Document:

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                                                                     Exhibit 4.2

                     TEXTRON FINANCIAL CANADA FUNDING CORP.,

                                     ISSUER,

                         TEXTRON FINANCIAL CORPORATION,

                                   GUARANTOR,

                                       AND

                                 SUNTRUST BANK,

                                     TRUSTEE

                                    INDENTURE

                          Dated as of November 30, 2001

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                     TEXTRON FINANCIAL CANADA FUNDING CORP.

                                 (THE "ISSUER")

                          TEXTRON FINANCIAL CORPORATION

                                (THE "GUARANTOR")

                                       AND

                         SUNTRUST BANK, (THE "TRUSTEE")

                                    INDENTURE

                          Dated as of November 30, 2001

         Reference is made to the following provisions of the Trust Indenture
Act of 1939, as amended, which establish certain duties and responsibilities of
the Issuer and the Trustee which are not set forth in this Indenture:
<TABLE>
<CAPTION>
Section                Subject               Section                    Subject
-------                -------               -------                    -------
<S>       <C>                                <C>         <C>
310(b)    Disqualification of Trustee for    315(b)      Notice of default from Trustee to
          conflicting interest                           Securityholders

311       Preferential collection of         315(c)      Duties of Trustee in case of default
          claims of Trustee as creditor of
          the Issuer

312(a)    Periodic filing of information     315(d)      Provisions relating to
          by the Issuer with Trustee                     responsibility of Trustee

312(b)    Access of Securityholders to       315(e)      Assessment of costs against
          information                                    litigating Securityholders in
                                                         certain circumstances
</TABLE>
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<TABLE>
<S>       <C>                                <C>         <C>
313(a)    Annual report of Trustee to        316(a)      Directions and waivers by
          Securityholders                                Securityholders in certain
                                                         circumstances

313(b)    Additional reports of Trustee to   316(b)      Prohibition of impairment of right
          Securityholders                                of Securityholders to payment

314(a)    Reports by the Issuer, including   316(c)      Right of the Issuer to set record
          annual compliance certificate                  date for certain purposes

314(c)    Evidence of compliance with        317(a)      Special powers of Trustee
          conditions precedent

315(a)    Duties of Trustee prior to         318(a)      Provisions of Act to control in case
          default                                        of conflict
</TABLE>

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<TABLE>
<S>                                                                                                                <C>
ARTICLE ONE......................................................................................................   1
  DEFINITIONS....................................................................................................   1
  SECTION 1.1  Certain Terms Defined.............................................................................   1

ARTICLE TWO......................................................................................................   7
  SECURITIES.....................................................................................................   7
  SECTION 2.1  Forms Generally...................................................................................   7
  SECTION 2.2  Form of Face of Security..........................................................................   8
  SECTION 2.3  Form of Reverse of Security.......................................................................  11
  SECTION 2.4  Form of Trustee's Certificate of Authentication...................................................  16
  SECTION 2.5  Amount Unlimited; Issuable in Series..............................................................  16
  SECTION 2.6  Authentication and Delivery of Securities.........................................................  19
  SECTION 2.7  Execution of Securities...........................................................................  20
  SECTION 2.8  Certificate of Authentication.....................................................................  20
  SECTION 2.9  Denomination and Date of Securities; Payments of Interest.........................................  21
  SECTION 2.10  Registration, Transfer and Exchange; Certain Transfers and Exchanges.............................  21
  SECTION 2.11  Mutilated, Defaced, Destroyed, Lost and Stolen Securities........................................  23
  SECTION 2.12  Cancellation of Securities Paid, etc.............................................................  24
  SECTION 2.13  Temporary Securities.............................................................................  24
  SECTION 2.14  Global Securities................................................................................  25
  SECTION 2.15  Form of Guarantee................................................................................  27

ARTICLE THREE....................................................................................................  28
  COVENANTS OF THE ISSUER AND THE GUARANTOR......................................................................  28
  SECTION 3.1  Payment of Principal and Interest.................................................................  28
  SECTION 3.2  Offices for Payments, etc.........................................................................  29
  SECTION 3.3  Paying Agents.....................................................................................  29
  SECTION 3.4  Limitation on Liens...............................................................................  30
  SECTION 3.5  Statement as to Compliance........................................................................  32
  SECTION 3.6  Existence.........................................................................................  33
  SECTION 3.7  Payment of Additional Amounts.....................................................................  33

ARTICLE FOUR.....................................................................................................  34
  REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT................................................  34
  SECTION 4.1  Events of Default.................................................................................  34
  SECTION 4.2  Payment of Securities on Default; Suit Therefor...................................................  37
  SECTION 4.3  Application of Moneys Collected by Trustee........................................................  39
  SECTION 4.4  Proceedings by Trustee............................................................................  40
  SECTION 4.5  Restoration of Rights on Abandonment of Proceedings...............................................  40
  SECTION 4.6  Proceedings by Securityholders....................................................................  40
  SECTION 4.7  Remedies Cumulative and Continuing................................................................  41
  SECTION 4.8  Control by Securityholders........................................................................  41
  SECTION 4.9  Waiver of Past Defaults...........................................................................  41

ARTICLE FIVE.....................................................................................................  42
</TABLE>
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<TABLE>
<S>                                                                                                                <C>
  CONCERNING THE TRUSTEE.........................................................................................  42
  SECTION 5.1  Reliance on Documents, Opinions, etc.; No Requirement for Expenditure of Own Funds................  42
  SECTION 5.2  No Responsibility for Recitals, etc...............................................................  44
  SECTION 5.3  Trustee and Agents May Hold Securities............................................................  44
  SECTION 5.4  Moneys to be Held in Trust........................................................................  44
  SECTION 5.5  Compensation and Expenses of Trustee..............................................................  45
  SECTION 5.6  Right of Trustee to Rely on Officers' Certificate, etc............................................  45
  SECTION 5.7  Eligibility of Trustee............................................................................  45
  SECTION 5.8  Resignation or Removal of Trustee; Appointment of Successor Trustee...............................  45
  SECTION 5.9  Acceptance of Appointment by Successor Trustee....................................................  47
  SECTION 5.10  Merger, Conversion, Consolidation or Succession to Business of Trustee...........................  48
  SECTION 5.11  Reports by Trustee to Securityholders............................................................  48
  SECTION 5.12  Compliance with Backup Withholding and Information Reporting.....................................  48

ARTICLE SIX......................................................................................................  48
  CONCERNING THE SECURITYHOLDERS.................................................................................  48
  SECTION 6.1  Action by Securityholders.........................................................................  48
  SECTION 6.2  Proof of Execution by Securityholders.............................................................  50
  SECTION 6.3  Holders to be Treated as Owners...................................................................  50
  SECTION 6.4  Securities Owned by Issuer or Guarantor Deemed Not Outstanding....................................  50
  SECTION 6.5  Right of Revocation of Action Taken...............................................................  51
  SECTION 6.6  Securityholders' Meetings; Purposes...............................................................  51
  SECTION 6.7  Call of Meetings by Trustee.......................................................................  52
  SECTION 6.8  Call of Meetings by Issuer, the Guarantor or Securityholders......................................  52
  SECTION 6.9  Qualifications for Voting.........................................................................  52
  SECTION 6.10  Quorum; Adjourned Meetings.......................................................................  52
  SECTION 6.11  Regulations......................................................................................  53
  SECTION 6.12  Voting...........................................................................................  53
  SECTION 6.13  No Delay of Rights by Meeting....................................................................  54
  SECTION 6.14  Written Consent in Lieu of Meeting...............................................................  54

ARTICLE SEVEN....................................................................................................  54
  SUPPLEMENTAL INDENTURES........................................................................................  54
  SECTION 7.1  Supplemental Indentures Without Consent of Securityholders........................................  54
  SECTION 7.2  Supplemental Indentures With Consent of Securityholders...........................................  56
  SECTION 7.3  Effect of Supplemental Indenture..................................................................  57
  SECTION 7.4  Certain Documents to be Given to Trustee..........................................................  57
  SECTION 7.5  Notation on Securities............................................................................  57

ARTICLE EIGHT....................................................................................................  58
  CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE..............................................................  58
  SECTION 8.1  Issuer, Guarantor May Consolidate, etc., on Certain Terms.........................................  58
  SECTION 8.2  Successor Person to be Substituted................................................................  59
  SECTION 8.3  Opinion of Counsel and Officers' Certificate to be Given to Trustee...............................  59

ARTICLE NINE.....................................................................................................  59
</TABLE>
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<TABLE>
<S>                                                                                                                <C>
  SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS......................................................  59
  SECTION 9.1  Satisfaction and Discharge of Indenture...........................................................  60
  SECTION 9.2  Application by Trustee of Funds Deposited for Payment of Securities...............................  60
  SECTION 9.3  Repayment of Moneys Held by Paying Agent..........................................................  61
  SECTION 9.4  Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years.........................  61

ARTICLE TEN......................................................................................................  61
  REDEMPTION OF SECURITIES AND SINKING FUNDS.....................................................................  61
  SECTION 10.1  Applicability of Article.........................................................................  61
  SECTION 10.2  Notice of Redemption; Selection of Securities....................................................  61
  SECTION 10.3  Payment of Securities Called for Redemption......................................................  62
  SECTION 10.4  Exclusion of Certain Securities from Eligibility for Selection for Redemption....................  63
  SECTION 10.5  Mandatory and Optional Sinking Funds.............................................................  63
  SECTION 10.6  Redemption for Tax Reasons.......................................................................  66

ARTICLE ELEVEN...................................................................................................  67
  DEFEASANCE AND COVENANT DEFEASANCE.............................................................................  67
  SECTION 11.1  Applicability of Article; Issuer's Option to Effect Defeasance or Covenant Defeasance............  67
  SECTION 11.2  Defeasance and Discharge.........................................................................  67
  SECTION 11.3  Covenant Defeasance..............................................................................  67
  SECTION 11.4  Conditions to Defeasance or Covenant Defeasance..................................................  68
  SECTION 11.5  Deposited Money and U.S. Government Obligations and Canadian Government Obligations to be
                Held in Trust; Other Miscellaneous Provisions....................................................  70

ARTICLE TWELVE...................................................................................................  71
  MISCELLANEOUS PROVISIONS.......................................................................................  71
  SECTION 12.1  Incorporators, Stockholders, Officers and Directors of Issuer and Guarantor Exempt from
                Individual Liability.............................................................................  71
  SECTION 12.2  Provisions of Indenture for the Sole Benefit of Parties and Securityholders......................  71
  SECTION 12.3  Successors and Assigns of Issuer and Guarantor Bound by Indenture................................  71
  SECTION 12.4  Notices and Demands on Issuer, Guarantor, Trustee and Securityholders............................  71
  SECTION 12.5  Officers' Certificates and Opinions of Counsel; Statements to be Contained Therein...............  72
  SECTION 12.6  Official Acts by Successor Entity................................................................  73
  SECTION 12.7  Payments Due on Saturdays, Sundays and Legal Holidays............................................  73
  SECTION 12.8  New York Law to Govern...........................................................................  73
  SECTION 12.9  Counterparts.....................................................................................  73
  SECTION 12.10  Effect of Headings..............................................................................  73
  SECTION 12.11  Conflict with Trust Indenture Act...............................................................  73
  SECTION 12.12  Severability....................................................................................  74
  SECTION 12.13  Judgment Currency...............................................................................  74
  SECTION 12.14  Submission to Jurisdiction......................................................................  74

ARTICLE THIRTEEN.................................................................................................  75
</TABLE>
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<TABLE>
<S>                                                                                                                <C>
  GUARANTEE OF SECURITIES........................................................................................  75
  SECTION 13.1  Guarantee........................................................................................  75
  SECTION 13.2  Execution of Guarantee...........................................................................  76
  SECTION 13.3  Guarantor Additional Amounts.....................................................................  77
</TABLE>

                                      -iv-

<PAGE>

         THIS INDENTURE, dated as of November 30, 2001, among Textron Financial
Canada Funding Corp., an unlimited liability corporation duly organized under
the laws of the Province of Nova Scotia (the "Issuer"), having its registered
office at Suite 800, 1959 Upper Water Street, P.O. Box 997, Halifax, Nova
Scotia, Canada B3J ZXZ, Textron Financial Corporation, a Delaware corporation
(the "Guarantor") having its principal office at 40 Westminster Street,
Providence, Rhode Island 02940-6687, and SunTrust Bank, a state banking
corporation existing under the laws of the State of Georgia (the "Trustee").

                               W I T N E S S E T H

         WHEREAS, the Issuer has duly authorized the execution and delivery of
this Indenture for the issuance from time to time of its unsecured bonds,
debentures, notes and other evidences of indebtedness to be issued in one or
more series (the "Securities"), up to such principal amount or amounts and
denominated in United States or Canadian dollars or foreign currency or units or
composites of two or more thereof as may from time to time be authorized in
accordance with the terms of this Indenture and to provide, among other things,
for the authentication, delivery and administration thereof;

         WHEREAS, for value received, the Guarantor has duly authorized the
execution and delivery of this Indenture to provide for the Guarantee of the
Securities provided herein; and

         WHEREAS, all things necessary to make this Indenture, when executed and
delivered by the parties hereto, a valid indenture and agreement according to
its terms, have been done;

         NOW, THEREFORE:

         In consideration of the premises and the purchases of the Securities by
the holders thereof, the Issuer, the Guarantor and the Trustee mutually covenant
and agree for the equal and proportionate benefit of the respective holders from
time to time of the Securities as follows:

                                   ARTICLE ONE

                                   DEFINITIONS

         SECTION 1.1 CERTAIN TERMS DEFINED. The following terms (except as
herein otherwise expressly provided or unless the context otherwise clearly
requires) for all purposes of this Indenture and of any indenture supplemental
hereto shall have the respective meanings specified in this Section. All other
terms used in this Indenture that are defined in the Trust Indenture Act of
1939, as amended to the date of this Indenture as originally executed, or the
definitions of which in the Securities Act of 1933, as amended to the date of
this Indenture as originally executed, are referred to in the Trust Indenture
Act of 1939 (except as herein otherwise expressly provided or unless the context
otherwise clearly requires), shall have the meanings assigned to such terms in
said Trust Indenture Act and in said Securities Act as in force at the date of
this Indenture. The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture, as it may be amended from time to time,
as a whole and not to any particular Article, Section or other subdivision. The
terms defined in this

<PAGE>

Article have the meanings assigned to them in this Article and include the
plural as well as the singular.

         "Additional Amounts" has the meaning set forth in Section 3.7.

         "Board of Directors" means either the Board of Directors of the Issuer
or the Guarantor, as applicable or any committee of such Board of Directors duly
authorized to act hereunder.

         "Business Day" means, except as otherwise provided pursuant to Section
2.5 for Securities of any series, any day that is not a Saturday or Sunday and
that is not a day on which banking institutions are generally authorized or
obligated by law to close in The City of New York, the City of Toronto or the
city in which the Corporate Trust Office is located.

         "Canadian Government Obligations" has the meaning set forth in Section
11.4.

         "Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or if at
any time after the execution and delivery of this Indenture such Commission is
not existing and performing the duties now assigned to it under the Trust
Indenture Act of 1939, then the body performing such duties on such date.

         "Consolidated Net Tangible Assets" means, as of any particular time,
the aggregate amount of assets after deducting therefrom (a) all current
liabilities (excluding any such liability that by its terms is extendable or
renewable at the option of the obligor thereon to a time more than 12 months
after the time as of which the amount thereof is being computed) and (b) all
goodwill, excess of cost over assets acquired, patents, copyrights, trademarks,
trade names and other like intangibles, all as shown in Guarantor's and its
Subsidiaries' most recent consolidated financial statements prepared in
accordance with generally accepted accounting principles.

         "Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date as of which this
Indenture is dated, located at Corporate Trust Division, 25 Park Place, 24th
Floor, Atlanta, Georgia 30303-2900.

         "covenant defeasance" and "defeasance" have the meanings assigned to
such terms, respectively, by Sections 11.3 and 11.2.

         "Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee which are capitalized in
accordance with generally accepted accounting principles, (v) any obligation of
others of a type described in the preceding clauses (i), (ii), (iii) or (iv)
secured by a Lien on any asset of such Person, whether or not such obligation is
assumed by such Person, and (vi) all obligations of others of a type described
in the preceding clauses (i), (ii), (iii) or (iv) guaranteed by such

                                      -2-
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Person; provided that "Debt" of the Guarantor or a Subsidiary shall not be
deemed to include Non-recourse Debt.

         "Depositary" means, with respect to the Securities of any series or
tranche issuable or issued in the form of one or more Global Securities, the
person designated as Depositary for such Global Securities by the Issuer
pursuant to Section 2.5 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 for such
Global Securities, and if at any time there is more than one person designated
as Depositary for Global Securities of a particular series or tranche,
"Depositary", as used with respect to the Securities of such series or tranche,
means the Depositary with respect to the particular Global Security or
Securities.

         "Event of Default" means any event or condition specified as such in
Section 4.1.

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

         "Global Security" means a Security evidencing all or a part of a series
or tranche of Securities, issued to the Depositary for such series or tranche,
as the case may be, in accordance with Section 2.5 and bearing the legend
prescribed in Section 2.14.

         "Guarantee" means the unconditional guarantee by the Guarantor of any
Security of any series authenticated and delivered pursuant to this Indenture
endorsed on such Security.

         "Guarantor" means Textron Financial Corporation, a Delaware
corporation, until any successor Person shall have become such pursuant to
Article Eight and thereafter "Guarantor" shall mean such successor Person except
as otherwise provided in Section 8.2.

         "holder" "holder of Securities", "Securityholder" or other similar
terms mean the registered holder of any Security.

         "Indenture" means this instrument as originally executed and delivered
or, if amended or supplemented as herein provided, as so amended and/or
supplemented from time to time, and shall include (i) for all purposes of this
instrument and any supplemental indenture, the provisions of the Trust Indenture
Act of 1939 that are deemed to be a part of and govern this instrument and any
such supplemental indenture, respectively, and (ii) the forms and terms of
particular series of Securities established as contemplated hereunder.

         "interest" means, when used with respect to a non-interest bearing
Security, interest payable after the principal thereof has become due and
payable whether at maturity, by declaration of acceleration, by call for
redemption, pursuant to a sinking fund or otherwise.

         "Issuer" means Textron Financial Canada Funding Corp., a Nova Scotia
unlimited liability corporation, until any successor Person shall have become
such pursuant to Article Eight and thereafter "Issuer" shall mean such successor
except as otherwise provided in Section 8.2.

         "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, hypothecation or encumbrance of any kind in respect
of such asset, provided that, "Lien" shall not mean security interests under
Article 9 of the Uniform Commercial Code, or any

                                      -3-
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successor to such Article, or under the Personal Property Security Act (Ontario)
and its equivalent in other provinces, or any successor to such legislation, in
respect of sales of accounts or chattel paper. For the purposes of the
Securities, the Guarantor or any Subsidiary shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.

         "mandatory sinking fund payments" has the meaning set forth in Section
10.5.

         "Market Exchange Rate" has the meaning set forth in Section 6.1.

         "Moody's," shall mean Moody's Investors Service, Inc. or any successor
thereto.

         "New York Location" means the location in the Borough of Manhattan, The
City of New York, State of New York, at which at any particular time the Trustee
receives and redelivers securities, which location at the date of execution of
this Indenture is SunTrust Bank, [ ], or such other location as the Issuer shall
specify in connection with any issuance of Securities.

         "Non-recourse Debt" of the Guarantor or any Subsidiary means any
obligations for borrowed money of the Guarantor or any Subsidiary, respectively,
secured by specific assets which obligations, in accordance with generally
accepted accounting principles, are not reflected in the balance sheet of the
Guarantor or any Subsidiary and are issued pursuant to or evidenced by an
instrument which limits the recourse against the obligor thereunder to such
specific assets, and (in the case of all Non-recourse Debt incurred after the
date of this Indenture), if under applicable law in respect of such obligations,
such assets or such obligor, at the time any such obligation is created, a
holder of such obligation could ever become entitled to recourse against the
obligor pursuant to Section 1111(b) of the Bankruptcy Reform Act of 1978 (11
U.S.C. Section 1111(b), or any successor section thereto) or any other
provisions of any bankruptcy, insolvency or other law of any jurisdiction, such
instrument also contains a provision to the effect that such holder's recourse
claim in respect of such obligation shall be and remain in all respects
subordinate and junior to all Debt evidenced by the Securities of any series and
such holder shall not be entitled to receive any payment, under any condition,
in respect of any obligation, other than the proceeds of such specific assets,
until all Securities of any series shall have been paid in full or funds for
their payment shall have been duly and sufficiently provided.

         "Officers' Certificate" when used with respect to the Issuer or the
Guarantor, means a certificate signed by the chairman of the Board of Directors,
the president or any vice president and by the chief financial officer,
treasurer, controller, the secretary or any assistant secretary of the Issuer or
the Guarantor, respectively, and delivered to the Trustee. Each such certificate
shall include the statements required by the Trust Indenture Act of 1939, or as
provided for in Section 12.5, if and to the extent required hereby.

         "Opinion of Counsel" means an opinion, in writing, signed by legal
counsel who may be an employee of or counsel to the Issuer or the Guarantor, as
the case may be, and who shall be reasonably satisfactory to the Trustee. Each
such opinion shall include the statements

                                      -4-
<PAGE>

required by the Trust Indenture Act of 1939 or as provided for in Section 12.5,
if and to the extent required hereby.

         "optional sinking fund payment" has the meaning set forth in Section
10.5.

         "Original Issue Discount Security" means any Security that provides for
an amount less than the principal amount thereof to be due and payable upon
redemption or a declaration of acceleration of the maturity thereof pursuant to
Section 4.1.

         "Outstanding" (except as otherwise required by the Trust Indenture Act
of 1939), when used with reference to Securities, shall, subject to the
provisions of Section 6.4, mean, as of any particular time, all Securities
theretofore authenticated and delivered by the Trustee under this Indenture,
except:

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

                  (b) Securities, or portions thereof, for which moneys and/or
         U.S. Government Obligations and/or Canadian Government Obligations, as
         applicable, for the payment thereof in the necessary amount shall have
         been theretofore deposited in trust with the Trustee or with any paying
         agent (other than the Issuer or the Guarantor) or shall have been set
         aside, segregated and held in trust by the Issuer or the Guarantor for
         the holders of such Securities (if the Issuer or the Guarantor shall
         act as the Issuer's paying agent); and

                  (c) Securities in lieu of or in substitution for which other
         Securities shall have been authenticated and delivered pursuant to the
         terms of Section 2.11, or which shall have been paid pursuant to
         Section 2.11.

         In determining whether the holders of the requisite principal amount of
Outstanding Securities of any or all series have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding for such purposes 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 4.1.

         "Overdue Rate" means, unless otherwise specified in the Securities of
any series, the same rate as the rate of interest specified in the Securities of
such series or, in the case of a series of Original Issue Discount Securities,
the Yield to Maturity of such series of Securities.

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

         "principal", whenever used with reference to the Securities or any
Security or any portion thereof, shall be deemed to include any premium that may
be payable thereon pursuant to the terms thereof.

                                      -5-
<PAGE>

         "record date" has the meaning set forth in Section 2.9.

         "Register" has the meaning set forth in Section 2.10.

         "Resolution" means a resolution of the Board of Directors of the Issuer
or the Guarantor, as the case may be, including without limitation, any such
resolution by which or pursuant to which any series of Securities and the
Guarantee noted or endorsed thereon is authorized and established pursuant to
Sections 2.1 and 2.5 hereof.

         "Responsible Officer", when used with respect to the Trustee, means any
vice president, the treasurer, any senior trust officer, trust officer, any
assistant trust officer, any assistant treasurer, or any other officer or
assistant officer of the Trustee who in each case is working with the Trustee's
corporate trust department at its Corporate Trust Office, or to whom any
corporate trust matter is referred because of his or her knowledge of, and
familiarity with, the particular subject.

         "S&P" shall mean Standard & Poor's Corporation or any successor
thereto.

         "Security Registrar" has the meaning set forth in Section 2.10.

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

         "Security" or "Securities" (except as otherwise required by the Trust
Indenture Act of 1939) has the meaning stated in the first recital of this
Indenture or means any Security or Securities issued, authenticated and
delivered under this Indenture, as the context may require.

         "Specified Currency" has the meaning set forth in Section 6.1.

         "Subsidiary" of the Issuer or of the Guarantor means any entity of
which at least a majority of the outstanding stock or other ownership interests
having, by the terms thereof, ordinary voting power for the election of
directors, managers or trustees of such entity or other persons performing
similar functions (irrespective of whether or not at the time stock or other
ownership interests of any other class or classes of such entity shall have or
might have voting power by reason of the happening any contingency) is at the
time directly or indirectly owned or controlled by the Issuer or the Guarantor,
as the case may be, or by one or more other Subsidiaries of such Person, or by
the Issuer or the Guarantor, as the case may be, and one or more other
Subsidiaries of such Person.

         "Support Agreement" means the Support Agreement dated as of May 25,
1994 between the Guarantor and Textron.

         "Taxes" has the meaning set forth in Section 2.2.

         "Tax Redemption Date" has the meaning set forth in Section 10.6.

         "Textron" shall mean Textron Inc., a Delaware corporation or any
successor thereto.

                                      -6-
<PAGE>

         "Trustee" means the Person identified as "Trustee" in the first
paragraph hereof and, subject to the provisions of Article Five, shall also
include any successor trustee. If, pursuant to the provisions of this Indenture,
there shall be at any time more than one Trustee hereunder, the term "Trustee"
as used with respect to Securities of any series shall mean the Trustee or
Trustees with respect to the Securities of that series.

         "Trust Indenture Act of 1939" (except as otherwise provided in Sections
7.1 and 7.2) means the Trust Indenture Act of 1939, as amended, and in force at
the date as of which this Indenture was originally executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act of 1939" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.

         "Uniform Commercial Code" means the New York Uniform Commercial Code as
in effect from time to time.

         "United States alien" has the meaning set forth in Section 3.7.

         "U.S. Government Obligations" has the meaning set forth in Section
11.4.

         "vice president", when used with respect to the Issuer, the Guarantor
or the Trustee, means any vice president, whether or not designated by a number
or a word or words added before or after the title of "vice president".

         "Yield to Maturity" means, in the case of any Original Issue Discount
Security, the yield to maturity specified in such Security or in a Resolution
relating thereto.

                                   ARTICLE TWO

                                   SECURITIES

         SECTION 2.1 FORMS GENERALLY. The Securities of each series shall be
substantially in the form set forth in this Article Two, or in such other form
as shall be established by, or in an Officers' Certificate pursuant to, a
Resolution of the Issuer 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 which may have
imprinted or otherwise reproduced thereon such letters, numbers or other marks
of identification and such legends or endorsements as may be required to comply
with any applicable law, rule or regulation or with the rules of any securities
exchange or as may, consistent with the provisions of this Indenture, be
determined by the officers executing such Securities, as evidenced by their
execution of the Securities.

         The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.

         If Article Thirteen is to be applicable to Securities of any series,
established as contemplated by Section 2.5, then Securities of each such series
shall bear a Guarantee in substantially the form set forth in Section 13.1. For
any other series of Securities, the Guarantee

                                      -7-
<PAGE>

shall be endorsed on the Securities and shall be substantially in the form
established by or pursuant to Resolutions of the Guarantor or one or more
indentures supplemental hereto. If the form of the Guarantee to be endorsed on
the Securities of any series is established by action taken pursuant to a
Resolution of the Board of Directors of the Guarantor, a copy of such Resolution
certified by the Secretary or Assistant Secretary of the Guarantor shall be
delivered to the Trustee at or prior to the delivery by the Issuer of the
written order contemplated by Section 2.6 hereof for the authentication and
delivery of such Securities. Notwithstanding the foregoing, the Guarantee or the
Guarantees to be endorsed on the Securities of any series may have such
appropriate insertions, omissions, substitutions and other corrections from the
forms thereof referred to above 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 the
rules of any securities exchange or as may, consistently herewith, be determined
by the directors or officers delivering the same, in each case as evidenced by
such delivery.

         SECTION 2.2 FORM OF FACE OF SECURITY. [If the Security is an Original
Issue Discount Security, insert any legend required by the Internal Revenue Code
of 1986, as amended and the regulations thereunder.]

No.

                     TEXTRON FINANCIAL CANADA FUNDING CORP.

                         [Insert Designation of Series]

         Textron Financial Canada Funding Corp., an unlimited liability
corporation duly organized and existing under the laws of the Province of Nova
Scotia (herein called the "Issuer"), for value received hereby promises to pay
to__________, or its registered assigns, the principal sum of ________________
on ______________ [if the Security is to bear interest prior to maturity, insert
--, and to pay interest thereon [[insert as applicable -- annually or
semi-annually or quarterly]] on [[insert appropriate interest payment dates]]
(the "Interest Payment Dates") in each year, commencing ___________, [insert --
at the rate of __% per annum or, if applicable, insert the method for
determining the adjustable, floating or other form of variable interest rate
borne by the Securities] until the principal hereof is paid or made available
for payment [if applicable, insert --, and (to the extent that the payment of
such interest shall be legally enforceable) at the rate of _____% per annum on
any overdue principal [if applicable, insert -- and premium, if any,] and on any
overdue installment of interest]. This Security shall bear interest from the
most recent Interest Payment Date to which interest in respect hereof has been
paid or duly provided for, unless no interest has been paid on this Security, in
which case from ___________. Any interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, subject to certain
exceptions provided in the Indenture referred to on the reverse hereof, be paid
to the Person in whose name this Security is registered at the close of business
on the_____________ or ________________ (whether or not a Business Day) (the
"Record Date") next preceding such Interest Payment Date; provided, however,
that the first payment of interest on this Security, if originally issued
between a Record Date and the related Interest Payment Date, shall be made on
the second Interest Payment Date following the date of original issuance of this
Security to the Person in whose name this Security is registered on the

                                      -8-
<PAGE>

Record Date relating to such second Interest Payment Date; and provided,
further, that any interest payable at maturity will be paid to the Person to
whom the principal is payable.]

         [If the Security is not to bear interest prior to maturity, insert --
The principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption, or at
maturity and in such case the overdue principal of this Security shall bear
interest at the rate of ______% per annum (to the extent that the payment of
such interest shall be legally enforceable), which shall accrue from the date of
such default in payment to the date payment of such principal has been made or
duly provided for. Interest on any overdue principal shall be payable on demand.
Any such interest on any overdue principal that is not so paid on demand shall
bear interest at the rate of ___% per annum (to the extent that the payment of
such interest shall be legally enforceable), which shall accrue from the date of
such demand for payment to the date payment of such interest has been made or
duly provided for, and such interest shall also be payable on demand.]

         [If applicable, insert -- All payments in respect of the Securities of
the series of which this Security is a part, including, without limitation,
payments of principal, [if the Security is to bear interest prior to maturity,
insert -- interest, if any,] [if applicable, insert -- and premium, if any,]
shall be made by the Issuer without withholding or deduction for or on account
of any present or future taxes, duties, levies or other governmental charges of
whatever nature in effect on the date of the original issuance of this Security
or imposed or established in the future by or on behalf of the Government of
Canada or of any province or territory thereof or therein or by any authority or
agency thereof or therein having power to tax ("Taxes") unless the Issuer is
required to withhold or deduct Taxes by applicable law or by the interpretation
of administration thereof by the relevant government authority. In the event the
Issuer is so required to deduct or withhold any amount for or on account of
Taxes from any payment on or with respect to the Securities of this series, the
Issuer shall pay such additional amounts ("Additional Amounts") as may be
necessary in order that the net amounts received by each holder or beneficial
owner of this Security after such withholding or deduction in respect of such
Taxes (including Additional Amounts) shall equal the respective amounts of
principal [if the Security is to bear interest prior to maturity, insert --,
interest, if any,] [if applicable, insert -- and premium, if any,] which would
have been received in respect of the Securities of this series in the absence of
such withholding or deduction; provided that no such Additional Amounts will be
payable with respect to (1) any payment to a holder or beneficial owner who is
liable for such Taxes in respect of such Security (a) by reason of such holder
or beneficial owner being a person with whom the Issuer is not dealing at arm's
length for the purposes of the Income Tax Act (Canada) or (b) by reason of the
existence of any present or former connection between such holder or beneficial
owner (or between a fiduciary, settlor, beneficiary, member or shareholder of,
or possessor of a power over, such holder or beneficial owner, if such holder or
beneficial owner is an estate, trust, partnership, limited liability company or
corporation) and Canada or any province or territory thereof or therein or
agency thereof or therein other than the mere holding, use or ownership or
deemed holding, use or ownership, or receiving payments or enforcing any rights
in respect of such Security as a non-resident or deemed non-resident of Canada
or any province or territory thereof or therein or any agency thereof or
therein, (2) any Tax which would not have been so imposed but for the
presentation by the holder of the Security of this series for payment on a date
more than 10 days after the date on which the payment became due and payable or
the date on which payment thereof is duly provided for, whichever occurs later;
(3) any estate, inheritance, gift,

                                      -9-
<PAGE>

sales, transfer, personal property or excise tax or any similar tax, assessment
or governmental charge; (4) any Tax which is payable otherwise than by
withholding from payments in respect of principal of, [if applicable, insert
--any premium,] or any interest on any Security of this series; (5) any Tax
imposed as result of the failure to comply with (a) certification, information,
documentation, reporting or other similar requirements concerning the
nationality, residence, identity or connection with Canada or any province or
territory thereof of the holder or beneficial owner of the Security of this
series, if such compliance is required by statute, or by regulation, as a
precondition to relief or exemption from such Tax or (b) any other
certification, information, documentation, reporting or other similar
requirements under Canadian federal or provincial income tax laws or regulations
that would establish entitlement to otherwise applicable relief or exemption
from such Tax, assessment or other governmental charge; (6) any tax, assessment
or other governmental charge required to be withheld by any paying agent from
any payment of the principal of [if applicable, insert --, any premium] or any
interest on any Security of this series, if the payment can be made without such
withholding by at least one other paying agent; or (7) any combination of items
(1), (2), (3), (4), (5) or (6). Furthermore, no Additional Amounts shall be paid
with respect to any payment on any Security of this series to a holder or
beneficial owner who is a fiduciary or partnership or other than the sole
beneficial owner of such payment to the extent that a beneficiary or settlor
with respect to such fiduciary or a member of such partnership or beneficial
owner would not have been entitled to receive the Additional Amounts had such
beneficiary, settlor, member or beneficial owner been the holder of any such
Security of this series.

         Whenever in this Security or in the Indenture there is a reference, in
any context, to the payment of the principal of [if the Security is to bear
interest prior to maturity, insert -- or interest, if any, on], or in respect
of, any Security, such payment shall be deemed to include the payment of
Additional Amounts to the extent that, in such context, Additional Amounts are,
were or would be payable in respect of such payment pursuant to the provisions
hereof or thereof and express mention of the payment of Additional Amounts (if
applicable) in any provision hereof or thereof shall not be construed as
excluding Additional Amounts in those provisions hereof where such express
mention is not made.]

         Payment of the principal of, [if applicable, insert -- premium if any,]
and [if applicable, insert--any such] interest on this Security will be made at
the office or agency of the Issuer maintained for that purpose in [insert -- the
places of payment], [insert -- the currency or currencies of payment]; provided,
however, that at the option of the Issuer payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security register; [if applicable, insert -- provided, further,
that a holder of U.S. $10,000,000 or more in aggregate principal amount of
Securities of this series denominated in U.S. dollars or Cdn. $10,000,000 or
more in aggregate principal amount of Securities of this series issued in
Canadian dollars will be entitled to receive interest payments on each Interest
Payment Date by wire transfer of immediately available funds if appropriate wire
transfer instructions have been received in writing by the Trustee not less than
15 calendar days prior to such Interest Payment Date. Any such wire transfer
instructions received by the Trustee shall remain in effect until revoked by
such holder by written notice received by the Trustee at least 15 calendar days
prior to the first Interest Payment Date for which such notice shall be
effective.]

                                      -10-
<PAGE>

         [If applicable, insert -- If any payment date for this Security falls
on a day that is not a Business Day, the required payment of principal and/or
interest, as the case may be, shall be made on the next succeeding Business Day
with the same force and effect as if made on the date such payment was due, and
no interest shall accrue with respect to such payment for the period from and
after such payment date to the date of such payment on the next succeeding
Business Day or insert other applicable provision.]

         [If the Security is an extendible security, insert -- The Securities of
this series are subject to repayment on [insert provisions with respect to
repayment date or dates] at the option of the holders thereof exercisable on or
before the ____________, but not prior to the ____________ preceding such
______, at a repayment price equal to the principal amount thereof to be repaid,
together with interest payable thereon to the repayment date, as described on
the reverse side hereof.]

         Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place on the face hereof.

         Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

         IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed as of the date first written above.

Dated:

                                         TEXTRON FINANCIAL CANADA FUNDING CORP.

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

                                         Name:
                                              ----------------------------------
                                              Duly Authorized

         SECTION 2.3 FORM OF REVERSE OF SECURITY.

                     TEXTRON FINANCIAL CANADA FUNDING CORP.

         This Security is one of a duly authorized issue of securities of the
Issuer (herein called the "Securities"), issued and to be issued in one or more
series under an indenture, dated as of November 30, 2001, as it may be amended
or supplemented from time to time (herein called the "Indenture"), among the
Issuer, the Guarantor and SunTrust Bank, as Trustee (herein called the
"Trustee", which term includes any successor trustee under the Indenture), to
which Indenture reference is hereby made for a statement of the respective
rights, limitations of rights, obligations, duties and immunities thereunder of
the Issuer, the Guarantor, the Trustee and the holders of the

                                      -11-
<PAGE>
 Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof [if applicable, insert -- limited in aggregate principal amount
to __________]. The separate series of Securities may be issued in various
aggregate principal amounts, may mature at different times, may bear interest,
if any, at different rates, may be subject to different redemption provisions
(if any), may be subject to different sinking or purchase funds (if any), may be
subject to different repayment provisions (if any), may be subject to different
covenants and Events of Default and may otherwise vary as provided in the
Indenture. The Indenture further provides that the Securities of a single series
may be issued at various times, with different maturity dates, may bear
interest, if any, at different rates, may be subject to different redemption
provisions (if any), may be subject to different sinking or purchase funds (if
any) and maybe subject to different repayment provisions (if any).

         [If applicable, insert -- The Securities of this series may not be
redeemed prior to maturity, except as provided for in the immediately succeeding
paragraph.]

         [If applicable, insert -- If at any time subsequent to the issuance of
the Securities of this series, as a result of any change in, or amendment to,
the laws, including any regulations or rulings promulgated thereunder, of Canada
or of any political subdivision thereof or any authority therein or thereof
having power to tax or as a result of any change in the application or official
interpretation of such laws, including any proposals for change, amendment or
application or interpretation of such laws, where the amendment or change
becomes effective [insert on or after the date on which the underwriting,
subscription, distribution, or similar agreement (an "Issuance Agreement") is
executed for the Securities of this series or if no such Issuance Agreement is
executed, the date on which the Securities of this series are first offered for
sale] or which proposal is made after such date, or as a result of any action
taken by any taxing authority of Canada which action is taken or becomes
generally known after such date, or any commencement of a proceeding in a court
of competent jurisdiction in the Canada after such date, whether or not such
action was taken or such proceeding was brought with respect to the Issuer, the
Issuer becomes, or will become, obligated to pay any Additional Amounts, then
the Securities of this series will be redeemable as a whole (but not in part),
at the option of the Issuer, at any time upon not less than thirty (30) nor more
than sixty (60) days' notice given to the holders at their principal amount [if
the Security is to bear interest prior to maturity, insert -- together with
accrued interest thereon, if any,] [if the Security is an Original Issue
Discount Security, - - (calculated as provided in the Indenture)] (and any
Additional Amounts payable with respect thereto) to the date fixed for
redemption (the "Tax Redemption Date"). In order to effect a redemption of
Securities of this series as described in this paragraph, the Issuer shall
deliver to the Trustee at least forty-five (45) days prior to the Tax Redemption
Date: (i) a written notice stating that the Securities of this series are to be
redeemed as a whole, specifying the redemption date and other pertinent
information, and (ii) an Opinion of Counsel to the effect that the Issuer has or
will become obligated to pay Additional Amounts as a result of any such change
or amendment. No notice of redemption may be given earlier than ninety (90) days
prior to the earliest date on which the Issuer would be obligated to pay such
Additional Amounts were a payment in respect of the Securities of this series
then due. The notice shall additionally specify the Tax Redemption Date and all
other information necessary to the publication and mailing by the Trustee of
notices of such redemption. The Trustee shall be entitled to rely conclusively
upon the information so

                                      -12-
<PAGE>

furnished by the Issuer in such notice and shall be under no duty to check the
accuracy or completeness thereof. Such notice shall be irrevocable and upon its
delivery the Issuer shall be obligated to make the payment or payments referred
to therein to the Trustee.]

         [If applicable, insert -- The Securities of this series are subject to
redemption upon not less than 30 nor more than 60 days' notice by mail, [[if
applicable, insert --(1) on _____________ in any year commencing with the year
________ and ending with the year _______ through operation of the sinking fund
for this series (as more fully described in the next succeeding paragraph) at
[[insert either -- a redemption price equal to 100% of the principal amount of
the Securities to be redeemed or the redemption prices for redemption through
operation of the sinking fund (expressed as percentages of the principal amount)
set forth in the table below,]], and (2)]) at any time [[if applicable, insert
-- on or after ___________]], as a whole or in part, at the election of the
Issuer, at the [[insert either -- following redemption prices or redemption
prices for redemption otherwise than through operation of the sinking fund]]
(expressed as percentages of the principal amount): if redeemed [[if applicable,
insert -- on or before _________, ____%, and if redeemed]] during the 12-month
period beginning _________ of the years indicated,

                                              [[If applicable, insert --
          Redemption Price For Redemption     Redemption Price For Redemption
          [[If applicable, insert --          Otherwise Than Through Operation
          Through Operation of the Sinking    of the Sinking Fund]]
Year      Fund]]

and thereafter at a redemption price equal to _____% of the principal amount
thereof, together in the case of any such redemption (whether through operation
of the sinking fund or otherwise) with accrued interest to the date fixed for
redemption, but interest installments maturing on or prior to such redemption
date will be payable to the holders of such Securities of record at the close of
business on the relevant Record Dates referred to on the face hereof, all as
provided in the indenture.]

         [If applicable, insert -- The sinking fund for this series provides for
the redemption on ____ each year beginning with the year _______ and ending with
the year _____of [[not less than]] $________ [[("mandatory sinking fund
payments") and not more than $_______]] aggregate principal amount of Securities
of this series.] [If applicable, insert -- Securities of this series acquired or
redeemed by the Issuer otherwise than through [[mandatory]] sinking fund
payments may be credited against subsequent [[mandatory]] sinking fund payments
otherwise required to be made.]

         [If applicable, insert -- Notwithstanding the foregoing, the Issuer may
not, prior to ________ redeem any Securities of this series as contemplated by
[[Clause (2) of]] the preceding paragraph as a part of, or in anticipation of,
any refunding operation by the application, directly or indirectly, of moneys
borrowed having an interest cost to the Issuer

                                      -13-
<PAGE>

(calculated in accordance with generally accepted accounting principles) of less
than ______% per annum.]

         [If applicable, insert -- Partial redemptions must be in an amount not
less than $_______ principal amount of Securities.]

         [If applicable, insert -- In the event of redemption of this Security
in part only, a new Security or Securities of this series for the unredeemed
portion hereof having the same interest rate and maturity as this Security will
be issued in the name of the holder hereof upon the cancellation hereof.]

         [If the Security is not an Original Issue Discount Security, insert --
If an Event of Default with respect to Securities of this series shall occur and
be continuing, then the Trustee or the holders of not less than 25% in aggregate
principal amount (calculated as provided in the Indenture) of the Securities of
this series then Outstanding may declare the principal of the Securities of this
series and accrued interest thereon, if any, to be due and payable in the manner
and with the effect provided in the Indenture.] [If the Security is an Original
Issue Discount Security, insert -- If an Event of Default with respect to
Securities of this series shall occur and be continuing, then the Trustee or the
holders of not less than 25% in aggregate principal amount (calculated as
provided in the Indenture) of the Securities of this series then Outstanding may
declare an amount of principal of the Securities of this series due and payable
in the manner and with the effect provided in the Indenture. Such amount shall
be equal to [[insert formula for determining the amount]].

         [If the Security is an extendible security, insert -- The Securities of
this series are subject to repayment in whole, or in part, on [insert _month,
day and years], in increments of _________ or multiples of __________in excess
of ___________, provided that the portion of the principal amount of any
Security of this series not being repaid shall be at least ____________, at the
option of the holder thereof at a repayment price equal to the principal amount
thereof to be repaid, together with interest payable thereon, if any, to the
repayment date. For this Security to be repaid at the option of the holder, the
Trustee must receive at the Corporate Trust Office or the New York Location, or
at ____________ [specify location in Canada, if applicable] on or before the
[insert month and day] or, if such [insert month and day] is not [insert -- a
day other than a day on which banking institutions in the Borough of Manhattan,
The City and State of New York are authorized or required by law or regulation
to close or, if applicable, insert appropriate definition] (a "Business Day"),
the next succeeding Business Day, but not earlier than the (insert month and
day) prior to the (insert month and day) on which the repayment price will be
paid (i) this Security, with the form entitled "Option to Elect Repayment" below
duly completed, or (ii) a telegram, telex, facsimile transmission or letter from
a member of a national securities exchange or the National Association of
Securities Dealers, Inc. or a commercial bank or trust company in the United
States of America in respect of Securities issued in the United States, or a
telegram, telex, facsimile transmission or letter from a stock exchange or a
chartered bank or trust company in Canada in respect of Securities issued in
Canada, setting forth the name of the holder of the Security, the principal
amount of the Security, the amount of such Security to be repaid, a statement
that the option to elect repayment is being made thereby and a guarantee that
the Security to be repaid with the form entitled "Option to Elect Repayment" on
the reverse thereof duly completed will be received by

                                      -14-
<PAGE>

the Issuer no later than five Business Days after the date of such telegram,
telex, facsimile transmission or letter, and such Security and form duly
completed are received by the Issuer by such fifth Business Day. Either form of
notice duly received on or before the [insert month and day] preceding any such
[insert month and day] shall be irrevocable. All questions as to the validity,
eligibility (including time of receipt) and acceptance of any Securities of this
series for repayment will be determined by the Issuer, whose determination shall
be final and binding.]

         The Indenture permits, with certain exceptions as therein provided, the
amendment or supplementing thereof and the modification of the rights and
obligations of the Issuer, the Guarantor and the rights of the holders of the
Securities of each series to be affected under the Indenture at any time by the
Issuer, the Guarantor and the Trustee with the consent of the holders of not
less than a majority in aggregate principal amount (calculated as provided in
the Indenture) of the Securities at the time Outstanding of all series to be
affected (all such series voting as a single class). The Indenture also contains
provisions permitting the holders of not less than a majority in aggregate
principal amount (calculated as provided in the Indenture) of the Securities of
each series at the time Outstanding, on behalf of the holders of all Securities
of such series, to waive certain past defaults or Events of Default under the
Indenture and the consequences of any such defaults or Events of Default. Any
such consent or waiver by the holder of this Security (unless revoked as
provided in the Indenture) shall be conclusive and binding upon such holder and
upon all future holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.

         No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest, if any, on
this Security at the times, place and rate, if any, and in the coin or currency,
herein prescribed or the obligation of the Guarantor pursuant to the Guarantee.

         As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
register, upon due presentment of this Security for registration of transfer at
the office or agency of the Issuer in any place where the principal of and
interest, if any, on this Security are payable, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Issuer and the
Security Registrar duly executed by the holder hereof or his or her attorney
duly authorized in writing, and thereupon one or more new Securities of this
series, having the same interest rate, if any, and maturity and bearing interest
from the same date as this Security, of any authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.

         The Securities of this series are issuable only in registered form
without coupons in denominations of ___________ and any integral multiple
thereof. As provided in the Indenture and subject to certain limitations set
forth therein and on the face hereof, Securities of this series are exchangeable
for a like aggregate principal amount of Securities of this series of a
different authorized denomination having the same interest rate, if any, and
maturity and bearing interest from the same date as such Securities, as
requested by the holder surrendering the same.

                                      -15-
<PAGE>

         No service charge shall be made for any such registration of transfer
or exchange, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         Prior to due presentment of this Security for registration of transfer,
the Issuer, the Guarantor, the Trustee and any agent of the Issuer, the
Guarantor or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes (other than for the
determination of any Additional Amounts payable), whether or not this Security
be overdue and notwithstanding any notation of ownership or other writing
thereon, and neither the Issuer, the Guarantor, the Trustee nor any such agent
shall be affected by notice to the contrary. All payments made to or upon the
order of such registered holder, shall, to the extent of the sum or sums paid,
effectually satisfy and discharge liability for monies payable on this Security.

         No recourse for the payment of the principal of [if applicable, insert
-- or interest, if any,] or interest, if any, on this Security, or for any claim
based hereon or otherwise in respect hereof, and no recourse under or upon any
obligation, covenant or agreement of the Issuer or the Guarantor in the
Indenture or in any Security, or because of the creation of any indebtedness
represented thereby, shall be had against any incorporator, stockholder,
official or director, as such, past, present or future, of the Issuer, the
Guarantor or of any successor entity of either of them, either directly or
through the Issuer, the Guarantor or any successor entity of either of them,
whether by virtue of any constitution, statute or rule of law or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.

         All terms used in this Security and not otherwise defined herein which
are defined in the Indenture shall have the meanings assigned to them in the
Indenture.

         This Security shall be governed by and construed in accordance with the
laws of the State of New York, without regard to conflict of law principles.

         SECTION 2.4 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. The
Trustee's certificate of authentication on all Securities shall be in
substantially the following form:

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

                                     SUNTRUST BANK,
                                          as Trustee

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

         SECTION 2.5 AMOUNT UNLIMITED; ISSUABLE IN SERIES. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.

                                      -16-
<PAGE>

         The Securities shall rank equally and pari passu and may be issued in
one or more series. There shall be established in one or more Resolutions or in
an Officers' Certificate pursuant to a Resolution of the Issuer, a copy of
which, certified by the secretary or an assistant secretary of the Issuer, shall
be delivered to the Trustee or established in one or more indentures
supplemental hereto, prior to the issuance of securities of a particular series:

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

                  (2) any limit upon the aggregate principal amount of the
         Securities of the series that may be authenticated and delivered under
         this Indenture (except for Securities authenticated and delivered upon
         registration of transfer of, or in exchange for, or in lieu of, other
         Securities of the series pursuant to Sections 2.10, 2.11, 2.13 or
         10.3);

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

                  (4) the rate or rates at which the Securities of the series
         shall bear interest, if any, or the method or methods, if any, by which
         such rate or rates (including the Overdue Rate) shall be determined,
         the date or dates from which such interest shall accrue or the method
         or methods, if any, by which such date or dates may be determined, the
         interest payment dates on which such interest shall be payable and the
         record dates for the determination of holders to whom interest is
         payable, and the basis upon which interest on Securities of the series
         shall be calculated if other than that of a 360-day year of twelve
         30-day months in the case of Securities issued in U.S. dollars or a
         365-day year and payable in two equal semi-annual installments in the
         case of Securities issued in Canadian dollars;

                  (5) if in addition to or other than The Borough of Manhattan,
         The City of New York, the place or places where the principal and
         interest with respect to the Securities of the series shall be payable,
         any of such Securities may be surrendered for registration of transfer
         or exchange, any of such Securities may be surrendered for exchange and
         notices or demands to or upon the Issuer in respect of the Securities
         of the series and this Indenture may be served;

                  (6) the price or prices at which, the period or periods within
         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 Issuer,
         pursuant to any sinking fund or otherwise;

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

                  (8) whether and under what circumstances the Issuer or the
         Guarantor will be obligated to pay Additional Amounts in respect of the
         Securities of the series as

                                      -17-
<PAGE>

         provided in Section 3.7 and, as a result, whether the Securities of the
         series will be subject to redemption as provided in Section 10.6;

                  (9) if other than such coin or currency of the United States
         of America or Canada as at the time of payment is legal tender for
         payment of public or private debts, the coin or currency (including
         composite currencies or currency units) in which the Securities of the
         series shall be denominated and, if different, the coin or currency
         (including composite currencies or currency units) in which payment of
         the principal of and/or interest on the Securities of the series shall
         be payable;

                  (10) if the principal of and/or interest on the Securities of
         the series are to be payable, at the election of the Issuer or a holder
         thereof, in a coin or currency (including composite currencies or
         currency units) other than that in which the Securities are stated to
         be payable, the period or periods within which, and the terms and
         conditions upon which, such election may be made;

                  (11) whether the amount of payments of principal of and/or
         interest on the Securities of the series may be determined with
         reference to an index, formula or other method or methods (which index,
         formula or method or methods may be based, without limitation, on one
         or more currencies (including composite currencies or currency units),
         commodities, equity securities, equity indices or other indices), and,
         if so, the terms and conditions upon which and the manner in which such
         amounts shall be determined;

                  (12) if other than denominations of U.S. $1,000 with respect
         to Securities issued in the United States, or Cdn.$1,000 with respect
         to Securities issued in Canada (or if the Securities are denominated in
         a currency other than U.S. dollars or Canadian dollars or in a
         composite currency or currency units, 1,000 units of such other
         currency or composite currency or currency units) and any multiple
         thereof, the denominations in which Securities of the series shall be
         issuable;

                  (13) 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 4.1 or provable in bankruptcy pursuant to Section
         4.2;

                  (14) if the Securities of the series are Original Issue
         Discount Securities, the price at which and the date on which
         Securities of the series are to be issued and the Yield to Maturity at
         the time of issuance of such series;

                  (15) if the Securities of the series are to be issued in the
         form of one or more Global Securities, the name of the Depositary for
         such Global Security or Securities or the nominee of such Depositary;

                  (16) if the Securities will be entitled to the benefit of the
         Guarantee afforded by Article Thirteen or, if not, the form of the
         Guarantee to be endorsed on the Securities; and

                  (17) any other terms of the series which are not inconsistent
         with this Indenture.

