unissued Common Stock,
such number of shares of Common Stock as shall then be deliverable upon the
conversion of all Outstanding Securities of any series of Securities which are
convertible into Common Stock.

Section 1410.  Other Conversions.

     If so provided in a Board Resolution with respect to the Securities of a
series, the principal amount of the Securities of such series shall be
convertible into or exchangeable for a principal amount of other securities of
the Company (which other securities may be issued under this Indenture or
otherwise), and the issuance of such securities upon any such conversion or
exchange shall be made in accordance with the terms of such Board Resolution.

                              ARTICLE FIFTEEN --
                      DEFEASANCE AND COVENANT DEFEASANCE

Section 1501.  Applicability of Article; Company's Option to Effect Defeasance
or Covenant Defeasance.

     If pursuant to Section 301 provision is made for either or both of (a)
defeasance of the Securities of a series under Section 1502 or (b) covenant
defeasance of the Securities of a series under Section 1503, then the provisions
of such Section or Sections, as the case may be, together with the other
provisions of this Article Fifteen, shall be applicable to the Securities of
such series, and the Company may at its option by Board Resolution, at any time,
with respect to the Securities of such series, elect to have either Section 1502
(if applicable) or Section 1503 (if applicable) be applied to the Outstanding
Securities of such series upon compliance with the conditions set forth below in
this Article Fifteen.

Section 1502.  Defeasance and Discharge.

     Upon the Company's exercise of the above option applicable to this Section
with respect to the Outstanding Securities of a particular series, the Company
shall be deemed to have been discharged from its obligations with respect to the
Outstanding Securities of such series on and after the date the conditions
precedent set forth below are satisfied (hereinafter, "defeasance"). For this
purpose, such defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the Outstanding Securities of
such series and to have satisfied all its other obligations under such
Securities and this Indenture insofar as such Securities are concerned (and the
Trustee, at the expense of the Company and upon Company Request, shall execute
proper instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of Outstanding Securities of such series to receive, solely from the
trust fund described

                                      -70-
<PAGE>

in Section 1504 as more fully set forth in such Section, payments of the
principal of and any premium and interest on such Securities when such payments
are due, (B) the Company's obligations with respect to such Securities under
Section 304, 305, 306, 607, 1002 and 1003 and such obligations as shall be
ancillary thereto, (C) the rights, powers, trusts, duties, immunities and other
provisions in respect of the Trustee hereunder and (D) this Article Fifteen.
Subject to compliance with this Article Fifteen, the Company may exercise its
option under this Section 1502 notwithstanding the prior exercise of its option
under Section 1503 with respect to the Securities of such series.

Section 1503.  Covenant Defeasance.

     Upon the Company's exercise of the above option applicable to this Section
with respect to the Outstanding Securities of a particular series, the Company
shall be released from its obligations under Sections 801, 1008 and 1009 (and
any other covenant applicable to such Securities that is determined pursuant to
Section 301 to be subject to covenant defeasance under this Section) and the
occurrence of an event specified in Clause (4) of Section 501 with respect to
any of Sections 801, 1008 or 1009 (and any other Event of Default applicable to
such Securities that is determined pursuant to Section 301 to be subject to
covenant defeasance under this Section) shall not be deemed to be an Event of
Default with respect to the Outstanding Securities of such series on and after
the date the conditions set forth below are satisfied (hereinafter, "covenant
defeasance"). For this purpose, such covenant defeasance means that, with
respect to the Outstanding Securities of such series, the Company may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such Section or Clause whether directly or
indirectly by reason of any reference elsewhere herein to any such Section or
Clause or by reason of any reference in any such Section or Clause to any other
provision herein or in any other document, but the remainder of this Indenture
and such Securities shall be unaffected thereby.

Section 1504.  Conditions to Defeasance or Covenant Defeasance.