                                      -18-
<PAGE>

         All Securities of any one series shall be substantially identical
except as to denomination, interest rate, if any, and maturity and except as may
otherwise be provided in or pursuant to such Resolution or in any such indenture
supplemental hereto. The applicable Resolution or the applicable supplemental
indenture may provide that Securities of any particular series may be issued at
various times, with different maturities and redemption and repayment provisions
(if any) and bearing interest (if any) at different rates, but shall for all
purposes under this Indenture, including, but not limited to, voting and Events
of Default, be treated as Securities of a single series. Unless otherwise
provided in such Resolution or supplemental indenture, a series may be reopened
for issuances of additional Securities of such series without the consent of the
holders of any of the existing Securities of such series.

         Except as otherwise specified pursuant to this Section 2.5 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 in the case of
Securities issued in U.S. dollars or a 365-day year and payable in two equal
semi-annual installments in the case of Securities issued in Canadian dollars.

         SECTION 2.6 AUTHENTICATION AND DELIVERY OF SECURITIES. At any time and
from time to time after the execution and delivery of this Indenture, the Issuer
may deliver Securities of any series executed by the Issuer, with the Guarantee
noted or endorsed thereon, to the Trustee for authentication, and the Trustee
shall thereupon authenticate and deliver such Securities to or upon the written
order of the Issuer, signed by both (a) the chairman of its Board of Directors,
the president or any vice president and (b) its chief financial officer,
treasurer, controller, secretary or any assistant secretary, without any further
action by the Issuer or, subject to Section 2.1, the Guarantor. 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 the requirements of the Trust Indenture Act
of 1939) shall be fully protected in relying upon:

                  (1) a copy of any Resolution or Resolutions relating to such
         series, certified by the secretary or an assistant secretary of the
         Issuer;

                  (2) an Officers' Certificate or executed supplemental
         indenture setting forth the form and terms of the Securities and the
         Guarantee as required pursuant to Sections 2.1 and 2.5, respectively,
         and prepared in accordance with the requirements of the Trust Indenture
         Act of 1939 and Section 12.5; and

                  (3) an Opinion of Counsel, prepared in accordance with the
         requirements of the Trust Indenture Act of 1939 and Section 12.5, which
         shall state that, if the form of such Securities has been established
         by or pursuant to a Resolution as permitted by Section 2.1, that such
         form or forms, as the case may be, have been established in conformity
         with the provisions of this Indenture, and that the terms of such
         Securities have been established by or pursuant to a Resolution as
         permitted by Section 2.5 in conformity with the provisions of this
         Indenture and that the authentication and delivery of such Securities
         by the Trustee is authorized under the provisions of this Indenture and
         that such Securities, together with any Guarantee noted or endorsed
         thereon, when executed and delivered by the Issuer and Guarantor, as
         applicable, to the Trustee in accordance with this Indenture and
         authenticated and delivered by the Trustee in

                                      -19-
<PAGE>

         accordance with the Indenture and issued by the Issuer, in the manner
         and subject to any conditions specified in such Opinion of Counsel will
         constitute valid and legally binding obligations of the Issuer and the
         Guarantor, respectively, enforceable in accordance with their
         respective terms, except as the enforceability thereof may be limited
         by bankruptcy, insolvency, reorganization or other similar laws
         affecting the enforcement of creditors' rights generally and to general
         principles of equity regardless of whether the issue of enforceability
         is considered in a proceeding in equity or at law.

         The Trustee shall have the right to decline to authenticate and deliver
any Securities under this Section if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken by the Issuer or the
Guarantor or if the Trustee in good faith by its board of directors or board of
trustees, executive committee, or a trust committee of directors or trustees
and/or Responsible Officers shall determine that such action would expose the
Trustee to personal liability to existing holders or would adversely affect the
Trustee's own rights, duties or immunities under this Indenture or otherwise.

         The Trustee shall not be required to authenticate Securities
denominated in a coin or currency other than that of the United States of
America or Canada if the Trustee reasonably determines that such Securities
impose duties or obligations on the Trustee which the Trustee is not able or
reasonably willing to accept; provided that the Trustee, upon the request of the
Issuer will resign as Trustee with respect to Securities of any series as to
which such a determination is made, prior to the issuance of such Securities,
and will comply with the request of the Issuer to execute and deliver a
supplemental indenture appointing a successor Trustee pursuant to Section 7.1
hereof.

         SECTION 2.7 EXECUTION OF SECURITIES. The Securities and any Guarantee
noted or endorsed thereon shall be signed on behalf of the Issuer and/or the
Guarantor, as applicable, by both (a) the chairman of its Board of Directors,
its president or any vice president and (b) the chief financial officer, its
treasurer, controller or secretary. Such signatures may be the manual or
facsimile signatures of the present or any future such officers. Typographical
and other minor errors or defects in any such signature shall not affect the
validity or enforceability of any Security that has been duly authenticated and
delivered by the Trustee.

         In case any officer of the Issuer or the Guarantor who shall have
signed any of the Securities or endorsed any Guarantee thereon shall cease to be
such officer before the Security with the Guarantee noted or endorsed thereon so
signed shall be authenticated and delivered by the Trustee or disposed of by the
Issuer, such Security with the Guarantee noted or endorsed thereon nevertheless
may be authenticated and delivered or disposed of as though the person who
signed such Security and Guarantee had not ceased to be such officer of the
Issuer or the Guarantor; and any Security may be signed on behalf of the Issuer
or Guarantee noted or endorsed on behalf of the Guarantor by such persons as, at
the actual date of the execution of such Security and Guarantee, shall be the
proper officers of the Issuer or the Guarantor, although at the date of the
execution and delivery of this Indenture any such person was not such an
officer.

         SECTION 2.8 CERTIFICATE OF AUTHENTICATION. Only such Securities (with
the Guarantee noted or endorsed thereon) as shall bear thereon a certificate of
authentication

                                      -20-
<PAGE>

substantially in the form hereinbefore recited, executed by the Trustee by the
manual signature of one of its authorized officers, shall be entitled to the
benefits of this Indenture or be valid or obligatory for any purpose. Such
certificate by the Trustee upon any Security (with the Guarantee noted or
endorsed thereon) executed by the Issuer shall be conclusive evidence that the
Security (with the Guarantee noted or endorsed thereon) so authenticated has
been duly authenticated and delivered hereunder and that the holder is entitled
to the benefits of this Indenture.

         SECTION 2.9 DENOMINATION AND DATE OF SECURITIES; PAYMENTS OF INTEREST.
The Securities of each series shall be issuable as registered securities without
coupons and in denominations as shall be specified as contemplated by Section
2.5. In the absence of any such specification with respect to the Securities of
any series, the Securities of such series shall be issuable in denominations of
U.S. $1,000 with respect to Securities issued in the United States, or
Cdn.$1,000 with respect to Securities issued in Canada (or, if such Securities
are denominated in a currency other than U.S. dollars or Canadian dollars or in
a composite currency, 1,000 units of such other currency or composite currency)
and any multiple thereof. The Securities of each series shall be numbered,
lettered, or otherwise distinguished in such manner or in accordance with such
plan as the officers of the Issuer executing the same may determine with the
approval of the Trustee as evidenced by the execution and authentication
thereof.

         Each Security shall be dated the date of its authentication, shall bear
interest, if any, from the date, and shall be payable on the dates, in each
case, which shall be specified as contemplated by Section 2.5.

         Except as otherwise specified for a particular series pursuant to
Section 2.5, the Person in whose name any Security of any series is registered
at the close of business on any record date applicable to a particular series
with respect to any interest payment date for such series shall be entitled to
receive the interest, if any, payable on such interest payment date
notwithstanding the cancellation of such Security upon any registration of any
transfer or exchange of such Security subsequent to the record date and prior to
such interest payment date, except if and to the extent the Issuer shall default
in the payment of the interest due on such interest payment date for such
series, in which case such defaulted interest shall be paid to the Persons in
whose names Outstanding Securities of such series are registered at. the close
of business on a subsequent record date (which shall be not less than five days
prior to the date of payment of such defaulted interest) established by notice
given by mail by or on behalf of the Issuer to the holders of Securities not
less than 15 days preceding such subsequent record date. The term "record date"
as used with respect to any interest payment date (except a date for payment of
defaulted interest) shall mean the date specified as such in the terms of the
Securities of any particular series, or, if no such date is so specified, if
such interest payment date is the first day of a calendar month, the fifteenth
day of the next preceding calendar month or, if such interest payment date is
the fifteenth day of a calendar month, the first day of such calendar month,
whether or not such record date is a Business Day.

         SECTION 2.10 REGISTRATION, TRANSFER AND EXCHANGE; CERTAIN TRANSFERS AND
EXCHANGES. The Issuer will keep, either at the office or agency designated and
maintained by the Issuer for such purpose in the Borough of Manhattan, The City
of New York, in accordance with the provisions of Section 3.2, or at any of such
other offices or agencies as may be

                                      -21-
<PAGE>

designated and maintained in accordance with the provisions of Section 3.2, a
register or registers in which, subject to such reasonable regulations as it may
prescribe, it will register, and will register the transfer of, Securities of a
series as in this Article provided. Such register shall be in written form in
the English language or in any other form capable of being converted into such
form within a reasonable time. At all reasonable times such register or
registers shall be open for inspection by the Trustee and any Security Registrar
other than the Trustee.

         Upon due presentation for registration of transfer of any Security of
any series at any such office or agency to be maintained for the purpose as
provided in Section 3.2, the Issuer shall execute and the Trustee shall
authenticate and deliver in the name of the transferee or transferees a new
Security or Securities of the same series in authorized denominations for a like
aggregate principal amount and having the same interest rate, maturity,
repayment and redemption provisions and with the Guarantee noted or endorsed
thereon.

         Any Security or Securities of any series (other than a Global Security,
except as set forth in Section 2.14) may be exchanged for a Security or
Securities of the same series in other authorized denominations, in an equal
aggregate principal amount and having the same interest rate, maturity,
redemption and repayment provisions. Securities of any series to be exchanged
shall be surrendered at any office or agency to be maintained by the Issuer for
the purpose as provided in Section 3.2, and the Issuer shall execute, the
Guarantor shall execute the Guarantee noted or endorsed on, and the Trustee
shall authenticate and deliver in exchange therefor the Security or Securities
of the same series and having the same interest rate and maturity which the
Securityholder making the exchange shall be entitled to receive, bearing numbers
or other distinguishing symbols not contemporaneously outstanding and with the
Guarantee noted or endorsed thereon. Each Person designated by the Issuer
pursuant to the provisions of Section 3.2 as a Person authorized to register and
register transfer of the Security is sometimes herein referred to as a "Security
Registrar".

         The Issuer will at all times designate one Person (who may be the
Issuer or the Guarantor and who need not be a Security Registrar) to act as
repository of a master list of names and addresses of the holders of the
Securities (the "Register"). The Trustee shall act as such repository unless and
until some other Person is, by written notice from the Issuer to the Trustee and
each Security Registrar, designated by the Issuer to act as such. The Issuer
shall cause each Security Registrar to furnish to such repository, on a current
basis, such information as to all registrations of transfer and exchanges
effected by such Security Registrar, as may be necessary to enable such
repository to maintain the Register on as current a basis as is practicable.

         No Person shall at any time be designated as or act as a Security
Registrar unless such Person is at such time empowered under applicable law to
act as. such and duly registered to act as such under and to the extent required
by applicable law and regulations.

         All Securities presented for registration of transfer, exchange,
redemption or payment shall (if so required by the Issuer or the Trustee) be
duly endorsed by, or be accompanied by a written instrument or instruments of
transfer or exchange in form satisfactory to the Issuer and the Trustee duly
executed by, the Securityholder or such Securityholders' attorney duly
authorized in writing.

                                      -22-
<PAGE>

        The Issuer may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any exchange or
registration of transfer of Securities, other than exchanges pursuant to Section
2.13, 7.5 or 10.3 not involving any registration of transfer. No service charge
shall be made for any such transaction.

        The Issuer shall not be required to exchange or register a transfer of
(a) any Securities of any series for a period of 15 days immediately preceding
the day of selection of Securities of that series to be redeemed, or (b) any
Securities selected, called or being called for redemption or surrendered for
repayment in whole or in part except, in the case of any Security to be redeemed
or repaid in part, the portion thereof not to be so redeemed or repaid.

        Notwithstanding any other provision of this Indenture, transfers and
exchanges of Securities shall be made only in accordance with Section 2.10 or
2.11 or, in the case of Global Securities, Section 2.14.

        SECTION 2.11 MUTILATED, DEFACED, DESTROYED, LOST AND STOLEN SECURITIES.
In case any temporary or definitive Security shall become mutilated, defaced or
be destroyed, lost or stolen and, in the absence of notice to the Issuer or the
Trustee that such Security has been acquired by a bona fide purchaser, the
Issuer may in its discretion execute, and the Trustee shall authenticate and
deliver, a new Security of the same series and of like tenor, having the
Guarantee noted or endorsed thereon and bearing a number or other distinguishing
symbol not contemporaneously appearing on an Outstanding Security, in exchange
and substitution for the mutilated or defaced Security, or in lieu of and
substitution for the Security so destroyed, lost or stolen. In every case the
applicant for a substitute Security shall furnish to the Issuer, the Guarantor
and to the Trustee (and any agent of the Issuer, the Guarantor or Trustee, if
requested by the Issuer or the Guarantor) such security or indemnity as may be
required by them to indemnify and defend and to save each of them harmless and,
in every case of destruction, loss or theft, evidence to their satisfaction of
the destruction, loss or theft of such Security and of the ownership thereof.

         Upon the issuance of any substitute Security, the Issuer may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee) connected therewith.

         In case any Security that has matured, or is about to mature, or has
been called for redemption in full, shall become mutilated or defaced or be
destroyed, lost or stolen, the Issuer in its discretion may instead of issuing a
substitute Security, pay or authorize the payment of the same (without surrender
thereof except in the case of a mutilated or defaced Security), if the applicant
for such payment shall furnish to the Issuer, the Guarantor and to the Trustee
(and any agent of the Issuer, the Guarantor or Trustee, if requested by the
Issuer or the Guarantor) such security or indemnity as any of them may require
to indemnify and defend and to save each of them harmless, and, in every case of
destruction, loss or theft, evidence to their satisfaction of the destruction,
loss or theft of such Security and of the ownership thereof.

         Every substituted Security of any series issued pursuant to the
provisions of this Section by virtue of the fact that any such Security is
destroyed, lost or stolen shall constitute an

                                      -23-
<PAGE>

additional contractual obligation of the Issuer and the Guarantor, whether or
not the destroyed, lost or stolen Security, and the Guarantee noted or endorsed
thereon, shall be at any time enforceable by anyone and shall be entitled to all
the benefits of (but shall be subject to all the limitations of rights set forth
in) this Indenture equally and proportionately with any and all other Securities
of such series and Guarantees duly authenticated and delivered hereunder. All
Securities shall be held and owned upon the express condition that, to the
extent permitted by law, the foregoing provisions are exclusive with respect to
the replacement or payment of mutilated, defaced or destroyed, lost or stolen
Securities and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the contrary
with respect to replacement or payment of negotiable instruments or other
securities without their surrender.

         SECTION 2.12 CANCELLATION OF SECURITIES PAID, ETC. All Securities
surrendered for the purpose of payment, redemption, registration of transfer or
exchange, or for credit against any payment in respect of a sinking or analogous
fund, if surrendered to the Issuer, any Security Registrar, any paying agent or
any other agent of the Issuer or any agent of the Trustee, shall be delivered to
the Trustee and promptly canceled by it or, if surrendered to the Trustee, shall
be promptly canceled by it; and no Securities shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Indenture. The
Trustee shall destroy canceled Securities held by it and deliver a certificate
of destruction to the Issuer. If the Issuer or the Guarantor shall acquire any
of the Securities, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Securities unless and until
the same are delivered to the Trustee for cancellation.

         SECTION 2.13 TEMPORARY SECURITIES. Pending the preparation of
definitive Securities for any series, the Issuer may execute, the Guarantor may
execute its Guarantee to be noted or endorsed on, and the Trustee shall
authenticate and deliver temporary Securities for such series (printed,
lithographed, typewritten or otherwise reproduced). Temporary Securities of any
series shall be issuable as registered Securities without coupons, in any
authorized denomination, and substantially in the form of the definitive
Securities of such series in lieu of which they are issued but with such
omissions, insertions and variations as may be appropriate for temporary
Securities, all as may be determined by the Issuer. Temporary Securities may
contain such reference to any provisions of this Indenture as may be
appropriate. Every temporary Security shall be authenticated by the Trustee upon
the same conditions and in substantially the same manner, and with like effect,
as the definitive Securities in lieu of which they are issued. Without
unreasonable delay the Issuer shall execute and shall furnish, and the Guarantor
shall execute its Guarantee to be noted or endorsed on, definitive Securities of
such series and thereupon temporary Securities of such series may be surrendered
in exchange therefor without charge at each office or agency to be maintained by
the Issuer for that purpose pursuant to Section 3.2, and the Trustee shall
authenticate and deliver in exchange for such temporary Securities of such
series a like aggregate principal amount of definitive Securities of the same
series of authorized denominations having the same interest rate, maturity and
redemption and repayment provisions, and bearing interest, if any, from the same
date as such temporary Securities. Until so exchanged, the temporary Securities
of any series shall be entitled to the same benefits under this Indenture as
definitive Securities of the same series authenticated and delivered hereunder.

                                      -24-
<PAGE>
      SECTION 2.14 GLOBAL SECURITIES. (a) Notwithstanding anything in this
Indenture to the contrary, if the Issuer shall establish pursuant to Section 2.5
that the Securities of a series are to be issued in the form of one or more
Global Securities, then the Issuer shall execute, and the Guarantor shall
execute its Guarantee to be noted or endorsed on, and the Trustee shall, in
accordance with Section 2.6 and the order of the Issuer and the Guarantor 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, 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 the appropriate legend provided in
Section 2.14(f) or such other legend, if any, as shall be required by the
Depositary. Each Depositary of a Global Security designated pursuant to Section
2.5 must, at the time of its designation and at all times while it serves as
Depositary hereunder, be a clearing agency registered under the Exchange Act and
any other applicable statute or regulation in respect of Securities issued in
the United States or registered as a clearing agency under the Securities Act
(Ontario) and equivalent legislation in other provinces and any other applicable
statute or regulation in respect of Securities issued in Canada.

      (b) Except as otherwise specified pursuant to Section 2.5 with respect to
any series of Securities or as provided in this Section 2.14(b), no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the name
of any Person other than the Depositary for such Global Security or a nominee
thereof. If (i) the Depositary advises the Issuer and the Trustee in writing
that such Depositary is no longer willing or able to continue as Depositary with
respect to such Global Security, and a qualified successor Depositary is not
appointed by the Issuer within 90 days of receipt of such notice from the
Depositary, (ii) the Depositary notifies the Issuer that it has ceased to be a
clearing agency registered and in good standing under the Exchange Act in
respect of Securities issued in the United States or under the Securities Act
(Ontario) and equivalent legislation in other provinces in respect of Securities
issued in Canada or other applicable statute or regulation and a successor
Depositary is not appointed by the Issuer within 90 days after the Issuer
receives such notice or becomes aware of such condition, as the case may be,
(iii) the Issuer, in its sole discretion, determines that the Global Securities
shall be exchangeable for Securities in registered form as described below, or
(iv) there shall have occurred and be continuing an Event of Default with
respect to the series of Securities evidenced by the Global Security, the Issuer
will execute, the Guarantor will execute its Guarantee to be noted or endorsed
on, and subject to Article Two of this Indenture, the Trustee will, upon receipt
of an order, authenticate and deliver Securities in definitive, certificated,
and fully-registered form, without interest coupons, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Outstanding Securities of such series evidenced by the Global
Securities of such series in exchange for such Global Securities. Upon such
exchange, the Global Securities of such series shall be surrendered to the
Trustee for cancellation. Such Securities in definitive form shall be registered
in such names and in such authorized denominations as the Depositary shall
instruct the Trustee. The Trustee shall deliver such Securities to the
Depositary for delivery to the persons in whose names such Securities are
registered.

                                     - 25 -
<PAGE>
      (c) Except as otherwise explicitly provided in Section 2.14(b), every
Security authenticated and delivered upon registration of transfer of, or in
exchange for or in lieu of, a Global Security or any portion thereof, whether
pursuant to this Article Two or otherwise, shall be authenticated and delivered
in the form of, and shall be, a Global Security, unless such Security is
registered in the name of a Person other than the Depositary for such Global
Security or a nominee thereof.

      (d) The Depositary or its nominee, as the registered owner of a Global
Security, shall be the owner and holder of such Global Security for all purposes
under this Indenture and the Securities (other than for the determination of
Additional Amounts payable), and owners of beneficial interests in a Global
Security shall hold such interests. Accordingly, any such owner's beneficial
interest in a Global Security shall be shown only on, and the transfer of such
interest shall be effected only through, records maintained by the Depositary or
its nominee or agent. None of the Issuer, the Guarantor, the Trustee, any
Security Registrar or any agent thereof shall have any liability in respect of
(i) any transfers effected by the Depositary, (ii) the accuracy of any records
maintained by the Depositary, (iii) the payment by the Depositary of any amount
due to the beneficial owners of the Securities of the principal of or interest
on the Securities or any other amounts payable with respect thereto or with
respect to the Guarantee thereof, (iv) the delivery or timeliness of delivery by
the Depositary of any notice which is required to be given to Securityholders
under this Indenture to the beneficial owners of the Securities, or (v) any
consent given or other action taken by the Depositary as registered owner of the
Securities. Notwithstanding the foregoing, nothing herein shall prevent the
Issuer, the Guarantor, the Trustee, any Securities Registrar or any such agent
from giving effect to any written certification, proxy or other authorization
furnished by the Depositary or, if applicable, such nominee, or impair, as
between the Depositary or its nominee and such owners of beneficial interests,
the operation of customary practices governing the exercise of rights of the
Depositary or its nominee as the holder of any Security.

      (e) The rights of owners of beneficial interests in a Global Security
shall be exercised only through the Depositary and shall be limited to the
rights established by law and agreements between such owners and the Depositary
and/or its members.

      (f) Any Global Security issued hereunder in the United States shall bear a
legend in substantially the following form:

            "This Security is a Global Security within the meaning of the
      Indenture hereinafter referred to and is registered in the name of a
      Depositary or a nominee thereof. Unless and until it is exchanged in whole
      or in part for Securities in certificated form, this Security may not be
      transferred except as a whole by The Depository Trust Company, a New York
      corporation ("DTC"), to a nominee of DTC or by DTC or any such nominee to
      a successor depositary or a nominee of such successor depositary. Unless
      this Security is presented by an authorized representative of DTC to
      Textron Financial Canada Funding Corp. or its agent for registration of
      transfer, exchange or payment, and any Security issued is registered in
      the name of Cede & Co. or in such other name as requested by an authorized

                                     - 26 -
<PAGE>
      representative of DTC (and any payment is made to Cede & Co. or to such
      other entity as is requested by an authorized representative of DTC), any
      transfer, pledge or other use hereof for value or otherwise by or to any
      person is wrongful inasmuch as the registered owner hereof, Cede & Co.,
      has an interest herein."

            Any Global Security issued hereunder in Canada shall bear a legend
      in substantially the following form:

            "This Security is a Global Security within the meaning of the
      Indenture herein referred to and is registered in the name of a Depositary
      or a nominee thereof. Unless and until it is exchanged in whole or in part
      for Securities in certificated form, this Security may not be transferred
      except as a whole by The Canadian Depository for Securities Limited
      ("CDS"), to a nominee of CDS or by CDS or any such nominee to a successor
      depositary or a nominee of such successor depositary. Unless this Security
      is presented by an authorized representative of CDS to Textron Financial
      Canada Funding Corp. or its agent for registration of transfer, exchange
      or payment, and any Security issued is registered in the name of CDS & Co.
      or in such other name as requested by an authorized representative of CDS
      (and any payment is made to CDS & Co. or to such other entity as is
      requested by an authorized representative of CDS), any transfer, pledge or
      other use hereof for value or otherwise by or to any person is wrongful
      inasmuch as the registered owner hereof, CDS & Co., has an interest
      therein."

      SECTION 2.15 FORM OF GUARANTEE. The Guarantee afforded by Article Thirteen
shall be endorsed on the Securities of any applicable series substantially as
follows:

            For value received, Textron Financial Corporation, a corporation
      duly organized and existing under the laws of the State of Delaware
      (herein called the "Guarantor", which term includes any successor Person
      under the Indenture (the "Indenture") referred to in the Security on which
      this Guarantee is endorsed), has fully and unconditionally guaranteed,
      pursuant to the terms of the Guarantee contained in Article Thirteen of
      the Indenture, the due and punctual payment of the principal of, and any
      premium, interest and any Additional Amounts on, such Security, when and
      as the same shall become due and payable, whether at the stated maturity,
      by declaration of acceleration, call for redemption or otherwise, in
      accordance with the terms of such Security and the Indenture.

            [If applicable: All payments pursuant to this Guarantee shall be
      made without withholding or deduction for, or on account of, any present
      or future taxes, duties, levies or other governmental charges of whatever
      nature in effect on the date that such Security is originally issued or
      imposed or established in the future by or on behalf of the United States
      or any authority thereof or therein, unless such taxes, duties,levies or
      governmental charges are required by the United States or such other
      jurisdiction or any such subdivision or authority to be withheld or
      deducted. In that event, the Guarantor will pay such additional amounts as
      will result (after deduction of such taxes, duties, levies or governmental
      charges and any additional taxes, duties, assessments or

                                     - 27 -
<PAGE>
      governmental charges payable in respect of such) in the payment to the
      holder of the Security on which this Guarantee is endorsed of the amounts
      which would have been payable in respect of the Guarantee thereof had no
      such withholding or deduction been required, subject to certain exceptions
      as set forth in Article Thirteen of the Indenture.]

            The obligations of the Guarantor to the Holders of the Securities
      and to the Trustee pursuant to the Guarantee and the Indenture are
      expressly set forth in Article Thirteen of the Indenture, and reference is
      hereby made to such Article and Indenture for the precise terms of the
      Guarantee.

            The Guarantee shall not be valid or obligatory for any purpose until
      the certificate of authentication on the Security upon which this
      Guarantee is endorsed shall have been executed by the Trustee under the
      Indenture by the manual signature of one of its authorized signatories.

            Capitalized terms used herein and not otherwise defined herein have
      the meanings specified in the Indenture.

            IN WITNESS WHEREOF, the Guarantor has caused this instrument to be
      duly executed under its corporate seal.

      Dated:                              TEXTRON FINANCIAL CORPORATION

      Attest:

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

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

                                  ARTICLE THREE

                    COVENANTS OF THE ISSUER AND THE GUARANTOR

      SECTION 3.1 PAYMENT OF PRINCIPAL AND INTEREST. The Issuer covenants and
agrees for the benefit of each series of Securities that it will duly and
punctually pay or cause to be paid the principal of and interest, if any,
(including any applicable premium or Additional Amounts) on each of the
Securities of such series at the place or places, at the respective times and in
the manner provided in such Securities. Each installment of interest on the
Securities of any series may be paid by mailing checks for such interest payable
to or upon the written order of the holders of Securities entitled thereto as
they shall appear in the Register; provided, however, that a holder of U.S.
$10,000,000 or more in aggregate principal amount of Securities of any series
issued in U.S. dollars or Cdn.$10,000,000 or more in aggregate principal amount
of

                                     - 28 -
<PAGE>
Securities of any series issued in Canadian dollars will be entitled to receive
installments of interests on each interest payment date by wire transfer of
immediately available funds if appropriate wire transfer instructions have been
received in writing by the Trustee not less than 15 calendar days prior to such
interest payment date. Any such wire transfer instructions received by the
Trustee shall remain in effect until revoked by such holder by written notice by
the Trustee at least 15 calendar days prior to the first Interest Payment Date
for which such notice shall be effective.

      SECTION 3.2 OFFICES FOR PAYMENTS, ETC. So long as any of the Securities
remain Outstanding, the Issuer and the Guarantor will designate and maintain in
the Borough of Manhattan, The City of New York, or such other place as may be
specified pursuant to Section 2.5 for each series: (a) an office or agency where
the Securities may be presented for payment, (b) an office or agency where the
Securities may be presented for registration of transfer and for exchange as in
this Indenture provided and (c) an office or agency where notices and demands to
or upon the Issuer or the Guarantor, as the case may be, in respect of the
Securities or of this Indenture may be served. In addition to such office or
offices or agency or agencies, the Issuer may from time to time designate and
maintain one or more additional offices or agencies within or outside the
Borough of Manhattan, The City of New York, where the Securities of that series
may be presented for payment or for registration of transfer or for exchange,
and the Issuer may from time to time rescind such designation, as it may deem
desirable or expedient. The Issuer will give to the Trustee written notice of
the location of any such office or agency and of any change of location thereof.
The Issuer and the Guarantor hereby designate the New York Location and the
Corporate Trust Office as the initial offices to be maintained by it for such
purposes. In case the Issuer and the Guarantor shall fail to maintain any such
office or agency or shall fail to give such notice of the location or of any
change in the location thereof, presentations and demands may be made and
notices may be served at the Corporate Trust Office and the Issuer and the
Guarantor appoint the Trustee as their agent to receive all such presentations,
surrenders, notices and demands.

      SECTION 3.3 PAYING AGENTS. Whenever the Issuer shall appoint a paying
agent or agents other than the Trustee with respect to the Securities of any
series, it will cause each such paying agent to execute and deliver to the
Trustee an instrument in which each such paying agent shall agree with the
Trustee, subject to the provisions of this Section:

            (a) that it will hold all sums received by it as such agent for the
      payment of the principal of or interest, if any, on the Securities of such
      series (whether such sums have been paid to it by the Issuer, the
      Guarantor or by any other obligor on the Securities of such 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;

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

                                     - 29 -
<PAGE>
            (c) that, at any time during the continuance of any such default
      referred to in clause (b) above, upon the written request of the Trustee,
      it will forthwith pay to the Trustee all sums so held in trust by such
      paying agent.

      Whenever the Issuer shall have one or more paying agents with respect to
Securities of any series, it will, prior to each due date of the principal of or
interest, if any, on the Securities of such series, deposit with a designated
paying agent a sum sufficient to pay such principal or interest, if any, so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal or interest, if any, and (unless such paying agent is
the Trustee) the Issuer will promptly notify the Trustee of any failure to take
such action.

      If the Issuer shall act as its own paying agent with respect to the
Securities of any series, or if the Guarantor shall act as a paying agent, it
will, on or before each due date of the principal of or interest, if any, on the
Securities of such series, set aside, segregate and hold in trust for the
benefit of the Persons entitled to such principal and interest, if any, a sum
sufficient to pay such principal or interest, if any, so becoming due until such
sums shall be paid to such Persons or otherwise disposed of as herein provided.
The Issuer will promptly notify the Trustee of any failure to take such action.

      Anything in this Section to the contrary notwithstanding, pursuant to
Section 9.1 the Issuer may at any time, for the purpose of obtaining a
satisfaction and discharge with respect to one or more or all series of
Securities hereunder, or for any other reason, pay or cause to be paid to the
Trustee all sums held in trust for any such series by the Issuer, the Guarantor
or any paying agent hereunder, as required by this Section, such sums to be held
by the Trustee upon the trusts herein contained.

      Anything in this section to the contrary notwithstanding, the agreement to
hold sums in trust as provided in this Section is subject to the provisions of
Sections 9.3 and 9.4.

      SECTION 3.4 LIMITATION ON LIENS. The Guarantor will not, at any time
directly or indirectly, and will not permit any Subsidiary to, create, assume,
incur or suffer to be created, assumed or incurred or to exist any Lien upon any
of the properties and assets of any character of the Guarantor or any Subsidiary
without making effective provision whereby the Securities of any series then
outstanding shall be secured equally and ratably with (or prior to) any other
obligation or indebtedness so secured, so long as such other obligation or
indebtedness remains secured; except, however, that, notwithstanding the
foregoing, the Guarantor or any Subsidiary, without so securing the Securities
of any series, may:

            (a) lease property to others in the ordinary course of the business
      of the Guarantor or any Subsidiary or lease or sublease any property if
      the property subject thereto is not needed by the Guarantor or any
      Subsidiary in the operation of its business;

            (b) create, assume, incur, or suffer to be created, assumed or
      incurred or to exist any Lien, provided, in each case, that the Lien
      secures indebtedness for borrowed money, including purchase money
      indebtedness, which is incurred to finance the acquisition of the property
      subject to such Lien and that such Lien attaches to such asset
      concurrently with or within 90 days after the acquisition thereof;

                                     - 30 -
<PAGE>
            (c) assume or suffer to exist (i) any Lien existing on any asset of
      any Person at the time such Person becomes a Subsidiary and not created in
      contemplation of such event; (ii) any Lien on any asset of any Person
      existing at the time such Person is merged or consolidated with or into
      the Guarantor or a Subsidiary and not created in contemplation of such
      event; and (iii) any Lien existing on any asset prior to the acquisition
      thereof by the Guarantor or a Subsidiary and not created in contemplation
      of such acquisition;

            (d) make any deposit with or give any form of security to any
      governmental agency or other body created or approved by law or
      governmental regulation in order to enable the Guarantor or a Subsidiary
      to maintain self-insurance, or to participate in any fund in connection
      with workmen's compensation, unemployment insurance, old-age pensions, or
      other social security, or to share in any privileges or other benefits
      available to Persons participating in any such arrangement, or for any
      other purpose at any time required by law or regulation promulgated by any
      governmental agency or office as a condition to the transaction of any
      business or the exercise of any privilege or license, or deposit assets of
      the Guarantor or such Subsidiary with any surety company or clerk of any
      court, or in escrow, as collateral in connection with, or in lieu of, any
      bond on appeal by the Guarantor or such Subsidiary from any judgment or
      decree against it, or in connection with any other proceedings in actions
      at law or suits in equity by or against the Guarantor or such Subsidiary;

            (e) incur or suffer to be incurred or to exist upon any of its
      property or assets (i) Liens for taxes, assessments or other governmental
      charges or levies which are not yet due or are payable without penalty or
      of which the amount, applicability or validity is being contested by the
      Guarantor or a Subsidiary in good faith by appropriate proceedings and the
      Guarantor or such Subsidiary shall have set aside on its books reserves
      which it deems to be adequate with respect thereto (segregated to the
      extent required by generally accepted accounting principles), provided
      that foreclosure, distraint, sale or similar proceedings have not been
      commenced, (ii) the Liens of any judgment, if such judgment shall not have
      remained undischarged, or unstayed on appeal or otherwise, for more than
      six months, (iii) undetermined Liens or charges incident to construction,
      (iv) materialmen's, mechanics', workmen's, repairmen's or other like Liens
      arising in the ordinary course of business in respect of obligations which
      are not overdue or which are being contested by the Guarantor or such
      Subsidiary in good faith by appropriate proceedings, or deposits to obtain
      the release of such Liens, or (v) any encumbrances consisting of zoning
      restrictions, licenses, easements and restrictions on the use of real
      property and minor defects and irregularities in the title thereto, which
      do not materially impair the use of such property by the Guarantor or such
      Subsidiary in the operation of its business or the value of such property
      for the purpose of such business;

            (f) create other Liens arising in the ordinary course of its
      business which (i) do not secure Debt, (ii) do not secure any obligation
      in an amount exceeding U.S. $5,000,000, and (iii) do not in the aggregate
      materially detract from the value of its property or assets or materially
      impair the use thereof in the operation of its business;

                                     - 31 -
<PAGE>
            (g) create or suffer to be created Liens not otherwise permitted
      securing Debt in an aggregate principal amount at any time outstanding not
      to exceed 15% of Consolidated Net Tangible Assets;

            (h) create or suffer to be created or to exist in favor of any
      lender of moneys or holder of commercial paper of the Guarantor or a
      Subsidiary in the ordinary course of business a banker's lien or right of
      offset in the holder of such indebtedness or moneys of the Guarantor or a
      Subsidiary deposited with such lender or holder in the ordinary course of
      business;

            (i) create, assume or suffer to exist Liens securing indebtedness
      owed to the Guarantor or any Subsidiary by another Subsidiary;

            (j) create, assume, incur, or suffer to be created, assumed or
      incurred or to exist any Lien upon any of its properties or assets of any
      character in connection with the sale, transfer or other disposition of
      such properties or assets (i) in connection with the securitization or
      other asset-based financing thereof, (ii) to a real estate investment
      trust or similar entity, or (iii) in connection with any transaction
      similar to the transactions referred to in the immediately preceding
      clauses (i) or (ii); provided, however, that any such sale, transfer or
      other disposition shall be for valid consideration and shall not be to
      prefer directly or indirectly any holder of any other obligation or
      indebtedness of the Guarantor or any Subsidiary as to any such other
      obligation or indebtedness that was already outstanding and did not
      previously benefit from a Lien; and

            (k) cause or allow any extension, renewal or replacement (or
      successive extensions, renewals or replacements), in whole or in part, of
      any Lien referred to in the foregoing clauses; provided, however, that the
      principal amount of any and all other obligations and indebtedness secured
      thereby shall not exceed the principal amount thereof so secured at the
      time of such extension, renewal or replacement (except that (a) the amount
      of obligations or indebtedness secured by extensions, renewals or
      replacements of Liens on property acquired through the exercise of rights
      arising out of defaults on receivables may exceed the principal amount
      prior to such extension, renewal or replacement and (b) the amount of
      obligations or indebtedness secured by extensions, renewals or
      replacements of Liens on property may exceed the principal amount of such
      obligations or indebtedness prior to such extension, renewal or
      replacement if the value of such property has increased and the loan to
      value ratio of the refinanced obligation or indebtedness does not exceed
      the loan to value ratio of the obligation or indebtedness relating to the
      original Lien); and provided, further, that such extension, renewal or
      replacement shall be limited to all or a part of the property which
      secured the Lien so extended, renewed or replaced (plus improvements on
      such property).

      SECTION 3.5 STATEMENT AS TO COMPLIANCE. Each of the Issuer and the
Guarantor will deliver to the Trustee within 120 days after the end of each of
the Issuer's or the Guarantor's fiscal years, as the case may be, a certificate
executed by the principal executive officer, the principal financial officer or
the principal financial accounting officer of the Issuer and the Guarantor as to
his or her knowledge of the Issuer's or the Guarantor's respective compliance
with all conditions and covenants under the Indenture and, in the event of any
noncompliance, specifying such non-compliance

                                     - 32 -
<PAGE>
and the nature and status thereof. For purposes of this Section 3.5, such
compliance shall be determined without regard to any period of grace or
requirement of notice under this Indenture.

      SECTION 3.6 EXISTENCE. Subject to Article Eight hereof, each of the Issuer
and the Guarantor will do or cause to be done all things necessary to preserve
and keep in full force and effect their respective existences, rights (charter
and statutory) and franchises and those of each of their respective
Subsidiaries; provided, however, that neither the Issuer nor the Guarantor shall
be required to preserve any right or franchise if the Board of Directors of the
Issuer or the Guarantor, as the case may be, shall determine that the
preservation thereof is no longer desirable in the context of the business of
the Issuer or the Guarantor, as the case may be, and its Subsidiaries as a whole
and that the loss thereof is not disadvantageous in any material respect to the
holders of the Securities.

      SECTION 3.7 PAYMENT OF ADDITIONAL AMOUNTS. If with respect to Securities
of any series it is specified pursuant to Section 2.5 that this Section 3.7 and
Section 10.6 shall apply to Securities of such series then all payments in
respect of Securities of such series, including, without limitation, payments of
principal and interest, if any, shall be made by the Issuer without withholding
or deduction for or on account of any Taxes unless the Issuer is required to
withhold or deduct Taxes by applicable law or by the interpretation of
administration thereof by the relevant government authority. In the event the
Issuer is so required to deduct or withhold any amount for or on account of
Taxes from any payment on or with respect to the Securities of such series, the
Issuer shall pay such Additional Amounts as may be necessary in order that the
net amounts received by each holder or beneficial owner of the Securities of
such series after such withholding or deduction in respect of such Taxes
(including Additional Amounts) shall equal the respective amounts of principal,
interest, if any, and premium, if any, which would have been received in respect
of the Securities of such series in the absence of such withholding or
deduction; provided that no such Additional Amounts will be payable with respect
to (1) any payment to a holder or beneficial owner who is liable for such Taxes
in respect of any Security of such series (a) by reason of such holder or
beneficial owner being a person with whom the Issuer is not dealing at arm's
length for the purposes of the Income Tax Act (Canada) or (b) by reason of the
existence of any present or former connection between such holder or beneficial
owner (or between a fiduciary, settlor, beneficiary, member or shareholder of,
or possessor of a power over, such holder or beneficial owner, if such holder or
beneficial owner is an estate, trust, partnership, limited liability company or
corporation) and Canada or any province or territory thereof or therein or
agency thereof or therein other than the mere holding, use or ownership or
deemed holding, use or ownership, or receiving payments or enforcing any rights
in respect of any Security of such series as a non-resident or deemed
non-resident of Canada or any province or territory thereof or therein or any
agency thereof or therein, (2) any Tax which would not have been so imposed but
for the presentation by the holder of any Security of such series for payment on
a date more than 10 days after the date on which the payment became due and
payable or the date on which payment thereof is duly provided for, whichever
occurs later; (3) any estate, inheritance, gift, sales, transfer, personal
property or excise tax or any similar tax, assessment or governmental charge;
(4) any Tax which is payable otherwise than by withholding from payments in
respect of principal of, any premium or any interest on any Security of such
series; (5) any Tax imposed as a result of the failure to comply with (a)
certification, information, documentation, reporting or other similar
requirements concerning

                                     - 33 -
<PAGE>
the nationality, residence, identity or connection with Canada or any province
or territory thereof of the holder or beneficial owner of any Security of such
series, if such compliance is required by statute, or by regulation, as a
precondition to relief or exemption from such Tax or (b) any other
certification, information, documentation, reporting or other similar
requirements under Canadian federal or provincial income tax laws or regulations
that would establish entitlement to otherwise applicable relief or exemption
from such Tax, assessment or other governmental charge; (6) any tax, assessment
or other governmental charge required to be withheld by any paying agent from
any payment of the principal of, any premium or any interest on any Security of
such series, if the payment can be made without such withholding by at least one
other paying agent; or (7) any combination of items (1), (2), (3), (4), (5) or
(6). Furthermore, no Additional Amounts shall be paid with respect to any
payment on any Security of such series to a holder or beneficial owner who is a
fiduciary or partnership or other than the sole beneficial owner of such payment
to the extent that a beneficiary or settlor with respect to such fiduciary or a
member of such partnership or beneficial owner would not have been entitled to
receive the Additional Amounts had such beneficiary, settlor, member or
beneficial owner been the holder of any such Security of such series.

      Whenever in this Indenture or the Securities of any series to which this
Section 3.7 is applicable there is a reference, in any context, to the payment
of the principal of or interest, if any, on, or in respect of, any Security to
which this Section 3.7 is applicable, such payment shall be deemed to include
the payment of Additional Amounts provided for in this Section to the extent
that, in such context, Additional Amounts are, were or would be payable in
respect of such payment pursuant to the provisions of this Section and express
mention of the payment of Additional Amounts (if applicable) in any provision
hereof or thereof shall not be construed as excluding Additional Amounts in
those provisions hereof where such express mention is not made.

      Except as specifically provided in this Section 3.7 and Section 10.6 with
respect to Securities of any series to which such sections are applicable, the
Issuer will not be required to make any payment with respect to any tax,
assessment or governmental charge imposed by any government or a political
subdivision or taxing authority thereof or therein.

                                  ARTICLE FOUR

                   REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
                               ON EVENT OF DEFAULT

      SECTION 4.1 EVENTS OF DEFAULT. "Event of Default" with respect to
Securities of a particular series wherever used herein, means any one of the
following events and such other events as may be established with respect to the
Securities of such series as contemplated by Section 2.5 hereof, continued for
the period of time, if any, and after the giving of notice, if any, designated
in this Indenture or as may be established with respect to such Securities as
contemplated by Section 2.5 hereof, as the case may be, unless such event is
either inapplicable or is specifically deleted or modified in, or pursuant to,
the applicable Resolution or in the supplemental indenture under which such
series of Securities is issued, as the case may be, as contemplated by Section
2.5:

                                     - 34 -
<PAGE>
            (a) default in the payment of any interest on, or any Additional
      Amounts, if any, with respect to such Securities when due and payable, and
      continuance of such default for a period of 30 days;

            (b) default in the payment of the principal of, or any premium on,
      the Securities of such series when the same shall become due and payable
      either at maturity, upon redemption, by declaration or otherwise;

            (c) default in the performance, or breach, of any covenant or
      warranty of the Issuer or the Guarantor contained in the Securities of
      such series or this Indenture, as the case may be, and continuance of such
      default or breach for a period of 90 days after written notice thereof
      shall have been given to the Issuer or the Guarantor, as the case may be,
      by the holders of at least 25% in aggregate principal amount of the
      Securities of such series then outstanding;

            (d) if any event of default as defined in any mortgage, indenture or
      instrument under which there may be issued, or by which there may be
      secured or evidenced, any indebtedness of the Issuer or the Guarantor for
      money borrowed, whether such indebtedness now exists or shall hereafter be
      created, shall occur and shall result in such indebtedness in principal
      amount in excess of $50,000,000 (or the equivalent thereof in foreign or
      composite currencies) becoming or being declared due and payable prior to
      the date on which it would otherwise become due and payable, and such
      acceleration shall not be rescinded or annulled, or such indebtedness
      shall not have been discharged, within a period of 30 days after written
      notice thereof shall have been given to the Issuer or the Guarantor, as
      the case may be, by the holders of at least 25% in aggregate principal
      amount of Securities of such series then outstanding;

            (e) the Support Agreement shall have ceased to be in full force and
      effect for any reason or shall be amended or modified in any manner
      unless, prior to such cessation, amendment or modification, S&P, Moody's
      and any other "nationally recognized statistical rating organization" (as
      such term is defined for purposes of Rule 436(g)(2) under the Securities
      Act) then rating securities of the Issuer and the Guarantor at the
      Issuer's or Guarantor's request, have each confirmed that the rating
      assigned to securities of the Issuer or the Guarantor by such rating
      agency immediately prior to such cessation, amendment or modification will
      not be downgraded, or placed on what is commonly referred to as a "watch
      list" for possible downgrading; provided, that, if the cessation amendment
      or modification of the Support Agreement is in connection with the
      assumption of the Guarantee by any other Person pursuant to the provisions
      described in Section 8.1 of this Indenture (whether by merger,
      consolidation, sale, conveyance, transfer or lease), it shall not
      constitute an Event of Default if the senior debt securities of the Person
      assuming the Guarantee are rated by S&P or Moody's immediately following
      such transfer or assumption at a rating equal to or greater than the
      respective rating assigned to securities of the Guarantor by each such
      rating agency;

            (f) Textron, the Issuer, the Guarantor or any "significant
      subsidiary" (as such term is defined in Section 1.02(w) of Regulation S-X
      of the Securities Act, or any

                                     - 35 -
<PAGE>
      successor provision thereto) of the Issuer or the Guarantor shall commence
      a voluntary case or other proceeding seeking liquidation, reorganization
      or other relief with respect to itself or its debts under any bankruptcy,
      insolvency or other similar law now or hereafter in effect or seeking the
      appointment of a trustee, receiver, liquidator, custodian or other similar
      official of it or any substantial part of its property, or shall consent
      to any such relief or to the appointment of or taking possession by any
      such official in an involuntary case or other proceeding commenced against
      it, or shall make a general assignment for the benefit of creditors, or
      shall fail generally or admit its inability to pay its debts as they
      become due, or shall take any corporate action to authorize any of the
      foregoing; or

            (g) an involuntary case or other proceeding shall be commenced
      against Textron, the Issuer, the Guarantor or any significant subsidiary
      of the Issuer or the Guarantor seeking liquidation, reorganization or
      other relief with respect to it or its debts under any bankruptcy,
      insolvency or other similar law now or hereafter in effect or seeking the
      appointment of a trustee, receiver, liquidator, custodian or other similar
      official of it or any substantial part of its property, and such
      involuntary case or other proceeding shall remain undismissed and unstayed
      for a period of 60 days; or an order for relief shall be entered against
      the Issuer, Textron, the Guarantor or any significant subsidiary of the
      Issuer or the Guarantor under Canadian Federal Bankruptcy laws in case of
      the Issuer or the federal bankruptcy laws of the United States in the case
      of the Guarantor, in each case as now or hereafter in effect.

      In case an Event of Default other than one under clause (f) or (g) above
shall have occurred and be continuing, then the holders of at least 25% in
aggregate principal amount of the Securities of such series then outstanding may
declare the principal of all Outstanding Securities of such series to be
immediately due and payable. If an Event of Default under clause (f) or (g)
above shall have occurred and be continuing, the principal of all Outstanding
Securities of such series shall automatically become due and payable. Upon any
such acceleration, any premium and interest on the Securities of such series
shall also become immediately due and payable.

      The foregoing provisions, however, are subject to the condition that if,
at any time after the principal (or, if the Securities are Original Issue
Discount Securities, such portion of the principal as may be specified in the
terms thereof) of the Securities of any series shall have been so declared due
and payable, and before any judgment or decree for the payment of the moneys due
shall have been obtained or entered as hereinafter provided:

            (a) the Issuer or the Guarantor shall pay or shall deposit with the
      Trustee a sum sufficient to pay all matured installments of interest, if
      any, upon all the Securities of such series and the principal of any and
      all Securities of such series which shall have become due otherwise than
      by such declaration of acceleration (with interest upon such principal
      and, to the extent that payment of such interest is enforceable under
      applicable law, on overdue installments of interest, if any, at the
      Overdue Rate applicable to such series to the date of such payment or
      deposit), and all amounts payable to the Trustee pursuant to Section 5.5;
      and

                                     - 36 -
<PAGE>
            (b) any and all Events of Default under the Indenture with respect
      to such series of Securities other than the non-payment of the principal
      of such Securities which shall have become due by such declaration of
      acceleration, shall have been cured, waived or otherwise remedied as
      provided herein or provision shall have been made therefor to the
      satisfaction of the Trustee,

then and in every such case the holders of not less than a majority in aggregate
principal amount of the Securities of such series then Outstanding, by written
notice to the Issuer, the Guarantor and to the Trustee, may rescind and annul
such declaration and its consequences with respect to such series, but no such
rescission and annulment shall extend to or shall affect any subsequent default
or shall impair any right consequent thereon.

      For all purposes under this Indenture, if a portion of the principal of
any Original Issue Discount Securities shall have been accelerated and declared
due and payable pursuant to the provisions hereof, then, from and after such
declaration, unless such declaration has been rescinded and annulled, the
principal amount of such Original Issue Discount Securities shall be deemed, for
all purposes hereunder, to be such portion of the principal thereof as shall be
due and payable as a result of such acceleration, and payment of such portion of
the principal thereof as shall be due and payable as a result of such
acceleration, together with interest, if any, thereon and all other amounts
owing thereunder, shall constitute payment in full of such Original Issue
Discount Securities.

      SECTION 4.2 PAYMENT OF SECURITIES ON DEFAULT; SUIT THEREFOR. The Issuer
and the Guarantor covenant that (a) in case a default shall be made in the
payment of any installment of interest on any of the Securities of any series as
and when such interest shall have become due and payable, and such default shall
have continued for a period of 30 days, or (b) in case a default shall be made
in the payment of the principal of any of the Securities of any series as and
when the same shall have become due and payable, whether upon maturity of the
Securities of such series or upon redemption or by declaration or otherwise, or
(c) in case of a default in the making or satisfaction of any sinking fund
payment or analogous obligation when the same becomes due by the terms of the
Securities of any series, then, upon demand of the Trustee, the Issuer or the
Guarantor will pay to the Trustee for the benefit of the holders of the
Securities of such series the whole amount then due and payable on all
Securities of such series for principal and interest, if any, as the case may be
(with interest to the date of such payment upon the overdue principal and, to
the extent that payment of such interest is enforceable under applicable law, on
overdue installments of interest, if any, at the Overdue Rate applicable to
Securities of such series); and in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, and any
further amounts payable to the Trustee pursuant to Section 5.5.

      Until such demand is made by the Trustee, the Issuer may pay the principal
of and interest, if any, on the Securities of any series to the registered
holders, whether or not the principal of and interest, if any, on the Securities
of such series be overdue.

      In case the Issuer and the Guarantor shall fail forthwith to pay such
amounts upon such demand, the Trustee, in its own name and as trustee of an
express trust, shall be entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceedings to judgment or final
decree, and may enforce any such judgment or final decree against the Issuer,
the Guarantor or

                                     - 37 -
<PAGE>
other obligor upon such Securities and collect in the manner provided by law out
of the property of the Issuer, the Guarantor or other obligor upon such
Securities, wherever situated, the moneys adjudged or decreed to be payable.

      In case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Issuer, the Guarantor or any other obligor upon the
Securities of any series under Title 11 of the United States Bankruptcy Code or
any other similar applicable Federal, state or Canadian federal law, or in case
a receiver, trustee in bankruptcy or similar official shall have been appointed
for the property of the Issuer, the Guarantor or such other obligor, or in case
of any other similar judicial proceedings relative to the Issuer, the Guarantor
or other obligor upon the Securities of any series, or to the creditors or
property of the Issuer, the Guarantor or such other obligor, the Trustee,
irrespective of whether the principal of any Securities shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
proceedings or otherwise:

            (a) to file a proof of claim or claims for the whole amount of
      principal (or, if the Securities of any series are Original Issue Discount
      Securities, such portion of the principal amount as may be due and payable
      with respect to such series pursuant to a declaration in accordance with
      Section 4.1) and interest, if any, owing and unpaid in respect of the
      Securities of any series, and, in case of any judicial proceedings, to
      file such proofs of claim and other papers or documents as may be
      necessary or advisable in order to have the claims of the Trustee
      (including any claim for any amounts payable to the Trustee pursuant to
      Section 5.5) and of the Securityholders allowed in any judicial
      proceedings relating to the Issuer, the Guarantor or other obligor upon
      the Securities of any series, or to the creditors or property of the
      Issuer, the Guarantor or such other obligor;

            (b) unless prohibited by applicable law and regulations, to vote on
      behalf of the holders of the Securities of any series in any election of a
      trustee or a standby trustee in arrangement, reorganization, liquidation
      or other bankruptcy or insolvency proceedings or of a person performing
      similar functions in comparable proceedings; and

            (c) to collect and receive any moneys or other property payable or
      deliverable on any such claims, and to distribute all amounts received
      with respect to the claims of the Securityholders and of the Trustee on
      their behalf (after deduction of costs and expenses of collection, and any
      further amounts payable to the Trustee pursuant to Section 5.5 and
      incurred by it up to the date of distribution); and any trustee in
      bankruptcy, receiver, or other similar official is hereby authorized by
      each of the Securityholders to make payments to the Trustee, and, in the
      event that the Trustee shall consent to the making of payments directly to
      the Securityholders, to pay to the Trustee costs and expenses of
      collection, and any further amounts payable to the Trustee pursuant to
      Section 5.5 and incurred by it up to the date of distribution.

      Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities of any series or

                                     - 38 -
<PAGE>
the rights of any holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Securityholder in any such proceeding except, as aforesaid,
to vote for the election of a trustee in bankruptcy or similar person.

      All rights of action and of asserting claims under this Indenture, or
under the Securities of any series, may be enforced by the Trustee without the
possession of any of the Securities of such series or the production thereof on
any trial or other proceedings relative thereto, and any such action or
proceedings instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment, shall be for the
ratable benefit of the holders of the Securities in respect of which such action
was taken.

      In any proceedings brought by the Trustee (and also any proceedings in
which a declaratory judgment of a court may be sought as to the interpretation
or construction of any provision of this Indenture to which the Trustee shall be
a party), the Trustee shall be held to represent all the holders of the
Securities to which such proceedings relate, and it shall not be necessary to
make any holders of such Securities parties to any such proceedings.

      SECTION 4.3 APPLICATION OF MONEYS COLLECTED BY TRUSTEE. Any moneys
collected by the Trustee pursuant to this Article shall be applied in the
following order at the date or dates fixed by the Trustee and, in the case of
distribution of such moneys on account of principal or interest, upon
presentation of the several Securities in respect of which moneys have been
collected and stamping (or otherwise noting) thereon the payment, or issuing
Securities in reduced principal amounts in exchange for the presented Securities
of like series and tenor if only partially paid, or upon surrender thereof if
fully paid:

            FIRST: To the payment of amounts due to the Trustee pursuant to
      Section 5.5;

            SECOND: In case the principal of the Outstanding Securities in
      respect of which moneys have been collected shall not have become and be
      then due and payable, to the payment of interest, if any, ratably, on the
      Securities in default in the order of the maturity of the installments of
      such interest, with interest (to the extent that such interest has been
      collected by the Trustee and to the extent permitted by applicable law)
      upon the overdue installments of interest at the Overdue Rate applicable
      to such Securities, such payments to be made ratably to the persons
      entitled thereto, without discrimination or preference;

            THIRD: In case the principal of the Outstanding Securities in
      respect of which moneys have been collected shall have become and shall be
      then due and payable by declaration or otherwise, to the payment of the
      whole amount then owing and unpaid upon such Securities for principal and
      interest, if any, with interest upon the overdue principal, and (to the
      extent that such interest has been collected by the Trustee and to the
      extent permitted by applicable law) upon overdue installments of interest,
      if any, at the Overdue Rate applicable to such Securities; and in case
      such moneys shall be insufficient to pay in full the whole amount so due
      and unpaid upon such Securities, then to the payment of such principal and
      interest, if any, without preference or priority of any kind, according to
      the aggregate amounts due and payable on such Securities for principal and
      interest; and

                                     - 39 -
<PAGE>
            FOURTH: To the payment of the remainder, if any, to the Issuer, the
      Guarantor or any other person lawfully entitled thereto.

      SECTION 4.4 PROCEEDINGS BY TRUSTEE. In case an Event of Default hereunder
has occurred, has not been waived and is continuing, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Indenture or in aid of the exercise
of any power granted in this Indenture or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.

      SECTION 4.5 RESTORATION OF RIGHTS ON ABANDONMENT OF PROCEEDINGS. In case
the Trustee or any Securityholder shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely to the Trustee
or to such Securityholder, then and in every such case the Issuer, the
Guarantor, the Securityholder and the Trustee shall subject to any determination
in such proceeding, be restored severally and respectively to their former
positions and rights hereunder, and all rights, remedies and powers of the
Issuer, the Guarantor, the Trustee and the Securityholders shall continue as
though no such proceedings had been taken.

      SECTION 4.6 PROCEEDINGS BY SECURITYHOLDERS. No holder of any Security of
any series shall have any right by virtue or by availing of any provision of
this Indenture to institute any action or proceeding at law or in equity or in
bankruptcy or otherwise upon or under or with respect to this Indenture, or for
the appointment of a trustee in bankruptcy, receiver or other similar official
or for any other remedy hereunder, unless such holder previously shall have
given to the Trustee written notice of an Event of Default with respect to
Securities of such series and of the continuance thereof, as hereinbefore
provided, and unless also the holders of not less than 25% in aggregate
principal amount of the Securities of such series then Outstanding shall have
made written request upon the Trustee to institute such action, suit or
proceedings in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the reasonable
costs, expenses and liabilities to be incurred therein or thereby and the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity shall have neglected or refused to institute any such action, suit or
proceeding and no direction inconsistent with such written request shall have
been given to the Trustee pursuant to Section 4.8; it being understood and
intended, and being expressly covenanted by the taker and holder of every
Security with every other taker and holder and the Trustee, that no one or more
holders of any Securities shall have any right in any manner whatever by virtue
or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of any other holder of Securities, or to obtain or seek to
obtain priority over or preference to any other holder or to enforce any right
under this Indenture, except in the manner herein provided and for the equal,
ratable and common benefit of all holders of Securities of the applicable
series. For the protection and enforcement of the provisions of this Section,
each and every Securityholder and the Trustee shall be entitled to such relief
as can be given either at law or in equity.

                                     - 40 -
<PAGE>
      SECTION 4.7 REMEDIES CUMULATIVE AND CONTINUING. Except as provided in
Section 4.6, no right or remedy herein conferred upon or reserved to the Trustee
or to the Securityholders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.

      No delay or omission of the Trustee or of any Securityholder to exercise
any right or power accruing upon any Event of Default occurring and continuing
as aforesaid shall impair any such right or power or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein; and, subject to
Section 4.6, every power and remedy given by this Indenture or by law to the
Trustee or to the Securityholders of any or all series, as the case may be, may
be exercised from time to time, and as often as shall be deemed expedient, by
the Trustee or by the Securityholders of such series or all series, as the case
may be.

      SECTION 4.8 CONTROL BY SECURITYHOLDERS. The holders of not less than a
majority in aggregate principal amount of the Securities of each series affected
at the time Outstanding (with each such series voting separately as a class)
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 by this Indenture with respect to Securities of
such series. Notwithstanding any of the foregoing, no such direction shall be
otherwise than in accordance with law and the provisions of this Indenture and
(subject to the requirements of the Trust Indenture Act of 1939) the Trustee
shall have the right to decline to follow any such direction if the Trustee,
being advised by counsel, shall determine that the action or proceeding so
directed may not lawfully be taken or if the Trustee in good faith by its board
of directors, the executive committee, or a trust committee of directors or
Responsible Officers of the Trustee shall determine that the action or
proceedings so directed would involve the Trustee in personal liability or may
be unduly prejudicial to the Securityholders not joining in the giving of such
direction.

      Nothing in this Indenture shall impair the right of the Trustee in its
discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction or directions by Securityholders.

      SECTION 4.9 WAIVER OF PAST DEFAULTS. Prior to the declaration of the
acceleration of the maturity of the Securities of any particular series the
holders of not less than a majority in aggregate principal amount of the
Securities of such particular series at the time Outstanding may on behalf of
the holders of all the Securities of such particular series waive any past
default or Event of Default with respect to such particular series and its
consequences, except a default in respect of a covenant or provision hereof
which cannot be modified or amended without the consent of the holder of each
Outstanding Security affected as provided in Section 7.2 hereof. In the case of
any such waiver, the Issuer, the Guarantor, the Trustee and the holders of the
Securities of each series affected shall be restored to their former positions
and rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.

                                     - 41 -
<PAGE>
      Upon any such waiver, such default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured, and not to have occurred for every
purpose of this Indenture.

                                  ARTICLE FIVE

                             CONCERNING THE TRUSTEE

      SECTION 5.1 RELIANCE ON DOCUMENTS, OPINIONS, ETC.; NO REQUIREMENT FOR
EXPENDITURE OF OWN FUNDS. Subject to the requirements of the Trust Indenture Act
of 1939,

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

            (b) any request, direction, order or demand of the Issuer or the
      Guarantor mentioned herein shall be sufficiently evidenced by an Officers'
      Certificate (unless other evidence in respect thereof be herein
      specifically prescribed); and any Resolution may be evidenced to the
      Trustee by a copy thereof certified by the respective secretary or an
      assistant secretary or attesting secretary of the Issuer or the Guarantor;

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

            (d) the Trustee shall be under no obligation to exercise any of the
      rights or powers vested in it by this Indenture at the request, order or
      direction of any of the Securityholders pursuant to the provisions of this
      Indenture, unless such Securityholders shall have offered to the Trustee
      reasonable security or indemnity against the costs, expenses and
      liabilities which might be incurred therein or thereby;

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

            (f) prior to the occurrence of an Event of Default hereunder and
      after the curing or waiving of all Events 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) the Trustee shall
      not be bound to make any investigation into the facts or matters stated in
      any resolution, certificate, statement, instrument, opinion, report,
      notice, request, consent, order, bond, direction, note, or other paper or
      document unless requested in writing so to do by the holders of not less
      than a majority in aggregate principal amount of the Securities of any
      series affected then Outstanding; provided that, if the payment within a
      reasonable time to the Trustee of the costs, expenses or liabilities
      likely to be

                                     - 42 -
<PAGE>
      incurred by it in the making of such investigation is, in the opinion of
      the Trustee, not reasonably assured to the Trustee by the security
      afforded to it by the terms of this Indenture, the Trustee may require
      reasonable indemnity against such expenses or liabilities as a condition
      to proceeding; and the reasonable expenses of every such investigation
      shall be paid by the Issuer or the Guarantor or, if paid by the Trustee,
      shall be repaid by the Issuer or the Guarantor upon demand;

            (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 not regularly in its employ and the Trustee shall not be
      responsible for any misconduct or negligence on the part of any such agent
      or attorney appointed with due care by it hereunder;

            (h) 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;

            (i) the Trustee is not required to take notice or deemed to have
      notice of any default or Event of Default, unless a Responsible Officer of
      the Trustee has received notice in writing of such default or Event of
      Default from the Issuer, the Guarantor or from the holders of at least 25%
      in aggregate principal amount of the Outstanding Securities of the series
      so affected, and in absence of any such notice, the Trustee may
      conclusively assume that no default or Event of Default exists;

            (j) the Trustee is not required to give any bond or surety with
      respect to the performance of its duties or the exercise of its powers
      under this Indenture;

            (k) the Trustee's immunities and protections from liability and its
      rights to compensation and indemnification in connection with the
      performance of its duties under this Indenture shall extend to the
      Trustee's officers, directors, agents and employees. Such immunities and
      protections and right to indemnification, together with the Trustee's
      right to compensation, shall survive the Trustee's resignation or removal
      and final payment of the Securities;

            (l) the Trustee shall have no responsibility for any information in
      any offering memorandum or other disclosure material distributed with
      respect to any series of Securities other than that information which it
      provides in writing to the Issuer or the Guarantor expressly for the
      purpose of being included in any such offering memorandum or other
      disclosure material, and the Trustee shall have no responsibility for
      compliance with any state or federal securities laws in connection with
      the Securities, other than the filing of any documents required to be
      filed by an indenture trustee pursuant to the Trust Indenture Act; and

            (m) 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 sole discretion, may

                                     - 43 -
<PAGE>
      make such further inquiry or investigations 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 Issuer and the Guarantor and their respective
      Subsidiaries, personally or by one or more agents and attorneys.

      None of the provisions contained in this Indenture shall be construed as
requiring the Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers if there shall be reasonable grounds for
believing that the repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it. 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 requirements of the Trust Indenture Act of 1939.

      SECTION 5.2 NO RESPONSIBILITY FOR RECITALS, ETC. The recitals contained
herein and in the Securities, except the Trustee's certificates of
authentication, shall be taken as the statements of the Issuer and the
Guarantor, and the Trustee assumes no responsibility for the correctness of the
same. The Trustee makes no representation as to the validity or sufficiency of
this Indenture or of the Securities, provided that the Trustee shall not be
relieved of its duty to authenticate Securities only as authorized by this
Indenture. The Trustee shall not be accountable for the use or application by
the Issuer or the Guarantor of any of the Securities or of the proceeds thereof.

      SECTION 5.3 TRUSTEE AND AGENTS MAY HOLD SECURITIES. The Trustee or any
agent of the Issuer, the Guarantor or the Trustee, in its individual or any
other capacity, may become the owner or pledgee of Securities with the same
rights it would have if it were not the Trustee or such agent and, subject to
the requirements of the Trust Indenture Act of 1939, may otherwise deal with the
Issuer or the Guarantor and receive, collect, hold and retain collections from
the Issuer or the Guarantor with the same rights it would have if it were not
the Trustee or such agent.

      SECTION 5.4 MONEYS TO BE HELD IN TRUST. Subject to the provisions of
Sections 9.3 and 9.4 hereof, all moneys received by the Trustee or any paying
agent, all money and U.S. Government Obligations or Canadian Government
Obligations deposited with the Trustee pursuant to Section 11.2 or Section 11.3
and all money received by the Trustee in respect of U.S. Government Obligations
or Canadian Government Obligations deposited with the Trustee pursuant to
Section 11.2 or Section 11.3, shall, until used or applied as herein provided,
be held in trust for the purposes for which they were received, but need not be
segregated from other funds except to the extent required by mandatory
provisions of law. Neither the Trustee nor any paying agent shall be under any
liability for interest on any moneys received by it hereunder, except such as it
may agree with the Issuer or the Guarantor to pay thereon. So long as no Event
of Default shall have occurred and be continuing, all interest allowed on any
such moneys shall be paid from time to time upon the written order of the Issuer
or the Guarantor signed by one of its respective officers, who is one of the
officers who may sign an Officers' Certificate.

                                     - 44 -
<PAGE>
      SECTION 5.5 COMPENSATION AND EXPENSES OF TRUSTEE. The Issuer and the
Guarantor covenant and agree to pay to the Trustee from time to time, and the
Trustee shall be entitled to, reasonable compensation (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) and, except as otherwise expressly provided, the Issuer or the
Guarantor will pay or reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by or on behalf of it
pursuant to any of the provisions of this Indenture (including the reasonable
compensation and the expenses and disbursements of its counsel and of all
persons not regularly in its employ) except any such expense, disbursement or
advance as may arise from its negligence or bad faith. The Issuer and the
Guarantor also covenant 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 this Indenture or the trusts hereunder and its duties
hereunder, including the costs and expenses of defending itself against any
claim of liability in the premises. The obligations of the Issuer and the
Guarantor under this Section to compensate and indemnify the Trustee and to pay
or reimburse the Trustee for reasonable expenses, disbursements and advances
shall constitute additional indebtedness hereunder and shall survive the
satisfaction and discharge of this Indenture. Such additional indebtedness, if
any, shall be secured by a lien prior to that of the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the benefit of the holders of particular Securities.

      SECTION 5.6 RIGHT OF TRUSTEE TO RELY ON OFFICERS' CERTIFICATE, ETC.
Subject to the requirements of the Trust Indenture Act of 1939, whenever in the
administration of the trusts of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or
suffering or omitting any action to be taken hereunder, such matter (unless
other evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to the
Trustee, and such certificate, in the absence of negligence or bad faith on the
part of the Trustee, shall be full warrant to the Trustee for any action taken,
suffered or omitted by it under the provisions of this Indenture upon the faith
thereof.

      SECTION 5.7 ELIGIBILITY OF TRUSTEE. The Trustee for each series of
Securities hereunder shall at all times be a corporation which complies with the
requirements of the Trust Indenture Act of 1939, having a combined capital and
surplus of at least U.S.$10,000,000. If such corporation files reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation at any time shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so filed. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 5.8.

      SECTION 5.8 RESIGNATION OR REMOVAL OF TRUSTEE; APPOINTMENT OF SUCCESSOR
TRUSTEE. (a) The Trustee, or any trustee or trustees hereafter appointed, may at
any time resign with respect to one or more or all series of Securities by
giving written notice of resignation to the Issuer and the Guarantor and by
mailing notice thereof to holders of the applicable series of Securities at
their last addresses as they shall appear in the Register. Upon receiving such

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notice of resignation, the Issuer and the Guarantor shall promptly appoint a
successor trustee or trustees with respect to the applicable series by written
instrument in duplicate, executed by authority of the Board of Directors, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee or trustees. If no successor trustee shall have
been so appointed with respect to any series and have accepted appointment
within 30 days after the mailing of such notice of resignation, the resigning
trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee, or any Securityholder who has been a bona fide holder of a
Security or Securities of the applicable series for at least six months may,
subject to the requirements of the Trust Indenture Act of 1939, on behalf of
such Securityholder and all others similarly situated, petition any such court
for the appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.

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

                  (i) the Trustee shall cease to be eligible in accordance with
            the provisions of Section 5.7 with respect to any series of
            Securities and shall fail to resign after written request therefor
            by the Issuer, the Guarantor or by any Securityholder; or

                  (ii) the Trustee shall become incapable of acting with respect
            to any series of Securities, or shall be adjudged a bankrupt or
            insolvent, or a receiver or liquidator 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, the Issuer or the Guarantor may remove the Trustee with
respect to the applicable series of Securities (or all series, if required) and
appoint a successor trustee for such series by written instrument, in duplicate,
executed by authority of the applicable Board of Directors, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee, or, subject to the requirements of the Trust Indenture Act of
1939, any Securityholder who has been a bona fide holder of a Security or
Securities of such series for at least six months may on behalf of such
Securityholder and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor trustee with respect to such series. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, remove the Trustee and
appoint a successor trustee with respect to such series.

      (c) The holders of a majority in aggregate principal amount of the
Securities of any series at the time Outstanding may at any time remove the
Trustee with respect to Securities of such series and appoint a successor
trustee with respect to the Securities of such series by delivering to the
Trustee so removed, to the successor trustee so appointed and to the Issuer and
the Guarantor the evidence provided for in Section 6.1 of the action in that
regard taken by the Securityholders.

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<PAGE>
      (d) Any resignation or removal of the Trustee with respect to any series
and any appointment of a successor trustee with respect to such series pursuant
to any of the provisions of this Section 5.8 shall become effective upon
acceptance of appointment by the successor trustee as provided in Section 5.9.

      SECTION 5.9 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE. Any successor
trustee appointed as provided in Section 5.8 shall execute, acknowledge and
deliver to the Issuer and the Guarantor and to its predecessor Trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor Trustee with respect to all or any applicable
series shall become effective and such successor trustee, without any further
act, deed or conveyance, shall become vested with all rights, powers, duties and
obligations with respect to such series of its predecessor hereunder, with like
effect as if originally named as trustee for such series hereunder; but,
nevertheless, on the written request of the Issuer, the Guarantor or of the
successor trustee, upon payment (or due provision therefor) of any amounts then
due it pursuant to Section 5.5, the predecessor Trustee ceasing to act shall,
subject to Section 9.4, pay over to the successor trustee all moneys at the time
held by it hereunder and shall execute and deliver an instrument transferring to
such successor trustee all such rights, powers, duties and obligations. Upon
request of any such successor trustee, the Issuer and the Guarantor shall
execute any and all instruments in writing for more fully and certainly vesting
in and confirming to such successor trustee all such rights and powers. Any
trustee ceasing to act shall, nevertheless, retain a lien upon all property or
funds held or collected by such trustee to secure any amounts then due it
pursuant to the provisions of Section 5.5.

      If a successor trustee is appointed with respect to the Securities of one
or more (but not all) series, the Issuer, the Guarantor, the predecessor Trustee
and each successor trustee with respect to the Securities of any applicable
series shall execute and deliver an indenture supplemental hereto which shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the predecessor Trustee with
respect to the Securities of any series as to which the predecessor Trustee is
not retiring shall continue to be vested in the predecessor Trustee, and 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 make 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.

      No successor trustee with respect to any series of Securities shall accept
appointment as provided in this Section 5.9 unless at the time of such
acceptance such successor trustee shall, with respect to such series, be
qualified under the provisions of the Trust Indenture Act of 1939 an eligible
under the provisions of Section 5.7.

      Upon acceptance of appointment by any successor trustee as provided in
this Section 5.9, the Issuer shall mail notice thereof to the holders of
Securities of any series for which such successor trustee is acting as trustee
at their last addresses as they shall appear in the Register. If the acceptance
of appointment is substantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined with the

                                     - 47 -
<PAGE>
notice called for by Section 5.8. If the Issuer fails to mail such notice within
ten days after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be mailed at the expense of the Issuer.

      SECTION 5.10 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS
OF TRUSTEE. 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 of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be qualified under the provisions of the
Trust Indenture Act of 1939 and eligible under the provisions of Section 5.7,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.

      In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities of any series shall have
been authenticated but not delivered, any such successor to the Trustee by
merger, conversion, consolidation or succession may adopt the certificate of
authentication of any predecessor Trustee and deliver such Securities so
authenticated; and, in case at that time any of the Securities of any series
shall not have been authenticated, any successor to the Trustee may authenticate
such Securities either in the name of such successor to the Trustee or, if such
successor to the Trustee is a successor by merger, conversion, consolidation or
succession in the name of any predecessor hereunder; and in all such cases such
certificate shall have the full force which the certificate of the Trustee shall
have as provided anywhere in the Securities of such series or in this Indenture.

      SECTION 5.11 REPORTS BY TRUSTEE TO SECURITYHOLDERS. Within 60 days after
March 15 in each year, beginning with the March 15 following the date of this
Indenture, the Trustee shall mail to the Securityholders a brief report dated as
of such reporting date in compliance with Section 313(a) of the Trust Indenture
Act of 1939, but only to the extent required by such Section 313(a). The Trustee
also shall comply with Section 313(b) of the Trust Indenture Act of 1939. The
Trustee shall also transmit by mail all reports as required by Section 313(c) of
the Trust Indenture Act of 1939. The Issuer shall promptly notify the Trustee
when the Securities are listed on any stock exchange.

      SECTION 5.12 COMPLIANCE WITH BACKUP WITHHOLDING AND INFORMATION REPORTING.
Notwithstanding anything else herein contained, the Trustee, or its agent, shall
comply with all U.S. federal backup withholding and U.S. and Canadian federal
information reporting requirements applicable to any payment under the
Securities of any series.

                                   ARTICLE SIX

                         CONCERNING THE SECURITYHOLDERS

      SECTION 6.1 ACTION BY SECURITYHOLDERS. Whenever in this Indenture it is
provided that the holders of a specified percentage in aggregate principal
amount of the Securities of any or all series may take any action (including the
making of any demand or request, the giving of any notice, consent or waiver or
the taking of any other action) the fact that at the time of

                                     - 48 -
<PAGE>
taking any such action the holders of such specified percentage have joined
therein may be evidenced (a) by any instrument or any number of instruments of
similar tenor executed by such Securityholders in person or by agent or proxy
appointed in writing, or (b) by the record of such holders of Securities voting
in favor thereof at any meeting of such Securityholders duly called and held in
accordance with the provisions of this Article, or (c) by a combination of such
instrument or instruments and any such record of such a meeting of such
Securityholders; and, except as herein otherwise expressly provided, such action
shall become effective when such instrument or instruments and/or such record
are delivered to the Trustee. Proof of execution of any instrument or of a
writing appointing any such agent or proxy shall be sufficient for any purpose
of this Indenture and (subject to the requirements of the Trust Indenture Act of
1939 and Section 5.1) conclusive in favor of the Trustee and the Issuer or the
Guarantor, if made in the manner provided in this Article.

      In determining whether the holders of the requisite principal amount of
Outstanding Securities of any or all series have taken any action (including the
making of any demand or request), the giving of any notice, consent or waiver
(or the taking of any other action) hereunder and in determining voting rights
of any holder of a Security hereunder (i) the principal amount of Original Issue
Discount Securities that shall be deemed to be Outstanding for such purposes
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 4.1 and (ii) the principal amount of any
Security, the principal amount of which is denominated in a currency other than
U.S. dollars or Canadian dollars or in units of currencies or in a composite
currency (the "Specified Currency") shall be deemed to be that amount of U.S.
dollars or Canadian dollars, as the case may be, which could have been obtained
by the principal amount of such Specified Currency at the Market Exchange Rate.
For purposes of this Section 6.1, "Market Exchange Rate" means, unless otherwise
specified for a Specified Currency with respect to any series of Securities
pursuant to Section 2.5, (i) with respect to U.S. dollars, the noon U.S. dollar
buying rate in the Borough of Manhattan, The City of New York for cable
transfers of the Specified Currency published by the Federal Reserve Bank of New
York; and (ii) with respect to Canadian dollars, the noon Canadian dollar buying
rate in Toronto, Ontario, Canada for cable transfers of the Specified Currency
as reported by the Bank of Canada.

      All decisions and determinations of the Trustee regarding the Market
Exchange Rate or any alternative determination provided for in the preceding
paragraph shall be in its sole discretion and shall, in the absence of manifest
error, be conclusive to the extent permitted by law for all purposes and
irrevocably binding upon the Issuer, the Guarantor and all Securityholders.

      If the Issuer or the Guarantor shall solicit from the Securityholders any
demand, request, notice, consent, waiver or the taking of any other action
(other than in accordance with the Securityholders' voting provisions set forth
in Section 6.6 through 6.14 of this Article), the Issuer or the Guarantor may,
at its option, by a Resolution, fix in advance a record date for the
determination of holders entitled to give such demand, request, notice, consent,
or waiver or to take such other action, but the Issuer or the Guarantor shall
have no obligation to do so. If such a record date is fixed, such demand,
request, notice, consent, waiver or such other action may be given before or
after the record date, but only the Securityholders of record at the close of

                                     - 49 -
<PAGE>
business on the record date shall be deemed to be holders for the purposes of
determining whether holders of the requisite percentage of Securities
Outstanding have authorized or agreed or consented to such demand, request,
notice, consent, waiver or taking of any other action, and for that purpose the
Securities Outstanding shall be computed as of the record date; provided, that
no such demand, request, notice, consent, waiver or taking of any other action
by the holders on the record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than six
months after the record date.

      SECTION 6.2 PROOF OF EXECUTION BY SECURITYHOLDERS. Subject to the
requirements of the Trust Indenture Act of 1939 and Sections 5.1 and 6.11, proof
of the execution of any instrument by a Securityholder or his or her agent or
proxy shall be sufficient if made in accordance with such reasonable rules and
regulations as may be prescribed by the Trustee or in such manner as shall be
satisfactory to the Trustee. The ownership of Securities shall be proved by the
Register or by a certificate of the Person designated by the Issuer or the
Guarantor to keep the Register and to act as repository in accordance with the
provisions of Section 2.10.

      The record of any Securityholders' meeting shall be proved in the manner
provided in Section 6.12.

      SECTION 6.3 HOLDERS TO BE TREATED AS OWNERS. The Issuer, the Guarantor,
the Trustee and any agent of the Issuer, the Guarantor or the Trustee may deem
and treat the Person in whose name any Security shall be registered in the
Register for such series as the absolute owner of such Security (whether or not
such Security shall be overdue and notwithstanding any notation of ownership or
other writing thereon) for the purpose of receiving payment of or an account of
the principal of and, subject to the provisions of this Indenture, interest, if
any, on such Security and for all other purposes (other than for the
determination of Additional Amounts payable); and the Issuer, the Guarantor, the
Trustee and any agent of the Issuer or the Trustee shall not be affected by any
notice to the contrary. All such payments so made to any such Person, or upon
his order, shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Security.

      SECTION 6.4 SECURITIES OWNED BY ISSUER OR GUARANTOR DEEMED NOT
OUTSTANDING. In determining whether the holders of the requisite aggregate
principal amount of Outstanding Securities of any or all series have concurred
in any demand, request, notice, direction, consent or waiver under this
Indenture, Securities which are owned by the Issuer, the Guarantor or any other
obligor on the Securities with respect to which such determination is being made
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Issuer, the Guarantor or any other
obligor on the Securities with respect to which such determination is being made
shall be disregarded and deemed not to be Outstanding for the purpose of any
such determination, except that for the purpose of determining whether the
Trustee shall be protected in relying on any such demand, request, notice,
direction, consent or waiver only Securities which a Responsible Officer of the
Trustee knows are so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding for purposes of
this Section 6.4 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 Issuer, the Guarantor or any other obligor upon the

                                     - 50 -
<PAGE>
Securities or any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Issuer, the Guarantor or any
other obligor on the Securities. In case of a dispute as to such right, the
advice of counsel shall be full protection in respect of any decision made by
the Trustee in accordance with such advice. Upon request of the Trustee, the
Issuer or the Guarantor shall furnish to the Trustee promptly an Officers'
Certificate listing and identifying all Securities, if any, known by the Issuer
or the Guarantor to be owned or held by or for the account of any of the
above-described Persons; and, subject to the requirements of the Trust Indenture
Act of 1939 and Section 5.1, the Trustee shall, in the absence of manifest
error, accept such Officers' Certificate as conclusive evidence of the facts
therein set forth and of the fact that all Securities not listed therein are
Outstanding for the purpose of any such determination.

      SECTION 6.5 RIGHT OF REVOCATION OF ACTION TAKEN. At any time prior to (but
not after) the evidencing to the Trustee, as provided in Section 6.1, of the
taking of any action by the holders of the percentage in aggregate principal
amount of the Securities of any or all series, as the case may be, specified in
this Indenture in connection with such action, any holder of a Security the
serial number or other distinguishing symbol of which is shown by the evidence
to be included among the serial numbers or other distinguishing symbols of the
Securities the holders of which have consented to such action may, by filing
written notice at the Corporate Trust Office and upon proof of holding as
provided in this Article, revoke such action so far as concerns such Security.
Except as aforesaid any such action taken by the holder of any Security shall be
conclusive and binding upon such holder and upon all future holders and owners
of such Security and of any Securities issued in exchange or substitution
therefor, irrespective of whether or not any notation in regard thereto is made
upon any such Security. Any action taken by the holders of the percentage in
aggregate principal amount of the Securities of any or all series, as the case
may be, specified in this Indenture in connection with such action shall be
conclusively binding upon the Issuer, the Guarantor, the Trustee and the holders
of all the Securities affected by such action.

      SECTION 6.6 SECURITYHOLDERS' MEETINGS; PURPOSES. A meeting of holders of
Securities of any series or all series, as the case may be, may be called at any
time and from time to time pursuant to the provisions of this Article Six for
any of the following purposes:

            (1) to give any notice to the Issuer, the Guarantor or to the
      Trustee, or to give any directions to the Trustee, or to consent to the
      waiving of any default or Event of Default hereunder and its consequences,
      or to take any other action authorized to be taken by Securityholders
      pursuant to any of the provisions of Article Four;

            (2) to remove the Trustee and nominate a successor trustee pursuant
      to the provisions of Article Five;

            (3) to consent to the execution of an indenture or indentures
      supplemental hereto pursuant to the provisions of Section 7.2; or

            (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
      Securities of any series or

                                     - 51 -
<PAGE>
      all series, as the case may be, under any other provision of this
      Indenture or under applicable law.

      SECTION 6.7 CALL OF MEETINGS BY TRUSTEE. The Trustee may at any time call
a meeting of holders of Securities of any series or all series, as the case may
be, to take any action specified in Section 6.6, to be held at such time and at
such place in the Borough of Manhattan, The City of New York, or elsewhere, as
the Trustee shall determine. Notice of every meeting of the holders of
Securities of any series or all series, as the case may be, 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 mailed to holders of Securities of each
series affected at their addresses as they shall appear in the Register as of a
date not more than 15 days prior to the mailing of such notice. Such notice
shall be mailed not less than 20 nor more than 90 days prior to the date fixed
for the meeting.

      Any meeting of the holders of Securities of any series or all series, as
the case may be, shall be valid without notice if the holders of all Securities
of any series then Outstanding are present in person or by proxy, or, if notice
is waived before or after the meeting by the holders of all Securities of any
series outstanding, and if the Issuer, the Guarantor and the Trustee are either
present by duly authorized representatives or have, before or after the meeting,
waived notice.

      SECTION 6.8 CALL OF MEETINGS BY ISSUER, THE GUARANTOR OR SECURITYHOLDERS.
In case at any time the Issuer or the Guarantor, pursuant to a Resolution, or
the holders of at least 10% in aggregate principal amount of the Securities then
Outstanding of any or all series, as the case may be, shall have requested the
Trustee to call a meeting of the holders of Securities of such series or all
series, as the case may be, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee shall not
have mailed the notice of such meeting within 20 days after receipt of such
request, then the Issuer, the Guarantor or such Securityholders, in the amount
specified above, may determine the time and the place in the Borough of
Manhattan, the City of New York, or elsewhere, for such meeting and may call
such meeting to take any action authorized in Section 6.6, by mailing notice
thereof as provided in Section 6.7.

      SECTION 6.9 QUALIFICATIONS FOR VOTING. To be entitled to vote at any
meeting of Securityholders a Person shall (a) be a holder of one or more
Securities with respect to which such meeting is being held or (b) be a Person
appointed by an instrument in writing as proxy by a holder of one or more of
such Securities. The only Persons who shall be entitled to be present or to
speak at any meeting of Securityholders shall be the Persons entitled to vote at
such meeting and their counsel and any representatives of the Trustee and its
counsel and any representatives of the Issuer or the Guarantor and their
respective counsel.

      SECTION 6.10 QUORUM; ADJOURNED MEETINGS. The Persons entitled to vote a
majority in aggregate principal amount of the Securities then Outstanding of the
relevant series or all series, as the case may be, shall constitute a quorum for
the transaction of all business specified in Section 6.6. No business shall be
transacted in the absence of a quorum (determined as provided in this Section
6.10). In the absence of a quorum within 30 minutes after the time appointed for
any such meeting, the meeting shall, if convened at the request of

                                     - 52 -
<PAGE>
the holders of Securities (as provided in Section 6.8), be dissolved. In any
other case, the meeting shall be adjourned for a period of not less than ten
days as determined by the chairman of the meeting. In the absence of a quorum at
any such adjourned meeting, such adjourned meeting shall be further adjourned
for a period of not less than ten days as determined by the chairman of the
meeting. Notice of the reconvening of any adjourned meeting shall be given as
provided in Section 6.7, except that such notice must be mailed not less than
five days prior to the date on which the meeting is scheduled to be reconvened.
Any holder of a Security who has executed in person or by proxy and delivered to
the Trustee an instrument in writing complying with the provisions of Section
6.2 shall be deemed to be present for the purposes of determining a quorum and
be deemed to have voted; provided that such holder of a Security shall be
considered as present or voting only with respect to the matters covered by such
instrument in writing.

      SECTION 6.11 REGULATIONS. Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Securityholders, in regard to proof of the holding
of Securities 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 determine.

      The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Issuer, the Guarantor or by Securityholders as provided in Section 6.8, in which
case the Issuer, the Guarantor or the Securityholders 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 majority
vote of the holders of a majority of the principal amount of the Outstanding
Securities present at the meeting.

      Subject to the provisions of Section 6.4, at any meeting each holder of
Securities, with respect to which such meeting is being held, or such holder's
proxy shall be entitled to one vote for each U.S. $1,000 or Cdn.$1,000, as the
case may be (or if any Securities are denominated in a currency other than U.S.
dollars or Canadian dollars or in a composite currency, the equivalent of U.S.
$1,000 or Cdn.$1,000, as the case may be, in the applicable currency or
composite currency), principal amount (in the case of Original Issue Discount
Securities, such principal amount to be determined as provided in the definition
of "Outstanding" in Section 1.1) of such Securities held or represented by him
or her; provided, however, that no vote shall be cast or counted at any meeting
in respect of any such 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 such Securities held by him or her
or instruments in writing as aforesaid duly designating him or her as the Person
to vote on behalf of other such Securityholders. Any meeting of holders of
Securities with respect to which a meeting was duly called pursuant to the
provisions of Section 6.7 or 6.8 may be adjourned from time to time by a
majority of those present, whether or not constituting a quorum, and the meeting
may be held as so adjourned without further notice.

      SECTION 6.12 VOTING. The vote upon any resolution submitted to any meeting
of holders of Securities with respect to which such meeting is being held shall
be by written

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<PAGE>
ballots on which shall be subscribed the signatures of such holders of
Securities or of their representatives by proxy and the principal amount (in the
case of Original Issue Discount Securities, such principal amount to be
determined as provided in the definition of "Outstanding" in Section 1.1) and
number or numbers or other distinguishing symbol or symbols of such 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
Securityholders 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 mailed as provided in Section 6.7. The record shall
show the principal amount of the Securities (in the case of Original Issue
Discount Securities, such principal amount to be determined as provided in the
definition of "Outstanding" in Section 1.1) 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 the duplicates shall be
delivered to the Issuer, the Guarantor and the other to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting.

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

      SECTION 6.13 NO DELAY OF RIGHTS BY MEETING. Nothing in this Article Six
shall be deemed or construed to authorize or permit, by reason of any call of a
meeting of Securityholders of any or all series 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
the Securityholders of any or all such series under any of the provisions of
this Indenture or of the Securities.

      SECTION 6.14 WRITTEN CONSENT IN LIEU OF MEETING. The written authorization
or consent by the holders of the requisite percentage in aggregate principal
amount of Outstanding Securities of one or more series herein provided, entitled
to vote at any such meeting, evidenced as provided in Section 6.1 and filed with
the Trustee, shall be effective in lieu of a meeting of the holders of
Securities of such series, with respect to any matter provided for in this
Article Six.

                                  ARTICLE SEVEN

                             SUPPLEMENTAL INDENTURES

      SECTION 7.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF SECURITYHOLDERS.
The Issuer and the Guarantor, when authorized by, or pursuant to Resolutions of
their respective Boards of Directors, and the Trustee may from time to time and
at any time enter into an indenture or indentures supplemental hereto (which
shall conform to the provisions of the Trust Indenture Act of 1939 as in force
at the date of the execution thereof) for one or more of the following purposes:

                                     - 54 -

<PAGE>
                  (a) to convey, transfer, assign, mortgage or pledge to the
         Trustee as security for the Securities of one or more series any
         property or assets;

                  (b) to evidence the succession of another Person to the Issuer
         or the Guarantor, or successive successions, and the assumption by the
         successor Person of the covenants, agreements and obligations of the
         Issuer or the Guarantor pursuant to Article Eight;

                  (c) to add to the covenants of the Issuer or the Guarantor
         such further covenants, restrictions, conditions or provisions as the
         Issuer, the Guarantor and the Trustee shall consider to be for the
         benefit of the holders of one or more series of Securities (and if such
         covenants, restrictions, conditions or provisions are to be for the
         benefit of less than all series of Securities, stating that such
         covenants, restrictions, conditions or provisions are expressly being
         included solely for the benefit of such series) or to surrender any
         right or power herein conferred upon the Issuer or the Guarantor;

                  (d) to add additional Events of Default and to provide with
         respect thereto for any particular periods of grace after default
         (which may be shorter or longer than that allowed in the case of other
         defaults) or for immediate enforcement upon such default or for any
         limitation of the remedies available to the Trustee upon such default;

                  (e) to provide for the issuance under this Indenture of
         Securities in bearer form (including Securities registrable as to
         principal only) with or without interest coupons and to provide for
         exchangeability of such Securities with the Securities of the same
         series issued hereunder in fully registered form and to make all
         appropriate changes for such purpose;

                  (f) to cure any ambiguity or to correct or supplement any
         provision contained herein or in any supplemental indenture which may
         be defective or inconsistent with any other provision contained herein
         or in any supplemental indenture, or to change or eliminate any
         provision or to make such other provisions in regard to matters or
         questions arising under this Indenture or under any supplemental
         indenture as the Issuer or the Guarantor may deem necessary or
         desirable and which shall not adversely affect the interests of the
         holders of the Securities at the time Outstanding;

                  (g) to establish the form or terms of Securities of any series
         as permitted by Sections 2.1 and 2.5; or

                  (h) 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 facilitate the
         administration of the trusts hereunder by more than one trustee,
         pursuant to the requirements of Section 5.9.

         Upon the request of the Issuer and the Guarantor, accompanied by copies
of Resolutions of their respective Boards of Directors certified, in each case,
by the secretary or an assistant secretary or attesting secretary of the Issuer
and the Guarantor authorizing the execution of any such supplemental indenture
and Officers' Certificates of the Issuer and the Guarantor and

                                      -55-
<PAGE>

Opinion of Counsel meeting the requirements of Section 12.5 hereof, the Trustee
shall join with the Issuer and the Guarantor in the execution of any such
supplemental indenture, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Trustee shall not be obligated to (but may in its discretion) enter into any
such supplemental indenture which adversely affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise.

         Any supplemental indenture authorized by the provisions of this Section
may be executed by the Issuer, the Guarantor and the Trustee without the consent
of the holders of any of the Securities at the time Outstanding, notwithstanding
any of the provisions of Section 7.2.

         SECTION 7.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF SECURITYHOLDERS.
With the consent (evidenced as provided in Article Six) of the holders of not
less than a majority in aggregate principal amount of the Securities of all
series affected by such supplemental indenture (all such series voting as a
single class) at the time Outstanding, the Issuer and the Guarantor, when
authorized by or pursuant to Resolutions of their respective Boards of
Directors, and the Trustee may, from time to time and at any time, enter into an
indenture or indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act of 1939 as in force at the date of
execution thereof) for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture or of modifying in any manner the rights and obligations
of the Issuer and the Guarantor and the rights of the holders of the Securities
of all such series; provided that no such supplemental indenture shall (a)
extend the fixed maturity of any Security, or reduce the principal amount
thereof, or reduce the rate or change the manner of calculation of interest
thereon or extend the time of payment of interest thereon, or change any
obligation of the Issuer or the Guarantor to pay Additional Amounts pursuant to
Section 3.7 or reduce any Additional Amounts payable thereon (except as
contemplated by Section 10.6), or reduce any amount payable on redemption, or
reduce the Overdue Rate thereof, or make the principal thereof or interest
thereon payable in any coin or currency other than that provided in the
Security, or reduce the amount of the principal of an Original Issue Discount
Security that would be due and payable upon an acceleration of the maturity
thereof pursuant to Section 4.1 or the amount thereof provable in bankruptcy
pursuant to Section 4.2, or modify any of the provisions of this Indenture
relating to the Guarantee provided by Section 13 in respect thereof in a manner
adverse to holders of the Securities or impair, if the Securities provide
therefor, any right of repayment at the option of the Securityholder, or impair
the right of any Securityholder to institute suit for the enforcement of any
required payment in respect of any Security on or after the fixed maturity
thereof, without the consent of the holder of each Security so affected, or (b)
reduce the aforesaid percentage of Securities the consent of the holders of
which is required for any such supplemental indenture or for the waiver of any
provisions of, or Event of Default or defaults under, this Indenture, without,
in each case, the consent of the holders of each Security so affected.

         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 Securityholders of such series with respect to such covenant
or provision, shall be deemed not to affect the rights under this

                                      -56-
<PAGE>

Indenture of the Securityholders of any other series. The preceding sentence
shall not, however, raise any inference as to whether or not a particular series
is affected by any supplemental indenture not referred to in such sentence.

         Upon the request of the Issuer and the Guarantor, accompanied by copies
of Resolutions of their respective Boards of Directors certified in each case by
the secretary or an assistant secretary or attesting secretary of the Issuer and
the Guarantor authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of Securityholders
as aforesaid and other documents, if any, required by Section 6.1, the Trustee
shall join with the Issuer and the Guarantor in the execution of such
supplemental indenture unless such supplemental indenture adversely affects the
Trustee's open rights, duties or immunities under this Indenture or otherwise,
in which case the Trustee may in its discretion, but shall not be obligated to,
enter into such supplemental indenture.

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

         Promptly after the execution by the Issuer, the Guarantor and the
Trustee of any supplemental indenture pursuant to the provisions of this Section
7.2, the Issuer shall mail a notice thereof to the holders of Securities of each
series affected thereby at their addresses as they shall appear in the Register,
setting forth in general terms the substance of such supplemental indenture. Any
failure of the Issuer to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture.

         SECTION 7.3 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith and the
respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Issuer, the Guarantor and the holders
of Securities of each series affected thereby shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.

SECTION 7.4 CERTAIN DOCUMENTS TO BE GIVEN TO TRUSTEE. The Trustee, subject to
the requirements of the Trust Indenture Act of 1939 and Section 5.1, may request
an Officers' Certificate and an Opinion of Counsel as a condition to entering
into any supplemental indenture pursuant to this Article Seven and the delivery
thereof to the Trustee shall constitute conclusive evidence that any
supplemental indenture to be executed pursuant to this Article Seven complies
with the requirements of this Article. Notwithstanding anything else herein
contained, the Trustee shall not be obligated to enter into any supplemental
indenture pursuant to this Article Seven which may, in the opinion of the
Trustee, adversely affect its rights, duties, liabilities, protections,
privileges, indemnities or immunities under this Indenture or otherwise.

         SECTION 7.5 NOTATION ON SECURITIES. Securities of any series
authenticated and delivered after the execution of any supplemental indenture
pursuant to the provisions of this

                                      -57-
<PAGE>

Article may bear a notation in form approved by the Trustee for such series as
to any matter provided for by such supplemental indenture or as to any action
taken at any such meeting. If the Issuer, the Guarantor or the Trustee shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee, the Guarantor and the Issuer, to any modification of
this Indenture contained in any such supplemental indenture may be prepared and
executed by the Issuer and the Guarantor, authenticated by the Trustee and
delivered in exchange for the Securities of such series then Outstanding.

                                  ARTICLE EIGHT

                CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

         SECTION 8.1 ISSUER, GUARANTOR MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.

         (a) Nothing contained in this Indenture or in any of the Securities
shall prevent any consolidation or merger of the Issuer with or into any other
Person or Persons (whether or not affiliated with the Issuer), or successive
consolidations or mergers in which the Issuer or its successor or successors
shall be a party or parties, or shall prevent any sale, conveyance, transfer or
lease of all or substantially all the property of the Issuer to any other Person
(whether or not affiliated with the Issuer) authorized to acquire and operate
the same; provided, however, the Issuer hereby covenants and agrees, that upon
any such consolidation, merger, sale, conveyance, transfer or lease, (i) the due
and punctual payment of the principal of and interest, if any, on all of the
Securities, according to their tenor and the due and punctual performance and
observance of all of the covenants and conditions of this Indenture to be
performed by the Issuer shall be expressly assumed, by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the Trustee by
the Person (if other than the Issuer) formed by such consolidation, or into
which the Issuer shall have been merged, or by the Person which shall have
acquired or leased such property and (ii) after giving effect to 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 occurred and be
continuing.

         (b) Nothing contained in this Indenture or in any of the Securities
shall prevent any consolidation or merger of the Guarantor with or into any
other Person or Persons (whether or not affiliated with the Guarantor), or
successive consolidations or mergers in which the Guarantor or its successor or
successors shall be a party or parties, or shall prevent any sale, conveyance,
transfer or lease of all or substantially all the property of the Guarantor, to
any other Person (whether or not affiliated with the Guarantor) authorized to
acquire and operate the same; provided, however, the Guarantor hereby covenants
and agrees, that upon any such consolidation, merger, sale, conveyance, transfer
or lease, (i) the due and punctual performance of the Guarantees and the due and
punctual performance and observance of all of the covenants and conditions of
this Indenture to be performed by Guarantor shall be expressly assumed, by
supplemental indenture satisfactory in form to the Trustee, executed and
delivered to the Trustee by the Person (if other than the Guarantor) formed by
such consolidation, or into which the Guarantor shall have been merged, or by
the Person which shall have acquired or leased such property and (ii) after
giving effect to 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
occurred and be continuing.