     The following shall be the conditions precedent to application of either
Section 1502 or Section 1503 to the Outstanding Securities of a particular
series:

          (1)  The Company shall irrevocably have deposited or caused to be
     deposited with the Trustee (or another trustee satisfying the requirements
     of Section 609 who shall agree to comply with the provisions of this
     Article Fifteen applicable to it) as trust funds in trust for the purpose
     of making the following payments, specifically pledged as security for, and
     dedicated solely to, the benefit of the Holders of such Securities, (A)
     money in an amount, or (B) U.S. Government Obligations which through the
     scheduled payment of principal and interest in respect thereof in
     accordance with their terms will provide, not later than one day before the
     due date of any payment, money in an amount, or (C) a combination thereof,
     sufficient, without reinvestment, in the opinion of a nationally recognized
     firm of independent public accountants expressed in a written certification
     thereto delivered to the Trustee, to pay and discharge, and which shall be
     applied by the Trustee (or other qualifying trustee) to pay and discharge,
     (i) the principal

                                      -71-
<PAGE>

     of and any premium and interest on the Outstanding Securities of such
     series on the maturity of such principal, premium or interest and (ii) any
     mandatory sinking fund payments or analogous payments applicable to the
     Outstanding Securities of such series on the day on which such payments are
     due in accordance with the terms of this Indenture and of such Securities.
     Before such a deposit, the Company may make arrangements satisfactory to
     the Trustee for the redemption of Securities at a future date or dates in
     accordance with Article Eleven, which shall be given effect in applying the
     foregoing. For this purpose, "U.S. Government Obligations" means securities
     that are (x) direct obligations of the United States of America for the
     payment of which its full faith and credit is pledged or (y) obligations of
     a Person controlled or supervised by and acting as an agency or
     instrumentality of the United States of America the timely payment of which
     is unconditionally guaranteed as a full faith and credit obligation by the
     United States of America, which, in either case, are not callable or
     redeemable at the option of the issuer thereof, and shall also include a
     depositary receipt issued by a bank (as defined in Section 3(a)(2) of the
     Securities Act of 1933, as amended) as custodian with respect to any such
     U.S. Government Obligation or a specific payment of principal of or
     interest on any such U.S. Government Obligation held by such custodian for
     the account of the holder of such depositary receipt, provided that (except
     as required by law) such custodian is not authorized to make any deduction
     from the amount payable to the holder of such depositary receipt from any
     amount received by the custodian in respect of the U.S. Government
     Obligation or the specific payment of principal of or interest on the U.S.
     Government Obligation evidenced by such depositary receipt.

          (2)  No Event of Default or event which with notice or lapse of time
     or both would become an Event of Default with respect to the Securities of
     such series shall have occurred and be continuing (A) on the date of such
     deposit or (B) insofar as subsections 501(6) and (7) are concerned, at any
     time during the period ending on the 91st day after the date of such
     deposit or, if longer, ending on the day following the expiration of the
     longest preference period applicable to the Company in respect of such
     deposit (it being understood that the condition in this condition shall not
     be deemed satisfied until the expiration of such period).

          (3)  Such defeasance or covenant defeasance shall not (A) cause the
     Trustee for the Securities of such series to have a conflicting interest as
     defined in Section 608 or for purposes of the Trust Indenture Act with
     respect to any securities of the Company or (B) result in the trust arising
     from such deposit to constitute, unless it is qualified as, a regulated
     investment company under the Investment Company Act of 1940, as amended.

          (4)  Such defeasance or covenant defeasance shall not result in a
     breach or violation of, or constitute a default under, this Indenture or
     any other agreement or instrument to which the Company is a party or by
     which it is bound.

          (5)  In the case of an election under Section 1502, the Company shall
     have delivered to the Trustee an Opinion of Counsel stating that (x) the
     Company has received from, or there has been published by, the Internal
     Revenue Service a ruling, or (y) since

                                      -72-
<PAGE>

     the date of this Indenture there has been a change in the applicable
     Federal income tax law, in either case to the effect that, and based
     thereon such opinion shall confirm that, the Holders of the Outstanding
     Securities of such series will not recognize income, gain or loss for
     Federal income tax purposes as a result of such defeasance and will be
     subject to Federal income tax on the same amounts, in the same manner and
     at the same times as would have been the case if such defeasance had not
     occurred.