                                      -58-
<PAGE>

         SECTION 8.2 SUCCESSOR PERSON TO BE SUBSTITUTED. (a) In case of any
consolidation, merger, sale, conveyance, transfer or lease referred to in
Section 8.1 and upon the assumption by the successor Person, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in form to the
Trustee, of, the due and punctual payment of the principal of and interest, if
any, on all of the Securities by the Issuer or the due and punctual performance
of the Guarantees by the Guarantor and the due and punctual performance of all
of the covenants and conditions of this Indenture to be performed by the Issuer
or the Guarantor, such successor Person shall succeed to and be substituted for
the Issuer or the Guarantor with the same effect as if it had been named herein
as the party of the first part. Such changes in phraseology and form (but not in
substance) may be made in the Securities thereafter to be issued as may be
appropriate.

         (b) In the case of a successor Person to the Issuer, such successor
Person thereupon may cause to be signed, and may issue either in its own name or
in the name of the Issuer, any or all of the Securities issuable hereunder which
theretofore shall not have been signed by the Issuer and delivered to the
Trustee; and, upon the order of such successor Person instead of the Issuer and
subject to all the terms, conditions and limitations in this Indenture
prescribed, the Trustee shall authenticate and shall deliver any Securities
which previously shall have been signed and delivered by the officers of the
Issuer to the Trustee for authentication, and any Securities which such
successor Person thereafter shall cause to be signed and delivered to the
Trustee for that purpose. In the case of a successor Person to the Guarantor,
such successor Person thereupon may cause to be signed and may have noted or
endorsed on the Securities in its own name or in the name of the Guarantor, any
or all of the Guarantees provided for hereunder which theretofore shall not have
been signed by the Guarantor and delivered to the Trustee; and, upon the order
of such successor Person instead of the Guarantor and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Securities with the Guarantee noted or
endorsed thereon which previously shall have been signed and delivered by the
officers of the Issuer and the Guarantor to the Trustee for authentication and
any Securities with the Guarantee noted or endorsed thereon which such successor
Person shall cause to be signed and delivered to the Trustee for that purpose.
All the Securities (with the Guarantee noted or enclosed thereon) so issued
shall in all respects have the same legal rank and benefit under this Indenture
as the Securities theretofore or thereafter issued in accordance with the terms
of this Indenture as though all of such Securities had been issued at the date
of the execution hereof. In the event of any such sale, conveyance or transfer,
but not any such lease, the Issuer or the Guarantor or any successor Person
which shall theretofore have become such in the manner described in this Article
Eight shall be discharged from all obligations and covenants under this
Indenture and the Securities and the Guarantees and may be dissolved and
liquidated.

         SECTION 8.3 OPINION OF COUNSEL AND OFFICERS' CERTIFICATE TO BE GIVEN TO
TRUSTEE. The Trustee, subject to the requirements of the Trust Indenture Act of
1939 and Section 5.1, may require delivery of an Opinion of Counsel and
respective Officers' Certificates of the Issuer and the Guarantor as conclusive
evidence that any such consolidation, merger, sale, conveyance, transfer or
lease complies with the provisions of this Article Eight.

                                  ARTICLE NINE

            SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

                                      -59-
<PAGE>

         SECTION 9.1 SATISFACTION AND DISCHARGE OF INDENTURE. If at any time (a)
the Issuer shall have paid or caused to be paid the principal of and interest on
all the Securities of any particular series Outstanding hereunder (other than
Securities which have been mutilated, defaced, destroyed, lost or stolen and
which have been replaced or paid as provided in Section 2.11 or in lieu of or in
substitution for which other Securities shall have been authenticated and
delivered) as and when the same shall have become due and payable, or (b) if the
Issuer has delivered to the Trustee for cancellation all Securities of such
series theretofore authenticated (other than any Securities of such series which
shall have been mutilated, defaced, destroyed, lost or stolen and which shall
have been replaced or paid as provided in Section 2.11 or in lieu of or in
substitution for which other Securities shall have been authenticated and
delivered) and not theretofore canceled, or (c)(i) all the Securities of such
series not theretofore canceled or delivered to the Trustee for cancellation
shall have become due and payable, or are by their terms to become due and
payable within one year or are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption,
and (ii) the Issuer shall have irrevocably deposited or caused to be deposited
with the Trustee as trust funds the entire amount in cash (other than moneys
repaid by the Trustee or any paying agent to the Issuer in accordance with
Section 9.4) sufficient to pay at maturity or upon redemption all Securities of
such series not theretofore delivered to the Trustee for cancellation (other
than any Securities of such series which shall have been mutilated, defaced,
destroyed, lost or stolen which have been replaced or paid as provided in
Section 2.11 or in lieu of or in substitution for which other Securities shall
have been authenticated and delivered), including principal and interest, if
any, due or to become due to such date of maturity or the date fixed for
redemption, as the case may be, and if, in any such case, the Issuer shall also
pay or make arrangements satisfactory in the reasonable opinion of the Trustee
for the payment thereof all other sums payable hereunder by the Issuer with
respect to Securities of such series, then this Indenture shall cease to be of
further effect with respect to Securities of such series (except as to (i)
rights of registration of transfer and exchange, and the Issuer's right of
optional redemption, (ii) substitution of mutilated, defaced, destroyed, lost or
stolen Securities, (iii) rights of Securityholders to receive payments of
principal thereof and interest, if any, thereon, and remaining rights of the
Securityholders to receive mandatory sinking fund payments, if any, (iv) the
rights, obligations and immunities of the Trustee hereunder, including its
rights under Section 5.5 and (v) the rights of the Securityholders of such
series as beneficiaries hereof with respect to the property so deposited with
the Trustee payable to all or any of them), and the Trustee, on demand of the
Issuer accompanied by an Officers' Certificate and an Opinion of Counsel and at
the cost and expense of the Issuer, shall execute proper instruments
acknowledging such satisfaction of and discharging this Indenture with respect
to such series.

         SECTION 9.2 APPLICATION BY TRUSTEE OF FUNDS DEPOSITED FOR PAYMENT OF
SECURITIES. Subject to Section 9.4, all moneys deposited with the Trustee
pursuant to Section 9.1 shall be held in trust and applied by it to the payment,
either directly or through any paying agent (including the Issuer acting as its
own, or the Guarantor acting as, paying agent), to the holders of the particular
Securities of such series for the payment or redemption of which such moneys
have been deposited with the Trustee, of all sums due and to become due thereon
for principal and interest, if any.

                                      -60-
<PAGE>

         SECTION 9.3 REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection
with the satisfaction and discharge of this Indenture with respect to Securities
of any series, all moneys then held by any paying agent, other than the Trustee,
under the provisions of this Indenture with respect to such series of Securities
shall, upon demand of the Issuer, be repaid to it or paid to the Trustee and
thereupon such paying agent shall be released from all further liability with
respect to such moneys.

         SECTION 9.4 RETURN OF MONEYS HELD BY TRUSTEE AND PAYING AGENT UNCLAIMED
FOR TWO YEARS. Any moneys deposited with or paid to the Trustee or any paying
agent for the payment of the principal of or interest, if any, on any Security
of any series and not applied but remaining unclaimed for two years after the
date upon which such principal, premium or interest, as the case may be, shall
have become due and payable, shall, upon the written request of the Issuer and
unless otherwise required by mandatory provisions of applicable escheat or
abandoned or unclaimed property law, be repaid to the Issuer by the Trustee for
such series or such paying agent, and the holder of such Security of such series
shall, unless otherwise required by mandatory provisions of applicable escheat
or abandoned or unclaimed property laws, thereafter look only to the Issuer for
any payment which such holder may be entitled to collect.

                                   ARTICLE TEN

                   REDEMPTION OF SECURITIES AND SINKING FUNDS

         SECTION 10.1 APPLICABILITY OF ARTICLE. The provisions of this Article
shall be applicable to the Securities of any series which are redeemable before
their maturity and to any sinking fund for the retirement of Securities of a
series except as otherwise specified as contemplated by Section 2.5 for
Securities of such series.

         SECTION 10.2 NOTICE OF REDEMPTION; SELECTION OF SECURITIES. In case the
Issuer shall desire to exercise any right to redeem all or any part of the
Securities of any series in accordance with their terms, the Issuer shall fix a
date for redemption and the Issuer, or at the request and at the expense of the
Issuer, the Trustee shall mail a notice of such redemption, at least 30 days and
not more than 60 days prior to the date fixed for redemption, to the holders of
Securities of such series so to be redeemed in whole or in part at their last
addresses as they shall appear in the Register. Any notice which is mailed in
the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the holder receives the notice. Failure to give notice by
mail, or any defect in the notice, to the holder of any Security of a series
designated for redemption as a whole or in part shall not affect the validity of
the proceedings for the redemption of any other Security of such series.

         The notice of redemption to each such holder shall specify the date
fixed for redemption, the redemption price, the place or places of payment, that
payment will be made upon presentation and surrender of such Securities, that
any interest accrued to the date fixed for redemption will be paid as specified
in such notice and that on and after said date any interest thereon or on the
portions thereof to be redeemed will cease to accrue. If less than all of the
Outstanding Securities of a series are to be redeemed, the notice of redemption
shall specify the number or numbers or distinguishing symbol or symbols of the
Securities to be redeemed. In case

                                      -61-
<PAGE>

any Security of a series is to be redeemed in part, only the notice of
redemption shall state the portion of the principal amount thereof to be
redeemed and shall state that on and after the date fixed for redemption, upon
surrender of such Security, a new Security or Securities of such series in
principal amount equal to the unredeemed portion thereof will be issued.

         Prior to the redemption date specified in the notice of redemption
given as provided in this Section, the Issuer will deposit with the Trustee or
with one or more paying agents (or, if the Issuer is acting as its own paying
agent, segregate and hold in trust as required by the Trust Indenture Act of
1939) an amount of money (in the currency or units of currency in which the
Securities so called for redemption are denominated or an appropriate equivalent
thereof) sufficient to redeem on the redemption date all the Securities of such
series or portions thereof so called for redemption at the appropriate
redemption price, together with accrued interest to the date fixed for
redemption. If less than all the Outstanding Securities of a series are to be
redeemed (or less than the full principal amount of each Security in such series
is to be redeemed), the Issuer will deliver to the Trustee at least 60 days
prior to the date fixed for redemption (or such shorter period if acceptable to
the Trustee) an Officers' Certificate stating the aggregate principal amount of
Securities to be redeemed and, if the Trustee is not acting as the repository of
the Register for such series, a current list of all Outstanding Securities of
such series.

         If less than all the Outstanding Securities of a series are to be
redeemed, the Trustee shall select, in such manner as it shall deem appropriate
and fair, Securities of such series to be redeemed in whole or in part. Except
as otherwise specified for Securities of a particular series pursuant to Section
2.5, Securities may be redeemed in part in amounts equal to the minimum
authorized denomination for Securities of such series or any multiple thereof.
The Trustee shall promptly notify the Issuer in writing of the Securities of
such series selected for redemption and, in the case of any Securities of such
series 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 of any series
shall relate, in the case of any Security redeemed or to be redeemed only in
part, to the portion of the principal amount of such Security which has been or
is to be redeemed.

         SECTION 10.3 PAYMENT OF SECURITIES CALLED FOR REDEMPTION. If notice of
redemption has been given as provided in Section 10.2 above, the Securities or
portions of Securities specified in such notice shall become due and payable on
the date and at the place or places stated in such notice at the applicable
redemption price, together with interest accrued to the date fixed for
redemption, and on and after said date (unless the Issuer shall default in the
payment of such Securities or portions thereof at the redemption price, together
with interest accrued to said date) interest on the Securities or portions of
Securities so called for redemption shall cease to accrue and, except as
provided in Sections 5.4 and 9.4, such Securities shall cease from and after the
date fixed for redemption to be entitled to any benefit or security under this
Indenture, and the holders of such Securities shall have no right in respect of
such Securities except the right to receive the redemption price thereof and
unpaid interest to the date fixed for redemption. On presentation and surrender
of such Securities at a place of payment specified in said notice, said
Securities or the specified portions thereof shall be paid and redeemed by the
Issuer at the applicable redemption price, together with interest accrued
thereon to the date fixed for redemption;

                                      -62-
<PAGE>

provided that if the date fixed for redemption is an interest payment date, the
interest due on that date shall be payable to the holders of such Securities
registered as such on the relevant record date according to their terms.

         If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal thereof so to be redeemed shall,
until paid or duly provided for, bear interest from the date fixed for
redemption at the Overdue Rate applicable to such series.

         Upon presentation of any Security redeemed in part only, the Issuer
shall execute, the Guarantor shall note or endorse the Guarantee thereon and the
Trustee shall authenticate and deliver to or on the order of the holder thereof,
at the expense of the Issuer, a new Security or Securities of such series, of
authorized denominations, in principal amount equal to the unredeemed portion of
the Security so presented.

         SECTION 10.4 EXCLUSION OF CERTAIN SECURITIES FROM ELIGIBILITY FOR
SELECTION FOR REDEMPTION. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and certificate
number or other distinguishing symbol in a written statement signed by an
authorized officer of the Issuer and delivered to the Trustee at least 10 days
prior to the date on which Securities are to be selected for redemption as being
owned of record and beneficially by, and not pledged or hypothecated by, either
(a) the Issuer or (b) an entity specifically identified in such written
statement directly or indirectly controlling or controlled by or under direct or
indirect common control with the Issuer.

         SECTION 10.5 MANDATORY AND OPTIONAL SINKING FUNDS. 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". The
date on which a sinking fund payment is to be made is herein referred to as the
"sinking fund payment date".

         In lieu of making all or any part of any mandatory sinking fund payment
with respect to any series of Securities in cash, the Issuer may at its option
(a) deliver to the Trustee Securities of such series theretofore purchased or
otherwise acquired (except upon redemption pursuant to the mandatory sinking
fund) by the Issuer or receive credit for Securities of such series (not
previously so credited) theretofore purchased or otherwise acquired (except as
aforesaid) by the Issuer and delivered to the Trustee for cancellation pursuant
to Section 2.12, (b) receive credit for optional sinking fund payments (not
previously so credited) made pursuant to this Section, or (c) receive credit for
Securities of such series (not previously so credited) redeemed by the Issuer
through any optional redemption provision contained in the terms of such series.
Securities so delivered or credited shall be received or credited by the Trustee
at the sinking fund redemption price specified in such Securities, and the
amount of such mandatory sinking fund payment shall be reduced accordingly.

         On or before the sixtieth day next preceding each sinking fund payment
date for any series of Securities, the Issuer will deliver to the Trustee a
certificate of the Issuer (which need not contain the statements required by the
Trust Indenture Act of 1939) signed by an officer of the Issuer who is one of
the officers authorized to sign an Officers' Certificate (a) specifying

                                      -63-
<PAGE>

the portion, if any, of the mandatory sinking fund payment to be satisfied by
payment of cash and the portion, if any, to be satisfied by credit of Securities
of such series, (b) stating that none of such Securities has theretofore been so
credited, (c) stating that no Event of Default with respect to such series has
occurred (which has not been waived or cured) and is continuing, and (d) stating
whether or not the Issuer intends to exercise its right to make an optional
sinking fund payment with respect to such series and, if so, specifying the
amount of such optional sinking fund payment which the Issuer intends to pay on
or before the next succeeding sinking fund payment date. Any Securities of such
series to be credited and required to be delivered to the Trustee in order for
the Issuer to be entitled to credit therefor as aforesaid which have not
theretofore been delivered to the Trustee shall be delivered for cancellation
pursuant to Section 2.12 to the Trustee with such certificate. Such certificate
shall be irrevocable and upon its receipt by the Trustee, the Issuer shall
become obligated to make all the cash payments or payments therein referred to,
if any (which cash may be deposited with the Trustee or with one or more paying
agents, or, if the Issuer is acting as its own paying agent, segregated and held
in trust as required by the Trust Indenture Act of 1939), on or before the next
succeeding sinking fund payment date. Failure of the Issuer, on or before any
such sixtieth day, to deliver such certificate and securities specified in this
paragraph, if any, shall not constitute a default but shall constitute, on and
as of such date, the irrevocable election of the Issuer (i) that the mandatory
sinking fund payment for such series due on the next succeeding sinking fund
payment date shall be paid entirely in cash without the option to deliver or
credit Securities of such series in respect thereof, and (ii) that the Issuer
will make no optional sinking fund payment with respect to such series as
provided in this Section.

         If the sinking fund payment or payments (mandatory or optional or both)
to be made in cash on the next succeeding sinking fund payment date plus any
unused balance of any preceding sinking fund payments made in cash shall exceed
U.S. $100,000 in respect of Securities issued in the United States or
Cdn.$100,000 in respect of Securities issued in Canada or, if payments on
Securities of such series are to be made in a currency other than U.S. dollars
or Canadian dollars or in units or composites of two or more currencies, the
equivalent thereof in the relevant currency or unit or composite currency (or
such other amount as is specified for a particular series of Securities pursuant
to Section 2.5), or a lesser sum if the Issuer shall so request, with respect to
the Securities of any particular series, such cash shall be applied by the
Trustee (or by the Issuer or the Guarantor if the Issuer or the Guarantor is
acting as paying agent) on the sinking fund payment date on which such payment
is made (or, if such payment is made before a sinking fund payment date, on the
next sinking fund payment date following the date of such payment) to the
redemption of such Securities at the sinking fund redemption price specified in
such Securities for operation of the sinking fund together with accrued
interest, if any, to the date fixed for redemption. If such amount shall be U.S.
$100,000 in respect of Securities issued in the United States or Cdn.$100,000 in
respect of Securities issued in Canada or if payments on Securities of such
series are to be made in a currency other than U.S. dollars or Canadian dollars,
as the case may be, or in units or composites of two or more currencies, the
equivalent thereof in the relevant currency or unit or composite currency (or
such other amount as is specified for the particular series pursuant to Section
2.5), or less and the Issuer makes no such request then it shall be carried over
until a sum in excess of U.S. $100,000 in respect of Securities issued in the
United States or Cdn.$100,000 in respect of Securities issued in Canada, or the
equivalent thereof in the relevant currency or unit or composite currency, is
available.

                                      -64-
<PAGE>

         The Trustee shall select, in the manner provided in Section 10.2, for
redemption on such sinking fund payment date Securities of such series to absorb
said cash, as nearly as may be, and shall (if requested in writing by the
Issuer) inform the Issuer of the serial numbers or other distinguishing symbols
of the Securities of such series (or portions thereof) so selected. If the
Trustee shall be required to select Securities of any series for the sinking
fund and is not acting as repository of the Register for such series, at least
60 days prior to the sinking fund payment date, the Issuer shall furnish to the
Trustee a current list of all Outstanding Securities of such series. Securities
of any series which are (a) owned by the Issuer or an entity known by the
Trustee to be directly or indirectly controlling or controlled by or under
direct or indirect common control with the Issuer, as shown by the Register, and
not known to the Trustee to have been pledged or hypothecated by the Issuer or
any such entity, or (b) identified in an Officers' Certificate at least 60 days
prior to the sinking fund payment date as being beneficially owned by, and not
pledged or hypothecated by, the Issuer or an entity directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Issuer, shall be excluded from Securities of such series eligible for selection
for redemption. The Trustee, in the name and at the expense of the Issuer (or
the Issuer, if it shall so request the Trustee in writing) shall cause notice of
redemption of the Securities of such series to be given in substantially the
manner provided in Section 10.2, except that the notice of redemption shall also
state that the Securities are being redeemed by operation of the sinking fund
(and with the effect provided in Section 10.3) for the redemption of Securities
of such series in part at the option of the Issuer. The amount of any sinking
fund payments not so applied or allocated by the Trustee (or by the Issuer if
the Issuer is acting as its own paying agent) to the redemption of Securities of
such series shall be added to the next cash sinking fund payment received by the
Trustee (or if the Issuer is acting as its own paying agent, segregated and held
in trust as required by the Trust Indenture Act of 1939) for such series and,
together with such payment (or such amount so segregated), shall be applied in
accordance with the provisions of this Section 10.5. Any and all sinking fund
moneys held by the Trustee (or if the Issuer is acting as its own paying agent,
segregated and held in trust as required by the Trust Indenture Act of 1939) on
the stated maturity date of the Securities of any particular series (or earlier,
if such maturity is accelerated), which are not held for the payment or
redemption of particular Securities of such series shall be applied by the
Trustee (or by the Issuer or the Guarantor if the Issuer or the Guarantor is
acting as paying agent), together with other moneys, if necessary, sufficient
for the purpose, to the payment of the principal of, and interest on, the
Securities of such series at maturity.

         On or before each sinking fund payment date, the Issuer shall pay to
the Trustee in cash (or if the Issuer is acting as its own paying agent will
segregate and hold in trust as required by the Trust Indenture Act of 1939) or
shall otherwise provide for the payment of all interest accrued to the date
fixed for redemption on Securities (or portions thereof) to be redeemed on such
sinking fund payment date.

         Neither the Issuer nor the Trustee shall redeem or cause to be redeemed
any Securities of a series with sinking fund moneys or mail any notice of
redemption of Securities for such series by operation of the sinking fund during
the continuance of a default in payment of interest, if any, on such Securities
or of any Event of Default (other than an Event of Default occurring as a
consequence of this paragraph, with respect to such Securities) except that,
where the mailing of notice of redemption of any Securities shall theretofore
have been made,

                                      -65-
<PAGE>

the Trustee (or the Issuer or the Guarantor if the Issuer or the Guarantor is
acting as paying agent) shall redeem or cause to be redeemed such Securities,
provided that it shall have received from the Issuer (or the Issuer shall have
segregated) a sum sufficient for such redemption. Except as aforesaid, any
moneys in the sinking fund for such series at the time when any such default or
Event of Default shall occur, and any moneys thereafter paid into the sinking
fund, shall, during the continuance of such default or Event of Default, be
deemed to have been collected under Article Four and held for the payment of all
such Securities. Notwithstanding anything in the foregoing to the contrary, in
case such default or Event of Default shall have been waived as provided in
Section 4.9 or the default or Event of Default cured on or before the sixtieth
day preceding the sinking fund payment date in any year, such moneys shall
thereafter be applied on the next succeeding sinking fund payment date in
accordance with this Section 10.5 to the redemption of such Securities.

         SECTION 10.6 REDEMPTION FOR TAX REASONS. If, with respect to Securities
of any series it is specified pursuant to Section 2.5 that Section 3.7 and this
Section 10.6 shall be applicable to Securities of such series, at any time after
the date of issuance of Securities of such series pursuant to this Indenture, as
a result of any change in, or amendment to, the laws, including any regulations
or rulings promulgated thereunder, of Canada or any political subdivision
thereof or any authority therein or thereof having power to tax or as a result
of any change, amendment or application or interpretation of such laws, where
the amendment or change becomes effective on or after the date on which the
underwriting, subscription, distribution, or similar agreement (an "Issuance
Agreement") is executed for such series of Securities and if no such Issuance
Agreement is executed, the date on which such series of Securities are first
offered for sale, or which proposal is made after such date, or as a result of
any action taken by any taxing authority of Canada which action is taken or
becomes generally known after such date, or any commencement of a proceeding in
a court of competent jurisdiction in Canada after such date, whether or not such
action was or such proceeding was brought with respect to the Issuer, the Issuer
becomes, or will become, obligated to pay any Additional Amounts with respect to
Securities of such series, then the Securities of such series will be redeemable
as a whole (but not in part), at the option of the Issuer, at any time upon not
less than thirty (30) nor more than sixty (60) days' notice given to the holders
at their principal amount together with accrued interest thereon (and any
Additional Amounts payable with respect thereto) to the date fixed for
redemption (the "Tax Redemption Date"). The Issuer will also pay to the holders
of Securities of such series on the Tax Redemption Date any Additional Amount
which would otherwise be payable. In order to effect a redemption of Securities
of any such series as described in this Section 10.6, the Issuer shall deliver
to the Trustee at least forty-five (45) days prior to the Tax Redemption Date:
(i) a written notice stating that the Securities of such series are to be
redeemed as a whole, specifying the redemption date and other pertinent
information and (ii) an Opinion of Counsel to the effect that the Issuer has or
will become obligated to pay Additional Amounts as a result of any such change
or amendment. No notice of redemption may be given earlier than ninety (90) days
prior to the earliest date on which the Issuer would be obligated to pay such
Additional Amounts were a payment in respect of the Securities of such series
then due. The notice shall additionally specify the Tax Redemption Date and all
other information necessary to the mailing by the Trustee of notices of such
redemption. The Trustee shall be entitled to rely conclusively upon the
information so furnished by the Issuer in such notice and shall be under no duty
to check the accuracy or completeness thereof. Such notice shall be irrevocable
and upon its delivery

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<PAGE>

the Issuer shall be obligated to make the payment or payments referred to
therein to the Trustee.

                                 ARTICLE ELEVEN

                       DEFEASANCE AND COVENANT DEFEASANCE

         SECTION 11.1 APPLICABILITY OF ARTICLE; ISSUER'S OPTION TO EFFECT
DEFEASANCE OR COVENANT DEFEASANCE. The Issuer may at its option, by or pursuant
to a Resolution, at any time, with respect to the Securities of any series elect
to have either Section 11.2 or Section 11.3 be applied to the Outstanding
Securities of such series upon compliance with the conditions set forth below in
this Article Eleven.

         SECTION 11.2 DEFEASANCE AND DISCHARGE. Upon the Issuer's exercise of
the above option applicable to this Section, each of the Issuer and the
Guarantor shall be deemed to have been discharged from its respective
obligations with respect to the Outstanding Securities of such series and under
the Guarantee in respect thereof, on the date the conditions set forth in
Section 11.4 are satisfied (hereinafter, "defeasance"). For this purpose, such
defeasance means that the Issuer and the Guarantor shall be deemed to have paid
and discharged the entire indebtedness represented by the Outstanding Securities
of such series and under the Guarantee in respect thereof, and to have satisfied
all of their respective obligations under such Securities, the Guarantee in
respect thereof and this Indenture insofar as such Securities are concerned (and
the Trustee, at the expense of the Issuer and the Guarantor, 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 and under the Guarantee in
respect thereof, to receive, solely from the trust fund described in Section
11.4 and as more fully set forth in such Section, payments in respect of the
principal of and interest on such Securities when such payments are due, (b) the
Issuer's and the Guarantor's obligations with respect to such Securities under
Sections 2.10, 2.11, 2.13, 3.2 and 3.3, (c) the rights, powers, trusts, duties,
and immunities of the Trustee under Sections 2.11, 2.12, 2.13, 4.3, 5.5 and
Article 9, and otherwise the duty of the Trustee to authenticate Securities of
such series issued on registration of transfer or exchange and (d) this Article
Eleven. Subject to compliance with this Article Eleven, the Issuer may exercise
its option under this Section 11.2 notwithstanding the prior exercise of its
option under Section 11.3 with respect to the Securities of such series.

         SECTION 11.3 COVENANT DEFEASANCE. Upon the Issuer's exercise of the
above option applicable to this Section, the Issuer and the Guarantor shall be
released from their respective obligations under Section 3.4 and Section 4.1 (c)
with respect to the Outstanding Securities of such series and under the
Guarantee in respect thereof, on and after the date the conditions set forth in
Section 11.4 are satisfied (hereinafter, "covenant defeasance"). For this
purpose, such covenant defeasance means that, with respect to the Outstanding
Securities of such series, the Issuer and the Guarantor may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in any such Section with respect to it, whether directly or indirectly by
reason of any reference elsewhere herein to any such Section or by reason of any
reference in any such Section to any other provision herein or in any other
document, but the remainder of this Indenture and such Securities shall be
unaffected thereby.

                                      -67-
<PAGE>

         SECTION 11.4 CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. The
following shall be the conditions to application of either Section 11.2 or
Section 11.3 to the Outstanding Securities of such series and the Guarantee in
respect thereof:

                  (a) the Issuer shall irrevocably have deposited or caused to
         be deposited with the Trustee (or another trustee satisfying the
         requirements of Section 5.7 who shall agree to comply with the
         provisions of this Article Eleven 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 in respect of Securities issued in U.S. dollars
         and Canadian Government Obligations in respect of Securities issued in
         Canadian dollars 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, in the
         opinion of a nationally recognized firm of independent public
         accountants expressed in a written certification thereof 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 of and each installment of principal of and interest on the
         Outstanding Securities of such series on the stated maturity of such
         principal or installment of principal 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 and payable in accordance with the terms of this Indenture and
         of such Securities. 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 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) 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.

                  For this purpose, "Canadian Government Obligations" means
         securities that are (x) direct obligations of the Government of Canada
         for the payment of which its full faith and credit is pledged or (y)
         obligations of the Person acting as an agency or instrumentality of the
         Government of Canada, the payment of which is unconditionally
         guaranteed, as a full faith and credit obligation by the Government of
         Canada or (z) the direct obligations of any Province of Canada for the
         payment of which such Province's full faith and credit is pledged,
         which, in any case, are not callable or redeemable at the option of the
         issuer thereof.

                                      -68-
<PAGE>

                  (b) 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 on the
         date of such deposit.

                  (c) Such defeasance or covenant defeasance shall not cause the
         Trustee for the Securities of such series to have a conflicting
         interest for purposes of the Trust Indenture Act of 1939 with respect
         to any securities of the Issuer or the Guarantor.

                  (d) 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 Issuer or the
         Guarantor is a party or by which it is bound.

                  (e) Such defeasance or covenant defeasance shall not cause any
         Securities of such series then listed on any registered national
         securities exchange under the Exchange Act, as amended, or any other
         stock exchange located in Canada, as applicable, to be delisted.

                  (f) In the case of an election under Section 11.2 with respect
         to Securities issued in the United States, the Issuer shall have
         delivered to the Trustee an Opinion of Counsel stating that (x) the
         Issuer has received from, or there has been published by, the Internal
         Revenue Service a ruling, or (y) since 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.

                  In the case of an election under Section 11.2 with respect to
         Securities issued in Canada, the Issuer shall have delivered to the
         Trustee an Opinion of Counsel in Canada and/or a ruling of the Canada
         Customs and Revenue Agency to the effect that the holders of the
         Outstanding Securities of such series will not recognize income, gain
         or loss for Canadian federal or provincial income or other tax purposes
         as a result of such defeasance and will be subject to Canadian federal
         or provincial income or other tax on the same amounts, in the same
         manner and at the same time as would have been the case if such
         defeasance had not occurred (for purposes of such Opinion of Counsel,
         such Canadian counsel shall assume that holders of Securities include
         holders who are not resident of Canada).

                  (g) In the case of an election under Section 11.3 with respect
         to Securities issued in the United States, the Issuer 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.

                                      -69-
<PAGE>

                  In the case of an election under Section 11.3 with respect to
         Securities issued in Canada, the Issuer shall have delivered to the
         Trustee an Opinion of Counsel in Canada to the effect that the holders
         of the Outstanding Securities of such series will not recognize income,
         gain or loss for Canadian federal or provincial or other 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 (for purposes of such Opinion of Counsel, such Canadian
         counsel shall assume that holders of Securities include holders who are
         not resident of Canada).

                  (h) The Issuer 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 11.2 or the covenant defeasance under Section 11.3 (as
         the case may be) have been complied with, and shall have paid (or made
         arrangements satisfactory to the Trustee for the payment thereof) all
         amounts payable to the Trustee hereunder which have accrued or will
         accrue until the Securities have been paid in full.

         SECTION 11.5 DEPOSITED MONEY, U.S. GOVERNMENT OBLIGATIONS AND CANADIAN
GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to the provisions of Section 9.4, all money and U.S. Government
Obligations and Canadian Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee -- collectively, for
purposes of this Section 11.5, the "Trustee") pursuant to Section 11.4 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
(including the Issuer or the Guarantor 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 and interest, but such money need not
be segregated from other funds except to the extent required by law.

         The Issuer shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations or
Canadian Government Obligations deposited pursuant to Section 11.4 or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the holders of the
Outstanding Securities of such series.

         Anything in this Article Eleven to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuer from time to time upon the Issuer's
request any money or U.S. Government Obligations or Canadian Government
Obligations held by it as provided in Section 11.4 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.

                                      -70-
<PAGE>

                                 ARTICLE TWELVE

                            MISCELLANEOUS PROVISIONS

         SECTION 12.1 INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS OF
ISSUER AND GUARANTOR EXEMPT FROM INDIVIDUAL LIABILITY. No recourse under or upon
any obligation, covenant or agreement contained in this Indenture, or in any
Security, or because of any indebtedness evidenced thereby, shall be had against
any incorporator, as such or against any past, present or future stockholder,
official or director, as such, of the Issuer, the Guarantor or of any of their
respective successors, either directly or through the Issuer, the Guarantor or
of any of their respective successors, under any rule of law, statute or
constitutional provision or by the enforcement of any assessment or by any legal
or equitable proceeding or otherwise, all such liability being expressly waived
and released by the acceptance of the Securities by the holders thereof and as
part of the consideration for the issue of the Securities.

         SECTION 12.2 PROVISIONS OF INDENTURE FOR THE SOLE BENEFIT OF PARTIES
AND SECURITYHOLDERS. Nothing in this Indenture or in the Securities, expressed
or implied, shall give or be construed to give to any Person, firm or
corporation, other than the parties hereto and their successors and assigns and
the holders of the Securities, any legal or equitable right, remedy or claim
under this Indenture or under any covenant, condition or provision herein
contained, all such covenants and provisions being for the sole benefit of the
parties hereto and their successors and of the holders of the Securities.

         SECTION 12.3 SUCCESSORS AND ASSIGNS OF ISSUER AND GUARANTOR BOUND BY
INDENTURE. All the covenants, stipulations, promises and agreements contained in
this Indenture by the Issuer and Guarantor shall bind their respective
successors and assigns, whether so expressed or not.

         SECTION 12.4 NOTICES AND DEMANDS ON ISSUER, GUARANTOR, TRUSTEE AND
SECURITYHOLDERS. Any notice or demand which by any provision of this Indenture
is required or permitted to be given or served by the Trustee or by the holders
of Securities to or on the Issuer or the Guarantor may be given or served by
being deposited postage prepaid, first-class mail, in a post office letter box
(except as otherwise specifically provided herein) addressed (until another
address of the Issuer is furnished by the Issuer or the Guarantor to the
Trustee) to Textron Financial Corporation, or Textron Financial Canada Funding
Corp., as the case may be, in each case to 40 Westminster Street, P.O. Box 6687,
Providence, Rhode Island 02940-6687, Attention: Treasurer and General Counsel.
Any notice, direction, request or demand by the Issuer, the Guarantor or any
Securityholder to or upon the Trustee shall be deemed to have been sufficiently
given or made, for all purposes, if given or made in writing at the Corporate
Trust Office.

         Where this Indenture provides for notice to Securityholders, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Securityholder
entitled thereto, at such Securityholder's last address as it appears in the
Register, except as otherwise specified pursuant to Section 2.5 with respect to
Securities of any series. In any case where notice to Securityholders is given
by mail, neither the failure to mail such notice, nor any defect in any notice
so mailed, to any

                                      -71-
<PAGE>

particular Securityholder shall affect the sufficiency of such notice with
respect to other Securityholders. 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 Securityholders 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. Notwithstanding
anything to the contrary elsewhere in this Indenture as to the giving of notice,
any other form of written notice is sufficient, if received.

         In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Issuer, the
Guarantor, the Trustee or Securityholders when such notice is required to be
given pursuant to any provision of this Indenture, then notwithstanding anything
to the contrary elsewhere in this Indenture as to the giving of notice, any
manner of giving such notice as shall be satisfactory to the Trustee shall be
deemed to be a sufficient giving of such notice.

         SECTION 12.5 OFFICERS' CERTIFICATES AND OPINIONS OF COUNSEL; STATEMENTS
TO BE CONTAINED THEREIN. Except as otherwise expressly provided in this
Indenture, upon any application or demand by the Issuer or the Guarantor to the
Trustee to take any action under any of the provisions of this Indenture, the
Issuer or the Guarantor 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 have been complied with, except that in the case of any such
application or demand as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.

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

         Any certificate, statement or opinion of an officer of the Issuer or
the Guarantor may be based, insofar as it relates to legal matters, upon a
certificate or opinion of or representations by counsel, unless such officer
knows that the certificate or opinion or representations with respect to the
matters upon which his or her certificate, statement or opinion may be based as
aforesaid are erroneous. Any certificate, statement or Opinion of Counsel may be
based, insofar as it relates to factual matters or information in the possession
of the Issuer or the Guarantor, upon the certificate, statement or opinion of or
representations by an officer or officers of the Issuer or the Guarantor, unless
such counsel knows that the certificate, statement or opinion or representations
with respect to the matters upon which his or her certificate, statement or
opinion may be based as aforesaid are erroneous.

         Any certificate, statement or opinion of an officer of the Issuer, the
Guarantor or of counsel may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of or representations by an accountant or
firm of accountants in the employ of the Issuer or the Guarantor, unless such
officer or counsel, as the case may be, knows that the certificate or opinion or

                                      -72-
<PAGE>

representations with respect to the accounting matters upon which his or her
certificate, statement or opinion may be based as aforesaid are erroneous.

         Any certificate, statement or opinion of an officer of the Issuer, the
Guarantor or of counsel may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of or representations by an accountant or
firm of accountants in the employ of the Issuer or the Guarantor, unless such
officer or counsel, as the case may be, knows that the certificate or opinion or
representations with respect to the accounting matters upon which his or her
certificate, statement or opinion may be based as aforesaid are erroneous.

         Any certificate or opinion of any independent firm of public
accountants filed with the Trustee shall contain a statement that such firm is
independent.

         All such certificates, statements or opinions shall otherwise be in
form and substance reasonably satisfactory to the Trustee.

         SECTION 12.6 OFFICIAL ACTS BY SUCCESSOR ENTITY. Any act or proceeding
by any provision of this Indenture authorized or required to be done or
performed by any board, committee or officer of the Issuer or the Guarantor
shall and may be done and performed with like force and effect by the like
board, committee or officer of any entity that shall at the time be the lawful
sole successor of the Issuer or the Guarantor.

         SECTION 12.7 PAYMENTS DUE ON SATURDAYS, SUNDAYS AND LEGAL HOLIDAYS.
Except as otherwise specified pursuant to Section 2.5, if the date of maturity
of interest on or principal of the Securities of any series or the date fixed
for redemption or repayment of any such Security shall not be a Business Day,
then payment of such interest, if any, or principal 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 date of maturity or the date fixed for redemption
or repayment, and no interest shall accrue for the period from and after such
date.

         SECTION 12.8 NEW YORK LAW TO GOVERN. This Indenture and each Security
shall be governed by and construed in accordance with the laws of the State of
New York, without regard to conflict of law principles.

         SECTION 12.9 COUNTERPARTS. This Indenture may be executed in any number
of counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.

         SECTION 12.10 EFFECT OF HEADINGS. The Article and Section headings
herein and the Table of Contents are for convenience of reference only, are not
to be considered a part hereof and shall not affect the construction hereof.

         SECTION 12.11 CONFLICT WITH TRUST INDENTURE ACT. If any provision
hereof limits, qualifies or conflicts with a provision of the Trust Indenture
Act of 1939 that is required under such Act to be a part of and govern this
Indenture, the latter provisions shall control. If any provision of this
Indenture modifies or excludes any provision of the Trust Indenture Act of 1939
that may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or excluded, as the case may be.

                                      -73-
<PAGE>

         SECTION 12.12 SEVERABILITY. 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 12.13 JUDGMENT CURRENCY. The Company and the Guarantor each
agrees, to the fullest extent that it may effectively do so under applicable
law, that (a) if for the purpose of obtaining judgment in any court it is
necessary to convert the sum due in respect of the principal of, or premium or
interest, if any, or Additional Amounts on the Securities of any series (the
"Required Currency") into a currency in which a judgment will be rendered (the
"Judgment Currency"), the rate of exchange used shall be the rate at which in
accordance with normal banking procedures the Trustee could purchase in The City
of New York the requisite amount of the Required Currency with the Judgment
Currency on the New York Banking Day preceding the day on which a final
unappealable judgment is given and (b) its obligations under this Indenture to
make payments in the Required Currency (i) shall not be discharged or satisfied
by any tender, or any recovery pursuant to any judgment (whether or not entered
in accordance with clause (a)), in any currency other than the Required
Currency, except to the extent that such tender or recovery shall result in the
actual receipt, by the payee, of the full amount of the Required Currency
expressed to be payable in respect of such payments, (ii) shall be enforceable
as an alternative or additional cause of action for the purpose of recovering in
the Required Currency the amount, if any, by which such actual receipt shall
fall short of the full amount of the Required Currency so expressed to be
payable and (iii) shall not be affected by judgment being obtained for any other
sum due under this Indenture. For purposes of the foregoing, "New York Banking
Day" means any day except a Saturday, Sunday or a legal holiday in The City of
New York or a day on which banking institutions in The City of New York are
authorized or obligated by law, regulation or executive order to be closed.

         SECTION 12.14 SUBMISSION TO JURISDICTION. To the extent they may do so
under applicable law, the Company and the Guarantor each agrees that any
judicial proceedings instituted in relation to any matter arising under this
Indenture, the Securities or any coupons appertaining thereto may be brought in
any United States Federal or New York State court sitting in the Borough of
Manhattan, The City of New York, New York to the extent that such court has
subject matter jurisdiction over the controversy, and, by execution and delivery
of this Indenture, the Company and the Guarantor each hereby irrevocably
accepts, generally and unconditionally, the jurisdiction of the aforesaid
courts, acknowledges their competence and irrevocably agrees to be bound by any
judgment rendered in such proceeding. The Company and the Guarantor each also
irrevocably and unconditionally waives for the benefit of the Trustee and the
holders of the Securities and coupons any immunity from jurisdiction and any
immunity from legal process (whether through service or notice, attachment prior
to judgment, attachment in the aid of execution, execution or otherwise) in
respect of this Indenture. The Company and the Guarantor each hereby irrevocably
designates and appoints for the benefit of the Trustee and the holders of the
Securities and coupons for the term of this Indenture Corporation Service
Company, 80 State Street, Albany, New York 1227-2543, as its agent to receive on
its behalf service of all process (with a copy of all such service of process to
be delivered to Textron Financial Corporation, 40 Westminster Street,
Providence, Rhode Island 02940-6687, Attention: Treasurer) brought against it
with respect to any such proceeding in any such court in The City of New York,
such service being hereby acknowledged by each of the Company and the Guarantor
to be effective and binding service on it in every respect whether or not the
Company or the Guarantor, as the case

                                      -74-
<PAGE>

may be, shall then be doing or shall have at any time done business in New York.
Such appointment shall be irrevocable so long as any of the Securities or
coupons or the respective obligations of the Company and the Guarantor hereunder
remain outstanding, or until the appointment of a successor by the Company or
the Guarantor, as the case may be, and such successor's acceptance of such
appointment. Upon such acceptance, the Company or the Guarantor, as the case may
be, shall notify the Trustee of the name and address of such successor. The
Company and the Guarantor each further agrees for the benefit of the Trustee and
the holders of the Securities and the coupons to take any and all action,
including the execution and filing of any and all such documents and
instruments, as may be necessary to continue such designation and appointment of
said Corporation Service Company in full force and effect so long as any of the
Securities or coupons or the respective obligations of the Company and the
Guarantor hereunder shall be outstanding. The Trustee shall not be obligated and
shall have no responsibility with respect to any failure by the Company or the
Guarantor to take any such action. Nothing herein shall affect the right to
serve process in any other manner permitted by any law or limit the right of the
Trustee or any holder to institute proceedings against the Company or the
Guarantor in the courts of any other jurisdiction or jurisdictions.

                                ARTICLE THIRTEEN

                             GUARANTEE OF SECURITIES

         SECTION 13.1 GUARANTEE. This Section 13.1 and Section 13.2 apply to the
Securities of any series to the extent that the form of the Guarantee to be
endorsed on such Securities is not otherwise specifically established as
contemplated by Section 2.15.

         The Guarantor hereby fully and unconditionally guarantees to each
holder of a Security of each series authenticated and delivered by the Trustee
the due and punctual payment of the principal (including any amount due in
respect of original issue discount) of, and any premium and interest on, and
Additional Amounts with respect to, such Security, and the due and punctual
payment of any sinking fund payments provided for pursuant to the terms of such
Security, when and as the same shall become due and payable, whether at the
stated maturity, by declaration of acceleration, call for redemption or
otherwise, in accordance with the terms of such Security and of this Indenture.
The Guarantor hereby agrees that its obligations hereunder shall be as if it
were a principal debtor and not merely a surety, and shall be full, absolute and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of any Security of any series or this
Indenture, any failure to enforce the provisions of any Security of any series
or this Indenture, any waiver, modification, consent or indulgence granted to
the Issuer with respect thereto, by the holder of any Security of any series or
the Trustee, or any other circumstances which may otherwise constitute a legal
or equitable discharge of a surety or guarantor. The Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of merger or bankruptcy of the Issuer, any right to require a proceeding
first against the Issuer, the benefit of discussion, protest or notice with
respect to any Security or the indebtedness evidenced thereby or with respect of
any sinking fund payment required pursuant to the terms of a Security issued
under this Indenture and all demands whatsoever, and covenants that this
Guarantee will not be discharged with respect to any Security except by payment
in full of the principal thereof and any premium and interest or Additional

                                      -75-
<PAGE>

Amounts thereon or as provided in Article Nine, Section 8.2 or Article Eleven.
The Guarantor further agrees that, as between the Guarantor, on the one hand,
and the holders and the Trustee, on the other hand, the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Four
hereof for the purposes of this Guarantee, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby.

         This Guarantee shall continue to be effective or be reinstated, as the
case may be, if at any time payment on any Security, in whole or in part, is
rescinded or must otherwise be restored to the Issuer or the Guarantor upon the
bankruptcy, liquidation or reorganization of the Issuer or otherwise.

         The Guarantor hereby waives, in favor of the holders and the Trustee,
any and all of its rights, protections, privileges and defenses provided by any
applicable law to a guarantor and waives any right of set-off which the
Guarantor may have against the holder of a Security in respect of any amounts
which are or may become payable by the holder of a Security to the Issuer.

         The Guarantor shall be subrogated to all rights of each holder of
Securities against the Issuer in respect of any amounts paid to such holder by
the Guarantor pursuant to the provisions of this Guarantee; provided, however,
that the Guarantor shall not be entitled to enforce, or to receive any payments
arising out of or based upon, such right of subrogation until the principal of
and any premium and interest or Additional Amounts on all the Securities of the
same series and of like tenor shall have been paid in full.

         The Guarantee shall be governed by and construed in accordance with the
laws of the State of New York. The Guarantor agrees to pay any and all costs and
expenses (including reasonable attorneys' fees and expenses) incurred by the
Trustee or any holders in enforcing any rights under the Guarantee.

         No past, present or future stockholder, officer, director, employee or
incorporator of the Guarantor shall have any personal liability under the
Guarantee set forth in this Section 13.1 by reason of his or its status as such
stockholder, officer, director, employee or incorporator.

         The Guarantee set forth in this Section 13.1 shall not be valid or
become obligatory for any purpose with respect to a Security until the
certificate of authentication on such Security shall have been signed by or on
behalf of the Trustee.

         SECTION 13.2 EXECUTION OF GUARANTEE. To evidence its Guarantee to the
holders specified in Section 13.1, the Guarantor hereby agrees to execute the
Guarantee in substantially the form set forth in Section 2.15 to be endorsed on
each Security authenticated and delivered by the Trustee. The Guarantor hereby
agrees that its Guarantee set forth in Section 13.1 shall remain in full force
and effect notwithstanding any failure to endorse on each Security such
Guarantee. Each such Guarantee shall be signed on behalf of the Guarantor, by
its President, one of its Vice Presidents, its Treasurer or its Secretary prior
to the authentication of the Security on which it is endorsed, and the delivery
of such Security by the Trustee, after the due authentication thereof by the
Trustee hereunder, shall constitute due delivery of the Guarantee on behalf of
the Guarantor.

                                      -76-
<PAGE>

Such signatures upon the Guarantee may be manual or facsimile signatures of any
present, past or future such officers and may be imprinted or otherwise
reproduced below the Guarantee, and in case any such officer who shall have
signed the Guarantee shall cease to hold such offices before the Security on
which such Guarantee is endorsed shall have been authenticated and delivered by
the Trustee or disposed of by the Issuer, such Security nevertheless may be
authenticated and delivered or disposed of as though the person who signed the
Guarantee had not ceased to hold such office of the Guarantor.

         SECTION 13.3 GUARANTOR ADDITIONAL AMOUNTS. If with respect to
Securities of any series it is specified pursuant to Section 2.5 that this
Article Thirteen shall apply to Securities of such series and to payments
pursuant to any Guarantee, then all payments in respect of any Guarantee shall
be made by the Guarantor without withholding or deduction for or on account of
any present or future taxes, duties, levies, or other governmental charges of
whatever nature in effect on the date that the Securities of such series are
originally issued or imposed or established in the future by or on behalf of the
United States or any authority in the United States ("United States Taxes"). In
the event any such United States Taxes are so imposed or established, the
Guarantor shall pay such additional amounts ("Guarantor Additional Amounts") as
may be necessary in order that the net amounts receivable by each holder of a
Security of such series who is a United States alien (as defined below) after
any payment, withholding or deduction in respect of such United States Taxes
shall equal the amount which would have been receivable in respect of the
Guarantee in the absence of such payment, withholding or deduction; provided
that no Guarantor Additional Amounts will be payable with respect to any payment
on any Guarantee to, or to a third party on behalf of, a holder who is a United
States alien for or on account of any such United States Taxes whatever that
have been imposed with respect to (1) any United States Tax which would not have
been so imposed but for (a) the existence of any present or former connection
between the holder (or a fiduciary, settlor, beneficiary, member, shareholder,
or holder of a power over, the holder, if the holder is an estate, trust,
partnership or corporation) and the United States, including, without
limitation, such holder (or such fiduciary, settlor, beneficiary, member,
shareholder of, or holder of a power) being or having been a citizen or resident
or treated as a resident thereof or being or having been engaged in a trade or
business therein or being or having been present therein or having or having had
a permanent establishment therein, or (b) the holder's present or former status
as a personal holding company or foreign personal holding company or controlled
foreign corporation or passive foreign investment company for United States
federal income tax purposes or as a corporation which accumulates earnings to
avoid United States federal income tax or as a private foundation or other
tax-exempt organization; (2) any United States Tax which would not have been so
imposed but for the presentation by the holder of a Guarantee for payment on a
date more than 10 days after the date on which the payment became due and
payable or the date on which payment thereof is duly provided for, whichever
occurs later; (3) any estate, inheritance, gift, sales, transfer, personal
property or excise tax or any similar tax, assessment or governmental charge;
(4) any United States Tax which is payable otherwise than by withholding from
payments in respect of the Guarantee; (5) any United States Tax imposed on
interest received by a holder or beneficial owner of a Security of such series
who actually or constructively owns 10% or more of the total combined voting
power of all classes of the Guarantor's stock entitled to vote or is a bank that
acquired a Security of such series in consideration of an extension of credit
made pursuant to a loan agreement entered into in the ordinary course of
business; (6) any United States Tax imposed as a result of the failure

                                      -77-
<PAGE>

to comply with (a) certification, information, documentation, reporting or other
similar requirements concerning the nationality, residence, identity or
connection with the United States of the holder or beneficial owner of the
Security, if such compliance is required by statute or by regulation of the
United States Treasury Department, as a precondition to relief or exemption from
such tax, assessment or other governmental charge (including backup withholding
tax) or (b) any other certification, information, documentation, reporting or
other similar requirements under United States federal income tax laws or
regulations that would establish entitlement to otherwise applicable relief or
exemption from such tax, assessment or other governmental charge; (7) any Tax
required to be withheld by any paying agent from any payment of amounts due
under the Guarantee, if the payment can be made without such withholding by at
least one other paying agent; or (8) any combination of items (1), (2), (3),
(4), (5), (6) or (7). Furthermore, no Guarantor Additional Amounts shall be paid
with respect to any payment on a Guarantee to a holder who is a United States
alien that is a fiduciary or partnership or other than the sole beneficial owner
of such payment to the extent that a beneficiary or settlor with respect to such
fiduciary or a member of such partnership or beneficial owner would not have
been entitled to receive the Guarantor Additional Amounts had such beneficiary,
settlor, member or beneficial owner been the holder of the Security of such
series.