          (6)  In the case of an election under Section 1503, the Company shall
     have delivered to the Trustee an Opinion of Counsel to the effect that the
     Holders of the Outstanding Securities of such series will not recognize
     income, gain or loss for Federal income tax purposes as a result of such
     covenant defeasance and will be subject to Federal income tax on the same
     amounts, in the same manner and at the same times as would have been the
     case if such covenant defeasance had not occurred.

          (7)  Such defeasance or covenant defeasance shall be effected in
     compliance with any additional terms, conditions or limitations which may
     be imposed on the Company in connection therewith pursuant to Section 301.

          (8)  The Company shall have delivered to the Trustee an Officers'
     Certificate and an Opinion of Counsel, each stating that all conditions
     precedent provided for relating to either the defeasance under Section 1502
     or the covenant defeasance under Section 1503 (as the case may be) have
     been complied with.

Section 1505.  Deposited Money and U.S. Government Obligations to be Held in
Trust; Other Miscellaneous Provisions.

     Subject to the provisions of the last paragraph of Section 1003, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee (or other qualifying trustee -- collectively, for purposes for this
Section 1505, the "Trustee") pursuant to Section 1504 in respect of the
Outstanding Securities of such series shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Securities and this
Indenture, to the payment, either directly or through any Paying Agent (but not
including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities, of all sums due and to become due
thereon in respect of principal, premium 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 1504 or the principal and interest
received in respect thereof.

     Anything herein to the contrary notwithstanding, the Trustee shall deliver
or pay to the Company from time to time upon Company Request any money or U.S.
Government Obligations held by it as provided in Section 1504 which, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect an equivalent defeasance or covenant defeasance.

                                      -73-
<PAGE>

Section 1506.  Reinstatement.

     If the Trustee or the Paying Agent is unable to apply any money in
accordance with Section 1502 or 1503 with respect to the Securities of any
series by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Company's obligations under this Indenture and the Securities of such series
shall be revived and reinstated as though no deposit had occurred pursuant to
this Article Fifteen until such time as the Trustee or Paying Agent is permitted
to apply all such money in accordance with Section 1502 or 1503; provided,
however, that if the Company makes any payment of the principal of or any
premium or interest on any such Security following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money held by the Trustee or
the Paying Agent.

                              ARTICLE SIXTEEN --
                          IMMUNITY OF INCORPORATORS,
                     STOCKHOLDERS, OFFICERS AND DIRECTORS

Section 1601.  Immunity of Incorporators, Stockholders, Officers and Directors.

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

                                    *  *  *

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

                                      -74-
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.

[SEAL]                            LOWE'S COMPANIES, INC.

                                       /s/ Richard D. Elledge
                                  ------------------------------
                                  By:   Richard D. Elledge
                                  Its:  Vice President

Attest:

     /s/ William C. Warden, Jr
------------------------------
By:   William C. Warden, Jr
Its:  Secretary

[SEAL]                            THE FIRST NATIONAL BANK OF CHICAGO

                                        /s/ R.D. Manella
                                  ------------------------------
                                  By:   R.D. Manella
                                  Its:  Vice President

Attest:

   /s/ Jeffrey L. Kinney
------------------------------
By:   Jeffrey L. Kinney
Its:  Trust Officer

                                      -75-
<PAGE>

State of North Carolina
                           SS:
County of Wilkes

     On the 14th day of December, 1995, before me personally came Richard D.
Elledge, to me known, who, being by me duly sworn, did depose and say that he is
Vice President of LOWE'S COMPANIES, INC., one of the corporations described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.

[SEAL]                                 /s/ Gloria Hinshaw
                                  ------------------------------
                                          Notary Public

State of Illinois
                           SS:
County of Cook

     On the 14th day of December, 1995, before me personally came R.D. Manella,
to me known, who, being by me duly sworn, did depose and say that he is Vice
President of THE FIRST NATIONAL BANK OF CHICAGO, one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such
corporation's seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.

[SEAL]                                  /s/ Nilda Sierra
                                  ------------------------------
                                           Notary Public

                                      -76-

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