         The term "United States alien" means any person who, for United States
federal income tax purposes, is a foreign corporation, a non-resident alien
individual, a non-resident alien fiduciary of a foreign estate or trust, or a
foreign partnership, one or more of the members of which is a foreign
corporation, a non-resident alien individual or a non-resident alien fiduciary
of a foreign estate or trust.

         Whenever in this Indenture, the Securities of any series to which this
Article Thirteen is applicable or the Guarantee there is a reference, in any
context, to the payment of the principal of or interest, if any, on, or in
respect of, any Security to which this Article Thirteen is applicable, such
payment shall be deemed to include the payment of Guarantor Additional Amounts
provided for in this Section to the extent that, in such context, Guarantor
Additional Amounts are, were or would be payable in respect of such payment
pursuant to the provisions of this Section and express mention of the payment of
Guarantor Additional Amounts (if applicable) in any provision hereof or thereof
shall not be construed as excluding Guarantor Additional Amounts in those
provisions hereof where such express mention is not made.

         Except as specifically provided in this Section 13.3 with respect to a
Guarantee to which such section is applicable, the Guarantor will not be
required to make any payment with respect to any tax, assessment or governmental
charge imposed by any government or a political subdivision or taxing authority
thereof or therein.

                                      -78-
<PAGE>

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

[SEAL]                               TEXTRON FINANCIAL CANADA FUNDING CORP
Attest:

                                     By:
----------------------------            ----------------------------------------
                                         Name: Thomas J. Cullen
                                        Title: Executive Vice President and
                                               Chief Financial Officer

[SEAL]                               TEXTRON FINANCIAL CORPORATION
Attest:

                                     By:
----------------------------            ----------------------------------------
                                         Name: Thomas J. Cullen
                                        Title: Executive Vice President and
                                               Chief Financial Officer

[SEAL]                               SUNTRUST BANK
Attest:

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

                                      -79-<PAGE>

                                                                     EXHIBIT 4.7

                                 ALKERMES, INC.

                                    as Issuer

                                       AND

                         U.S. BANK NATIONAL ASSOCIATION

                                   as Trustee

                                    INDENTURE

                           Dated as of August 22, 2003

                 2 1/2% Convertible Subordinated Notes due 2023

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                    PAGE
                                                                                                                    ----
<S>                                                                                                                 <C>
                                   ARTICLE I

                                  DEFINITIONS

Section 1.1       Definitions....................................................................................     1

                                   ARTICLE II

       ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES

Section 2.1       Designation, Amount and Issue of Notes.........................................................     9
Section 2.2       Form of Notes..................................................................................     9
Section 2.3       Date and Denomination of Notes; Payments of Interest...........................................    10
Section 2.4       Execution of Notes.............................................................................    12
Section 2.5       Exchange and Registration of Transfer of Notes; Restrictions on Transfer; Depositary...........    12
Section 2.6       Mutilated, Destroyed, Lost or Stolen Notes.....................................................    19
Section 2.7       Temporary Notes................................................................................    20
Section 2.8       Cancellation of Notes Paid, Etc. ..............................................................    20
Section 2.9       CUSIP Numbers..................................................................................    21
Section 2.10      Transfer of Interests in Global Notes..........................................................    21

                                  ARTICLE III

                              REDEMPTION OF NOTES

Section 3.1       Optional Redemption; Redemption Prices.........................................................    21
Section 3.2       Notice of Redemption; Selection of Notes.......................................................    21
Section 3.3       Payment of Notes Called for Redemption.........................................................    23
Section 3.4       Conversion Arrangement on Call for Redemption..................................................    23

                                   ARTICLE IV

                             SUBORDINATION OF NOTES

Section 4.1       Agreement of Subordination.....................................................................    24
Section 4.2       Payments to Noteholders........................................................................    24
Section 4.3       Bankruptcy and Dissolution, Etc................................................................    26
Section 4.4       Subrogation of Notes...........................................................................    27
Section 4.5       Authorization by Noteholders...................................................................    28
Section 4.6       Notice to Trustee..............................................................................    28
Section 4.7       Trustee's Relation to Senior Indebtedness......................................................    29
Section 4.8       No Impairment of Subordination.................................................................    30
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                                                                  <C>
Section 4.9       Certain Conversions, Make-Whole Interest Payments and Repurchases in Common Stock Not
                  Deemed Payment.................................................................................    30
Section 4.10      Article Applicable to Paying Agents............................................................    30

                                   ARTICLE V

                      PARTICULAR COVENANTS OF THE COMPANY

Section 5.1       Payment of Principal, Premium and Interest.....................................................    30
Section 5.2       Maintenance of Office or Agency................................................................    31
Section 5.3       Appointments to Fill Vacancies in Trustee's Office.............................................    31
Section 5.4       Provisions as to Paying Agent..................................................................    31
Section 5.5       Existence......................................................................................    32
Section 5.6       Rule 144A Information Requirement..............................................................    32
Section 5.7       Stay, Extension and Usury Laws.................................................................    33
Section 5.8       Compliance Certificate.........................................................................    33
Section 5.9       Liquidated Damages.............................................................................    33
Section 5.10      Further Instruments and Acts...................................................................    33

                                   ARTICLE VI

         NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE

Section 6.1       Noteholders' Lists.............................................................................    33
Section 6.2       Preservation and Disclosure of Lists...........................................................    34
Section 6.3       Reports by Trustee.............................................................................    34
Section 6.4       Reports by Company.............................................................................    34

                                  ARTICLE VII

                             DEFAULTS AND REMEDIES

Section 7.1       Events of Default..............................................................................    35
Section 7.2       Payments of Notes on Default; Suit Therefor....................................................    38
Section 7.3       Application of Monies Collected by Trustee.....................................................    39
Section 7.4       Proceedings by Noteholder......................................................................    40
Section 7.5       Proceedings by Trustee.........................................................................    41
Section 7.6       Remedies Cumulative and Continuing.............................................................    41
Section 7.7       Direction of Proceedings and Waiver of Defaults by Majority of Noteholders.....................    41
Section 7.8       Notice of Defaults.............................................................................    42
Section 7.9       Undertaking to Pay Costs.......................................................................    42
Section 7.10      Delay or Omission Not Waiver...................................................................    42
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                                  <C>
                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

Section 8.1       Duties and Responsibilities of Trustee.........................................................    42
Section 8.2       Reliance on Documents, Opinions, Etc...........................................................    43
Section 8.3       No Responsibility for Recitals, Etc............................................................    45
Section 8.4       Trustee, Paying Agents, Conversion Agents or Registrar May Own Notes...........................    45
Section 8.5       Monies to Be Held in Trust.....................................................................    45
Section 8.6       Compensation and Expenses of Trustee...........................................................    45
Section 8.7       Officers' Certificate as Evidence..............................................................    46
Section 8.8       Conflicting Interests of Trustee...............................................................    46
Section 8.9       Eligibility of Trustee.........................................................................    46
Section 8.10      Resignation or Removal of Trustee..............................................................    46
Section 8.11      Acceptance by Successor Trustee................................................................    47
Section 8.12      Succession by Merger, Etc......................................................................    48
Section 8.13      Limitation on Rights of Trustee as Creditor....................................................    48

                                   ARTICLE IX

                           CONCERNING THE NOTEHOLDERS

Section 9.1       Action by Noteholders..........................................................................    49
Section 9.2       Proof of Execution by Noteholders..............................................................    49
Section 9.3       Who Are Deemed Absolute Owners.................................................................    49
Section 9.4       Company-Owned Notes Disregarded................................................................    49
Section 9.5       Revocation of Consents; Future Holders Bound...................................................    50

                                   ARTICLE X

                             NOTEHOLDERS' MEETINGS

Section 10.1      Purpose of Meetings............................................................................    50
Section 10.2      Call of Meetings by Trustee....................................................................    51
Section 10.3      Call of Meetings by Company or Noteholders.....................................................    51
Section 10.4      Qualifications for Voting......................................................................    51
Section 10.5      Regulations....................................................................................    51
Section 10.6      Voting.........................................................................................    52
Section 10.7      No Delay of Rights by Meeting..................................................................    52

                                   ARTICLE XI

                            SUPPLEMENTAL INDENTURES

Section 11.1      Supplemental Indentures Without Consent of Noteholders.........................................    52
Section 11.2      Supplemental Indentures With Consent of Noteholders............................................    54
Section 11.3      Effect of Supplemental Indentures..............................................................    54
</TABLE>

                                       iii

<PAGE>

<TABLE>
<S>                                                                                                                  <C>
Section 11.4      Revocation and Effect of Consents..............................................................    55
Section 11.5      Notation on Notes..............................................................................    55
Section 11.6      Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee.......................    55

                                  ARTICLE XII

               CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

Section 12.1      Company May Consolidate, Etc. on Certain Terms.................................................    56
Section 12.2      Successor Corporation to Be Substituted........................................................    56
Section 12.3      Opinion of Counsel to Be Given Trustee.........................................................    57

                                  ARTICLE XIII

                    SATISFACTION AND DISCHARGE OF INDENTURE

Section 13.1      Discharge of Indenture.........................................................................    57
Section 13.2      Deposited Monies to Be Held in Trust by Trustee................................................    58
Section 13.3      Paying Agent to Repay Monies Held..............................................................    58
Section 13.4      Return of Unclaimed Monies.....................................................................    58
Section 13.5      Reinstatement..................................................................................    58

                                  ARTICLE XIV

        IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

Section 14.1      Indenture and Notes Solely Corporate Obligations...............................................    59

                                   ARTICLE XV

                              CONVERSION OF NOTES

Section 15.1      Right to Convert...............................................................................    59
Section 15.2      Exercise of Conversion Privilege; Issuance of Common Stock on Conversion; No Adjustment
                  for Interest or Dividends......................................................................    60
Section 15.3      Cash Payments in Lieu of Fractional Shares.....................................................    61
Section 15.4      Conversion Price...............................................................................    61
Section 15.5      Adjustment of Conversion Price.................................................................    61
Section 15.6      Effect of Reclassification, Consolidation, Merger or Sale......................................    71
Section 15.7      Taxes on Shares Issued.........................................................................    72
Section 15.8      Reservation of Shares; Shares to Be Fully Paid; Listing of Common Stock........................    72
Section 15.9      Responsibility of Trustee......................................................................    72
Section 15.10     Notice to Holders Prior to Certain Actions.....................................................    73
Section 15.11     Automatic Conversion by the Company............................................................    74
Section 15.12     Restrictions on Company's Ability to Pay any Make-Whole Interest Payment in Common Stock.......    75
Section 15.13     Notification to Trustee........................................................................    76
</TABLE>

                                       iv

<PAGE>

<TABLE>
<S>                                                                                                                  <C>
                                  ARTICLE XVI

                       REPURCHASE UPON A REPURCHASE EVENT

Section 16.1      Repurchase Right...............................................................................    76
Section 16.2      Notices; Method of Exercising Repurchase Right, Etc............................................    76
Section 16.3      Conditions to the Company's Election to Pay the Repurchase Event Price in Common Stock.........    79
Section 16.4      Certain Definitions............................................................................    80

                                  ARTICLE XVII

            REPURCHASE OF THE NOTES AT THE OPTION OF THE NOTEHOLDER

Section 17.1      Repurchase of Notes by the Company at Option of the Noteholder.................................    81
Section 17.2      Company Repurchase Notice......................................................................    82
Section 17.3      Effect of Repurchase Notice....................................................................    83
Section 17.4      Withdrawal of Purchase Notice..................................................................    84
Section 17.5      Deposit of Purchase Price......................................................................    84
Section 17.6      Notes Repurchased in Part......................................................................    85
Section 17.7      Repayment to the Company.......................................................................    85

                                 ARTICLE XVIII

                            MISCELLANEOUS PROVISIONS

Section 18.1      Provisions Binding on Company's Successors.....................................................    85
Section 18.2      Official Acts by Successor Corporation.........................................................    85
Section 18.3      Addresses for Notices, Etc.....................................................................    85
Section 18.4      GOVERNING LAW..................................................................................    86
Section 18.5      Evidence of Compliance with Conditions Precedent; Certificates to Trustee......................    86
Section 18.6      Legal Holidays.................................................................................    86
Section 18.7      No Security Interest Created...................................................................    86
Section 18.8      Trust Indenture Act............................................................................    86
Section 18.9      Benefits of Indenture..........................................................................    87
Section 18.10     Table of Contents, Headings, Etc...............................................................    87
Section 18.11     Authenticating Agent...........................................................................    87
Section 18.12     Execution in Counterparts......................................................................    88
</TABLE>

                                        v

<PAGE>

         INDENTURE dated as of August 22, 2003 between Alkermes, Inc., a
Pennsylvania corporation as issuer (hereinafter sometimes called the "Company",
as more fully set forth in Section 1.1), and U.S. Bank National Association, a
national banking association organized under the laws of the United States of
America, as trustee (hereinafter sometimes called the "Trustee", as more fully
set forth in Section 1.1).

         W I T N E S S E T H:

         WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the delivery of its 2 1/2% Convertible SubordinatEd Notes due 2023
(hereinafter sometimes called the "Notes"), in an aggregate principal amount not
to exceed $100,000,000 (or $125,000,000 if the option to purchase additional
Notes granted to the Initial Purchaser (as defined herein) pursuant to the
Purchase Agreement (as defined herein) is exercised in full), and in order to
provide the terms and conditions upon which the Notes are to be authenticated,
issued and delivered, the Company has duly authorized the execution and delivery
of this Indenture; and

         WHEREAS, the Notes, the certificate of authentication to be borne by
the Notes, a form of assignment, a form of option to elect repayment upon a
Repurchase Event (as defined herein), a form of conversion notice, a form of
repurchase notice and a certificate of transfer to be borne by the Notes are to
be substantially in the forms hereinafter provided for; and

         WHEREAS, all acts and things necessary to make the Notes, when executed
by the Company and authenticated and delivered by the Trustee or a duly
authorized authenticating agent, as in this Indenture provided, the valid,
binding and legal obligations of the Company, and to constitute these presents a
valid agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized.

         NOW, THEREFORE, THIS INDENTURE WITNESSETH:

         That in order to declare the terms and conditions upon which the Notes
are, and are to be, authenticated, issued and delivered, and in consideration of
the premises and of the purchase and acceptance of the Notes by the holders
thereof, the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below), as follows:

                                   ARTICLE I

                                  DEFINITIONS

         Section 1.1 Definitions. The terms defined in this Section 1.1 (except
as herein otherwise expressly provided or unless the context otherwise requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section 1.1. All other
terms used in this Indenture, which are defined in the Trust Indenture Act or
which are by reference therein defined in the Securities Act (except as herein
otherwise expressly provided or unless the context otherwise requires) shall
have the meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of the execution of this Indenture. The
words "herein," "hereof," "hereunder," and words of

<PAGE>

similar import refer to this Indenture as a whole and not to any particular
Article, Section or other Subdivision. The terms defined in this Article include
the plural as well as the singular.

         Affiliate: The term "Affiliate" of any specified person shall mean 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 or cause the direction of the management and policies of such
person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

         Agent Members: The term "Agent Members" shall have the meaning
specified in Section 2.2(b).

         Automatic Conversion: The term "Automatic Conversion" shall have the
meaning specified in Section 15.11(a).

         Automatic Conversion Date: The term "Automatic Conversion Date" shall
have the meaning specified in Section 15.11(a).

         Board of Directors: The term "Board of Directors" shall mean the Board
of Directors of the Company or a committee of such Board duly authorized to act
for it hereunder.

         Board Resolution: The term "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, or duly authorized
committee thereof (to the extent permitted by applicable law), and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.

         Business Day: The term "Business Day" means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which the banking
institutions in The City of New York or the city in which the Corporate Trust
Office is located are authorized or obligated by law or executive order to close
or be closed.

         Change in Control: The term "Change in Control" shall have the meaning
specified in Section 16.4.

         close of business: The term "close of business" means 5 p.m. (New York
City time).

         Commission: The term "Commission" shall mean the Securities and
Exchange Commission.

         Common Stock: The term "Common Stock" shall mean 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.
Subject to the provisions of Section 15.6, however, shares issuable on
conversion of Notes shall include only shares of the class designated as common
stock of the Company at the date of this Indenture or shares of any class or
classes

                                        2

<PAGE>

resulting from any reclassification or reclassifications thereof and which have
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 are not subject to redemption by the Company; provided that if at any
time there shall be more than one such resulting class, the shares of each such
class then so issuable shall be substantially in the proportion which the total
number of shares of such class resulting from all such reclassifications bears
to the total number of shares of all such classes resulting from all such
reclassifications.

         Company: The term "Company" shall mean Alkermes, Inc., a Pennsylvania
corporation, and subject to the provisions of Article XII, shall include its
successors and assigns.

         Company Notice: The term "Company Notice" shall have the meaning
specified in Section 16.2.

         Conversion Price: The term "Conversion Price" shall have the meaning
specified in Section 15.4.

         Company Repurchase Notice: The term "Company Repurchase Notice" has the
meaning specified in Section 17.2(b).

         Company Repurchase Notice Date: The term "Company Repurchase Notice
Date" has the meaning specified in Section 17.2(b).

         Corporate Trust Office: The term "Corporate Trust Office," or other
similar term, shall mean the office of the Trustee at which at any particular
time its corporate trust business shall be principally administered, which
office is, at the date as of which this Indenture is dated, located at One
Federal Street, 3rd Floor, Boston, MA 02110, Attention: Corporate Trust Services
(Alkermes, Inc. 2 1/2% Convertible Subordinated Notes due 2023).

         Custodian: The term "Custodian" means U.S. Bank National Association
with respect to the Notes in global form, or any successor entity thereto.

         default: The term "default" shall mean any event that is, or after
notice or passage of time, or both, would be, an Event of Default.

         Defaulted Interest: The term "Defaulted Interest" shall have the
meaning specified in Section 2.3.

         Depositary: The term "Depositary" means, with respect to the Notes
issuable or issued in whole or in part in global form, the person specified in
Section 2.5(d) as the Depositary with respect to such Notes, until a successor
shall have been appointed and become such pursuant to the applicable provisions
of this Indenture, and thereafter, "Depositary" shall mean or include such
successor.

         Designated Senior Indebtedness: The term "Designated Senior
Indebtedness" means (i) the Company's obligations in respect of money now or
hereafter borrowed from Fleet National Bank or any commercial bank and (ii) the
Company's obligations under any particular Senior Indebtedness in which the
instrument creating or evidencing the same or the assumption or

                                        3

<PAGE>

guarantee thereof (or related agreements or documents to which the Company is a
party) expressly provides that such Senior Indebtedness shall be "Designated
Senior Indebtedness" for purposes of this Indenture (provided that such
instrument, agreement or other document may place limitations and conditions on
the right of such Senior Indebtedness to exercise the rights of Designated
Senior Indebtedness).

         Dividend Adjustment Amount: The term "Dividend Adjustment Amount" shall
have the meaning specified in Section 15.5(e).

         Event of Default: The term "Event of Default" shall mean any event
specified in Section 7.1, continued for the period of time, if any, and after
the giving of notice, if any, therein designated.

         Event Repurchase Date: The term "Event Repurchase Date" has the meaning
specified in Section 16.1.

         Exchange Act: The term "Exchange Act" means the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder.

         Expiration Time: The term "Expiration Time" shall have the meaning
specified in Section 15.5(f) or 15.5(g).

         Global Note: The term "Global Note" shall have the meaning specified in
Section 2.5(b).

         Indebtedness: The term "Indebtedness" shall mean any obligations of, or
guaranteed or assumed by, the Company or any Significant Subsidiary for borrowed
money.

         Indenture: The term "Indenture" shall mean this instrument as
originally executed or, if amended or supplemented as herein provided, as so
amended or supplemented.

         Initial Purchaser: The term "Initial Purchaser" means U.S. Bancorp
Piper Jaffray Inc.

         Liquidated Damages: The term "Liquidated Damages" means all liquidated
damages then owing pursuant to Section 3 of the Registration Rights Agreement.

         Make-Whole Interest Payment: The term "Make-Whole Interest Payment"
shall mean the additional interest to be paid by the Company upon an Automatic
Conversion in an amount equal to three full years of interest on the Notes, less
any interest actually paid or provided for on the Notes prior to such Automatic
Conversion. The Company may, at its option, pay the Make-Whole Interest Payment
in cash or in Common Stock. In the event that the Company elects to pay the
Make-Whole Interest Payment in Common Stock, the shares of Common Stock will be
valued at 97.5% of the average Closing Price (as defined in Section 15.5(h)) for
each of the five Trading Days (as defined in Section 15.5(h)) immediately
preceding the second Trading Day prior to the Automatic Conversion Date (as
defined in Section 15.11).

         Note or Notes: The terms "Note" or "Notes" shall mean any Note or
Notes, as the case may be, issued, authenticated and delivered under this
Indenture.

                                        4

<PAGE>

         Noteholder or holder: The terms "Noteholder" or "holder" as applied to
any Note, or other similar terms (but excluding the term "beneficial holder"),
shall mean any person in whose name at the time a particular Note is registered
on the Note register.

         Note registrar: The term "Note registrar" shall have the meaning
specified in Section 2.5(a).

         Note register: The term "Note register" shall have the meaning
specified in Section 2.5.

         Officers' Certificate: The term "Officers' Certificate", when used with
respect to the Company, shall mean a certificate signed by (a) one of the
President, the Chief Executive Officer, any Executive or Senior Vice President
or any Vice President (whether or not designated by a number or numbers or word
added before or after the title "Vice President") and (b) by one of the
Treasurer or any Assistant Treasurer, Secretary or any Assistant Secretary or
Controller of the Company, which is delivered to the Trustee. Each such
certificate shall include the statements provided for in Section 18.5 if and to
the extent required by the provisions of such Section.

         Opinion of Counsel: The term "Opinion of Counsel" shall mean an opinion
in writing signed by legal counsel, who may be an employee of or counsel to the
Company, or other counsel acceptable to the Trustee, which is delivered to the
Trustee. Each such opinion shall include the statements provided for in Section
18.5 if and to the extent required by the provisions of such Section.

         outstanding: The term "outstanding," when used with reference to Notes,
shall, subject to the provisions of Section 9.4, mean, as of any particular
time, all Notes authenticated and delivered by the Trustee under this Indenture,
except:

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

                  (b)      Notes, or portions thereof, for the payment, or
         redemption of which monies in the necessary amount shall have been
         deposited in trust with the Trustee or with any paying agent (other
         than the Company) or shall have been set aside and segregated in trust
         by the Company (if the Company shall act as its own paying agent);
         provided that if such Notes are to be redeemed, as the case may be,
         prior to the maturity thereof, notice of such redemption shall have
         been given as provided in Section 3.2, or provision satisfactory to the
         Trustee shall have been made for giving such notice;

                  (c)      Notes in lieu of which, or in substitution for which,
         other Notes shall have been authenticated and delivered pursuant to the
         terms of Section 2.6 unless proof satisfactory to the Trustee is
         presented that any such Notes are held by bona fide holders in due
         course; and

                  (d)      Notes converted into Common Stock pursuant to Article
         XV and Notes deemed not outstanding pursuant to Section 3.2.

                                        5

<PAGE>

         Payment Blockage Notice: The term "Payment Blockage Notice" shall have
the meaning specified in Section 4.2(b).

         person: The term "person" shall mean an individual, a corporation, a
limited liability company, an association, a partnership, an individual, a joint
venture, a joint stock company, a trust, an unincorporated organization or a
government or an agency or a political subdivision thereof.

         Portal Market: The term "Portal Market" shall mean The Portal Market
operated by the National Association of Securities Dealers, Inc. or any
successor thereto.

         Predecessor Note: The term "Predecessor Note" of any particular Note
shall mean every previous Note evidencing all or a portion of the same debt as
that evidenced by such particular Note; and, for the purposes of this
definition, any Note authenticated and delivered under Section 2.6 in lieu of a
lost, destroyed or stolen Note shall be deemed to evidence the same debt as the
lost, destroyed or stolen Note that it replaces.

         Pre-Dividend Sale Price: The term "Pre-Dividend Sale Price" shall have
the meaning specified in Section 15.5(e).

         Purchase Agreement: The term "Purchase Agreement" means that certain
Purchase Agreement, dated as of August 19, 2003, between the Company and the
Initial Purchaser (as amended from time to time by the parties thereto).

         Purchased Shares: The term "Purchased Shares" shall have the meaning
specified in Sections 15.5(f) and 15.5(g).

         QIB: The term "QIB" shall mean a "qualified institutional buyer" as
defined in Rule 144A.

         record date: The term "record date" shall have the meaning specified in
Section 2.3.

         Registration Rights Agreement: The term "Registration Rights Agreement"
means that certain Registration Rights Agreement, dated as of August 19, 2003,
between the Company and the Initial Purchaser.

         Repurchase Date: The term "Repurchase Date" has the meaning specified
in Section 17.1.

         Repurchase Event: The term "Repurchase Event" shall have the meaning
specified in Section 16.4.

         Repurchase Notice: The term "Repurchase Notice" has the meaning
specified in Section 17.1.

         Repurchase Event Price: The term "Repurchase Event Price" has the
meaning specified in Section 16.1.

                                        6

<PAGE>

         Repurchase Price: The term "Repurchase Price" has the meaning specified
in Section 17.1.

         Responsible Officer: The term "Responsible Officer", when used with
respect to the Trustee, shall mean an officer of the Trustee in the Corporate
Trust Office assigned and duly authorized by the Trustee to administer its
obligations under this Indenture.

         Restricted Securities: The term "Restricted Securities" has the meaning
specified in Section 2.5(d).

         Rule 144A: The term "Rule 144A" shall mean Rule 144A as promulgated
under the Securities Act.

         Securities Act: The term "Securities Act" means the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.

         Senior Indebtedness: The term "Senior Indebtedness" means the principal
of, premium, if any, interest on (including any interest accruing after the
filing of a petition by or against the Company under any bankruptcy law, whether
or not allowed as a claim after such filing in any proceeding under such
bankruptcy law) and any other payment due pursuant to any of the following,
whether outstanding on the date of this Indenture or thereafter incurred or
created:

                  (a)      all indebtedness of the Company for money borrowed
         that is evidenced by notes, debentures, bonds or other securities
         (including, but not limited to, those which are convertible or
         exchangeable for securities of the Company);

                  (b)      all indebtedness of the Company due and owing with
         respect to letters of credit, bank guarantees or bankers' acceptances
         (including, but not limited to, reimbursement obligations with respect
         thereto);

                  (c)      all indebtedness or other obligations of the Company
         due and owing with respect to interest rate and currency swap
         agreements, cap, floor and collar agreements, currency spot and forward
         contracts and other similar agreements and arrangements;

                  (d)      all indebtedness consisting of commitment or standby
         fees due and payable to lending institutions with respect to credit
         facilities or letters of credit available to the Company;

                  (e)      all obligations of the Company under leases required
         or permitted to be capitalized under generally accepted accounting
         principles;

                  (f)      all indebtedness or obligations of others of the
         kinds described in any of the preceding clauses (a), (b), (c), (d) or
         (e) assumed by or guaranteed in any manner by the Company or in effect
         guaranteed (directly or indirectly) by the Company through an agreement
         to purchase, contingent or otherwise, and all obligations of the
         Company under any such guarantee or other arrangements; and

                                        7

<PAGE>

                  (g)      all renewals, extensions, refundings, deferrals,
         amendments or modifications of indebtedness or obligations of the kinds
         described in any of the preceding clauses (a), (b), (c), (d), (e) or
         (f);

unless in the case of any particular indebtedness, obligation, renewal,
extension, refunding, amendment, modification or supplement, the instrument or
other document creating or evidencing the same or the assumption or guarantee of
the same expressly provides that such indebtedness, obligation, renewal,
extension, refunding, amendment, modification or supplement is subordinate to,
or is not superior to, or is pari passu with, the Notes; provided that Senior
Indebtedness shall not include (i) any indebtedness of any kind of the Company
to any Subsidiary of the Company, a majority of the voting stock of which is
owned, directly or indirectly, by the Company, (ii) indebtedness for trade
payables or constituting the deferred purchase price of assets or services
incurred in the ordinary course of business, or (iii) the Notes.

         Significant Subsidiary: The term "Significant Subsidiary" means, with
respect to any person, a Subsidiary of such person that would constitute a
"significant subsidiary" as such term is defined under Rule 1-02 of Regulation
S-X of the Commission.

         Subsidiary: The term "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.

         Trading Day: The term "Trading Day" has the meaning specified in
Section 15.5(h)(5).

         transfer: The term "transfer" shall have the meaning specified in
Section 2.5(d).

         Trigger Event: The term "Trigger Event" shall have the meaning
specified in Section 15.5(d).

         Trust Indenture Act: The term "Trust Indenture Act" shall mean the
Trust Indenture Act of 1939, as amended, as it was in force at the date of
execution of this Indenture, except as provided in Sections 11.3 and 15.6;
provided, however, that in the event the Trust Indenture Act of 1939 is amended
after the date hereof, the term "Trust Indenture Act" shall mean, to the extent
required by such amendment, the Trust Indenture Act of 1939 as so amended.

         Trustee: The term "Trustee" shall mean U.S. Bank National Association,
and its successors and any corporation resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee at the time serving as successor trustee hereunder.

         The definitions of certain other terms are as specified in Article XV
and Article XVI.

                                        8

<PAGE>

                                   ARTICLE II

       ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES

         Section 2.1 Designation, Amount and Issue of Notes. The Notes shall be
designated as "2 1/2% Convertible Subordinated Notes due 2023." Notes not to
exceed the aggregate principal amount of $100,000,000 (or $125,000,000 if the
option to purchase additional Notes granted to the Initial Purchaser (as defined
herein) pursuant to the Purchase Agreement (as defined herein) is exercised in
full) upon the execution of this Indenture, or (except pursuant to Sections 2.5,
2.6, 3.3, 15.2 and 16.2) from time to time thereafter, may be executed by the
Company and delivered to the Trustee for authentication, and the Trustee shall
thereupon authenticate and deliver said Notes upon the written order of the
Company, signed by the Company's (a) President, Executive or Senior Vice
President or any Vice President (whether or not designated by a number or
numbers or word or words added before or after the title "Vice President") and
(b) Treasurer or Assistant Treasurer or its Secretary or any Assistant
Secretary, without any further action by the Company hereunder, provided,
however, that said Notes may not be executed, delivered or authenticated unless
and until the Trustee shall have received an Officers' Certificate and opinion
of counsel.

         Section 2.2 Form of Notes. The Notes and the Trustee's certificate of
authentication to be borne by such Notes shall be substantially in the form set
forth in Exhibit A, which is incorporated in and made a part of this Indenture.

         Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends and endorsements as the officers
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
securities exchange or automated quotation system on which the Notes may be
listed or designated for issuance, or to conform to usage.

                  (a)      Global Notes. Notes shall be issued initially in the
         form of one or more Global Notes in definitive, fully registered form
         without interest coupons, which shall be deposited on behalf of the
         holders of the Notes represented thereby with the Trustee, at its
         office at One Federal Street, 3rd Floor, Boston, MA 02110, Attention:
         Corporate Trust Services (Alkermes, Inc. 2 1/2% Convertible
         Subordinated Notes due 2023), as Custodian for the Depositary, and
         registered in the name of the Depositary or a nominee of the
         Depositary, duly executed by the Company and authenticated by the
         Trustee as hereinafter provided. The aggregate principal amount of the
         Global Note may from time to time be increased or decreased by
         adjustments made on the records of the Trustee and the Depositary or
         its nominee as hereinafter provided.

                  Each Global Note shall represent such of the outstanding Notes
         as shall be specified therein and each shall provide that it shall
         represent the aggregate amount of outstanding Notes from time to time
         endorsed thereon and that the aggregate amount of outstanding Notes
         represented thereby may from time to time be reduced or increased, as
         appropriate, to reflect exchanges and redemptions. Any endorsement of a
         Global Note to

                                        9

<PAGE>

         reflect the amount of any increase or decrease in the amount of
         outstanding Notes represented thereby shall be made by the Trustee or
         the Custodian, at the direction of the Trustee, in such manner and upon
         instructions given by the holder of such Notes in accordance with this
         Indenture. Payment of principal of and interest and premium, if any
         (including any redemption price), on the Global Note shall be made to
         the holder of such Note.

                  (b)      Book-Entry Provisions. This Section 2.2(b) shall
         apply only to the Global Note(s) deposited with or on behalf of the
         Depositary. The Company shall execute and the Trustee shall, in
         accordance with this Section 2.2(b), authenticate and deliver initially
         one or more Global Notes that (a) shall be registered in the name of
         the Depositary or nominee of the Depositary and (b) shall be delivered
         by the Trustee to such Depositary or pursuant to such Depositary's
         instructions or held by the Trustee as Custodian for the Depositary
         pursuant to a FAST Balance Certificate Agreement between the Depositary
         and the Trustee.

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

         Section 2.3 Date and Denomination of Notes; Payments of Interest. The
Notes shall be issuable in registered form without coupons in denominations of
$1,000 principal amount and integral multiples thereof. Every Note shall be
dated the date of its authentication, and shall bear interest from the
applicable date and accrued interest shall be payable in cash semiannually on
March 1 and September 1, of each year, commencing March 1, 2004 as specified on
the face of the form of Note, attached as Exhibit A hereto.

         The person in whose name any Note (or its Predecessor Note) is
registered at the close of business on any record date with respect to any
interest payment date (including any Note that is converted after the record
date and on or before the interest payment date) shall be entitled to receive
the interest payable on such interest payment date notwithstanding the
cancellation of such Note upon any transfer, exchange or conversion subsequent
to the record date and on or prior to such interest payment date; provided that,
in the case of any Note, or portion thereof, called for redemption pursuant to
Article III on a redemption date, or repurchased by the Company pursuant to
Article XVI or Article XVII on a repurchase date, during the period from the
close of business on the record date to the close of business on the Business
Day next preceding the following interest payment date, interest shall not be
paid to the person in whose name the Note, or portion thereof, is registered on
the close of business on such record date, and the Company shall have no
obligation to pay interest on such Note or portion thereof except to

                                       10

<PAGE>

the extent required to be paid upon such redemption or repurchase in accordance
with Article III, Article XVI or Article XVII. Interest may, at the option of
the Company, be paid by check mailed to the address of such person on the Note
registry; provided that, with respect to any holder of Notes with an aggregate
principal amount equal to or in excess of $2,000,000, at the request of such
holder in writing to the Company, interest on such holder's Notes shall be paid
by wire transfer in immediately available funds in accordance with the wire
transfer instruction supplied by such holder from time to time to the Trustee
and paying agent (if different from Trustee) at least two days prior to the
applicable record date. The term "record date" with respect to any interest
payment date shall mean the February 15 or August 15 immediately preceding said
March 1 or September 1, respectively.

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

         Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any said March 1 or September 1 (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Noteholder on
the relevant record date by virtue of his having been such Noteholder; and such
Defaulted Interest shall be paid by the Company, at its election in each case,
as provided in clause (1) or (2) below:

                           (1)      The Company may elect to make payment of any
                  Defaulted Interest to the persons in whose names the Notes (or
                  their respective Predecessor Notes) are registered at the
                  close of business on a special record date for the payment of
                  such Defaulted Interest, which shall be fixed in the following
                  manner. The Company shall notify the Trustee in writing of the
                  amount of Defaulted Interest to be paid on each Note and the
                  date of the payment (which shall be not less than twenty-five
                  (25) days after the receipt by the Trustee of such notice,
                  unless the Trustee shall consent to an earlier date), and at
                  the same time, the Company shall deposit with the Trustee an
                  amount of money equal to the aggregate amount 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 fifteen
                  (15) days and not less than ten (10) days prior to the date of
                  the proposed payment and not less than ten (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 Noteholder as of
                  such special record date at his address as it appears in the
                  Note register, not less than ten (10) days prior to such
                  special record date. Notice of the proposed payment of such
                  Defaulted Interest and the special record date therefor having
                  been so mailed, such Defaulted Interest shall be paid to the
                  persons in whose names the Notes (or their respective
                  Predecessor Notes) were registered at the close of business on

                                       11

<PAGE>

                  such special record date and shall no longer be payable
                  pursuant to the following clause (2).

                           (2)      The Company may make payment of any
                  Defaulted Interest in any other lawful manner not inconsistent
                  with the requirements of any securities exchange or automated
                  quotation system on which the Notes may be listed or
                  designated for issuance, and upon such notice as may be
                  required by such exchange or automated quotation system, 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.

         Section 2.4 Execution of Notes. The Notes shall be signed in the name
and on behalf of the Company by the facsimile signature of its President, its
Chief Executive Officer, any of its Executive or Senior Vice Presidents, or any
of its Vice Presidents (whether or not designated by a number or numbers or word
or words added before or after the title "Vice President") and attested by the
facsimile signature of its Secretary or any of its Assistant Secretaries (which
may be printed, engraved or otherwise reproduced thereon, by facsimile or
otherwise). Only such Notes as shall bear thereon a certificate of
authentication substantially in the form set forth on the form of Note attached
as Exhibit A hereto, manually executed by the Trustee (or an authenticating
agent appointed by the Trustee as provided by Section 18.11), shall be entitled
to the benefits of this Indenture or be valid or obligatory for any purpose.
Such certificate by the Trustee (or such an authenticating agent) upon any Note
executed by the Company shall be conclusive evidence that the Note so
authenticated has been duly authenticated and delivered hereunder and that the
holder is entitled to the benefits of this Indenture.

         In case any officer of the Company who shall have signed any of the
Notes shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company; and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution of this Indenture any such
person was not such an officer.

         Section 2.5 Exchange and Registration of Transfer of Notes;
Restrictions on Transfer; Depositary.

                  (a)      The Company shall cause to be kept at the Corporate
         Trust Office a register (the register maintained in such office and in
         any other office or agency of the Company designated pursuant to
         Section 5.2 being herein sometimes collectively referred to as the
         "Note register") in which, subject to such reasonable regulations as it
         may prescribe, the Company shall provide for the registration of Notes
         and of transfers of Notes. Such register shall be in written form or in
         any form capable of being converted into written form within a
         reasonable period of time. The Trustee is hereby appointed "Note
         registrar" for the purpose of registering Notes and transfers of Notes
         as herein provided. The Company may appoint one or more co-registrars
         in accordance with Section 5.2.

                                       12

<PAGE>

                  Upon surrender for registration of transfer of any Note to the
         Note registrar or any co-registrar, and satisfaction of the
         requirements for such transfer set forth in this Section 2.5, the
         Company shall execute, and the Trustee shall authenticate and deliver,
         in the name of the designated transferee or transferees, one or more
         new Notes of any authorized denominations and of a like aggregate
         principal amount and bearing such restrictive legends as may be
         required by this Indenture.

                  Notes may be exchanged for other Notes of any authorized
         denominations and of a like aggregate principal amount, upon surrender
         of the Notes to be exchanged at any such office or agency. Whenever any
         Notes are so surrendered for exchange, the Company shall execute, and
         the Trustee shall authenticate and deliver, the Notes which the
         Noteholder making the exchange is entitled to receive, bearing
         registration numbers not contemporaneously outstanding.

                  All Notes presented or surrendered for registration of
         transfer or for exchange shall (if so required by the Company, the
         Trustee, the Note registrar or any co-registrar) be duly endorsed, or
         be accompanied by a written instrument or instruments of transfer in
         form satisfactory to the Company and duly executed, by the Noteholder
         thereof or his attorney-in-fact duly authorized in writing.

                  No service charge shall be charged to the Noteholder for any
         exchange or registration of transfer of Notes, but the Company may
         require payment of a sum sufficient to cover any tax, assessments or
         other governmental charges that may be imposed in connection therewith.

                  None of the Company, the Trustee, the Note registrar or any
         co-registrar shall be required to exchange or register a transfer of
         (a) any Notes for a period of fifteen (15) days next preceding any
         selection of Notes to be redeemed or (b) any Notes called for
         redemption or, if a portion of any Note is selected or called for
         redemption, such portion thereof selected or called for redemption or
         (c) any Notes surrendered for conversion or, if a portion of any Note
         is surrendered for conversion, such portion thereof surrendered for
         conversion or (d) any Notes, or a portion of any Note, surrendered for
         repurchase (and not withdrawn) in connection with a Repurchase Event or
         (e) any Notes, or a portion of any Note, tendered for repurchase (and
         not withdrawn) pursuant to Section 17.1.

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

                  (b)      So long as the Notes are eligible for book-entry
         settlement with the Depositary, unless otherwise required by law, all
         Notes issued to QIBs pursuant to Rule 144A of the Securities Act to be
         traded on The Portal Market shall be represented by a Note in global
         form (the "Global Note") registered in the name of the Depositary or
         the nominee of the Depositary. The transfer and exchange of beneficial
         interests in the Global Note, which does not involve the issuance of a
         definitive Note, shall be effected through the Depositary (but not the
         Trustee or the Custodian) in accordance with this

                                       13

<PAGE>

         Indenture (including the restrictions on transfer set forth herein) and
         the procedures of the Depositary therefor.

                  Notes resold to persons who are not QIBs will be issued in
         definitive registered form and may not be represented by the Global
         Note. Any transfer of a beneficial interest in the Global Note which
         cannot be effected through book-entry settlement must be effected by
         the delivery to the transferee (or its nominee) of a definitive Note or
         Notes registered in the name of the transferee (or its nominee) on the
         books maintained by the Trustee in accordance with the transfer
         restrictions set forth herein. With respect to any such transfer, the
         Trustee or the Custodian, at the direction of the Trustee, will cause,
         in accordance with the standing instructions and procedures existing
         between the Depositary and the Custodian, the aggregate principal
         amount of the Global Note to be reduced by the principal amount of the
         beneficial interest in the Global Note being transferred and, following
         such reduction, the Company will execute and the Trustee will
         authenticate and deliver to the transferee (or such transferee's
         nominee, as the case may be), a Note or Notes in the appropriate
         aggregate principal amount in the name of such transferee (or its
         nominee) and bearing such restrictive legends as may be required by
         this Indenture.

                  (c)      So long as the Notes are eligible for book-entry
         settlement, unless otherwise required by law, upon any transfer of a
         definitive Note to a QIB in accordance with Rule 144A and upon receipt
         of the definitive Note or Notes being so transferred, together with a
         certification from the transferor that the transferee is a QIB (or
         other evidence satisfactory to the Trustee), the Trustee shall make or
         direct the Custodian to make, an endorsement on the Global Note to
         reflect an increase in the aggregate principal amount of the Notes
         represented by the Global Note by the principal amount of the Note
         being transferred to the QIB, the Trustee shall cancel such definitive
         Note or Notes and cause, or direct the Custodian to cause, in
         accordance with the standing instructions and procedures existing
         between the Depositary and the Custodian, the aggregate principal
         amount of Notes represented by the Global Note to be increased
         accordingly; provided that no definitive Note, or portion thereof, in
         respect of which the Company or an Affiliate of the Company held any
         beneficial interest shall be included in the Global Note until such
         definitive Note is freely tradable in accordance with Rule 144(k);
         provided further that the Trustee shall authenticate and deliver Notes
         in definitive form upon any transfer of a beneficial interest in the
         Global Note to the Company or any Affiliate of the Company.

                  Any Global Note may be endorsed with or have incorporated in
         the text thereof such legends or recitals or changes not inconsistent
         with the provisions of this Indenture as may be required by the
         Custodian, the Depositary or by the National Association of Securities
         Dealers, Inc. in order for the Notes to be tradeable on The Portal
         Market or as may be required for the Notes to be tradeable on any other
         market developed for trading of securities pursuant to Rule 144A or
         required to comply with any applicable law or any regulation thereunder
         or with the rules and regulations of any securities exchange or
         automated quotation system upon which the Notes may be listed or traded
         or designated for issuance or to conform with any usage with respect
         thereto, or to indicate any special limitations or restrictions to
         which any particular Notes are subject.

                                       14

<PAGE>

                  (d)      Every Note that bears or is required under this
         Section 2.5(d) to bear either of the legends set forth in this Section
         2.5(d) (together with any Common Stock issued upon conversion of the
         Notes and required to bear either of the legends set forth in Section
         2.5(f), collectively, the "Restricted Securities") shall be subject to
         the restrictions on transfer set forth in this Section 2.5(d)
         (including one of the legends set forth below), unless such
         restrictions on transfer shall be waived by written consent of the
         Company, and the holder of each such Restricted Security, by such
         holder's acceptance thereof, agrees to be bound by all such
         restrictions on transfer. As used in Sections 2.5(d) and 2.5(f), the
         term "transfer" encompasses any sale, pledge, transfer or other
         disposition whatsoever of any Restricted Security.

                  Until two (2) years after the original issuance date of any
         Note, any certificate evidencing such Note (and all securities issued
         in exchange therefor or substitution thereof, other than Common Stock,
         if any, issued upon conversion thereof which shall bear the legend set
         forth in Section 2.5(f), if applicable) shall bear a legend in
         substantially the following form (unless such Notes have been
         transferred pursuant to a registration statement that has been declared
         effective under the Securities Act and which continues to be effective
         at the time of such transfer, pursuant to the exemption from
         registration provided by Rule 144 under the Securities Act, or unless
         otherwise agreed by the Company in writing, with notice thereof to the
         Trustee):

                  THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
                  U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
                  OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD
                  EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
                  ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A
                  "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
                  THE SECURITIES ACT); (2) AGREES THAT IT WILL NOT WITHIN TWO
                  YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY
                  RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE
                  COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A)
                  TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED
                  INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
                  SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM
                  REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
                  AVAILABLE) OR (D) PURSUANT TO A REGISTRATION STATEMENT WHICH
                  HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND
                  WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER);
                  AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE
                  NOTE EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER
                  PURSUANT TO CLAUSE 2(D) ABOVE) A NOTICE SUBSTANTIALLY TO THE
                  EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE
                  NOTE EVIDENCED HEREBY WITHIN TWO YEARS AFTER THE ORIGINAL
                  ISSUANCE OF SUCH NOTE (OTHER THAN A TRANSFER PURSUANT TO
                  CLAUSE 2(D) ABOVE), THE HOLDER MUST CHECK THE APPROPRIATE BOX
                  SET FORTH ON THE

                                       15

<PAGE>

                  REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
                  SUBMIT THIS CERTIFICATE TO U.S. BANK NATIONAL ASSOCIATION, AS
                  TRUSTEE. IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE 2(C)
                  ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO
                  U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE, SUCH
                  CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE
                  COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER
                  IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
                  TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
                  THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE
                  EARLIER OF THE TRANSFER OF THE NOTE EVIDENCED HEREBY PURSUANT
                  TO CLAUSE 2(C) OR 2(D) ABOVE OR THE EXPIRATION OF TWO YEARS
                  FROM THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY.

                  Any Note (or security issued in exchange or substitution
         therefor) as to which such restrictions on transfer shall have expired
         in accordance with their terms may, upon surrender of such Note for
         exchange to the Note registrar in accordance with the provisions of
         this Section 2.5, be exchanged for a new Note or Notes, of like tenor
         and aggregate principal amount, which shall not bear the restrictive
         legend required by this Section 2.5(d).

                  Notwithstanding any other provisions of this Indenture (other
         than the provisions set forth in this Section 2.5(d)), a Global Note
         may not be transferred as a whole except by the Depositary to a nominee
         of the Depositary or by a nominee of the Depositary to the Depositary
         or another nominee of the Depositary or by the Depositary or any such
         nominee to a successor Depositary or a nominee of such successor
         Depositary.

                  The Depositary shall be a clearing agency registered under the
         Exchange Act. The Company initially appoints The Depository Trust
         Company to act as Depositary with respect to the Global Note.
         Initially, the Global Note shall be issued to the Depositary,
         registered in the name of Cede & Co., as the nominee of the Depositary,
         and deposited with the Trustee as custodian for Cede & Co.

                  (e)      Authentication of Certificated Note in Absence of
         Depositary. If at any time the Depositary for a Global Note notifies
         the Company that it is unwilling or unable to continue as Depositary
         for such Note, the Company may appoint a successor Depositary with
         respect to such Note. If a successor Depositary for the Global Note is
         not appointed by the Company within ninety (90) days after delivery of
         such notice; or an Event of Default has occurred and is continuing,
         then the Company shall execute, and the Trustee shall, upon receipt of
         an authentication order in accordance with Section 2.4 hereof,
         authenticate and deliver certificated Notes in an aggregate principal
         amount equal to the principal amount of the Global Note in exchange for
         such Global Note and upon delivery of the Global Note to the Trustee
         the Global Note shall be canceled.

                  If a Note in certificated form is issued in exchange for any
         portion of a Global Note after the close of business on any record date
         at the office or agency where such

                                       16

<PAGE>

         exchange occurs and before the opening of business at such office or
         agency on the next succeeding interest payment date, interest will not
         be payable on such interest payment date in respect of such
         certificated Note, but will be payable on such interest payment date
         only with respect to the exchanged portion of the Global Note in
         accordance with the provisions of this Indenture.

                  Definitive Notes issued in exchange for all or a part of the
         Global Note pursuant to this Section 2.5(e) shall be registered in such
         names and in such authorized denominations as the Depositary, pursuant
         to instructions from its direct or indirect participants or otherwise,
         shall instruct the Trustee. Upon execution and authentication, the
         Trustee shall deliver such definitive Notes to the persons in whose
         names such definitive Notes are so registered.

                  At such time as all interests in the Global Note have been
         redeemed, converted, canceled, repurchased or transferred, the Global
         Note shall be, upon receipt thereof, canceled by the Trustee in
         accordance with standing procedures and instructions existing between
         the Depositary and the Custodian. At any time prior to such
         cancellation, if any interest in the Global Note is exchanged for
         definitive Notes, redeemed, converted, canceled, repurchased or
         transferred to a transferee who receives definitive Notes therefore or
         any definitive Note is exchanged or transferred for part of the Global
         Note, the principal amount of the Global Note shall, in accordance with
         the standing procedures and instructions existing between the
         Depositary and the Custodian, be appropriately reduced or increased, as
         the case may be, and an endorsement shall be made on the Global Note,
         by the Trustee or the Custodian, at the direction of the Trustee, to
         reflect such reduction or increase.

                  In the event of the occurrence of either of the events
         specified in this Section, the Company will promptly make available to
         the Trustee a reasonable supply of certificated Notes in definitive,
         fully registered form without interest coupons.

                  (f)      Until two (2) years after the original issuance date
         of any Note, any stock certificate representing Common Stock issued
         upon conversion of such Note shall bear a legend in substantially the
         following form (unless the Note or such Common Stock has been sold
         pursuant to the exemption from registration provided by Rule 144 under
         the Securities Act or pursuant to a registration statement that has
         been declared effective under the Securities Act, and which continues
         to be effective at the time of such transfer, or such Common Stock has
         been issued upon conversion of Notes that have been transferred
         pursuant to a registration statement that has been declared effective
         under the Securities Act or pursuant to the exemption from registration
         provided by Rule 144 under the Securities Act, or unless otherwise
         agreed by the Company with written notice thereof to the Trustee and
         any transfer agent for the Common Stock):

                  THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED
                  UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
                  "SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND MAY NOT BE
                  OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
                  THE HOLDER HEREOF AGREES THAT

                                       17

<PAGE>

                  UNTIL THE EXPIRATION OF TWO YEARS AFTER THE ORIGINAL ISSUANCE
                  OF THE NOTE UPON THE CONVERSION OF WHICH THE COMMON STOCK
                  EVIDENCED HEREBY WAS ISSUED, (1) IT WILL NOT RESELL OR
                  OTHERWISE TRANSFER THE COMMON STOCK EVIDENCED HEREBY EXCEPT
                  (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
                  "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
                  THE SECURITIES ACT) IN COMPLIANCE WITH RULE 144A, (C) PURSUANT
                  TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
                  THE SECURITIES ACT (IF AVAILABLE), OR (D) PURSUANT TO A
                  REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
                  THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE
                  TIME OF SUCH TRANSFER); (2) PRIOR TO ANY SUCH TRANSFER (OTHER
                  THAN A TRANSFER PURSUANT TO CLAUSE 1(D) ABOVE), IT WILL
                  FURNISH TO EQUISERVE, AS TRANSFER AGENT, SUCH CERTIFICATIONS,
                  LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY
                  REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
                  PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
                  TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND
                  (3) IT WILL DELIVER TO EACH PERSON TO WHOM THE COMMON STOCK
                  EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER
                  PURSUANT TO CLAUSE 1(D) ABOVE) A NOTICE SUBSTANTIALLY TO THE
                  EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE
                  EARLIER OF THE TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY
                  PURSUANT TO CLAUSE 1(C) OR 1(D) ABOVE OR THE EXPIRATION OF TWO
                  YEARS FROM THE ORIGINAL ISSUANCE OF THE NOTE UPON THE
                  CONVERSION OF WHICH THE COMMON STOCK EVIDENCED HEREBY WAS
                  ISSUED.

                  Any such Common Stock as to which such restrictions on
         transfer shall have expired in accordance with their terms may, upon
         surrender of the certificates representing such shares of Common Stock
         for exchange in accordance with the procedures of the transfer agent
         for the Common Stock, be exchanged for a new certificate or
         certificates for a like aggregate number of shares of Common Stock,
         which shall not bear the restrictive legend required by this Section
         2.5(f).

                  (g)      Any Note or Common Stock issued upon the conversion
         or exchange of a Note that, prior to the expiration of the holding
         period applicable to sales thereof under Rule 144(k) under the
         Securities Act (or any successor provision), is purchased or owned by
         the Company or any Affiliate thereof may not be resold by the Company
         or such Affiliate unless registered under the Securities Act or resold
         pursuant to an exemption from the registration requirements of the
         Securities Act in a transaction that results in such Notes or Common
         Stock, as the case may be, no longer being "restricted securities" (as
         defined under Rule 144).

                                       18

<PAGE>

                  (h)      Notwithstanding any provision of Section 2.5 to the
         contrary, in the event Rule 144(k) as promulgated under the Securities
         Act (or any successor rule) is amended to change the two-year period
         under Rule 144(k) (or the corresponding period under any successor
         rule), from and after receipt by the Trustee of the Officers'
         Certificate and Opinion of Counsel provided for in this Section 2.5(h),
         (i) each reference in Section 2.5(d) to "two (2) years" and in the
         restrictive legend set forth in such paragraph to "TWO YEARS" shall be
         deemed for all purposes hereof to be references to such changed period,
         (ii) each reference in Section 2.5(f) to "two (2) years" and in the
         restrictive legend set forth in such paragraph to "TWO YEARS" shall be
         deemed for all purposes hereof to be references to such changed period
         and (iii) all corresponding references in the Notes and the restrictive
         legends thereon shall be deemed for all purposes hereof to be
         references to such changed period, provided that such changes shall not
         become effective if they are otherwise prohibited by, or would
         otherwise cause a violation of, the then-applicable federal securities
         laws. As soon as practicable after the Company has knowledge of the
         effectiveness of any such amendment to change the two-year period under
         Rule 144(k) (or the corresponding period under any successor rule),
         unless such changes would otherwise be prohibited by, or would
         otherwise cause a violation of, the then-applicable securities law, the
         Company shall provide to the Trustee an Officers' Certificate and
         Opinion of Counsel informing the Trustee of the effectiveness of such
         amendment and the effectiveness of the foregoing changes to Sections
         2.5(d) and 2.5(f) and the Notes. The provisions of this Section 2.5(h)
         will not be effective until such time as the Opinion of Counsel and
         Officers' Certificate have been received by the Trustee hereunder. This
         Section 2.5(h) shall apply to successive amendments to Rule 144(k) (or
         any successor rule) changing the holding period thereunder.

         Section 2.6 Mutilated, Destroyed, Lost or Stolen Notes. In case any
Note shall become mutilated or be destroyed, lost or stolen, the Company in its
discretion may execute, and upon its request the Trustee or an authenticating
agent appointed by the Trustee shall authenticate and deliver, a new Note,
bearing a number not contemporaneously outstanding, in exchange and substitution
for the mutilated Note, or in lieu of and in substitution for the Note so
destroyed, lost or stolen. In every case the applicant for a substituted Note
shall furnish to the Company, to the Trustee and, if applicable, to such
authenticating agent such security or indemnity as may be required by them to
save each of them harmless from any loss, liability, cost or expense caused by
or connected with such substitution, and, in every case of destruction, loss or
theft, the applicant shall also furnish to the Company, to the Trustee and, if
applicable, to such authenticating agent evidence to their satisfaction of the
destruction, loss or theft of such Note and of the ownership thereof.

         The Trustee or such authenticating agent may authenticate any such
substituted Note and deliver the same upon the receipt of such security or
indemnity as the Trustee, the Company and, if applicable, such authenticating
agent may require. Upon the issuance of any substituted Note, 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 connected
therewith. In case any Note which has matured or is about to mature, has been
called for redemption, has been surrendered for repurchase on a Repurchase Date
(and not withdrawn) or is about to be converted into Common Stock shall become
mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a
substitute Note, pay or authorize the payment of or

                                       19

<PAGE>

convert or authorize the conversion of the same (without surrender thereof
except in the case of a mutilated Note), as the case may be, if the applicant
for such payment or conversion shall furnish to the Company, to the Trustee and,
if applicable, to such authenticating agent such security or indemnity as may be
required by them to save each of them harmless for any loss, liability, cost or
expense caused by or connected with such substitution, and, in case of
destruction, loss or theft, evidence satisfactory to the Company, the Trustee
and, if applicable, any paying agent or conversion agent of the destruction,
loss or theft of such Note and of the ownership thereof.

         Every substitute Note issued pursuant to the provisions of this Section
2.6 by virtue of the fact that any Note is destroyed, lost or stolen shall
constitute an additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of (but shall be subject to all the limitations set
forth in) this Indenture equally and proportionately with any and all other
Notes duly issued hereunder. To the extent permitted by law, all Notes shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment or conversion or redemption
or repurchase of mutilated, destroyed, lost or stolen Notes and shall preclude
any and all other rights or remedies notwithstanding any law or statute existing
or hereafter enacted to the contrary with respect to the replacement or payment
or conversion or redemption or repurchase of negotiable instruments or other
securities without their surrender.

         Section 2.7 Temporary Notes. Pending the preparation of definitive
Notes, the Company may execute and the Trustee or an authenticating agent
appointed by the Trustee shall, upon written request of the Company,
authenticate and deliver temporary Notes (printed or lithographed). Temporary
Notes shall be issuable in any authorized denomination, and substantially in the
form of the definitive Notes but with such omissions, insertions and variations
as may be appropriate for temporary Notes, all as may be determined by the
Company. Every such temporary Note shall be executed by the Company and
authenticated by the Trustee or such authenticating agent upon the same
conditions and in substantially the same manner, and with the same effect, as
the definitive Notes. Without unreasonable delay the Company will execute and
deliver to the Trustee or such authenticating agent definitive Notes (other than
in the case of Notes in global form) and thereupon any or all temporary Notes
(other than any the Global Note) may be surrendered in exchange therefor, at
each office or agency maintained by the Company pursuant to Section 5.2 and the
Trustee or such authenticating agent shall authenticate and deliver in exchange
for such temporary Notes an equal aggregate principal amount of definitive
Notes. Such exchange shall be made by the Company at its own expense and without
any charge therefor. Until so exchanged, the temporary Notes shall in all
respects be entitled to the same benefits and subject to the same limitations
under this Indenture as definitive Notes authenticated and delivered hereunder.

         Section 2.8 Cancellation of Notes Paid, Etc. All Notes surrendered for
the purpose of payment, redemption, repurchase, conversion, exchange or
registration of transfer, shall, if surrendered to the Company or any paying
agent or any Note registrar or any conversion agent, be surrendered to the
Trustee and promptly canceled by it, or, if surrendered to the Trustee, shall be
promptly canceled by it, and no Notes shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. Upon written
instructions of the Company, the Trustee shall destroy canceled Notes and, after
such destruction, shall deliver a certificate of such destruction to the
Company. If the Company shall acquire any of the Notes, such

                                       20

<PAGE>

acquisition shall not operate as a redemption, repurchase or satisfaction of the
indebtedness represented by such Notes unless and until the same are delivered
to the Trustee for cancellation.

         Section 2.9 CUSIP Numbers. The Company in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the trustee shall use
"CUSIP" numbers in notices of redemption and Company Notices as a convenience to
holders of the Notes; provided, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Notes or as contained in any notice of a redemption or Company Notice and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any redemption or offer to purchase pursuant to Article XVI shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the "CUSIP" numbers.

         Section 2.10 Transfer of Interests in Global Notes. The registered
holder of a Global Note may grant proxies and otherwise authorize any person,
including Agent Members and persons that may hold interests through Agent
Members, to take any action which a holder is entitled to take under this
Indenture or the Note.

                                  ARTICLE III

                              REDEMPTION OF NOTES

         Section 3.1 Optional Redemption; Redemption Prices. The Company may, at
its option, redeem all or from time to time any part of the Notes on any date
prior to maturity, upon notice as set forth in Section 3.2, and at the optional
redemption prices set forth in the form of Note attached as Exhibit A hereto,
together with accrued interest, if any, to, but excluding, the date fixed for
redemption, provided, however, that no such redemption shall be effected before
September 6, 2006.

         Section 3.2 Notice of Redemption; Selection of Notes. In case the
Company shall desire to exercise the right to redeem all or, as the case may be,
any part of the Notes pursuant to Section 3.1, it shall fix a date for
redemption, and it, or at its request (which must be received by the Trustee at
least ten (10) Business Days prior to the date the Trustee is requested to give
notice as described below unless a shorter period is agreed to by the Trustee),
the Trustee in the name of and at the expense of the Company, shall mail or
cause to be mailed a notice of such redemption at least twenty (20) Trading Days
and not more than sixty (60) Trading Days prior to the date fixed for a
redemption to the holders of Notes to be redeemed as a whole or in part at their
last addresses as the same appear on the Note register (provided that if the
Company shall give such notice, it shall also give such notice, and notice of
the Notes to be redeemed, to the Trustee). Such mailing shall be by first class
mail. The notice if mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the holder receives such
notice. In any case, failure to give such notice by mail or any defect in the
notice to the holder of any Note designated for redemption as a whole or in part
shall not affect the validity of the proceedings for the redemption of any other
Note.

         Each such notice of redemption shall specify the aggregate principal
amount of Notes to be redeemed, the date fixed for redemption, the redemption
price at which Notes are to be

                                       21

<PAGE>

redeemed, the place or places of payment, that payment will be made upon
presentation and surrender of such Notes, that interest accrued to, but
excluding, the date fixed for redemption will be paid as specified in said
notice, and that on and after said date interest thereon or on the portion
thereof to be redeemed will cease to accrue. Such notice shall also state the
current Conversion Price and the date on which the right to convert such Notes
or portions thereof into Common Stock will expire. If fewer than all the Notes
are to be redeemed, the notice of redemption shall identify the Notes to be
redeemed. In case any Note is to be redeemed in part only, the notice of
redemption shall state the portion of the principal amount thereof to be
redeemed and shall state that on and after the date fixed for redemption, upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion thereof will be issued.

         On or prior to the redemption date specified in the notice of
redemption given as provided in this Section, the Company will deposit with the
Trustee or with one or more paying agents (or, if the Company is acting as its
own paying agent, set aside, segregate and hold in trust as provided in Section
5.4) an amount of money sufficient to redeem on the redemption date all the
Notes (or portions thereof) so called for redemption (other than those
theretofore surrendered for conversion into Common Stock) at the appropriate
redemption price, together with accrued interest to, but excluding, the date
fixed for redemption; provided that if such payment is made on the redemption
date it must be received by the Trustee or paying agent, as the case may be, by
10:00 a.m. New York City time, on such date. If any Note called for redemption
is converted pursuant hereto, any money deposited with the Trustee or any paying
agent or so segregated and held in trust for the redemption of such Note shall
be paid to the Company upon its request, or, if then held by the Company shall
be discharged from such trust.

         If fewer than all the Notes are to be redeemed, the Company will give
the Trustee written notice in the form of an Officers' Certificate not fewer
than thirty-five (35) days (or such shorter period of time as may be acceptable
to the Trustee) prior to the redemption date as to the aggregate principal
amount of Notes to be redeemed. If fewer than all the Notes are to be redeemed,
the Trustee shall select the Notes or portions thereof to be redeemed (in
principal amounts of $1,000 or integral multiples thereof), by lot, or by a
method the Trustee considers fair and appropriate (as long as such method is not
prohibited by the rules of any United States national securities exchange or of
an established automated over-the-counter trading market in the United States on
which the Notes are then listed). If any Note selected for partial redemption is
converted in part after such selection, the converted portion of such Note shall
be deemed (so far as is possible) to be the portion to be selected for
redemption. The Notes (or portions thereof) so selected shall be deemed duly
selected for redemption for all purposes hereof, notwithstanding that any such
Note is converted as a whole or in part before the mailing of the notice of
redemption.

         Upon any redemption of less than all Notes, the Company and the Trustee
may (but need not) treat as outstanding any Notes surrendered for conversion
during the period of fifteen (15) days next preceding the mailing of a notice of
redemption and may (but need not) treat as not outstanding any Note
authenticated and delivered during such period in exchange for the unconverted
portion of any Note converted in part during such period.

                                       22

<PAGE>

         Section 3.3 Payment of Notes Called for Redemption. If notice of
redemption has been given as provided in Section 3.2, the Notes or portion of
Notes with respect to which such notice has been given shall, unless converted
into Common Stock pursuant to the terms hereof, become due and payable on the
date and at the place or places stated in such notice at the applicable
redemption price, together with interest accrued to, but excluding, the date
fixed for redemption, and on and after said date (unless the Company shall
default in the payment of such Notes at the redemption price, together with
interest accrued to, but excluding, said date) interest on the Notes or portion
of Notes so called for redemption shall cease to accrue and such Notes shall
cease after the close of business on the Business Day next preceding the date
fixed for redemption to be convertible into Common Stock and, except as provided
in Sections 8.5 and 13.4, to be entitled to any benefit or security under this
Indenture, and the holders thereof shall have no right in respect of such Notes
except the right to receive the redemption price thereof and unpaid interest to,
but excluding, the date fixed for redemption. On presentation and surrender of
such Notes at a place of payment in said notice specified, the said Notes or the
specified portions thereof to be redeemed shall be paid and redeemed by the
Company at the applicable redemption price, together with interest accrued
thereon to, but excluding, the date fixed for redemption; provided that, if the
applicable redemption date is an interest payment date, the semi-annual payment
of interest becoming due on such date shall be payable to the holders of such
Notes registered as such on the relevant record date subject to the terms and
provisions of Section 2.3 hereof.

         Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the holder thereof, at
the expense of the Company, a new Note or Notes, of authorized denominations, in
principal amount equal to the unredeemed portion of the Notes so presented.

         Notwithstanding the foregoing, the Trustee shall not redeem any Notes
or mail any notice of optional redemption during the continuance of a default in
payment of interest or premium on the Notes or of any Event of Default of which,
in the case of any Event of Default other than under Section 7.1(a), (b) or (d),
a Responsible Officer of the Trustee has knowledge. If any Note called for
redemption shall not be so paid upon surrender thereof for redemption, the
principal and premium, if any, shall, until paid or duly provided for, bear
interest from the date fixed for redemption at the rate borne by the Note and
such Note shall remain convertible into Common Stock until the principal and
premium, if any, shall have been paid or duly provided for.

         Section 3.4 Conversion Arrangement on Call for Redemption. In
connection with any redemption of Notes, the Company may arrange for the
purchase and conversion of any Notes not converted prior to the expiration of
such conversion right by an agreement with one or more investment bankers or
other purchasers to purchase such Notes by paying to the Trustee in trust for
the Noteholders, on or before the date fixed for redemption, an amount not less
than the applicable redemption price, together with interest accrued to the date
fixed for redemption, of such Notes. Notwithstanding anything to the contrary
contained in this Article III, the obligation of the Company to pay the
redemption price of such Notes, together with interest accrued to, but
excluding, the date fixed for redemption, shall be deemed to be satisfied and
discharged to the extent such amount is so paid by such purchasers. If such an
agreement is entered into, a copy of which, certified as true and correct by the
Secretary or Assistant Secretary of the Company will be filed with the Trustee
prior to the date fixed for redemption, any Notes not duly surrendered

                                       23

<PAGE>

for conversion by the holders thereof may, at the option of the Company, be
deemed, to the fullest extent permitted by law, acquired by such purchasers from
such holders and (notwithstanding anything to the contrary contained in Article
XV) surrendered by such purchasers for conversion, all as of immediately prior
to the close of business on the date fixed for redemption (and the right to
convert any such Notes shall be deemed to have been extended through such time),
subject to payment of the above amount as aforesaid. At the direction of the
Company, the Trustee shall hold and dispose of any such amount paid to it in the
same manner as it would monies deposited with it by the Company for the
redemption of Notes. Without the Trustee's prior written consent, no arrangement
between the Company and such purchasers for the purchase and conversion of any
Notes shall increase or otherwise affect any of the powers, duties,
responsibilities or obligations of the Trustee as set forth in this Indenture,
and the Company agrees to indemnify the Trustee from, and hold it harmless
against, any loss, liability or expense arising out of or in connection with any
such arrangement for the purchase and conversion of any Notes between the
Company and such purchasers, including the costs and expenses incurred by the
Trustee in the defense of any claim or liability arising out of or in connection
with the exercise or performance of any of its powers, duties, responsibilities
or obligations under this Indenture.

                                   ARTICLE IV

                             SUBORDINATION OF NOTES

         Section 4.1 Agreement of Subordination. The Company, for itself and its
successors, covenants and agrees, and each holder of Notes issued hereunder by
his acceptance thereof likewise covenants and agrees, that all Notes shall be
issued subject to the provisions of this Article IV; and each person holding any
Note, whether upon original issue or upon transfer, assignment or exchange
thereof, accepts and agrees to be bound by such provisions.

         The payment of the principal of, premium, if any, and interest on all
Notes (including, but not limited to, the redemption price or repurchase price
with respect to the Notes to be redeemed or repurchased, as provided in this
Indenture) issued hereunder shall, to the extent and in the manner hereinafter
set forth, be subordinated to the prior payment in full, in cash or in such
other form of payment as may be acceptable to the holders of Senior
Indebtedness, of all Senior Indebtedness, whether outstanding at the date of
this Indenture or thereafter incurred or created.

         The Notes issued under this Indenture shall rank pari passu with the
Company's 3.75% Convertible Subordinated Notes due 2007.

         No provision of this Article IV shall prevent the occurrence of any
default or Event of Default hereunder.

         Section 4.2 Payments to Noteholders. No payment (including pursuant to
any redemption or repurchase of Notes) shall be made with respect to the
principal of, or premium, if any, or interest (including Liquidated Damages, if
any) on the Notes, except payments and distributions made by the Trustee as
permitted by Section 4.6, if at the time of such payment:

                                       24
<PAGE>

                  (a)      a default in the payment of principal, premium, if
         any, or interest or other payment due on Senior Indebtedness occurs and
         is continuing beyond any applicable period of grace; or

                  (b)      any other default occurs and is continuing with
         respect to Designated Senior Indebtedness that then permits holders of
         the Designated Senior Indebtedness as to which such default related to
         accelerate its maturity and the Trustee and the Company receive a
         notice of such default (a "Payment Blockage Notice") from a
         representative of Designated Senior Indebtedness or a holder of
         Designated Senior Indebtedness or the Company.

         The Company may and shall resume payments on the Notes (1) in the case
of a payment default, on the date upon which such default is cured or waived or
ceases to exist, and (2) in the case of a nonpayment default with respect to
Designated Senior Indebtedness, on the earlier of the date on which the
nonpayment default is cured or waived or ceases to exist or 179 days pass after
the date on which the applicable Payment Blockage Notice is received.

         No new period of payment blockage may be commenced pursuant to a
Payment Blockage Notice unless (A) at least 365 days shall have elapsed since
the first day of effectiveness of the immediately prior Payment Blockage Notice
and (B) all scheduled payments of principal, premium, if any, and interest on
the Notes that have come due have been paid in full in cash, or in such other
form of payment as may be acceptable to the holders of the Notes or the Trustee
or the Noteholders shall not have begun proceedings to enforce the right of the
Noteholders to receive payment. No default (whether or not such default is on
the same issue of Designated Senior Indebtedness) that existed or was continuing
on the date of delivery of any Payment Blockage Notice to the Trustee shall be,
or be made, the basis for a subsequent Payment Blockage Notice.

         In addition, in the event of any acceleration of the Notes because of
an Event of Default, no payment or distribution (including with respect to any
redemption or repurchase of the Notes) shall be made to the Trustee or any
holder of Notes with respect to the principal of, premium, if any, or interest
(including Liquidated Damages, if any) on the Notes, except payments and
distributions made by the Trustee as permitted by Section 4.6, until all Senior
Indebtedness has been paid in full in cash or other payment satisfactory to the
holders of Senior Indebtedness or such acceleration is rescinded in accordance
with the terms of this Indenture. If payment of the Notes is accelerated because
of an Event of Default, the Company shall promptly notify holders of Senior
Indebtedness of the acceleration.

         Notwithstanding the foregoing, in the event that the Trustee or any
holder of Notes receives any payment or distribution of assets of the Company of
any kind in contravention of any term of this Indenture, whether in cash,
property or securities, including, without limitation, by way of setoff or
otherwise, before all Senior Indebtedness is paid in full, in cash or such other
form of payment as may be acceptable to the holders of Senior Indebtedness, then
such payment or distribution shall be held by the recipient or recipients in
trust for the benefit of, and shall immediately be paid over or delivered to,
the holders of Senior Indebtedness or their respective representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their

                                       25
<PAGE>

respective interests may appear, as calculated by the Company, for application
to the payment of all Senior Indebtedness remaining unpaid to the extent
necessary to make payment in full, in cash or such other form of payment as may
be acceptable to the holders of Senior Indebtedness, of all Senior Indebtedness
remaining unpaid, after giving effect to any concurrent payment or distribution,
or provision therefor, to or for the holders of such Senior Indebtedness.

         Nothing in this Section 4.2 shall apply to claims of, or payments to,
the Trustee pursuant to Section 8.6. This Section 4.2 shall be subject to the
further provisions of Section 4.6.

         Section 4.3       Bankruptcy and Dissolution, Etc. Upon any payment by
the Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to creditors upon any dissolution,
winding-up, liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all
amounts due or to become due upon all Senior Indebtedness shall first be paid in
full, in cash or in such other form of payment as may be acceptable to the
holders of Senior Indebtedness, before any payment is made on account of the
principal or premium, if any, and interest on the Notes (except payments made
pursuant to Article XIII from monies deposited with the Trustee pursuant thereto
prior to the happening of such dissolution, winding-up, liquidation or
reorganization or bankruptcy, insolvency, receivership or other such
proceedings); and upon any such dissolution, winding-up, liquidation or
reorganization or bankruptcy, insolvency, receivership or other such
proceedings, any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
which the holders of the Notes or the Trustee under this Indenture would be
entitled, except for the provisions of this Article IV, shall (except as
aforesaid) be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or distribution,
or by the holders of the Notes or by the Trustee under this Indenture if
received by them or it, directly to the holders of Senior Indebtedness (pro rata
to such holders on the basis of the respective amounts of Senior Indebtedness
held by such holders, or as otherwise required by law or a court order) or their
respective representative or representatives, or to the trustee or trustees
under any indenture pursuant to which any instruments evidencing any Senior
Indebtedness may have been issued, as their respective interests may appear, to
the extent necessary to pay all Senior Indebtedness in full in cash or in such
other form of payment as may be acceptable to the holders of Senior Indebtedness
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness, before any payment or distribution is made to
the holders of the Notes or to the Trustee under this Indenture.

         Notwithstanding the foregoing, in the event that the Trustee or any
holder of Notes receives any payment or distribution of assets of the Company of
any kind in contravention of any term of this Indenture, whether in cash,
property or securities, including, without limitation, by way of setoff or
otherwise, before all Senior Indebtedness is paid in full, in cash or such other
form of payment as may be acceptable to the holders of Senior Indebtedness, then
such payment or distribution shall be held by the recipient or recipients in
trust for the benefit of, and shall immediately be paid over or delivered to,
the holders of Senior Indebtedness or their respective representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, as calculated by the Company, for
application to the payment of all Senior Indebtedness remaining unpaid to the
extent necessary to make payment in full, in

                                       26
<PAGE>

cash or such other form of payment as may be acceptable to the holders of Senior
Indebtedness, of all Senior Indebtedness remaining unpaid, after giving effect
to any concurrent payment or distribution, or provision therefor, to or for the
holders of such Senior Indebtedness.

         For purposes of Section 4.2 hereof and this Section 4.3, the words
"cash, property or securities" shall not be deemed to include shares of stock of
the Company as reorganized or readjusted, or securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated (at least to the extent provided in this
Article IV with respect to the Notes) to the payment of all Senior Indebtedness
which may at the time be outstanding; provided that (i) the Senior Indebtedness
is assumed by the new corporation, if any, resulting from such reorganization or
adjustment, and (ii) the rights of the holders of Senior Indebtedness (other
than leases which are not assumed by the Company or by the new corporation, as
the case may be) are not, without the consent of such holders, altered by such
reorganization or readjustment. The consolidation of the Company with, or the
merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided for in Article XII shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 4.3 if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article
XII.

         Nothing in this Section 4.3 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 8.6. This Section 4.3 shall be subject
to the further provisions of Section 4.6.

         Section 4.4       Subrogation of Notes. Subject to the payment in full
in cash or in such other form of payment as may be acceptable to the holders of
Senior Indebtedness of all Senior Indebtedness, the rights of the holders of the
Notes shall be subrogated to the extent of the payments or distributions made to
the holders of such Senior Indebtedness pursuant to the provisions of this
Article IV (equally and ratably with the holders of all indebtedness of the
Company which by its express terms is subordinated to other indebtedness of the
Company to substantially the same extent as the Notes are subordinated and is
entitled to like rights of subrogation) to the rights of the holders of Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness until the
principal of, and premium, if any, and interest on the Notes shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions to
the holders of the Senior Indebtedness of any cash, property or securities to
which the holders of the Notes or the Trustee would be entitled except for the
provisions of this Article IV, and no payment over pursuant to the provisions of
this Article IV, to or for the benefit of the holders of Senior Indebtedness by
holders of the Notes or the Trustee, shall, as between the Company, its
creditors other than holders of Senior Indebtedness, and the holders of the
Notes, be deemed to be a payment by the Company to or on account of the Senior
Indebtedness; and no payments or distributions of cash, property or securities
to or for the benefit of the holders of the Notes pursuant to the subrogation
provisions of this Article IV, which would otherwise have been paid to the
holders of Senior Indebtedness shall be deemed to be a payment by the Company to
or for the account of the Notes. It is understood that the provisions of this
Article IV are intended solely for the purposes of defining the relative rights
of the holders of the Notes, on the one hand, and the holders of the Senior
Indebtedness, on the other hand.

                                       27
<PAGE>

         Nothing contained in this Article IV or elsewhere in this Indenture or
in the Notes is intended to or shall impair, as among the Company, its creditors
other than the holders of Senior Indebtedness, and the holders of the Notes, the
obligation of the Company, which is absolute and unconditional, to pay to the
holders of the Notes the principal of, and premium, if any, and interest on the
Notes as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the holders of
the Notes and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or the
holder of any Note from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article IV of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.

         Upon any payment or distribution of assets of the Company referred to
in this Article IV, the Trustee, subject to the provisions of Section 8.1, and
the holders of the Notes shall be entitled to rely upon any order or decree made
by any court of competent jurisdiction in which such bankruptcy, dissolution,
winding-up, liquidation or reorganization proceedings are pending, or a
certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent
or other person making such payment or distribution, delivered to the Trustee or
to the holders of the Notes, for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article IV.

         Section 4.5       Authorization by Noteholders. Each holder of a Note
by his acceptance thereof authorizes and directs the Trustee on his behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article IV and appoints the Trustee his
attorney-in-fact for any and all such purposes.

         Section 4.6       Notice to Trustee. The Company shall give written
notice to the Trustee of the issuance of any Designated Senior Indebtedness. In
addition, the Company shall give prompt written notice in the form of an
Officers' Certificate to a Responsible Officer of the Trustee and to any paying
agent of any fact known to the Company which would prohibit the making of any
payment of monies to or by the Trustee or any paying agent in respect of the
Notes pursuant to the provisions of this Article IV. Notwithstanding the
provisions of this Article IV or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any Senior
Indebtedness or of any default or Event of Default with respect to any Senior
Indebtedness or of any other facts which would prohibit the making of any
payment of monies to or by the Trustee in respect of the Notes pursuant to the
provisions of this Article IV, unless and until a Responsible Officer of the
Trustee shall have received written notice thereof at the Corporate Trust Office
from the Company (in the form of an Officers' Certificate) or a holder or
holders of Senior Indebtedness or from any trustee thereof who shall have been
certified by the Company or otherwise established to the reasonable satisfaction
of the Trustee to be such holder or trustee; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Section 8.1, shall be
entitled in all respects to assume that no such facts exist; provided that if on
a date at least two (2) Business Days prior to the date upon which by the terms
hereof any such monies may become payable for any purpose (including, without
limitation, the payment of the principal of, or premium, if any, or interest on
any Note),

                                       28
<PAGE>

the Trustee shall not have received with respect to such monies the notice
provided for in this Section 4.6, then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such monies and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary which may be
received by it on or after such prior date.

         Notwithstanding anything to the contrary hereinbefore set forth,
nothing shall prevent (a) any payment by the Company or the Trustee to the
Noteholders of amounts in connection with a redemption of Notes if (i) notice of
such redemption has been given to the Noteholders pursuant to Article III prior
to the receipt by the Trustee of written notice as aforesaid, and (ii) such
notice of redemption is given not earlier than sixty (60) days before the
redemption date, (b) any payment by the Company or the Trustee to the
Noteholders of amounts in connection with a repurchase of Notes if (i) notice of
such repurchase has been given pursuant to Article XVI prior to the receipt by
the Trustee of written notice as aforesaid, and (ii) such notice of repurchase
is given not earlier than forty (40) days before the repurchase date, or (c) any
payment by the Trustee to the Noteholders of monies deposited with it pursuant
to Section 13.1.

         The Trustee, subject to the provisions of Section 8.1, shall be
entitled to rely on the delivery to it of a written notice by a person
representing himself to be a holder of Senior Indebtedness (or a trustee on
behalf of such holder) to establish that such notice has been given by a holder
of Senior Indebtedness or a trustee on behalf of any such holder or holders. In
the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article IV, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such person, the extent to which such person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such person under this Article IV, and if such evidence is not furnished the
Trustee may defer any payment to such person pending judicial determination as
to the right of such person to receive such payment.

         Section 4.7       Trustee's Relation to Senior Indebtedness. The
Trustee and any agent of the Company or the Trustee in its individual capacity
shall be entitled to all the rights set forth in this Article IV in respect of
any Senior Indebtedness at any time held by it, to the same extent as any other
holder of Senior Indebtedness, and nothing in Section 8.13 or elsewhere in this
Indenture shall deprive the Trustee or any such agent of any of its rights as
such holder. Nothing in this Article IV shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 8.6.

         With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article IV, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Section 4.2 and Section 8.1, the Trustee shall not be liable to
any holder of Senior Indebtedness if it shall pay over or deliver to holders of
Notes, the Company or any other person money or assets to which any holder of
Senior Indebtedness shall be entitled by virtue of this Article IV or otherwise.

                                       29
<PAGE>

         Section 4.8       No Impairment of Subordination. No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.

         Section 4.9       Certain Conversions, Make-Whole Interest Payments and
Repurchases in Common Stock Not Deemed Payment. For the purposes of this Article
IV only, (1) the issuance and delivery of junior securities upon (i) conversion
of Notes in accordance with Article XV, or (ii) the payment of any Make-Whole
Interest Payment in Common Stock in accordance with Section 15.11 in the manner
specified in such Section shall not be deemed to constitute a payment or
distribution on account of the principal of (or premium, if any) or interest on
Notes or on account of the purchase or other acquisition of Notes, and will
therefore not be subject to the subordination provisions of Article IV, and (2)
the payment, issuance or delivery of cash (excluding cash paid for fractional
shares upon conversion of a Note), property or securities (other than junior
securities) upon conversion shall be deemed to constitute payment on account of
the principal of such Note. For the purposes of this Section, the term "junior
securities" means (a) shares of any stock of any class of the Company and (b)
securities of the Company which are subordinated in right of payment to all
Senior Indebtedness which may be outstanding at the time of issuance or delivery
of such securities to substantially the same extent as, or to a greater extent
than, the Notes are so subordinated as provided in this Article IV. Nothing
contained in this Article or elsewhere in this Indenture or in the Notes is
intended to or shall impair, as among the Company, its creditors other than
holders of Senior Indebtedness and the holders of the Notes, the right, which is
absolute and unconditional, of the holder of any Note to convert such Note in
accordance with Article XV.

         Section 4.10      Article Applicable to Paying Agents. If at any time
any paying agent other than the Trustee shall have been appointed by the Company
and be then acting hereunder, the term Trustee as used in this Article IV shall
(unless the context shall otherwise require) be construed as extending to and
including such paying agent within its meaning as fully for all intents and
purposes as if such paying agent were named in this Article in addition to or in
place of the Trustee; provided, however, that Section 4.5 shall not apply to the
Company or any Affiliate of the Company if it or such Affiliate acts as paying
agent.

                                   ARTICLE V

                       PARTICULAR COVENANTS OF THE COMPANY

         Section 5.1       Payment of Principal, Premium and Interest. The
Company covenants and agrees that it will duly and punctually pay or cause to be
paid the principal of and premium, if any, and interest on each of the Notes at
the places, at the respective times and in the manner provided herein and in the
Notes. Each installment of interest on the Notes due on any semi-annual interest
payment date may be paid by mailing checks for the interest payable to or upon
the written order of the holders of Notes entitled thereto as they shall appear
on the registry books of the Company, provided that, with respect to any holder
of Notes with an aggregate principal amount equal to or in excess of $2,000,000,
at the request of such holder in writing to

                                       30
<PAGE>

the Company, interest on such holder's Notes shall be paid by wire transfer in
immediately available funds in accordance with the wire transfer instructions
supplied by such holder from time to time to the Trustee and paying agent (if
different from the Trustee) at least two days prior to the applicable record
date.

         Section 5.2       Maintenance of Office or Agency. The Company will
maintain in the Borough of Manhattan, The City of New York, an office or agency
where the Notes may be surrendered for registration of transfer or exchange or
for presentation for payment or for conversion, redemption or repurchase and
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency not designated or appointed by the Trustee. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office or the
office or agency of the Trustee in the Borough of Manhattan, The City of New
York.

         The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
The City of New York, 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.

         The Company hereby initially designates the Trustee as paying agent,
Note registrar, Custodian and conversion agent and the Corporate Trust Office
and the office or agency of the Trustee in the Borough of Manhattan, The City of
New York (which initially shall be U.S. Bank Trust National Association, an
affiliate of the Trustee, located at 100 Wall Street, Suite 1600, New York, NY
10005) as one such office or agency of the Company for each of the aforesaid
purposes.

         So long as the Trustee is the Note registrar, the Trustee agrees to
mail, or cause to be mailed, the notices set forth in Section 8.10(a) and the
third paragraph of Section 8.11.

         Section 5.3       Appointments to Fill Vacancies in Trustee's Office.
The Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 8.10, a Trustee, so
that there shall at all times be a Trustee hereunder.

         Section 5.4       Provisions as to Paying Agent.

                  (a)      If the Company shall appoint a paying agent other
         than the Trustee or if the Trustee shall appoint such a paying agent,
         it will cause such paying agent to execute and deliver to the Trustee
         an instrument in which such agent shall agree with the Trustee, subject
         to the provisions of this Section 5.4:

                           (1)      that it will hold all sums held by it as
                  such agent for the payment of the principal of and premium, if
                  any, or interest on the Notes (whether such sums

                                       31
<PAGE>

                  have been paid to it by the Company or by any other obligor on
                  the Notes) in trust for the benefit of the holders of the
                  Notes;

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

                           (3)      that at any time during the continuance of
                  an Event of Default, upon request of the Trustee, it will
                  forthwith pay to the Trustee all sums so held in trust.

                  The Company shall, on or before each due date of the principal
         of, premium, if any, or interest on the Notes, deposit with the paying
         agent a sum sufficient to pay such principal, premium, if any, or
         interest, and (unless such paying agent is the Trustee) the Company
         will promptly notify the Trustee of any failure to take such action,
         provided that if such deposit is made on the due date, such deposit
         must be received by the paying agent by 10:00 a.m., New York City time,
         on such date.

                  (b)      If the Company shall act as its own paying agent, it
         will, on or before each due date of the principal of, premium, if any,
         or interest on the Notes, set aside, segregate and hold in trust for
         the benefit of the holders of the Notes a sum sufficient to pay such
         principal, premium, if any, or interest so becoming due and will notify
         the Trustee of any failure to take such action and of any failure by
         the Company (or any other obligor under the Notes) to make any payment
         of the principal of, premium, if any, or interest on the Notes when the
         same shall become due and payable.

                  (c)      Anything in this Section 5.4 to the contrary
         notwithstanding, the Company may, at any time, for the purpose of
         obtaining a satisfaction and discharge of this Indenture, or for any
         other reason, pay or cause to be paid to the Trustee all sums held in
         trust by the Company or any paying agent hereunder as required by this
         Section 5.4, such sums to be held by the Trustee upon the trusts herein
         contained and upon such payment by the Company or any paying agent to
         the Trustee, the Company or such paying agent shall be released from
         all further liability with respect to such sums.

                  (d)      Anything in this Section 5.4 to the contrary
         notwithstanding, the agreement to hold sums in trust as provided in
         this Section 5.4 is subject to Sections 13.3 and 13.4.

         Section 5.5       Existence. Subject to Article XII, the Company will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence.

         Section 5.6       Rule 144A Information Requirement. Within the period
prior to the expiration of the holding period applicable to sales thereof under
Rule 144(k) under the Securities Act (or any successor provision), the Company
covenants and agrees that it shall, during any period in which it is not subject
to Section 13 or 15(d) under the Exchange Act, make available to any holder or
beneficial holder of Notes or any Common Stock issued upon conversion thereof,
in each case which continue to be Restricted Securities, in connection with

                                       32
<PAGE>

any sale thereof and any prospective purchaser of Notes or such Common Stock
from such holder or beneficial holder, the information required pursuant to Rule
144A(d)(4) under the Securities Act upon the request of any holder or beneficial
holder of the Notes or such Common Stock and it will take such further action as
any holder or beneficial holder of such Notes or such Common Stock may
reasonably request, all to the extent required from time to time to enable such
holder or beneficial holder to sell its Notes or Common Stock without
registration under the Securities Act within the limitation of the exemption
provided by Rule 144A, as such rule may be amended from time to time. Upon the
request of any holder or any beneficial holder of the Notes or such Common
Stock, the Company will deliver to such holder a written statement as to whether
it has complied with such requirements.

         Section 5.7       Stay, Extension and Usury Laws. The Company covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would prohibit or
forgive the Company from paying all or any portion of the principal of or
interest on the Notes as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this Indenture; and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not, by resort to any such law, 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 has been enacted.

         Section 5.8       Compliance Certificate. The Company shall deliver to
the Trustee within 120 days after the end of each fiscal year of the Company
(beginning with the fiscal year ending on March 31, 2004) an Officers'
Certificate stating whether or not to the best of their knowledge the signers
know of any default or Event of Default that occurred during such period. If
they do, such Officers' Certificate shall describe the default or Event of
Default and its status.

         Section 5.9       Liquidated Damages. If Liquidated Damages are payable
by the Company pursuant to the Registration Rights Agreement, the Company shall
deliver to the Trustee a certificate to that effect stating (i) the amount of
such Liquidated Damages that are payable and (ii) the date on which such damages
are payable. Unless and until a Responsible Officer of the Trustee receives at
the Corporate Trust Office such a certificate, the Trustee may assume without
inquiry that no such Liquidated Damages are payable. If the Company has paid
Liquidated Damages directly to the persons entitled to them, the Company shall
deliver to the Trustee a certificate setting forth the particulars of such
payment

         Section 5.10      Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.

                                   ARTICLE VI

          NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE

         Section 6.1       Noteholders' Lists. The Company covenants and agrees
that it will furnish or cause to be furnished to the Trustee, semi-annually, not
more than fifteen (15) days after each

                                       33
<PAGE>

February 15 and August 15 in each year beginning with February 15, 2004, and at
such other times as the Trustee may request in writing, within thirty (30) days
after receipt by the Company of any such request (or such lesser time as the
Trustee may reasonably request in order to enable it to timely provide any
notice to be provided by it hereunder), a list in such form as the Trustee may
reasonably require of the names and addresses of the holders of Notes as of a
date not more than fifteen (15) days (or such other date as the Trustee may
reasonably request in order to so provide any such notices) prior to the time
such information is furnished, except that no such list need be furnished so
long as the Trustee is acting as Note registrar.

         Section 6.2       Preservation and Disclosure of Lists.

                  (a)      The Trustee shall preserve, in as current a form as
         is reasonably practicable, all information as to the names and
         addresses of the holders of Notes contained in the most recent list
         furnished to it as provided in Section 6.1 or maintained by the Trustee
         in its capacity as Note registrar, if so acting. The Trustee may
         destroy any list furnished to it as provided in Section 6.1 upon
         receipt of a new list so furnished.

                  (b)      The rights of Noteholders to communicate with other
         holders of Notes with respect to their rights under this Indenture or
         under the Notes and the corresponding rights and duties of the Trustee,
         shall be as provided by the Trust Indenture Act.

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

         Section 6.3       Reports by Trustee.

                  (a)      After this Indenture has been qualified under the
         Trust Indenture Act, the Trustee shall transmit to holders of Notes
         such reports concerning the Trustee and its actions under this
         Indenture as may be required pursuant to the Trust Indenture Act at the
         times and in the manner provided pursuant thereto.

                  (b)      A copy of such report shall, at the time of such
         transmission to holders of Notes, be filed by the Trustee with each
         stock exchange and automated quotation system upon which the Notes are
         listed and with the Company. The Company will notify the Trustee when
         the Notes are listed on any stock exchange or automated quotation
         system and when any such listing is discontinued.

         Section 6.4       Reports by Company.

                  (a)      After this Indenture has been qualified under the
         Trust Indenture Act, the Company shall file with the Trustee and the
         Commission, and transmit to holders of Notes, 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 Exchange

                                       34
<PAGE>

         Act shall be filed with the Trustee within 15 days after the same is so
         required to be filed with the Commission.

                  (b)      The Company will deliver to the Trustee (a) as soon
         as available and in any event within ninety (90) days (or such shorter
         period as the information specified in (a)(i) and (ii) is required to
         be filed with the Commission) after the end of each fiscal year of the
         Company (i) a consolidated balance sheet of the Company and its
         Subsidiaries as of the end of such fiscal year and the related
         consolidated statements of operations, stockholders' equity and cash
         flows for such fiscal year, all reported on by an independent public
         accountant of nationally recognized standing and (ii) a report
         containing a management's discussion and analysis of the financial
         condition and results of operations and a description of the business
         and properties of the Company and (b) as soon as available and in any
         event within forty-five (45) days (or such shorter period as the
         information specified in (b)(i) and (ii) is required to be either filed
         with or furnished to the Commission) after the end of each of the first
         three quarters of each fiscal year of the Company (i) unaudited
         consolidated interim financial statements as specified in Regulation
         S-X of the rules and regulations of the Commission and (ii) a report
         containing management's discussion and analysis of the financial
         condition and results of operations of the Company for such quarter;
         provided that the foregoing statements and reports shall not be
         required for any fiscal year or quarter, as the case may be, with
         respect to which the Company files or expects to file with the Trustee
         an annual report or quarterly report, as the case may be, pursuant to
         the preceding paragraph of this Section 6.4. Notwithstanding anything
         to the contrary in this Indenture, the Company will provide to the
         Trustee the report specified in this Section. The Trustee shall have no
         liability as regards the substance of the information provided by the
         Company or its agents pursuant to this Section 6.4.

                                  ARTICLE VII

                              DEFAULTS AND REMEDIES

         Section 7.1       Events of Default. In case one or more of the
following Events of Default (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) shall have occurred and
be continuing:

                  (a)      default in the payment of the principal of and
         premium, if any, on any of the Notes as and when the same shall become
         due and payable either at maturity or in connection with any
         redemption, by declaration or otherwise, whether or not such payment is
         prohibited by the provisions of Article IV; or

                  (b)      default for thirty (30) days in the payment of any
         installment of interest or Liquidated Damages, if any, upon any of the
         Notes as and when the same shall become due and payable, whether or not
         such payment is prohibited by the provisions of Article IV; or

                                       35
<PAGE>

                  (c)      failure on the part of the Company duly to observe or
         perform any other of the covenants on the part of the Company in the
         Notes or in this Indenture (other than a covenant default in whose
         performance or whose breach is elsewhere in this Section specifically
         dealt with) and the continuance of such failure for a period of
         forty-five (45) days after the date on which written notice of such
         failure, requiring the Company to remedy the same, shall have been
         given to the Company by the Trustee, or to the Company and a
         Responsible Officer of the Trustee by the holders of at least 25% in
         aggregate principal amount of the outstanding Notes at the time
         outstanding determined in accordance with Section 9.4; or

                  (d)      default in the payment of the Repurchase Event Price
         in respect of any Note on the Event Repurchase Date therefor in
         accordance with the provisions of Article XVI, whether or not such
         payment in cash of the Repurchase Event Price is prohibited by the
         provisions of Article IV; or

                  (e)      default in the payment of the Repurchase Price in
         respect of any Note on the Repurchase Date therefor in accordance with
         the provisions of Article XVII, whether or not such payment in cash of
         the Repurchase Price is prohibited by the provisions of Article IV; or

                  (f)      failure on the part of the Company to provide a
         written notice of a Repurchase Event in accordance with Section 16.2;
         or

                  (g)      failure on the part of the Company or any Significant
         Subsidiary to make any payment at maturity, including any applicable
         grace period, in respect of Indebtedness of, or guaranteed or assumed
         by, the Company or any Significant Subsidiary, in a principal amount
         then outstanding in excess of U.S. $7,500,000, and the continuance of
         such failure for a period of thirty (30) 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 not less
         than 25% in aggregate principal amount of the Notes then outstanding, a
         written notice specifying such default and requiring the Company to
         cause such default to be cured or waived and stating that such notice
         is a "Notice of Default" hereunder; or

                  (h)      default on the part of the Company or any Significant
         Subsidiary with respect to any Indebtedness of, or guaranteed or
         assumed by, the Company or any Significant Subsidiary, which default
         results in the acceleration of Indebtedness in a principal amount then
         outstanding in excess of U.S. $7,500,000, and such Indebtedness shall
         not have been discharged or such acceleration shall not have been
         rescinded or annulled for a period of thirty (30) 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 not
         less than 25% in aggregate principal amount of the Notes then
         outstanding, a written notice specifying such default and requiring the
         Company to cause such Indebtedness to be discharged or cause such
         default to be cured or waived or such acceleration to be rescinded or
         annulled and stating that such notice is a "Notice of Default"
         hereunder; or

                                       36
<PAGE>

                  (i)      the Company or any Significant Subsidiary shall
         commence a voluntary case or other proceeding seeking liquidation,
         reorganization or other relief with respect to itself or its debts
         under any bankruptcy, insolvency or other similar law now or hereafter
         in effect or seeking the appointment of a trustee, receiver,
         liquidator, custodian or other similar official of it or any
         substantial part of its property, or shall consent to any such relief
         or to the appointment of or taking possession by any such official in
         an involuntary case or other proceeding commenced against it, or shall
         make a general assignment for the benefit of creditors, or shall fail
         generally to pay its debts as they become due; or

                  (j)      an involuntary case or other proceeding shall be
         commenced against the Company or any Significant Subsidiary seeking
         liquidation, reorganization or other relief with respect to itself or
         its debts under any bankruptcy, insolvency or other similar law now or
         hereafter in effect or seeking the appointment of a trustee, receiver,
         liquidator, custodian or other similar official of it or any
         substantial part of its property, and such involuntary case or other
         proceeding shall remain undismissed and unstayed for a period of ninety
         (90) consecutive days;

then, and in each and every such case (other than an Event of Default specified
in Section 7.1(i) or 7.1(j) with respect to the Company), unless the principal
of all of the Notes shall have already become due and payable, either the
Trustee or the holders of not less than 25% in aggregate principal amount of the
Notes then outstanding hereunder determined in accordance with Section 9.4, by
notice in writing to the Company (and to the Trustee if given by Noteholders),
may declare the principal of and premium, if any, on all the Notes and the
interest accrued thereon to be due and payable immediately, and upon any such
declaration the same shall become and shall be immediately due and payable,
anything in this Indenture or in the Notes contained to the contrary
notwithstanding. If an Event of Default specified in Section 7.1(i) or 7.1(j)
occurs and is continuing with respect to the Company, the principal of all the
Notes and the interest accrued thereon shall be immediately due and payable.
This provision, however, is subject to the conditions that if, at any time after
the principal of the Notes shall have been so declared due and payable, and
before any judgment or decree for the payment of the monies due shall have been
obtained or entered as hereinafter provided, the Company shall pay or shall
deposit with the Trustee a sum sufficient to pay all matured installments of
interest upon all Notes and the principal of and premium, if any, on any and all
Notes which shall have become due otherwise than by acceleration (with interest
on overdue installments of interest (to the extent that payment of such interest
is enforceable under applicable law) and on such principal and premium, if any,
at the rate borne by the Notes, to the date of such payment or deposit) and
amounts due to the Trustee pursuant to Section 8.6, and if any and all defaults
under this Indenture, other than the nonpayment of principal of and premium, if
any, and accrued interest on Notes which shall have become due by acceleration,
shall have been cured or waived pursuant to Section 7.7, then and in every such
case the holders of a majority in aggregate principal amount of the Notes then
outstanding, by written notice to the Company and to the Trustee, may waive all
defaults or Events of Default and rescind and annul such declaration and its
consequences; but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent default or Event of Default, or shall impair any
right consequent thereon. The Company shall notify the Responsible Officer of
the Trustee, promptly upon becoming aware thereof, of any default or Event of
Default and shall deliver to the Trustee a statement specifying

                                       37
<PAGE>

such default or Event of Default and the action the Company has taken, is taking
or proposes to take with respect thereto.

         In case the Trustee shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or abandoned
because of such waiver or rescission and annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such case
the Company, the holders of Notes, and the Trustee shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Company, the holders of Notes, and the Trustee shall
continue as though no such proceeding had been instituted.

         Section 7.2       Payments of Notes on Default; Suit Therefor. The
Company covenants that (a) in case default shall be made in the payment by the
Company of any installment of interest upon any of the Notes as and when the
same shall become due and payable, and such default shall have continued for a
period of thirty (30) days, or (b) in case default shall be made in the payment
of the principal of or premium, if any, on any of the Notes as and when the same
shall have become due and payable, whether at maturity of the Notes or in
connection with any redemption or repurchase, by declaration under this
Indenture or otherwise, then, upon demand of the Trustee, the Company will pay
to the Trustee, for the benefit of the holders of the Notes, the whole amount
that then shall have become due and payable on all such Notes for principal and
premium, if any, or interest, or both, as the case may be, with interest upon
the overdue principal and premium, if any, and (to the extent that payment of
such interest is enforceable under applicable law) upon the overdue installments
of interest at the rate borne by the Notes; and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including reasonable compensation to the Trustee, its agents,
attorneys and counsel, and any expenses or liabilities incurred by the Trustee
hereunder other than through its negligence or bad faith. Until such demand by
the Trustee, the Company may pay the principal of and premium, if any, and
interest on the Notes to the registered holders, whether or not the Notes are
overdue.

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

         In the case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Company or any other obligor on the Notes under
Title 11 of the United States Code, or any other applicable law, or in case a
receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Company or such other obligor, the property of the Company or
such other obligor, or in the case of any other judicial proceedings relative to
the Company or such other obligor upon the Notes, or to the creditors or
property of the Company or such other obligor, the Trustee, irrespective of
whether the principal of the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the

                                       38
<PAGE>

Trustee shall have made any demand pursuant to the provisions of this Section
7.2, shall be entitled and empowered, by intervention in such proceedings or
otherwise, to file and prove a claim or claims for the whole amount of
principal, premium, if any, and interest owing and unpaid in respect of the
Notes, and, in case of any judicial proceedings, to file such proofs of claim
and other papers or documents and to take such other actions as it may deem
necessary or advisable in order to have the claims of the Trustee and of the
Noteholders allowed in such judicial proceedings relative to the Company or any
other obligor on the Notes, its or their creditors, or its or their property,
and to collect and receive any monies or other property payable or deliverable
on any such claims, and to distribute the same after the deduction of any
amounts due the Trustee under Section 8.6; and any receiver, assignee or trustee
in bankruptcy or reorganization, liquidator, custodian or similar official is
hereby authorized by each of the Noteholders 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 Noteholders, to pay to the Trustee any amount due it
for reasonable compensation, expenses, advances and disbursements, including
agents and counsel fees incurred by it up to the date of such distribution. To
the extent that such payment of reasonable compensation, expenses, advances and
disbursements out of the estate in any such proceedings shall be denied for any
reason, payment of the same shall be secured by a lien on, and shall be paid out
of, any and all distributions, dividends, monies, securities and other property
which the holders of the Notes may be entitled to receive in such proceedings,
whether in liquidation or under any plan of reorganization or arrangement or
otherwise.

         All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Trustee without the possession of
any of the Notes, or the production thereof on any trial or other proceeding
relative thereto, and any such suit or proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for 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 Notes.

         In any proceedings brought by the Trustee (and in any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Notes, and it shall not be necessary to make any holders of the Notes
parties to any such proceedings.

         Section 7.3       Application of Monies Collected by Trustee. Any
monies collected by the Trustee pursuant to this Article VII shall be applied in
the order following, at the date or dates fixed by the Trustee for the
distribution of such monies, upon presentation of the several Notes, and
stamping thereon 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 8.6;

                  Second: Subject to the provisions of Article IV, in case the
         principal of the outstanding Notes shall not have become due and be
         unpaid, to the payment of interest on the Notes in default in the order
         of the maturity of the installments of such interest, with interest (to
         the extent that such interest has been collected by the Trustee) upon
         the

                                       39
<PAGE>

         overdue installments of interest at the rate borne by the Notes, such
         payments to be made ratably to the persons entitled thereto;

                  Third: Subject to the provisions of Article IV, in case the
         principal of the outstanding Notes shall have become due, by
         declaration or otherwise, and be unpaid, to the payment of the whole
         amount then owing and unpaid upon the Notes for principal and premium,
         if any, and interest, with interest on the overdue principal and
         premium, if any, and (to the extent that such interest has been
         collected by the Trustee) upon overdue installments of interest at the
         rate borne by the Notes; and in case such monies shall be insufficient
         to pay in full the whole amounts so due and unpaid upon the Notes, then
         to the payment of such principal and premium, if any, and interest
         without preference or priority of principal and premium, if any, over
         interest, or of interest over principal and premium, if any, or of any
         installment of interest over any other installment of interest, or of
         any Note over any other Note, ratably to the aggregate of such
         principal and premium, if any, and accrued and unpaid interest; and

                  Fourth: Subject to the provisions of Article IV, to the
         payment of the remainder, if any, to the Company or any other person
         lawfully entitled thereto.

         Section 7.4       Proceedings by Noteholder. No holder of any Note
shall have any right by virtue of or by availing of any provision of this
Indenture to institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Indenture, or for the appointment of a
receiver, trustee, liquidator, custodian or other similar official, or for any
other remedy hereunder, unless such holder previously shall have given to the
Trustee written notice of an Event of Default and of the continuance thereof, as
hereinbefore provided, and unless also the holders of not less than 25% in
aggregate principal amount of the Notes then outstanding shall have made written
request upon the Trustee to institute such action, suit or proceeding in its own
name as Trustee hereunder and shall have offered to the Trustee such indemnity
as may be reasonably satisfactory to the Trustee against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for sixty (60)
days after its receipt of such notice, request and offer of indemnity, shall
have neglected or refused to institute any such action, suit or proceeding and
no direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 7.7; it being understood and intended, and being
expressly covenanted by the taker and holder of every Note with every other
taker and holder and the Trustee, that no one or more holders of Notes 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 holder of Notes, or to obtain or seek to obtain priority over or
preference to any other such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Notes (except as otherwise provided herein).
For the protection and enforcement of this Section 7.4, each and every
Noteholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.

         Notwithstanding any other provision of this Indenture and any provision
of any Note, the right of any holder of any Note to receive payment of the
principal of and premium, if any, and interest on such Note, on or after the
respective due dates expressed in such Note, or to institute suit for the
enforcement of any such payment on or after such respective dates against the
Company shall not be impaired or affected without the consent of such holder.

                                       40
<PAGE>

         Anything in this Indenture or the Notes to the contrary
notwithstanding, the holder of any Note, without the consent of either the
Trustee or the holder of any other Note, in his own behalf and for his own
benefit, may enforce, and may institute and maintain any proceeding suitable to
enforce, his rights of conversion as provided herein.

         Section 7.5       Proceedings by Trustee. In case of an Event of
Default the Trustee may in its discretion proceed to protect and enforce the
rights vested in it by this Indenture by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any of such
rights, either by suit in equity or by action at law or by proceeding in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.

         Section 7.6       Remedies Cumulative and Continuing. Except as
provided in the last paragraph of Section 2.6, all powers and remedies given by
this Article VII to the Trustee or to the Noteholders shall, to the extent
permitted by law, be deemed cumulative and not exclusive of any thereof or of
any other powers and remedies available to the Trustee or the holders of the
Notes, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Indenture, and no
delay or omission of the Trustee or of any holder of any of the Notes to
exercise any right or power accruing upon any default or Event of Default
occurring and continuing as aforesaid shall impair any such right or power, or
shall be construed to be a waiver of any such default or any acquiescence
therein; and, subject to the provisions of Section 7.4, every power and remedy
given by this Article VII or by law to the Trustee or to the Noteholders may be
exercised from time to time, and as often as shall be deemed expedient, by the
Trustee or by the Noteholders.

         Section 7.7       Direction of Proceedings and Waiver of Defaults by
Majority of Noteholders. The holders of a majority in aggregate principal amount
of the Notes at the time outstanding determined in accordance with Section 9.4
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; provided, however, that (a) such direction shall
not be in conflict with any rule of law or with this Indenture, and (b) the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction. The holders of a majority in aggregate
principal amount of the Notes at the time outstanding determined in accordance
with Section 9.4 may on behalf of the holders of all of the Notes waive any past
default or Event of Default hereunder and its consequences except (i) a default
in the payment of interest or premium, if any, on, or the principal of, the
Notes when due, (ii) a failure by the Company to convert any Notes into Common
Stock or (iii) a default in respect of a covenant or provisions hereof which
under Article XI cannot be modified or amended without the consent of the
holders of all Notes then outstanding. Upon any such waiver the Company, the
Trustee and the holders of the Notes shall be restored to their former positions
and rights hereunder; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon. Whenever any
default or Event of Default hereunder shall have been waived as permitted by
this Section 7.7, said default or Event of Default shall for all purposes of the
Notes and this Indenture be deemed to have been cured and to be not continuing;
but no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon.

                                       41
<PAGE>

         Section 7.8       Notice of Defaults. The Trustee shall, within ninety
(90) days after the occurrence of a default, mail to all Noteholders, as the
names and addresses of such holders appear upon the Note register, notice of all
defaults known to a Responsible Officer, unless such defaults shall have been
cured or waived before the giving of such notice; and provided that, except in
the case of default in the payment of the principal of, or premium, if any, or
interest on any of the Notes, including without limiting the generality of the
foregoing any default in the payment of any Repurchase Event Price, any
Repurchase Price or in the payment of any amount due in connection with any
redemption of Notes, then in any such event the Trustee shall be protected in
withholding such notice if and so long as a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determine that the withholding
of such notice is in the best interests of the Noteholders.

         Section 7.9       Undertaking to Pay Costs. All parties to this
Indenture agree, and each holder of any Note by his acceptance thereof shall be
deemed to have agreed, that any court may, in its discretion, require, in any
suit for the enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; provided that the provisions of this Section 7.9 shall not
apply to any suit instituted by the Trustee, to any suit instituted by any
Noteholder, or group of Noteholders, holding in the aggregate more than 10% in
principal amount of the Notes at the time outstanding determined in accordance
with Section 9.4, or to any suit instituted by any Noteholder for the
enforcement of the payment of the principal of or premium, if any, or interest
on any Note (including, but not limited to, the redemption price or repurchase
price with respect to the Notes being redeemed or repurchased as provided in
this Indenture) on or after the due date expressed in such Note or to any suit
for the enforcement of the right to convert any Note in accordance with the
provisions of Article XV.

         Section 7.10      Delay or Omission Not Waiver. No delay or omission of
the Trustee or of any holder of any Note 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 any acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to the
holders of Notes may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the holders of Notes, as the case may be.

                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

         Section 8.1       Duties and Responsibilities of Trustee. The Trustee,
prior to the occurrence of an Event of Default and after the curing or waiver of
all Events of Default which may have occurred, undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture. In case an
Event of Default has occurred (which has not been cured or waived) the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs.

                                       42
<PAGE>

         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

                  (a)      prior to the occurrence of an Event of Default and
         after the curing or waiving of all Events of Default which may have
         occurred:

                           (1)      the duties and obligations of the Trustee
                  shall be determined solely by the express provisions of this
                  Indenture and, after it has been qualified thereunder, the
                  Trust Indenture Act, and the Trustee shall not be liable
                  except for the performance of such duties and obligations as
                  are specifically set forth in this Indenture and no implied
                  covenants or obligations shall be read into this Indenture and
                  the Trust Indenture Act against the Trustee; and

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

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

                  (c)      the Trustee shall not be liable to any Noteholder
         with respect to any action taken or omitted to be taken by it in good
         faith in accordance with the direction of the holders of not less than
         a majority in principal amount of the Notes at the time outstanding
         determined as provided in Section 9.4 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

                  (d)      whether or not therein 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.

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

         Section 8.2       Reliance on Documents, Opinions, Etc. Except as
otherwise provided in Section 8.1:

                                       43
<PAGE>

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

                  (b)      any request, direction, order or demand of the
         Company mentioned herein shall be sufficiently evidenced by an
         Officers' Certificate (unless other evidence in respect thereof be
         herein specifically prescribed); and any resolution of the Board of
         Directors may be evidenced to the Trustee by a copy thereof certified
         by the Secretary or an Assistant Secretary of the Company;

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

                  (d)      the Trustee shall be under no obligation to exercise
         any of the rights or powers vested in it by this Indenture at the
         request, order or direction of any of the Noteholders pursuant to the
         provisions of this Indenture, unless such Noteholders shall have
         offered to the Trustee reasonable security or indemnity against the
         costs, expenses and liabilities which may be incurred therein or
         thereby;

                  (e)      the Trustee shall not be bound to make any
         investigation into the facts or matters stated in any resolution,
         certificate, statement, instrument, opinion, report, notice, request,
         direction, consent, order, bond, debenture or other paper or document,
         but the Trustee, in its discretion, may make such further inquiry or
         investigation into such facts or matters as it may see fit, and, if the
         Trustee shall determine 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; provided, however, that if
         the payment within a reasonable time to the Trustee of the costs,
         expenses or liabilities likely to be incurred by it in the making of
         such investigation is, in the opinion of the Trustee, not reasonably
         assured to the Trustee by the security afforded to it by the terms of
         this Indenture, the Trustee may require indemnity reasonably
         satisfactory to the Trustee from the Noteholders against such expenses
         or liability as a condition to so proceeding; the reasonable expenses
         of every such examination shall be paid by the Company or, if paid by
         the Trustee or any predecessor Trustee, shall be repaid by the Company
         upon demand; and

                  (f)      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 by it with due care hereunder.

In no event shall the Trustee be liable for any consequential loss or damage of
any kind whatsoever (including but not limited to lost profits), even if the
Trustee has been advised of the likelihood of such loss or damage and regardless
of the form of action other than through the Trustee's willful misconduct or
gross negligence.

                                       44
<PAGE>

         Section 8.3       No Responsibility for Recitals, Etc. The recitals
contained herein and in the Notes (except in the Trustee's certificate of
authentication) shall be taken as the statements of the Company, and the Trustee
assumes no responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of any Notes or the proceeds of any Notes authenticated and delivered by
the Trustee in conformity with the provisions of this Indenture.

         Section 8.4       Trustee, Paying Agents, Conversion Agents or
Registrar May Own Notes. The Trustee, any paying agent, any conversion agent or
Note registrar, in its individual or any other capacity, may become the owner or
pledgee of Notes with the same rights it would have if it were not Trustee,
paying agent, conversion agent or Note registrar.

         Section 8.5       Monies to Be Held in Trust. Subject to the provisions
of Section 13.4, all monies received by the Trustee shall, until used or applied
as herein provided, be held in trust for the purposes for which they were
received. 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
may be agreed from time to time by the Company and the Trustee.

         Section 8.6       Compensation and Expenses of Trustee. The Company
covenants and agrees to pay to the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation for all services rendered by it
hereunder in any capacity (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust), and the Company
will pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances reasonably incurred or made by the Trustee in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence, willful misconduct or
bad faith. The Company also covenants to indemnify the Trustee in any capacity
under this Indenture and its agents and any authenticating agent for, and to
hold them harmless against, any loss, liability or expense incurred without
negligence, willful misconduct or bad faith on the part of the Trustee or such
agent or authenticating agent, as the case may be, and arising out of or in
connection with the acceptance or administration of this trust or in any other
capacity hereunder, including the costs and expenses of defending themselves
against any claim of liability in the premises. The obligations of the Company
under this Section 8.6 to compensate or indemnify the Trustee and to pay or
reimburse the Trustee for expenses, disbursements and advances shall be secured
by a lien prior to that of the Notes upon all property and funds held or
collected by the Trustee as such, except, subject to the effect of Sections 4.3
and 7.6, funds held in trust herewith for the benefit of the holders of
particular Notes prior to the date of the accrual of such unpaid compensation or
indemnifiable claim. The obligation of the Company under this Section shall
survive the satisfaction and discharge of this Indenture. The indemnification
provided in this Section 8.6 shall extend to the officers, directors, agents and
employees of the Trustee.

         When the Trustee and its agents and any authenticating agent incur
expenses or render services after an Event of Default specified in Section
7.1(h) or (i) occurs, the expenses and the

                                       45
<PAGE>

compensation for the services are intended to constitute expenses of
administration under any bankruptcy, insolvency or similar laws.

         Section 8.7       Officers' Certificate as Evidence. Except as
otherwise provided in Section 8.1, whenever in the administration of the
provisions of this Indenture the Trustee shall deem it necessary or desirable
that a matter be proved or established prior to taking or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence, willful misconduct,
recklessness and bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to the
Trustee, and such Officers' Certificate, in the absence of negligence, willful
misconduct, recklessness and bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken or omitted by it under the
provisions of this Indenture upon the faith thereof.

         Section 8.8       Conflicting Interests of Trustee. After qualification
under the Trust Indenture Act, if the Trustee has or shall acquire a conflicting
interest within the meaning 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.

         Section 8.9       Eligibility of Trustee. 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 (together
with its corporate parent) of at least $50,000,000. If such person publishes
reports of condition at least annually, pursuant to law or to the requirements
of any 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 8.10      Resignation or Removal of Trustee.

                  (a)      The Trustee may at any time resign by giving written
         notice of such resignation to the Company and by mailing notice thereof
         to the holders of Notes at their addresses as they shall appear on the
         Note register. Upon receiving such notice of resignation, the Company
         shall promptly appoint a successor trustee by written instrument, in
         duplicate, executed by order of the Board of Directors, one copy of
         which instrument shall be delivered to the resigning Trustee and one
         copy to the successor trustee. If no successor trustee shall have been
         so appointed and have accepted appointment sixty (60) days after the
         mailing of such notice of resignation to the Noteholders, the resigning
         Trustee may petition any court of competent jurisdiction for the
         appointment of a successor trustee, or any Noteholder who has been a
         bona fide holder of a Note or Notes for at least six months may,
         subject to the provisions of Section 7.9, on behalf of himself and all
         others similarly situated, petition any such court for the appointment
         of a successor trustee. Such court may thereupon, after such notice, if
         any, as it may deem proper and prescribe, appoint a successor trustee.

                                       46
<PAGE>

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

                           (1)      the Trustee shall fail to comply with
                  Section 8.8 within a reasonable time after written request
                  therefor by the Company or by any Noteholder who has been a
                  bona fide holder of a Note or Notes for at least six months,
                  or

                           (2)      the Trustee shall cease to be eligible in
                  accordance with the provisions of Section 8.9 and shall fail
                  to resign after written request therefor by the Company or by
                  any such Noteholder, 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, the Company may by a Board Resolution remove
         the Trustee and appoint a successor trustee by written instrument, in
         duplicate, executed by order of the Board of Directors, one copy of
         which instrument shall be delivered to the Trustee so removed and one
         copy to the successor trustee, or, subject to the provisions of Section
         7.9, any Noteholder who has been a bona fide holder of a Note or Notes
         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 and the appointment of a successor trustee.
         Such court may thereupon, after such notice, if any, as it may deem
         proper and prescribe, remove the Trustee and appoint a successor
         trustee.

                  (c)      The holders of a majority in aggregate principal
         amount of the Notes at the time outstanding may at any time remove the
         Trustee and nominate a successor trustee which shall be deemed
         appointed as successor trustee unless within ten (10) days after notice
         to the Company of such nomination the Company objects thereto, in which
         case the Trustee so removed or any Noteholder, upon the terms and
         conditions and otherwise as in Section 8.10(a) provided, may petition
         any court of competent jurisdiction for an appointment of a successor
         trustee.

                  (d)      Any resignation or removal of the Trustee and
         appointment of a successor trustee pursuant to any of the provisions of
         this Section 8.10 shall become effective upon acceptance of appointment
         by the successor trustee as provided in Section 8.11.

         Section 8.11      Acceptance by Successor Trustee. Any successor
trustee appointed as provided in Section 8.10 shall execute, acknowledge and
deliver to the Company and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Company or of the successor trustee, the trustee ceasing to act shall,
upon payment of any amounts then due it pursuant to the provisions of Section
8.6, execute and deliver an instrument transferring to such

                                       47
<PAGE>

successor trustee all the rights and powers of the trustee so ceasing to act.
Upon request of any such successor trustee, the Company shall execute any and
all instruments in writing for more fully and certainly vesting in and
confirming to such successor trustee all such rights and powers. Any trustee
ceasing to act shall, nevertheless, retain a lien upon all property and funds
held or collected by such trustee as such, except for funds held in trust for
the benefit of holders of particular Notes, to secure any amounts then due it
pursuant to the provisions of Section 8.6.

         No successor trustee shall accept appointment as provided in this
Section 8.11 unless at the time of such acceptance such successor trustee shall
be qualified under the provisions of Section 8.8 and be eligible under the
provisions of Section 8.9.

         Upon acceptance of appointment by a successor trustee as provided in
this Section 8.11, each of the Company and the former trustee shall mail or
cause to be mailed notice of the succession of such trustee hereunder to the
holders of Notes at their addresses as they shall appear on the Note register.
If the Company fails to mail such notice within ten (10) days after acceptance
of appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Company.

         Section 8.12      Succession by Merger, Etc. Any corporation or other
entity 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 or other
entity succeeding to all or substantially all of the corporate trust business of
the Trustee (including the administration of this Indenture), shall be the
successor to the Trustee hereunder without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that in
the case of any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee such corporation shall be qualified
under the provisions of Section 8.8 and eligible under the provisions of Section
8.9.

         In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture, any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee or authenticating agent appointed
by such predecessor trustee, and deliver such Notes so authenticated; and in
case at that time any of the Notes shall not have been authenticated, any
successor to the Trustee or an authenticating agent appointed by such successor
trustee may authenticate such Notes either in the name of any predecessor
trustee hereunder or in the name of the successor trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have;
provided, however, that the right to adopt the certificate of authentication of
any predecessor Trustee or to authenticate Notes in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.

         Section 8.13      Limitation on Rights of Trustee as Creditor. If and
when the Trustee shall be or become a creditor of the Company (or any other
obligor upon the Notes), after qualification under the Trust Indenture Act, the
Trustee shall be subject to the provisions of the Trust Indenture Act regarding
the collection of the claims against the Company (or any such other obligor).

                                       48
<PAGE>

                                   ARTICLE IX

                           CONCERNING THE NOTEHOLDERS

         Section 9.1       Action by Noteholders. Whenever in this Indenture it
is provided that the holders of a specified percentage in aggregate principal
amount of the Notes may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action, the holders of
such specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by Noteholders
in person or by agent or proxy appointed in writing, or (b) by the record of the
holders of Notes voting in favor thereof at any meeting of Noteholders duly
called and held in accordance with the provisions of Article X, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of Noteholders. Whenever the Company or the Trustee solicits the taking
of any action by the holders of the Notes, the Company or the Trustee may fix in
advance of such solicitation, a date as the record date for determining holders
entitled to take such action. The record date shall be not more than fifteen
(15) days prior to the date of commencement of solicitation of such action.

         Section 9.2       Proof of Execution by Noteholders. Subject to the
provisions of Sections 8.1, 8.2 and 10.5, proof of the execution of any
instrument by a Noteholder or his agent or proxy shall be sufficient if made in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
holding of Notes shall be proved by the Note register or by a certificate of the
Note registrar. The record of any Noteholders' meeting shall be proved in the
manner provided in Section 10.6.

         Section 9.3       Who Are Deemed Absolute Owners. The Company, the
Trustee, any authenticating agent, any paying agent, any conversion agent and
any Note registrar may deem the person in whose name such Note shall be
registered upon the Note register to be, and may treat him as, the absolute
owner of such Note (whether or not such Note shall be overdue and
notwithstanding any notation of ownership or other writing thereon) for the
purpose of receiving payment of or on account of the principal of, premium, if
any, and interest on such Note, for conversion of such Note and for all other
purposes; and neither the Company nor the Trustee nor any paying agent nor any
conversion agent nor any Note registrar shall be affected by any notice to the
contrary. All such payments so made to any holder for the time being, or upon
his order, shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for monies payable upon any
such Note.

         Section 9.4       Company-Owned Notes Disregarded. In determining
whether the holders of the requisite aggregate principal amount of Notes have
concurred in any direction, consent, waiver or other action under this
Indenture, Notes which are owned by the Company or any other obligor on the
Notes or by any person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company or any other obligor on
the Notes shall be disregarded and deemed not to be outstanding for the purpose
of any such determination; provided that for the purposes of determining whether
the Trustee shall be protected in relying on any such direction, consent, waiver
or other action only Notes which a Responsible Officer knows are so owned shall
be so disregarded. Notes so owned which have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 9.4 if the pledgee
shall

                                       49
<PAGE>

establish to the satisfaction of the Trustee the pledgee's right to vote such
Notes and that the pledgee is not the Company, any other obligor on the Notes or
a person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company or any such other obligor. In the case
of a dispute as to such right, any decision by the Trustee taken upon the advice
of counsel shall be full protection to the Trustee. Upon request of the Trustee,
the Company shall furnish to the Trustee promptly an Officers' Certificate
listing and identifying all Notes, if any, known by the Company to be owned or
held by or for the account of any of the above described persons; and, subject
to Section 8.1, the Trustee shall be entitled to accept such Officers'
Certificate as conclusive evidence of the facts therein set forth and of the
fact that all Notes not listed therein are outstanding for the purpose of any
such determination.

         Section 9.5       Revocation of Consents; Future Holders Bound. At any
time prior to (but not after) the evidencing to the Trustee, as provided in
Section 9.1, of the taking of any action by the holders of the percentage in
aggregate principal amount of the Notes specified in this Indenture in
connection with such action, any holder of a Note which is shown by the evidence
to be included in the Notes the holders of which have consented to such action
may, by filing written notice with the Trustee at its Corporate Trust Office and
upon proof of holding as provided in Section 9.2, revoke such action so far as
concerns such Note. Except as aforesaid, any such action taken by the holder of
any Note shall be conclusive and binding upon such holder and upon all future
holders and owners of such Note and of any Notes issued in exchange or
substitution therefor, irrespective of whether any notation in regard thereto is
made upon such Note or any Note issued in exchange or substitution therefor.

                                   ARTICLE X

                              NOTEHOLDERS' MEETINGS

         Section 10.1      Purpose of Meetings. A meeting of Noteholders may be
called at any time and from time to time pursuant to the provisions of this
Article X for any of the following purposes:

                           (1)      to give any notice to the Company or to the
                  Trustee or to give any directions to the Trustee permitted
                  under this Indenture, or to consent to the waiving of any
                  default or Event of Default hereunder and its consequences, or
                  to take any other action authorized to be taken by Noteholders
                  pursuant to any of the provisions of Article VII;

                           (2)      to remove the Trustee and nominate a
                  successor trustee pursuant to the provisions of Article VIII;

                           (3)      to consent to the execution of an indenture
                  or indentures supplemental hereto pursuant to the provisions
                  of Section 11.2;

                           (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 Notes under any other
                  provision of this Indenture or under applicable law; or

                                       50
<PAGE>

                           (5)      to take any other action authorized by this
                  Indenture or under applicable law.

         Section 10.2      Call of Meetings by Trustee. The Trustee may at any
time call a meeting of Noteholders to take any action specified in Section 10.1,
to be held at such time and at such place in the Borough of Manhattan, The City
of New York, as the Trustee shall determine. Notice of every meeting of the
Noteholders, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting and the establishment of
any record date pursuant to Section 9.1, shall be mailed to holders of Notes at
their addresses as they shall appear on the Note register. Such notice shall
also be mailed to the Company. Such notices shall be mailed not less than twenty
(20) nor more than ninety (90) days prior to the date fixed for the meeting.

         Any meeting of Noteholders shall be valid without notice if the holders
of all Notes then outstanding are present in person or by proxy or if notice is
waived before or after the meeting by the holders of all Notes outstanding, and
if the Company and the Trustee are either present by duly authorized
representatives or have, before or after the meeting, waived notice.

         Section 10.3      Call of Meetings by Company or Noteholders. In case
at any time the Company, pursuant to a resolution of its Board of Directors, or
the holders of at least 10% in aggregate principal amount of the Notes then
outstanding, shall have requested the Trustee to call a meeting of Noteholders,
by written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed the notice of such
meeting within twenty (20) days after receipt of such request, then the Company
or such Noteholders may determine the time and the place for such meeting and
may call such meeting to take any action authorized in Section 10.1, by mailing
notice thereof as provided in Section 10.2.

         Section 10.4      Qualifications for Voting. To be entitled to vote at
any meeting of Noteholders a person shall (a) be a holder of one or more Notes
on the record date pertaining to such meeting or (b) be a person appointed by an
instrument in writing as proxy by a holder of one or more Notes. The only
persons who shall be entitled to be present or to speak at any meeting of
Noteholders shall be the persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.

         Section 10.5      Regulations. Notwithstanding any other provisions of
this Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Noteholders, in regard to proof of the holding of
Notes 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 think fit.

         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 Noteholders as provided in Section 10.3, in which case the Company
or the Noteholders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and

                                       51
<PAGE>

a permanent secretary of the meeting shall be elected by vote of the holders of
a majority in principal amount of the Notes represented at the meeting and
entitled to vote at the meeting.

         Subject to the provisions of Section 9.4, at any meeting each
Noteholder or proxyholder shall be entitled to one vote for each $1,000
principal amount of Notes held or represented by him; provided, however, that no
vote shall be cast or counted at any meeting in respect of any Note 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 Notes held by him or instruments in writing as aforesaid duly
designating him as the proxy to vote on behalf of other Noteholders. Any meeting
of Noteholders duly called pursuant to the provisions of Section 10.2 or 10.3
may be adjourned from time to time by the holders of a majority of the aggregate
principal amount of Notes represented at the meeting, whether or not
constituting a quorum, and the meeting may be held as so adjourned without
further notice.

         Section 10.6      Voting. The vote upon any resolution submitted to any
meeting of Noteholders shall be by written ballot on which shall be subscribed
the signatures of the holders of Notes or of their representatives by proxy and
the principal amount of the Notes 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 Noteholders 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 mailed as provided in
Section 10.2. The record shall show the principal amount of the Notes 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, the latter to have attached thereto the ballots
voted at the meeting.

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

         Section 10.7      No Delay of Rights by Meeting. Nothing in this
Article X contained shall be deemed or construed to authorize or permit, by
reason of any call of a meeting of Noteholders 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
the Noteholders under any of the provisions of this Indenture or of the Notes.

                                   ARTICLE XI

                             SUPPLEMENTAL INDENTURES

         Section 11.1      Supplemental Indentures Without Consent of
Noteholders. The Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may from time to

                                       52
<PAGE>

time and at any time enter into an indenture or indentures supplemental hereto
for one or more of the following purposes:

                  (a)      to make provision with respect to the conversion
         rights of the holders of Notes pursuant to the requirements of Section
         15.6;

                  (b)      subject to Article IV, to convey, transfer, assign,
         mortgage or pledge to the Trustee as security for the Notes, any
         property or assets;

                  (c)      to evidence the succession of another corporation to
         the Company, or successive successions, and the assumption by the
         successor corporation of the covenants, agreements and obligations of
         the Company pursuant to Article XII;

                  (d)      to add to the covenants of the Company such further
         covenants, restrictions or conditions for the benefit of the holders of
         Notes, and to make the occurrence, or the occurrence and continuance,
         of a default in any such additional covenants, restrictions or
         conditions a default or an Event of Default permitting the enforcement
         of all or any of the several remedies provided in this Indenture as
         herein set forth; provided, however, that in respect of any such
         additional covenant, restriction or condition such supplemental
         indenture may provide for a particular period of grace after default
         (which period may be shorter or longer than that allowed in the case of
         other defaults) or may provide for an immediate enforcement upon such
         default or may limit the remedies available to the Trustee upon such
         default;

                  (e)      to provide for the issuance under this Indenture of
         Notes in coupon form (including Notes registrable as to principal only)
         and to provide for exchangeability of such Notes with the Notes issued
         hereunder in fully registered form and to make all appropriate changes
         for such purpose;

                  (f)      to cure any ambiguity or to correct or supplement any
         provision contained herein or in any supplemental indenture which may
         be defective or inconsistent with any other provision contained herein
         or in any supplemental indenture, or to make such other provisions in
         regard to matters or questions arising under this Indenture which shall
         not materially adversely affect the interests of the holders of the
         Notes;

                  (g)      to evidence and provide for the acceptance of
         appointment hereunder by a successor Trustee with respect to the Notes;
         or

                  (h)      to modify, eliminate or add to the provisions of this
         Indenture to such extent as shall be necessary to effect the
         qualifications of this Indenture under the Trust Indenture Act, or
         under any similar federal statute hereafter enacted.

         The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer and assignment of any property thereunder, but the Trustee
shall not be obligated to, but may in its discretion, enter into any
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.

                                       53
<PAGE>

         Any supplemental indenture authorized by the provisions of this Section
11.1 may be executed by the Company and the Trustee without the consent of the
holders of any of the Notes at the time outstanding, notwithstanding any of the
provisions of Section 11.2.

         Section 11.2      Supplemental Indentures With Consent of Noteholders.
With the consent (evidenced as provided in Article IX) of the holders of not
less than a majority in aggregate principal amount of the Notes at the time
outstanding (determined in accordance with Section 9.4), the Company, when
authorized by the resolutions of the Board of Directors, and the Trustee may
from time to time and at any time 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 any
supplemental indenture or of modifying in any manner the rights of the holders
of the Notes; provided, however, that no such supplemental indenture shall (i)
extend the fixed maturity of any Note, or reduce the rate or extend the time of
payment of interest thereon, or reduce the principal amount thereof or premium,
if any, thereon, or reduce any amount payable on redemption or repurchase
thereof, impair, or change in any respect adverse to the holder of Notes, the
obligation of the Company to repurchase any Note at the option of the holder
upon the happening of a Repurchase Event, or impair, or change in any respect
adverse to the holder of Notes, the obligation of the Company to repurchase any
Note on a Repurchase Date, or impair or adversely affect the right of any
Noteholder to institute suit for the payment thereof, or change the currency in
which the Notes are payable, or impair or change in any respect adverse to the
Noteholders the right to convert the Notes into Common Stock subject to the
terms set forth herein, including Section 15.6, or modify the provisions of this
Indenture with respect to the subordination of the Notes in a manner adverse to
the Noteholders, without the consent of the holder of each Note so affected, or
(ii) reduce the aforesaid percentage of Notes, the holders of which are required
to consent to any such supplemental indenture, without the consent of the
holders of all Notes then outstanding.

         Upon the request of the Company, accompanied by a copy of the Board
Resolutions authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of Noteholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.

         It shall not be necessary for the consent of the Noteholders under this
Section 11.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.

         Section 11.3      Effect of Supplemental Indentures. Any supplemental
indenture executed pursuant to the provisions of this Article XI shall comply
with the Trust Indenture Act, as then in effect. Upon the execution of any
supplemental indenture pursuant to the provisions of this Article XI, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitation of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the holders
of Notes shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and

                                       54
<PAGE>

amendments and all the terms and conditions of any such supplemental indenture
shall be and be deemed to be part of the terms and conditions of this Indenture
for any and all purposes.

         Section 11.4 Revocation and Effect of Consents. Until an amendment,
supplement or waiver becomes effective, a consent to it by a Noteholder is a
continuing consent by the Noteholder and every subsequent Noteholder of a Note
or portion of a Note that evidences the same debt as the consenting Noteholder's
Note, even if notation of the consent is not made on any Note. However, any such
Noteholder or subsequent Noteholder may revoke the consent as to such
Noteholder's Note or portion of a Note if the Trustee receives the notice of
revocation before the date on which the Trustee receives an Officers'
Certificate certifying that the Noteholders of the requisite principal amount of
Notes have consented to the amendment, supplement or waiver.

                  The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Noteholders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then notwithstanding
the provisions of the immediately preceding paragraph, those persons who were
Noteholders at such record date (or their duly designated proxies), and only
those persons, shall be entitled to consent to such amendment, supplement or
waiver or to revoke any consent previously given, whether or not such persons
continue to be Noteholders after such record date. No consent shall be valid or
effective for more than 90 days after such record date unless consents from
Noteholders of the principal amount of Notes required hereunder or such
amendment or waiver to be effective shall have also been given and not revoked
within such 90-day period.

                  After an amendment, supplement or waiver becomes effective it
shall bind every Noteholder, unless it is of the type described in clause (i) of
Section 11.2 hereof. In such case, the amendment or waiver shall bind each
Noteholder who has consented to it and every subsequent Noteholder of a Note or
portion of a Note that evidences the same debt as the consenting Noteholder's
Note.

         Section 11.5 Notation on Notes. Notes authenticated and delivered after
the execution of any supplemental indenture pursuant to the provisions of this
Article XI may bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company or the Trustee shall
so determine, new Notes so modified as to conform, in the opinion of the Trustee
and the Board of Directors, to any modification of this Indenture contained in
any such supplemental indenture may, at the Company's expense, be prepared and
executed by the Company, authenticated by the Trustee (or an authenticating
agent duly appointed by the Trustee pursuant to Section 18.11) and delivered in
exchange for the Notes then outstanding, upon surrender of such Notes then
outstanding.

         Section 11.6 Evidence of Compliance of Supplemental Indenture to Be
Furnished Trustee. The Trustee, subject to the provisions of Sections 8.1 and
8.2, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article XI.

                                       55
<PAGE>

                                   ARTICLE XII

                CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

         Section 12.1 Company May Consolidate, Etc. on Certain Terms. The
Company shall not, directly or indirectly, consolidate with or merge with or
into any other person or sell, lease, convey or transfer all its properties and
assets substantially as an entirety, whether in a single transaction or a series
of related transactions, to any person or group of affiliated persons unless:

                  (a)      either (i) in the case of a merger or consolidation
         that does not involve a transfer of all or substantially all of the
         Company's properties and assets, the Company is the surviving entity or
         (ii) in case the Company shall consolidate with or merge into another
         person or sell, lease, convey or transfer all its properties and assets
         substantially as an entirety, whether in a single transaction or a
         series of related transactions, to any person, the person formed by
         such consolidation or into which the Company is merged, or the person
         which acquires by sale, conveyance or transfer, or which leases the
         properties and assets of the Company substantially as an entirety,
         shall be a corporation, limited liability company, 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, in form satisfactory to the
         Trustee, the due and punctual payment of the principal of, premium, if
         any, and interest (including Liquidated Damages, if any) on all of the
         Notes as applicable, and the performance or observance of every
         covenant of this Indenture on the part of the Company to be performed
         or observed and shall have provided for the applicable conversion
         rights set forth in Section 15.6 and the repurchase rights set forth in
         Article XVI;

                  (b)      immediately after giving effect to such transaction,
         no Event of Default, and no event that after notice or lapse of time or
         both, would become an Event of Default, shall have happened and be
         continuing; and

                  (c)      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, together with any documents required under
         Article IX.

         Section 12.2 Successor Corporation to Be Substituted. In case of any
such consolidation, merger, sale, conveyance or lease in accordance with Section
12.1, and, where required in accordance with Section 12.1(a) upon the assumption
by the successor corporation, limited liability company, partnership or trust by
supplemental indenture, executed and delivered to the Trustee and satisfactory
in form to the Trustee, of the due and punctual payment of the principal of and
premium, if any, and interest on all of the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Company, such successor corporation, limited liability company,
partnership or trust shall succeed to and be substituted for the Company, with
the same effect as if it had been named

                                       56
<PAGE>

herein as the party of the first part. Such successor corporation thereupon may
cause to be signed, and may issue either in its own name or in the name of
Alkermes, Inc. any or all of the Notes issuable hereunder which theretofore
shall not have been signed by the Company and delivered to the Trustee; and,
upon the order of such successor corporation instead of the Company and subject
to all the terms, conditions and limitations in this Indenture prescribed, the
Trustee shall authenticate and shall deliver, or cause to be authenticated and
delivered, any Notes which previously shall have been signed and delivered by
the officers of the Company to the Trustee for authentication, and any Notes
which such successor corporation thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All the Notes so issued shall in all
respects have the same legal rank and benefit under this Indenture as the Notes
theretofore or thereafter issued in accordance with the terms of this Indenture
as though all of such Notes had been issued at the date of the execution hereof.
In the event of any such consolidation, merger, sale, conveyance or lease, the
person named as the "Company" in the first paragraph of this Indenture or any
successor which shall thereafter have become such in the manner prescribed in
this Article XII may be dissolved, wound up and liquidated at any time
thereafter and such person shall be released from its liabilities as obligor and
maker of the Notes and from its obligations under this Indenture.

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

         Section 12.3 Opinion of Counsel to Be Given Trustee. The Trustee,
subject to Sections 8.1 and 8.2, shall receive an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, conveyance or lease and any such assumption complies with the provisions
of this Article XII.

                                  ARTICLE XIII

                     SATISFACTION AND DISCHARGE OF INDENTURE

         Section 13.1 Discharge of Indenture. When (a) the Company shall deliver
to the Trustee for cancellation all Notes theretofore authenticated (other than
any Notes which have been destroyed, lost or stolen and in lieu of or in
substitution for which other Notes shall have been authenticated and delivered)
and not theretofore canceled, or (b) all the Notes not theretofore canceled or
delivered to the Trustee for cancellation shall have become due and payable, or
are by their terms to become due and payable within one year or are to be called
for redemption within one year under arrangements satisfactory to the Trustee
for the giving of notice of redemption, and the Company shall deposit with the
Trustee, in trust, funds sufficient to pay at maturity or upon redemption of all
of the Notes (other than any Notes which shall have been mutilated, destroyed,
lost or stolen and in lieu of or in substitution for which other Notes shall
have been authenticated and delivered) not theretofore canceled or delivered to
the Trustee for cancellation, including principal and premium, if any, and
interest due or to become due to such date of maturity or redemption date, as
the case may be, and if in either case the Company shall also pay or cause to be
paid all other sums payable hereunder by the Company, then this Indenture shall
cease to be of further effect (except as to (i) remaining rights of registration
of transfer, substitution and exchange and conversion of Notes, (ii) rights
hereunder of Noteholders

                                       57
<PAGE>

to receive payments of principal of and premium, if any, and interest on, the
Notes and the other rights, duties and obligations of Noteholders, as
beneficiaries hereof with respect to the amounts, if any, so deposited with the
Trustee and (iii) the rights, obligations and immunities of the Trustee
hereunder), and the Trustee, on demand of the Company accompanied by an
Officers' Certificate and an Opinion of Counsel as required by Section 18.5 and
at the cost and expense of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture; the Company,
however, hereby agreeing to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred by the Trustee and to compensate the
Trustee for any services thereafter reasonably and properly rendered by the
Trustee in connection with this Indenture or the Notes.

         Section 13.2 Deposited Monies to Be Held in Trust by Trustee. Subject
to Section 13.4, all monies deposited with the Trustee pursuant to Section 13.1
shall be held in trust and applied by it to the payment, notwithstanding the
provisions of Article IV, either directly or through any paying agent (including
the Company if acting as its own paying agent), to the holders of the particular
Notes for the payment or redemption of which such monies have been deposited
with the Trustee, of all sums due and to become due thereon for principal and
interest and premium, if any.

         Section 13.3 Paying Agent to Repay Monies Held. Upon the satisfaction
and discharge of this Indenture, all monies then held by any paying agent of the
Notes (other than the Trustee) shall, upon demand of the Company, be repaid to
it or paid to the Trustee, and thereupon such paying agent shall be released
from all further liability with respect to such monies.

         Section 13.4 Return of Unclaimed Monies. Subject to the requirements of
applicable law, any monies deposited with or paid to the Trustee for payment of
the principal of, premium, if any, or interest on Notes and not applied but
remaining unclaimed by the holders of Notes for two years after the date upon
which the principal of, premium, if any, or interest on such Notes, as the case
may be, shall have become due and payable, shall be repaid to the Company by the
Trustee on demand and all liability of the Trustee shall thereupon cease with
respect to such monies; and the holder of any of the Notes shall thereafter look
only to the Company for any payment which such holder may be entitled to collect
unless an applicable abandoned property law designates another person.

         Section 13.5 Reinstatement. If (i) the Trustee or the paying agent is
unable to apply any money in accordance with Section 13.2 by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application and (ii) the holders of at least a
majority in principal amount of the then outstanding Notes so request by written
notice to the Trustee, the Company's obligations under this Indenture and the
Notes shall be revived and reinstated as though no deposit had occurred pursuant
to Section 13.1 until such time as the Trustee or the paying agent is permitted
to apply all such money in accordance with Section 13.2; provided, however, that
if the Company makes any payment of interest on or principal of any Note
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the holders of such Notes to receive such payment from the
money held by the Trustee or paying agent.

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                                   ARTICLE XIV

         IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

         Section 14.1 Indenture and Notes Solely Corporate Obligations. No
recourse for the payment of the principal or of premium, if any, or interest on
any Note, or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
this Indenture or in any supplemental indenture or in any Note, or for any claim
based thereon, shall be had against any incorporator, stockholder, employee,
agent, officer or director or Subsidiary, as such, past, present or future, of
the Company or of any successor corporation, either directly or through the
Company or any successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that all such liability is hereby
expressly waived and released as a condition of, and as a consideration for, the
execution of this Indenture and the issue of the Notes; provided, however, that
this Section 14.1 is not intended in any way to be inconsistent with Section 14
of the Securities Act and Section 29(a) of the Exchange Act.

                                   ARTICLE XV

                               CONVERSION OF NOTES

         Section 15.1 Right to Convert. Subject to and upon compliance with the
provisions of this Indenture, the holder of any Note shall have the right, at
his option, at any time following the date of original issuance of the Notes and
prior to the close of business on September 1, 2023 (except that, with respect
to any Note or portion of a Note which shall be called for redemption, such
right shall terminate, except as provided in the fifth paragraph of Section 15.2
and Section 3.4, at the close of business on the Business Day immediately
preceding the date fixed for redemption of such Note or portion of a Note unless
the Company shall default in payment due upon redemption thereof) to convert the
principal amount of any such Note, or any portion of such principal amount which
is $1,000 or an integral multiple thereof, into that number of fully paid and
non-assessable shares of Common Stock (as such shares shall then be constituted)
obtained by dividing the principal amount of the Note or portion thereof
surrendered for conversion by the Conversion Price in effect at such time, by
surrender of the Note so to be converted in whole or in part in the manner
provided in Section 15.2. A holder of Notes is not entitled to any rights of a
holder of Common Stock until such holder has converted his Notes to Common
Stock, and only to the extent such Notes are deemed to have been converted to
Common Stock under this Article XV. A Note with respect to which a holder has
delivered a notice in accordance with Section 16.2 regarding such holder's
election to require the Company to repurchase such holder's Notes following the
occurrence of a Repurchase Event may be converted in accordance with this
Article XV only if such holder withdraws such notice by delivering a written
notice of withdrawal to the Company prior to the close of business on last
Business Day prior to the day fixed for repurchase. A Note with respect to which
a holder has delivered a notice in accordance with Section 17.1 regarding such
holder's election to require the Company to repurchase such holder's Notes may
be converted in accordance with this Article XV only if such holder withdraws
such notice by delivering a written notice of

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<PAGE>

withdrawal to the Company in accordance with Section 17.4 prior to the close of
business on last Business Day prior to the day fixed for repurchase.

         Section 15.2 Exercise of Conversion Privilege; Issuance of Common Stock
on Conversion; No Adjustment for Interest or Dividends. In order to exercise the
conversion privilege with respect to any Note in definitive form, the holder of
any such Note to be converted in whole or in part shall surrender such Note,
duly endorsed, at an office or agency maintained by the Company pursuant to
Section 5.2, accompanied by the funds, if any, required by the fifth paragraph
of this Section 15.2, and shall give written notice of conversion in the form
provided on the Notes (or such other notice which is acceptable to the Company)
to the office or agency that the holder elects to convert such Note or such
portion thereof specified in said notice. Such notice shall also state the name
or names (with address) in which the certificate or certificates for shares of
Common Stock which shall be issuable on such conversion shall be issued, and
shall be accompanied by transfer taxes, if required pursuant to Section 15.7.
Each such Note surrendered for conversion shall, unless the shares issuable on
conversion are to be issued in the same name as the registration of such Note,
be duly endorsed by, or be accompanied by instruments of transfer in form
satisfactory to the Company duly executed by, the holder or his duly authorized
attorney.

         In order to exercise the conversion privilege with respect to any
interest in the Global Note, the beneficial holder must complete the appropriate
instruction form for conversion pursuant to the Depositary's book-entry
conversion program, deliver by book-entry delivery an interest in the Global
Note, furnish appropriate endorsements and transfer documents if required by the
Company or the Trustee or conversion agent, and pay the funds, if any, required
by the fifth paragraph of this Section 15.2 and any transfer taxes, if required
pursuant to Section 15.7.

         As promptly as practicable after satisfaction of the requirements for
conversion set forth above, but no later than three Business Days after the
conversion date, subject to compliance with any restrictions on transfer if
shares issuable on conversion are to be issued in a name other than that of the
Noteholder (as if such transfer were a transfer of the Note or Notes (or portion
thereof) so converted), the Company shall issue and shall deliver to such holder
at the office or agency maintained by the Company for such purpose pursuant to
Section 5.2, a certificate or certificates for the number of full shares of
Common Stock issuable upon the conversion of such Note 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 15.3 (which payment, if any, shall be paid no
later than five Business Days after satisfaction of the requirements for
conversion set forth above). In case any Note of a denomination greater than
$1,000 shall be surrendered for partial conversion, and subject to Section 2.3,
the Company shall execute and the Trustee shall authenticate and deliver to the
holder of the Note so surrendered, without charge to him, a new Note or Notes in
authorized denominations in an aggregate principal amount equal to the
unconverted portion of the surrendered Note.

         Each conversion shall be deemed to have been effected as to any such
Note (or portion thereof) on the date on which the requirements set forth above
in this Section 15.2 have been satisfied as to such Note (or portion thereof),
and the person in whose name any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed

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<PAGE>

to have 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 issued 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 Note shall be surrendered.

         Any Note or portion thereof surrendered for conversion during the
period from the close of business on the record date for any interest payment
date through the close of business on the Business Day immediately preceding
such interest payment date shall (unless (a) such Note or portion thereof being
converted shall have been called for redemption pursuant to a redemption notice
mailed to the Noteholders in accordance with Section 3.2 or (b) the Company has
elected to automatically convert such Note or portion thereof and has issued an
Automatic Conversion Notice in accordance with Section 15.11 and such redemption
or automatic conversion, as the case may be, will occur prior to such interest
payment date) be accompanied by payment, in New York Clearing House funds 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
Notes. Except as provided above in this Section 15.2, no adjustment shall be
made for interest accrued on any Note converted or for dividends on any shares
issued upon the conversion of such Note as provided in this Article.

         Upon the conversion of an interest in the Global Note, the Trustee, or
the Custodian at the direction of the Trustee, shall make a notation on the
Global Note as to the reduction in the principal amount represented thereby.

         Section 15.3 Cash Payments in Lieu of Fractional Shares. No fractional
shares of Common Stock or scrip representing fractional shares shall be issued
upon conversion of Notes. If more than one Note shall be surrendered for
conversion at one time by the same holder, the number of full shares which shall
be issuable upon conversion shall be computed on the basis of the aggregate
principal amount of the Notes (or specified portions thereof to the extent
permitted hereby) so surrendered for conversion. If any fractional share of
stock otherwise would be issuable upon the conversion of any Note or Notes, the
Company shall make an adjustment therefor in cash at the current market value
thereof to the holder of Notes. The current market value of a share of Common
Stock shall be the Closing Price on the first Trading Day immediately preceding
the day on which the Notes (or specified portions thereof) are deemed to have
been converted and such Closing Price shall be determined as provided in Section
15.5(h)(1).

         Section 15.4 Conversion Price. The conversion price shall be as
specified in the form of Note (herein called the "Conversion Price") attached as
Exhibit A hereto, subject to adjustment as provided in this Article XV.

         Section 15.5 Adjustment of Conversion Price. The Conversion Price shall
be adjusted from time to time by the Company as follows:

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<PAGE>

                  (a)      In case the Company shall hereafter pay a dividend or
         make a distribution to all holders of the outstanding Common Stock in
         shares of Common Stock, the Conversion Price in effect at the opening
         of business on the date following the date fixed for the determination
         of stockholders entitled to receive such dividend or other distribution
         shall be reduced by multiplying such Conversion Price by a fraction of
         which the numerator shall be the number of shares of Common Stock
         outstanding at the close of business on the record date (as defined in
         Section 15.5(h)(4)) fixed for such determination and the denominator
         shall be the sum of such number of shares and the total number of
         shares constituting such dividend or other distribution, such reduction
         to become effective immediately after the opening of business on the
         day following the record date. If any dividend or distribution of the
         type described in this Section 15.5(a) is declared but not so paid or
         made, the Conversion Price shall again be adjusted to the Conversion
         Price which would then be in effect if such dividend or distribution
         had not been declared.

                  (b)      In case the Company shall issue rights or warrants to
         all holders of its outstanding shares of Common Stock entitling them
         (for a period expiring within forty-five (45) days after the date fixed
         for the determination of stockholders entitled to receive such rights
         or warrants) to subscribe for or purchase shares of Common Stock at a
         price per share less than the Current Market Price (as defined in
         Section 15.5(h)(2)) on the record date fixed for the determination of
         stockholders entitled to receive such rights or warrants, the
         Conversion Price shall be adjusted so that the same shall equal the
         price determined by multiplying the Conversion Price in effect at the
         opening of business on the date after such record date by a fraction of
         which the numerator shall be the number of shares of Common Stock
         outstanding at the close of business on the record date plus the number
         of shares which the aggregate offering price of the total number of
         shares so offered for subscription or purchase would purchase at such
         Current Market Price, and of which the denominator shall be the number
         of shares of Common Stock outstanding on the close of business on the
         record date plus the total number of additional shares of Common Stock
         so offered for subscription or purchase. Such adjustment shall become
         effective immediately after the opening of business on the day
         following the record date fixed for determination of stockholders
         entitled to receive such rights or warrants. To the extent that shares
         of Common Stock are not delivered pursuant to such rights or warrants,
         upon the expiration or termination of such rights or warrants the
         Conversion Price shall be readjusted to the Conversion Price which
         would then be in effect had the adjustments made upon the issuance of
         such rights or warrants been made on the basis of delivery of only the
         number of shares of Common Stock actually delivered. In the event that
         such rights or warrants are not so issued, the Conversion Price shall
         again be adjusted to be the Conversion Price which would then be in
         effect if such date fixed for the determination of stockholders
         entitled to receive such rights or warrants had not been fixed. In
         determining whether any rights or warrants entitle the holders to
         subscribe for or purchase shares of Common Stock at less than such
         Current Market Price, and in determining the aggregate offering price
         of such shares of Common Stock, there shall be taken into account any
         consideration received for such rights or warrants, the value of such
         consideration, if other than cash, to be determined by the Board of
         Directors.

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<PAGE>

                  (c)      In case the outstanding shares of Common Stock shall
         be split or subdivided into a greater number of shares of Common Stock,
         the Conversion Price in effect at the opening of business on the day
         following the day upon which such subdivision becomes effective shall
         be proportionately reduced, and conversely, in case outstanding shares
         of Common Stock shall be combined into a smaller number of shares of
         Common Stock, the Conversion Price in effect at the opening of business
         on the day following the day upon which such combination becomes
         effective shall be proportionately increased, such reduction or
         increase, as the case may be, to become effective immediately after the
         opening of business on the day following the day upon which such
         subdivision or combination becomes effective.

                  (d)      In case the Company shall, by dividend or otherwise,
         distribute to all holders of its Common Stock shares of any class of
         capital stock of the Company (other than any dividends or distributions
         to which Section 15.5(a) applies) or evidences of its indebtedness,
         cash or other assets (including securities, but excluding (1) any
         rights or warrants referred to in Section 15.5(b) and, (2) dividends
         and distributions (A) in connection with the liquidation, dissolution
         or winding up of the Company or paid (B) exclusively in cash and (3)
         any capital stock, evidences of indebtedness, cash or assets
         distributed upon a merger or consolidation to which Section 15.6
         applies) (the foregoing hereinafter in this Section 15.5(d) called the
         "Securities")), unless the Company elects to reserve such Securities
         for distribution to the Noteholders upon conversion of the Notes so
         that any such holder converting Notes will receive upon such
         conversion, in addition to the shares of Common Stock to which such
         holder is entitled, the amount and kind of such Securities which such
         holder would have received if such holder had converted its Notes into
         Common Stock immediately prior to the record date (as defined in
         Section 15.5(h)(4)) for such distribution of the Notes) then, in each
         such case, the Conversion Price shall be reduced so that the same shall
         be equal to the price determined by multiplying the Conversion Price in
         effect immediately prior to the close of business on the record date
         (as defined in Section 15.5(h)(4)) with respect to such distribution by
         a fraction of which the numerator shall be the Current Market Price
         (determined as provided in Section 15.5(h)(2)) on such date less the
         fair market value (as determined by the Board of Directors, whose
         determination shall be conclusive and described in a Board Resolution)
         on such date of the portion of the Securities so distributed applicable
         to one share of Common Stock and the denominator shall be such Current
         Market Price, such reduction to become effective immediately prior to
         the opening of business on the day following the record date; provided,
         however, that in the event the then fair market value (as so
         determined) of the portion of the Securities so distributed applicable
         to one share of Common Stock is equal to or greater than the Current
         Market Price on the record date, in lieu of the foregoing adjustment,
         adequate provision shall be made so that each Noteholder shall have the
         right to receive upon conversion of a Note (or any portion thereof) the
         amount of Securities such holder would have received had such holder
         converted such Note (or portion thereof) immediately prior to such
         record date. In the event that such dividend or distribution is not so
         paid or made, the Conversion Price shall again be adjusted to be the
         Conversion Price which would then be in effect if such dividend or
         distribution had not been declared. If the Board of Directors
         determines the fair market value of any distribution for purposes of
         this Section 15.5(d) by reference to the actual or when issued trading
         market for any securities comprising all or part of such

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<PAGE>

         distribution, it must in doing so consider the prices in such market
         over the same period (the "Reference Period") used in computing the
         Current Market Price pursuant to Section 15.5(h)(2) to the extent
         possible, unless the Board of Directors in a board resolution
         determines in good faith that determining the fair market value during
         the Reference Period would not be in the best interest of the
         Noteholder.

                  Rights or warrants distributed by the Company to all holders
         of Common Stock entitling the holders thereof to subscribe for or
         purchase shares of the Company's capital stock (either initially or
         under certain circumstances), which rights or warrants, until the
         occurrence of a specified event or events ("Trigger Event"): (i) are
         deemed to be transferred with such shares of Common Stock; (ii) are not
         exercisable; and (iii) are also issued in respect of future issuances
         of Common Stock, shall be deemed not to have been distributed for
         purposes of this Section 15.5(d) (and no adjustment to the Conversion
         Price under this Section 15.5(d) will be required) until the occurrence
         of the earliest Trigger Event. If such right or warrant is subject to
         subsequent events, upon the occurrence of which such right or warrant
         shall become exercisable to purchase different securities, evidences of
         indebtedness or other assets or entitle the holder to purchase a
         different number or amount of the foregoing or to purchase any of the
         foregoing at a different purchase price, then the occurrence of each
         such event shall be deemed to be the date of issuance and record date
         with respect to a new right or warrant (and a termination or expiration
         of the existing right or warrant without exercise by the holder
         thereof). In addition, in the event of any distribution (or deemed
         distribution) of rights or warrants, or any Trigger Event or other
         event (of the type described in the preceding sentence) with respect
         thereto, that resulted in an adjustment to the Conversion Price under
         this Section 15.5(d), (1) in the case of any such rights or warrants
         which shall all have been redeemed or repurchased without exercise by
         any holders thereof, the Conversion Price shall be readjusted upon such
         final redemption or repurchase to give effect to such distribution or
         Trigger Event, as the case may be, as though it were a cash
         distribution, equal to the per share redemption or repurchase price
         received by a holder of Common Stock with respect to such rights or
         warrants (assuming such holder had retained such rights or warrants),
         made to all holders of Common Stock as of the date of such redemption
         or repurchase, and (2) in the case of such rights or warrants all of
         which shall have expired or been terminated without exercise, the
         Conversion Price shall be readjusted as if such rights and warrants had
         never been issued.

                  For purposes of this Section 15.5(d) and Sections 15.5(a) and
         (b), any dividend or distribution to which this Section 15.5(d) is
         applicable that also includes shares of Common Stock, or rights or
         warrants to subscribe for or purchase shares of Common Stock to which
         Section 15.5(b) applies (or both), shall be deemed instead to be (1) a
         dividend or distribution of the evidences of indebtedness, assets,
         shares of capital stock, rights or warrants other than such shares of
         Common Stock or rights or warrants to which Section 15.5(b) applies
         (and any Conversion Price reduction required by this Section 15.5(d)
         with respect to such dividend or distribution shall then be made)
         immediately followed by (2) a dividend or distribution of such shares
         of Common Stock or such rights or warrants (and any further Conversion
         Price reduction required by Sections 15.5(a) and (b) with respect to
         such dividend or distribution shall then be made, except (A) the record
         date of such dividend or distribution shall be substituted as "the

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<PAGE>

         date fixed for the determination of stockholders entitled to receive
         such dividend or other distribution", " record date fixed for such
         determination" and "record date" within the meaning of Section 15.5(a)
         and as "the date fixed for the determination of stockholders entitled
         to receive such rights or warrants," "the record date fixed for the
         determination of the stockholders entitled to receive such rights or
         warrants" and "such record date" within the meaning of Section 15.5(b)
         and (B) any shares of Common Stock included in such dividend or
         distribution shall not be deemed "outstanding at the close of business
         on the date fixed for such determination" within the meaning of Section
         15.5(a).

                  (e)      In case the Company shall, by dividend or otherwise,
         distribute to all holders of its Common Stock cash (excluding any cash
         that is distributed upon a merger or consolidation to which Section
         15.6 applies or as part of a distribution referred to in Section
         15.5(d)), then, and in each such case, immediately after the close of
         business on such date, the Conversion Price shall be reduced so that
         the same shall equal the price determined by multiplying the Conversion
         Price in effect immediately prior to the close of business on the
         record date for such dividend or distribution by a fraction (i) the
         numerator of which shall be equal to Pre-Dividend Sale Price minus the
         Dividend Adjustment Amount and (ii) the denominator of which shall be
         the Pre-Dividend Sale Price; provided, however, that in the event the
         portion of the cash so distributed applicable to one share of Common
         Stock is equal to or greater than the Current Market Price of the
         Common Stock on the record date, in lieu of the foregoing adjustment,
         adequate provision shall be made so that each Noteholder shall have the
         right to receive upon conversion of a Note (or any portion thereof) the
         amount of cash such holder would have received had such holder
         converted such Note (or portion thereof) immediately prior to such
         record date. In the event that such dividend or distribution is not so
         paid or made, the Conversion Price shall again be adjusted to be the
         Conversion Price which would then be in effect if such dividend or
         distribution had not been declared. "Pre-Dividend Sale Price" means the
         average Common Stock price for the three consecutive Trading Days
         ending on the Trading Day immediately preceding the ex-dividend date
         for such dividend or distribution. "Dividend Adjustment Amount" means
         the full amount of the dividend or distribution to the extent payable
         in cash applicable to one share of Common Stock. Any cash distribution
         to all holders of Common Stock as to which the Company makes the
         election permitted by Section 15.5(n) and as to which the Company has
         complied with the requirements of such Section shall be treated as not
         having been made for all purposes of this Section 15.5(e)).

                  (f)      In case a tender offer made by the Company or any
         Subsidiary for all or any portion of the Common Stock shall expire and
         such tender offer (as amended upon the expiration thereof) shall
         require the payment to shareholders (based on the acceptance (up to any
         maximum specified in the terms of the tender offer) of Purchased Shares
         (as defined below)) of an aggregate consideration having a fair market
         value (as determined by the Board of Directors, whose determination
         shall be conclusive and described in a Board Resolution) that combined
         together with the aggregate of the cash plus the fair market value (as
         determined by the Board of Directors, whose determination shall be
         conclusive and described in a Board Resolution), as of the expiration
         of such tender offer, of consideration payable in respect of any other
         tender offers, by the Company or any of its Subsidiaries for all or any
         portion of the Common Stock expiring within the twelve

                                       65
<PAGE>

         (12) months preceding the expiration of such tender offer and in
         respect of which no adjustment pursuant to this Section 15.5(f) has
         been made, exceeds 10% of the product of the Current Market Price
         (determined as provided in Section 15.5(h)(2)) as of the last time (the
         "Expiration Time") tenders could have been made pursuant to such tender
         offer (as it may be amended) times the number of shares of Common Stock
         outstanding (including any tendered shares) on the Expiration Time,
         then, and in each such case, immediately prior to the opening of
         business on the day after the date of the Expiration Time, the
         Conversion Price shall be adjusted so that the same shall equal the
         price determined by multiplying the Conversion Price in effect
         immediately prior to close of business on the date of the Expiration
         Time by a fraction of which the numerator shall be the number of shares
         of Common Stock outstanding (including any tendered shares) on the
         Expiration Time multiplied by the Current Market Price of the Common
         Stock on the Trading Day next succeeding the Expiration Time and the
         denominator shall be the sum of (x) the fair market value (determined
         as aforesaid) of the aggregate consideration payable to stockholders
         based on the acceptance (up to any maximum specified in the terms of
         the tender offer) of all shares validly tendered and not withdrawn as
         of the Expiration Time (the shares deemed so accepted, up to any such
         maximum, being referred to as the "Purchased Shares") and (y) the
         product of the number of shares of Common Stock outstanding (less any
         Purchased Shares) on the Expiration Time and the Current Market Price
         of the Common Stock on the Trading Day next succeeding the Expiration
         Time, such reduction (if any) to become effective immediately prior to
         the opening of business on the day following the Expiration Time. In
         the event that the Company is obligated to purchase shares pursuant to
         any such tender offer, but the Company is permanently prevented by
         applicable law from effecting any such purchases or all such purchases
         are rescinded, the Conversion Price shall again be adjusted to be the
         Conversion Price which would then be in effect if such tender offer had
         not been made. If the application of this Section 15.5(f) to any tender
         offer would result in an increase in the Conversion Price, no
         adjustment shall be made for such tender offer under this Section
         15.5(f). Any cash distribution to all holders of Common Stock as to
         which the Company has made the election permitted by Section 15.5(n)
         and as to which the Company has complied with the requirements of such
         Section shall be treated as not having been made for all purposes of
         this Section 15.5(f).

                  (g)      In case of a tender or exchange offer made by a
         person other than the Company or any Subsidiary for an amount which
         increases the offeror's ownership of Common Stock to more than 25% of
         the Common Stock outstanding and shall involve the payment by such
         person of consideration per share of Common Stock having a fair market
         value (as determined by the Board of Directors), whose determination
         shall be conclusive, and described in a resolution of the Board of
         Directors at the last time (the "Expiration Time") tenders or exchanges
         may be made pursuant to such tender or exchange offer (as it shall have
         been amended) that exceeds the Current Market Price of the Common Stock
         on the Trading Day next succeeding the Expiration Time, and in which,
         as of the Expiration Time the Board of Directors is not recommending
         rejection of the offer, the Conversion Price shall be reduced so that
         the same shall equal the price determined by multiplying the Conversion
         Price in effect immediately prior to the Expiration Time by a fraction
         of which the numerator shall be the number of shares of Common Stock
         outstanding (including any tendered or exchanged shares) on the

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         Expiration Time multiplied by the current Market Price of the Common
         Stock on the Trading Day next succeeding the Expiration Time and the
         denominator shall be the sum of (x) the fair market value (determined
         as aforesaid) of the aggregate consideration payable to stockholders
         based on the acceptance (up to any maximum specified in the terms of
         the tender or exchange offer) of all shares validly tendered or
         exchanged and not withdrawn as of the Expiration Time (the shares
         deemed so accepted, up to any such maximum, being referred to as the
         "Purchased Shares") and (y) the product of the number of shares of
         Common Stock outstanding (less any Purchased Shares) on the Expiration
         Time and the Current Market Price of the Common Stock on the Trading
         Day next succeeding the Expiration Time, such reduction to become
         effective immediately prior to the opening of business on the day
         following the Expiration Time. In the event that such person is
         obligated to purchase shares pursuant to any such tender or exchange
         offer, but such person is permanently prevented by applicable law from
         effecting any such purchases or all such purchases are rescinded, the
         Conversion Price shall again be adjusted to be the Conversion Price
         which would then be in effect if such tender or exchange offer had not
         been made. Notwithstanding the foregoing, the adjustment described in
         this Section 15.5(g) shall not be made if, as of the Expiration Time,
         the offering documents with respect to such offer disclose a plan or
         intention to cause the Company to engage in any transaction described
         in Article XII.

                  (h)      For purposes of this Indenture, the following terms
         shall have the meaning indicated:

                           (1)      "Closing Price" with respect to any
                  securities on any day shall mean the closing sale price
                  regular way on such day or, in case no such sale takes place
                  on such day, the average of the reported closing bid and asked
                  prices, regular way, in each case on the NASDAQ National
                  Market ("NASDAQ") or New York Stock Exchange, as applicable,
                  or, if such security is not listed or admitted to trading on
                  such NASDAQ or New York Stock Exchange, on the principal
                  national security exchange or quotation system on which such
                  security is quoted or listed or admitted to trading, or, if
                  not quoted or listed or admitted to trading on any national
                  securities exchange or quotation system, the average of the
                  closing bid and asked prices of such security on the
                  over-the-counter market on the day in question as reported by
                  the National Quotation Bureau Incorporated, or a similar
                  generally accepted reporting service, or if not so available,
                  in such manner as furnished by any New York Stock Exchange
                  member firm selected from time to time by the Board of
                  Directors for that purpose, or a price determined in good
                  faith by the Board of Directors, whose determination shall be
                  conclusive and described in a Board Resolution.

                           (2)      "Current Market Price" shall mean the
                  average of the daily Closing Prices per share of Common Stock
                  for the ten (10) consecutive Trading Days immediately prior to
                  the date in question; provided, however, that (1) if the "ex"
                  date (as hereinafter defined) for any event (other than the
                  issuance or distribution requiring such computation) that
                  requires an adjustment to the Conversion Price pursuant to
                  Section 15.5(a), (b), (c), (d), (e), (f) or (g) occurs during
                  such ten (10) consecutive Trading Days, the Closing Price for
                  each Trading Day prior to the

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                  "ex" date for such other event shall be adjusted by
                  multiplying such Closing Price by the same fraction by which
                  the Conversion Price is so required to be adjusted as a result
                  of such other event, (2) if the "ex" date for any event (other
                  than the issuance or distribution requiring such computation)
                  that requires an adjustment to the Conversion Price pursuant
                  to Section 15.5(a), (b), (c), (d), (e), (f) or (g) occurs on
                  or after the "ex" date for the issuance or distribution
                  requiring such computation and prior to the day in question,
                  the Closing Price for each Trading Day on and after the "ex"
                  date for such other event shall be adjusted by multiplying
                  such Closing Price by the reciprocal of the fraction by which
                  the Conversion Price is so required to be adjusted as a result
                  of such other event, and (3) if the "ex" date for the issuance
                  or distribution requiring such computation is prior to the day
                  in question, after taking into account any adjustment required
                  pursuant to clause (1) or (2) of this proviso, the Closing
                  Price for each Trading Day on or after such "ex" date shall be
                  adjusted by adding thereto the amount of any cash and the fair
                  market value (as determined by the Board of Directors in a
                  manner consistent with any determination of such value for
                  purposes of Section 15.5(d), (f) or (g), whose determination
                  shall be conclusive and described in a Board Resolution) of
                  the evidences of indebtedness, shares of capital stock or
                  assets being distributed applicable to one share of Common
                  Stock as of the close of business on the day before such "ex"
                  date. For purposes of any computation under Sections 15.5(f)
                  or (g), the Current Market Price of the Common Stock on any
                  date shall be deemed to be the average of the daily Closing
                  Prices per share of Common Stock for such day and the next two
                  succeeding Trading Days; provided, however, that if the "ex"
                  date for any event (other than the tender offer requiring such
                  computation) that requires an adjustment to the Conversion
                  Price pursuant to Section 15.5(a), (b), (c), (d), (e), (f) and
                  (g) occurs on or after the Expiration Time for the tender or
                  exchange offer requiring such computation and prior to the day
                  in question, the Closing Price for each Trading Day on and
                  after the "ex" date for such other event shall be adjusted by
                  multiplying such Closing Price by the reciprocal of the
                  fraction by which the Conversion Price is so required to be
                  adjusted as a result of such other event. For purposes of this
                  paragraph, the term "ex" date, (1) when used with respect to
                  any issuance or distribution, means the first date on which
                  the Common Stock trades regular way on the relevant exchange
                  or in the relevant market from which the Closing Price was
                  obtained without the right to receive such issuance or
                  distribution, (2) when used with respect to any subdivision or
                  combination of shares of Common Stock, means the first date on
                  which the Common Stock trades regular way on such exchange or
                  in such market after the time at which such subdivision or
                  combination becomes effective, and (3) when used with respect
                  to any tender or exchange offer means the first date on which
                  the Common Stock trades regular way on such exchange or in
                  such market after the Expiration Time of such offer.
                  Notwithstanding the foregoing, whenever successive adjustments
                  to the Conversion Price are called for pursuant to this
                  Section 15.5, such adjustments shall be made to the Current
                  Market Price as may be necessary or appropriate to effectuate
                  the intent of this Section 15.5 and to avoid unjust or
                  inequitable results as determined in good faith by the Board
                  of Directors.

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                           (3)      "fair market value" shall mean the amount
                  which a willing buyer would pay a willing seller in an arm's
                  length transaction.

                           (4)      "record date" shall mean, with respect to
                  any dividend, distribution or other transaction or event in
                  which the holders of Common Stock have the right to receive
                  any cash, securities or other property or in which the Common
                  Stock (or other applicable security) is exchanged for or
                  converted into any combination of cash, securities or other
                  property, the date fixed for determination of stockholders
                  entitled to receive such cash, securities or other property
                  (whether such date is fixed by the Board of Directors or by
                  statute, contract or otherwise).

                           (5)      "Trading Day" shall mean (x) if the
                  applicable security is listed or admitted for trading on the
                  New York Stock Exchange or another national security exchange,
                  a day on which the New York Stock Exchange or another national
                  security exchange is open for business or (y) if the
                  applicable security is quoted on the NASDAQ, a day on which
                  trades may be made thereon or (z) if the applicable security
                  is not so listed, admitted for trading or quoted, 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.

                  (i)      The Company may make such reductions in the
         Conversion Price, in addition to those required by Sections 15.5(a),
         (b), (c), (d), (e), (f) and (g), as the Board of Directors considers to
         be advisable to avoid or diminish any income tax to holders of Common
         Stock or rights to purchase Common Stock resulting from any dividend or
         distribution of stock (or rights to acquire stock) or from any event
         treated as such for income tax purposes.

                  To the extent permitted by applicable law, the Company from
         time to time may reduce the Conversion Price by any amount for any
         period of time if the period is at least twenty (20) days, the
         reduction is irrevocable during the period and the Board of Directors
         shall have made a determination that such reduction would be in the
         best interests of the Company, which determination shall be conclusive
         and described in a Board Resolution. Whenever the Conversion Price is
         reduced pursuant to the preceding sentence, the Company shall mail to
         the holder of each Note at his last address appearing on the Note
         register provided for in Section 2.5(a) a notice of the reduction at
         least fifteen (15) days prior to the date the reduced Conversion Price
         takes effect, and such notice shall state the reduced Conversion Price
         and the period during which it will be in effect.

                  (j)      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 Section 15.5(j) are not required to be made
         shall be carried forward and taken into account in any subsequent
         adjustment. All calculations under this Article XV shall be made by the
         Company and shall be made to the nearest cent or to the nearest one
         hundredth of a share, as the case may be. No adjustment need be made
         for a change in the par value or no par value of the Common Stock.

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<PAGE>

                  (k)      Whenever the Conversion Price is adjusted as herein
         provided, the Company shall promptly file with the Trustee, and any
         conversion agent other than 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. Unless
         and until a Responsible Officer of the Trustee shall have received such
         Officers' Certificate, the Trustee shall not be deemed to have
         knowledge of any adjustment of the Conversion Price and may assume
         without inquiry that the last Conversion Price of which it has
         knowledge remains in effect. Promptly after delivery of such
         certificate, the Company shall prepare a notice of such adjustment of
         the Conversion Price setting forth the adjusted Conversion Price and
         the date on which each adjustment becomes effective and shall mail such
         notice of such adjustment of the Conversion Price to the holder of each
         Note at his last address appearing on the Note register provided for in
         Section 2.5(a), within twenty (20) days of the effective date of such
         adjustment. Failure to deliver such notice shall not effect the
         legality or validity of any such adjustment.

                  (l)      In any case in which this Section 15.5 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
         (i) issuing to the holder of any Note 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 (ii) paying
         to such holder any amount in cash in lieu of any fraction pursuant to
         Section 15.3.

                  (m)      For purposes of this Section 15.5, the number of
         shares of Common Stock at any time outstanding shall not include shares
         held in the treasury of the Company but shall include shares issuable
         in respect of scrip certificates issued in lieu of fractions of shares
         of Common Stock. The Company will not pay any dividend or make any
         distribution on shares of Common Stock held in the treasury of the
         Company.

                  (n)      In lieu of making any adjustment to the Conversion
         Price pursuant to Section 15.5(e), the Company may elect to reserve an
         amount of cash for distribution to the holders of the Notes upon the
         conversion of the Notes so that any such holder converting Notes will
         receive upon such conversion, in addition to the shares of Common Stock
         and other items to which such holder is entitled, the full amount of
         cash which such holder would have received if such holder had,
         immediately prior to the record date for such distribution of cash,
         converted its Notes into Common Stock, together with any interest
         accrued with respect to such amount, in accordance with this Section
         15.5(n). The Company may make such election by providing an Officers'
         Certificate to the Trustee to such effect on or prior to the payment
         date for any such distribution and depositing with the Trustee on or
         prior to such date an amount of cash equal to the aggregate amount the
         holders of the Notes would have received if such holders had,
         immediately prior to the record date for such distribution, converted
         all of the Notes into Common Stock. Any such funds so deposited by the
         Company with the Trustee shall be invested by the Trustee in marketable
         obligations issued or fully guaranteed by the United States government
         with a maturity not more than three (3) months from the date of
         issuance. Upon conversion of Notes by a holder, the holder will be
         entitled to receive,

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<PAGE>

         in addition to the Common Stock issuable upon conversion, an amount of
         cash equal to the amount such holder would have received if such holder
         had, immediately prior to the record date for such distribution,
         converted its Note into Common Stock, along with such holder's pro rata
         share of any accrued interest earned as a consequence of the investment
         of such funds. Promptly after making an election pursuant to this
         Section 15.5(n), the Company shall give or shall cause to be given
         notice to all Noteholders of such election, which notice shall state
         the amount of cash per $1,000 principal amount of Notes such holders
         shall be entitled to receive (excluding interest) upon conversion of
         the Notes as a consequence of the Company having made such election.

         Section 15.6 Effect of Reclassification, Consolidation, Merger or Sale.
If any of the following events occur, namely (i) any reclassification or change
of the 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), (ii) any consolidation, merger or
combination of the Company with 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 (iii) any sale or conveyance of the properties and assets of the Company as,
or substantially as, an entirety to any other 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, then the Company or the successor or purchasing corporation, as
the case may be, shall execute with the Trustee a supplemental indenture (which
shall comply with the Trust Indenture Act as in force at the date of execution
of such supplemental indenture if such supplemental indenture is then required
to so comply) providing that such Note shall be convertible into the kind and
amount of shares of stock and other securities or property or assets (including
cash) receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance by a holder of a number of shares of Common
Stock issuable upon conversion of such Notes (assuming, for such purposes, a
sufficient number of authorized shares of Common Stock available to convert all
such Notes) immediately prior to such reclassification, change, consolidation,
merger, combination, sale or conveyance assuming such holder of Common Stock did
not exercise his rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
statutory exchange, sale or conveyance (provided that, if the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
statutory exchange, sale or conveyance is not the same for each share of Common
Stock in respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purposes of this Section 15.6 the kind and
amount of securities, cash or other property receivable upon such consolidation,
merger, statutory exchange, sale or conveyance for each non-electing share shall
be deemed to be the kind and amount so receivable per share by a plurality of
the non-electing shares). Such supplemental indenture shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article. If, in the case of any such
reclassification, change, consolidation, merger, combination, sale or
conveyance, the stock or other securities and assets receivable thereupon by a
holder of shares of Common Stock include shares of stock or other securities and
assets of a corporation other than the successor or purchasing corporation, as
the case may be, in such reclassification, change, consolidation, merger,
combination, sale or conveyance, then such supplemental indenture shall also be
executed by such other corporation and shall contain such additional provisions
to protect the

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<PAGE>

interests of the holders of the Notes as the Board of Directors shall reasonably
consider necessary by reason of the foregoing, including to the extent
practicable the provisions providing for the repurchase rights set forth in
Article XVI herein.

         The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Notes, at his address appearing on the
Note register provided for in Section 2.5(a) of this Indenture, within twenty
(20) days after execution thereof. Failure to deliver such notice shall not
affect the legality or validity of such supplemental indenture.

         The above provisions of this Section shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.

         If this Section 15.6 applies to any event or occurrence, Section 15.5
shall not apply.

         Section 15.7 Taxes on Shares Issued. The issue of stock certificates on
conversions of Notes shall be made without charge to the converting Noteholder
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 issue and delivery of stock in any name other than that of the holder of
any Note converted, and the Company shall not be required to issue or deliver
any such stock certificate unless and until the person or persons requesting the
issue 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 15.8 Reservation of Shares; Shares to Be Fully Paid; Listing of
Common Stock. The Company shall provide, free from preemptive rights, out of its
authorized but unissued shares or shares held in treasury, sufficient shares to
provide for the conversion of the Notes from time to time as such Notes are
presented for conversion.

         Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the Notes, the Company will take all corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue shares of such Common Stock at such
adjusted Conversion Price.

         The Company covenants that all shares of Common Stock issued upon
conversion of Notes will be fully paid and non-assessable by the Company and
free from all taxes, liens and charges with respect to the issue thereof.

         The Company further covenants that if at any time the Common Stock
shall be listed on any other national securities exchange or automated quotation
system the Company will, if permitted and required by the rules of such exchange
or automated quotation system, list and keep listed, so long as the Common Stock
shall be so listed on such exchange or automated quotation system, all Common
Stock issuable upon conversion of the Notes.

         Section 15.9 Responsibility of Trustee. The Trustee and any other
conversion agent shall not at any time be under any duty or responsibility to
any holder of Notes to determine whether any facts exist which may require any
adjustment of the Conversion Price, or with respect to the nature or extent or
calculation of any such adjustment when made, or with respect

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<PAGE>

to the method employed, or herein or in any supplemental indenture provided to
be employed, in making the same. The Trustee and any other conversion agent
shall not 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 issued or delivered upon the conversion of any Note; and the
Trustee and any other conversion agent make no representations with respect
thereto. Subject to the provisions of Section 8.1, neither the Trustee nor any
conversion agent shall be responsible for any failure of the Company to issue,
transfer or deliver any shares of Common Stock or stock certificates or other
securities or property or cash upon the surrender of any note for the purpose of
conversion or to comply with any of the duties, responsibilities or covenants of
the Company contained in this Article. Without limiting the generality of the
foregoing, neither the Trustee nor any conversion agent shall be under any
responsibility to determine the correctness of any provisions contained in any
supplemental indenture entered into pursuant to Section 15.6 relating either to
the kind or amount of shares of stock or securities or property (including cash)
receivable by Noteholders upon the conversion of their Notes after any event
referred to in such Section 15.6 or to any adjustment to be made with respect
thereto, but, subject to the provisions of Section 8.1, may accept as conclusive
evidence of the correctness of any such provisions, and shall be protected in
relying upon, the Officers' Certificate (which the Company shall be obligated to
file with the Trustee prior to the execution of any such supplemental indenture)
with respect thereto.

         Section 15.10 Notice to Holders Prior to Certain Actions. In case:

                  (a)      the Company shall declare a dividend (or any other
         distribution) on its Common Stock (that would require an adjustment in
         the Conversion Price pursuant to Section 15.5); or

                  (b)      the Company shall authorize the granting to the
         holders of its Common Stock of rights or warrants to subscribe for or
         purchase any share of any class or any other rights or warrants; or

                  (c)      of any reclassification of the Common Stock of the
         Company (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 or
         merger to which the Company is a party and for which approval of any
         shareholders of the Company is required, or of the sale or transfer of
         all or substantially all of the assets of the Company; or

                  (d)      of the voluntary or involuntary dissolution,
         liquidation or winding-up of the Company;

the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Notes at his address appearing on the Note register, provided for in
Section 2.5(a) of this Indenture, as promptly as possible but in any event at
least fifteen days prior to the applicable date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or rights are to be determined, or (y) the date
on which such reclassification, consolidation, merger, sale,

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<PAGE>

transfer, dissolution, liquidation or winding-up is expected to become effective
or occur, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding-up. Failure to give such
notice, or any defect therein, shall not affect the legality or validity of such
dividend, distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up.

         Section 15.11 Automatic Conversion by the Company.

                  (a)      The Company may elect to automatically convert the
         Notes (an "Automatic Conversion") at any time prior to maturity if the
         Closing Price of the Company's Common Stock has exceeded 150% of the
         Conversion Price for at least 20 Trading Days during a 30-day Trading
         Day period, ending within five Trading Days prior to the date of the
         Automatic Conversion Notice (as defined below); provided, however,
         that, during the two year period commencing on the date of the last
         delivery of the Notes under this Indenture, the Company may only
         automatically convert the Notes if, in accordance with the terms of the
         Registration Rights Agreement, a registration statement registering the
         resale of the Notes and Common Stock issuable upon conversion of the
         Notes is declared effective under the Securities Act prior to the date
         of the Automatic Conversion Notice and such registration statement
         remains effective on the date selected for Automatic Conversion (the
         "Automatic Conversion Date"). In the event that the date on which the
         Notes will be automatically converted (the "Automatic Conversion Date")
         occurs on or prior to September 1, 2006, the Company will pay the
         Make-Whole Interest Payment on the Automatic Conversion Date.

                  (b)      Unless the Company shall have theretofore called for
         redemption all of the outstanding Notes, the Company or, at the request
         and expense of the Company, the Trustee, shall give to all holders of
         Notes notice (the "Automatic Conversion Notice") of the Automatic
         Conversion not more than thirty (30) days but not less than twenty (20)
         days prior to the Automatic Conversion Date. The Company shall also
         deliver a copy of such Automatic Conversion Notice to the Trustee.

                  (c)      Each Automatic Conversion Notice shall state:

                           (1)      the Automatic Conversion Date,

                           (2)      whether the Make-Whole Interest Payment, if
                  any, shall be paid by the Company and, if so, if it shall be
                  paid in cash or by delivery of shares of Common Stock,

                           (3)      the place or places where such Notes are to
                  be surrendered for conversion and accrued and unpaid
                  Make-Whole Interest Payment, if any, and

                           (4)      the Conversion Price then in effect.

                  (d)      In the event of an Automatic Conversion, the Company
         shall issue and deliver a certificate or certificates for the number of
         full shares of Common Stock

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<PAGE>

         issuable upon conversion of the Notes and the Make-Whole Interest
         Payment, if any, due on such Notes along with any cash in respect of
         any fractional shares of Common Stock otherwise issuable upon
         conversion or in the event that the Company elects to pay Make-Whole
         Interest Payment, if any, in Common Stock instead of cash, for payment
         to the holder as promptly after the Automatic Conversion Date, as
         practicable in accordance with the provisions of this Article XV, but
         in no event later than the close of business of the next succeeding
         third Business Day following such Automatic Conversion Date.

                  (e)      All Notes subject to the Automatic Conversion shall
         be delivered to the Trustee to be canceled at the direction of the
         Trustee, which shall dispose of the same as provided in Section 2.8
         hereof.

                  (f)      If any of the foregoing provisions or other
         provisions of this Section 15.11 are inconsistent with applicable law
         at the time of such Automatic Conversion, such law shall govern.

         Section 15.12 Restrictions on Company's Ability to Pay any Make-Whole
Interest Payment in Common Stock. If any of the following conditions are present
at the time of an Automatic Conversion as contemplated by Section 15.11, the
Make-Whole Interest Payment shall be paid only in cash:

                  (a)      In the event any shares of Common Stock to be issued
         for the payment of Make-Whole Interest Payment on the Notes hereunder
         (i) require registration under any U.S. federal securities law before
         such shares of Common Stock may be freely transferable without being
         subject to any transfer restrictions under the Securities Act upon an
         Automatic Conversion Date and if such registration is not completed or
         does not become effective prior to the Automatic Conversion Date and
         remain in effect on the Automatic Conversion Date and/or (ii) require
         registration with or approval of any governmental authority under any
         state law or any other federal law before such shares may be validly
         issued or delivered upon an Automatic Conversion Date and if such
         registration is not completed or does not become effective or such
         approval is not obtained prior to the Automatic Conversion Date and
         remain in effect on the Automatic Conversion Date;

                  (b)      In the event the shares of Common Stock to be issued
         for the payment of the Make-Whole Interest Payment on the Notes
         hereunder are not approved for listing on the New York Stock Exchange,
         the American Stock Exchange (the "Amex") or for quotation on the NASDAQ
         prior to the Automatic Conversion Date; and

                  (c)      In the event all shares of Common Stock which may be
         issued with respect to the payment of the Make-Whole Interest Payment
         on the Notes cannot be issued out of the Company's authorized but
         unissued Common Stock and will not, upon issue, be duly and validly
         issued and fully paid and non-assessable and free of any preemptive
         rights.

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<PAGE>

If all of the conditions set forth in this Section 15.12 are not satisfied in
accordance with the terms thereof, the interest required to be paid or duly
provided for by the Company pursuant to this Section shall be paid by the
Company only in cash.

         Section 15.13 Notification to Trustee. If the Company is obligated to
pay any Make-Whole Interest Payment upon Automatic Conversion pursuant to
Section 15.11(a), it shall deliver to the Trustee a certificate setting forth
(i) the amount of interest actually paid or provided for by the Company with
respect to the affected Notes prior to the Automatic Conversion Date, and (ii)
if such Make-Whole Interest Payment upon Automatic Conversion is payable in
Common Stock, the number of shares of Common Stock which is equal to the
Make-Whole Interest Payment, valued at 97.5% of the average of the Closing Price
for each of the five (5) Trading Days immediately preceding the second Trading
Day prior to the Automatic Conversion Date. Unless and until the Trustee shall
receive such certificate, it shall not be charged with knowledge of the facts
required by this Section 15.13 to be set forth therein. In no event will the
Trustee be required to inquire into or verify the information required to be set
forth in such certificate, other than the amount of interest actually paid by
the Trustee as paying agent with respect to the affected Notes. The Trustee need
not inquire into or confirm any amount of interest "provided for" by the
Company, unless such amount has actually been delivered to the Trustee as paying
agent and is being held by the Trustee as paying agent pending distribution to
the affected holders.

                                   ARTICLE XVI

                       REPURCHASE UPON A REPURCHASE EVENT

         Section 16.1 Repurchase Right. If, at any time prior to September 1,
2023 there shall occur a Repurchase Event, then each Noteholder shall have the
right, at such holder's option, to require the Company to repurchase all of such
holder's Notes, or any portion thereof (in principal amounts of $1,000 or
integral multiples thereof), on the date (the "Event Repurchase Date") that is
forty (40) calendar days after the date of the Company Notice (as defined in
Section 16.2 below) of such Repurchase Event (or, if such 40th day is not a
Business Day, the next succeeding Business Day). Such repurchase shall be made
in cash at a price equal to 105% of the principal amount of Notes such holder
elects to require the Company to repurchase, together with accrued and unpaid
interest, if any, to but excluding the Event Repurchase Date (the "Repurchase
Event Price") (or, at the option of the Company, by delivery of Common Stock in
accordance with the provisions of Section 16.3); provided, however, that if such
Event Repurchase Date is March 1 or September 1 then the interest payable on
such date shall be paid to the holder of record of the Note on the next
preceding February 15 or August 15, respectively. No Notes may be redeemed at
the option of holders upon a Repurchase Event if there has occurred and is
continuing an Event of Default, other than a default in the payment of the
Repurchase Event Price with respect to such Notes on the Event Repurchase Date.

         Section 16.2 Notices; Method of Exercising Repurchase Right, Etc.

                  (a)      Reserved.

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<PAGE>

                  (b)      Unless the Company shall have theretofore called for
         redemption all of the outstanding Notes, on or before the fifteenth
         (15th) calendar day after the occurrence of a Repurchase Event, the
         Company or, at the written request of the Company, the Trustee, shall
         mail to all holders of record of the Notes a notice (the "Company
         Notice") in the form as prepared by the Company of the occurrence of
         the Repurchase Event and of the repurchase right set forth herein
         arising as a result thereof. The Company shall also deliver a copy of
         such Company Notice to the Trustee and cause a copy of such Company
         Notice, or a summary of the information contained therein, to be
         published once in a newspaper of general circulation in The City of New
         York. The Company Notice shall contain the following information:

                           (1)      a description of the Repurchase Event that
                  occurred;

                           (2)      the Event Repurchase Date;

                           (3)      the date by which the repurchase right must
                  be exercised;

                           (4)      the last date by which the election to
                  require repurchase, if submitted, must be revoked;

                           (5)      the Repurchase Event Price and whether the
                  Repurchase Event Price shall be payable in cash or Common
                  Stock and, if payable in Common Stock, the method of
                  calculating the amount of the Common Stock to be delivered
                  upon the repurchase as provided in Section 16.3(a);

                           (6)      a description of the procedure which a
                  holder must follow to exercise a repurchase right;

                           (7)      the Conversion Price then in effect, the
                  date on which the right to convert the principal amount of the
                  Notes to be repurchased will terminate and the place or places
                  where Notes may be surrendered for conversion; and

                           (8)      the CUSIP numbers of the Notes.

                  No failure of the Company to give the foregoing notices or
         defect therein shall limit any holder's right to exercise a repurchase
         right or affect the validity of the proceedings for the repurchase of
         Notes.

                  If any of the foregoing provisions are inconsistent with
         applicable law, such law shall govern.

                  (c)      To exercise a repurchase right, a holder shall
         deliver to the Trustee on or before the thirty-fifth (35th) day after
         the Company Notice was delivered (i) written notice to the Company (or
         agent designated by the Company for such purpose) of the holder's
         exercise of such right, which notice shall set forth the name of the
         holder, the principal amount of the Notes to be repurchased, a
         statement that an election to exercise the repurchase right is being
         made thereby, and, in the event that the Repurchase Event Price shall
         be paid in shares of Common Stock, the name or names (with addresses)
         in

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<PAGE>

         which the certificate or certificates for shares of Common Stock shall
         be issued, and (ii) the Notes with respect to which the repurchase
         right is being exercised, duly endorsed for transfer to the Company.
         Election of repurchase by a holder shall be revocable at any time prior
         to, but excluding, the Event Repurchase Date, by delivering written
         notice to that effect to the Trustee prior to the close of business on
         the Business Day prior to the Event Repurchase Date.

                  (d)      If the Company fails to repurchase on the Event
         Repurchase Date any Notes (or portions thereof) as to which the
         repurchase right has been properly exercised, then the principal of
         such Notes shall, until paid, bear interest to the extent permitted by
         applicable law from the Event Repurchase Date at the rate borne by the
         Note and each such Note shall be convertible into Common Stock in
         accordance with this Indenture (without giving effect to Section
         16.2(b)) until the principal of such Note shall have been paid or duly
         provided for.

                  (e)      Any Note which is to be repurchased only in part
         shall be surrendered to the Trustee duly endorsed for transfer to the
         Company and accompanied by appropriate evidence of genuineness and
         authority 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 Note without service charge, a new Note
         or Notes, containing identical terms and conditions, of any authorized
         denomination as requested by such holder in aggregate principal amount
         equal to and in exchange for the unrepurchased portion of the principal
         of the Note so surrendered.

                  (f)      On or prior to the Event Repurchase 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 5.4) the Repurchase Event Price in cash for
         payment to the holder on the Event Repurchase Date; provided that if
         payment is to be made in cash, such cash payment is made on the Event
         Repurchase Date it must be received by the Trustee or paying agent, as
         the case may be, by 10:00 a.m., New York City time, on such date;
         provided further that if the Repurchase Event Price is to be paid in
         shares of Common Stock, such shares of Common Stock are to be paid as
         promptly after the Event Repurchase Date as practicable.

                  (g)      Any issuance of shares of Common Stock in respect of
         the Repurchase Event Price shall be deemed to have been effected
         immediately prior to the close of business on the Event Repurchase Date
         and the person or persons in whose name or names any certificate or
         certificates for shares of Common Stock shall be issuable upon such
         repurchase shall be deemed to have become on the Event Repurchase Date
         the holder or holders of record of the shares represented thereby;
         provided, however, that any surrender for repurchase on a date when the
         stock transfer books of the Company shall be closed shall constitute
         the person or persons in whose name or names the certificate or
         certificates for such shares are to be issued as the record holder or
         holders thereof for all purposes at the opening of business on the next
         succeeding day on which such stock transfer books are open. No payment
         or adjustment shall be made for dividends or

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<PAGE>

         distributions on any Common Stock issued upon repurchase of any Note
         declared prior to the Event Repurchase Date.

                  (h)      No fractions of shares shall be issued upon
         repurchase of Notes. If more than one Note shall be repurchased from
         the same holder and the Repurchase Event Price shall be payable in
         shares of Common Stock, the number of full shares which shall be
         issuable upon such repurchase shall be computed on the basis of the
         aggregate principal amount of the Notes so repurchased. Instead of any
         fractional share of Common Stock which would otherwise be issuable on
         the repurchase of any Note or Notes, the Company will deliver to the
         applicable holder its check for the current market value of such
         fractional share. The current market value of a fraction of a share is
         determined by multiplying the current market price of a full share by
         the fraction, and rounding the result to the nearest cent. For purposes
         of this Section, the current market price of a share of Common Stock is
         the Closing Price of the Common Stock on the Trading Day immediately
         preceding the Event Repurchase Date.

                  (i)      Any issuance and delivery of certificates for shares
         of Common Stock on repurchase of Notes shall be made without charge to
         the holder of Notes being repurchased for such certificates or for any
         tax or duty in respect of the issuance or delivery of such certificates
         or the securities represented thereby; provided, however, that the
         Company shall not be required to pay any tax or duty which may be
         payable in respect of (i) income of the holder or (ii) any transfer
         involved in the issuance or delivery of certificates for shares of
         Common Stock in a name other than that of the holder of the Notes being
         repurchased, and no such issuance or delivery shall be made unless and
         until the person requesting such issuance or delivery has paid to the
         Company the amount of any such tax or duty or has established, to the
         satisfaction of the Company, that such tax or duty has been paid.

                  (j)      All Notes delivered for repurchase shall be delivered
         to the Trustee to be canceled in accordance with the provisions of
         Section 2.8.

         Section 16.3 Conditions to the Company's Election to Pay the Repurchase
Event Price in Common Stock. The Company may elect to pay the Repurchase Event
Price by delivery of shares of Common Stock pursuant to Section 16.1 if and only
if the following conditions shall have been satisfied:

                  (a)      the shares of Common Stock deliverable in payment of
         the Repurchase Event Price shall have a fair market value as of the
         Event Repurchase Date of not less than the Repurchase Event Price. For
         purposes of Section 16.1 and this Section 16.3, the fair market value
         of shares of Common Stock shall be determined by the Company and shall
         be equal to 95% of the average of the Closing Price of the Common Stock
         for each of the five consecutive Trading Days immediately preceding the
         second Trading Day prior to the Event Repurchase Date;

                  (b)      the Repurchase Event Price shall be paid only in cash
         in the event any shares of Common Stock to be issued upon repurchase of
         Notes hereunder (i) require registration under any federal securities
         law before such shares may be freely transferable

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<PAGE>

         without being subject to any transfer restrictions under the Securities
         Act upon repurchase and if such registration is not completed or does
         not become effective prior to the Event Repurchase Date, and/or (ii)
         require registration with or approval of any governmental authority
         under any state law or any other federal law before such shares may be
         validly issued or delivered upon repurchase and if such registration is
         not completed or does not become effective or such approval is not
         obtained prior to the Event Repurchase Date;

                  (c)      payment of the Repurchase Event Price may not be made
         in Common Stock unless such stock is, or shall have been, or approved
         for quotation on the NASDAQ or listed on a national securities
         exchange, in either case, prior to the Event Repurchase Date; and

                  (d)      all shares of Common Stock which may be issued upon
         repurchase of the Notes will be issued out of the Company's authorized
         but unissued Common Stock and, will upon issue, be duly and validly
         issued and fully paid and non-assessable and free of any preemptive
         rights.

         If all of the conditions set forth in this Section 16.3 are not
satisfied in accordance with the terms thereof, the Repurchase Event Price shall
be paid by the Company only in cash.

         Section 16.4 Certain Definitions. For purposes of this Article XVI:

                  (a)      the term "beneficial owner" shall be determined in
         accordance with Rule 13d-3 and 13d-5, as in effect on the date of the
         original execution of this Indenture, promulgated by the Commission
         pursuant to the Exchange Act;

                  (b)      the term "person" or "group" shall include any
         syndicate or group which would be deemed to be a "person" under Section
         13(d) and 14(d) of the Exchange Act as in effect on the date of the
         original execution of this Indenture;

                  (c)      the term "Continuing Director" means at any date a
         member of the Company's Board of Directors (i) who was a member of such
         board on August 15, 2003 or (ii) who was nominated or elected by at
         least a majority of the directors who were Continuing Directors at the
         time of such nomination or election or whose election to the Company's
         Board of Directors was recommended or endorsed by at least a majority
         of the directors who were Continuing Directors at the time of such
         nomination or election or such lesser number comprising a majority of a
         nominating committee comprised of the Company's independent directors
         if authority for such nominations or elections has been delegated to a
         nominating committee whose authority and composition have been approved
         by at least a majority of the directors who were continuing directors
         at the time such committee was formed. (Under this definition, if the
         Board of Directors of the Company as of the date of this Indenture were
         to approve a new director or directors and then resign, no Change in
         Control would occur even though the current Board of Directors would
         thereafter cease to be in office);

                  (d)      the term "Repurchase Event" means a Change in Control
         or a Termination of Trading;

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<PAGE>

                  (e)      a "Change in Control" shall be deemed to have
         occurred when: (i) any "person" or "group" (as such terms are used in
         Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
         "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
         Exchange Act) of shares representing more than 50% of the combined
         voting power of the then outstanding securities entitled to vote
         generally in elections of directors of the Company (the "Voting
         Stock"); (ii) approval by stockholders of the Company of any plan or
         proposal for the liquidation, dissolution or winding up of the Company;
         (iii) the Company (A) consolidates with, merges into or participates in
         a share exchange with any other corporation, partnership, limited
         liability company or other entity or any other corporation,
         partnership, limited liability company or other entity merges into the
         Company, and in the case of any such merger, consolidation or share
         exchange, the outstanding Common Stock of the Company is changed or
         exchanged into other assets or securities as a result, or (B) conveys,
         transfers or leases all or substantially all of its assets to any
         person; or (iv) any time Continuing Directors do not constitute a
         majority of the Board of Directors of the Company (or, if applicable, a
         successor corporation to the Company); provided that a Change in
         Control shall not be deemed to have occurred if either (x) the Closing
         Price (as defined in Section 15.5(h)(1) hereof) of the Common Stock for
         any five (5) Trading Days during the ten (10) Trading Days immediately
         preceding the Change in Control is at least equal to 105% of the
         Conversion Price in effect on the date on which the Change in Control
         occurs or (y) in the event of a transaction specified in (i) or (iii)
         above, if the stockholders of the Company immediately before such
         transaction constituting the Change in Control own, directly or
         indirectly, immediately following such transaction, at least 51% of the
         combined voting power of the outstanding voting securities resulting
         from such Change in Control in substantially the same proportion as
         their ownership of the voting stock immediately before such
         transaction, or (z) in the case of a transaction specified in (iii)
         above constituting a Change in Control, all of the consideration
         (excluding cash payments for fractional shares) in such merger or
         consolidation constituting the Change in Control consists of common
         stock traded on a United States national securities exchange or quoted
         on the NASDAQ (or which will be so traded or quoted when issued or
         exchanged in connection with such Change in Control) and as a result of
         such transaction or transactions such Notes become convertible solely
         into such common stock; and

                  (f)      a "Termination of Trading" shall have occurred if the
         Common Stock (or other common stock into which the Notes are then
         convertible) is neither listed for trading on a United States national
         securities exchange nor approved for trading on an established
         automated over-the-counter trading market in the United States.

                                  ARTICLE XVII

             REPURCHASE OF THE NOTES AT THE OPTION OF THE NOTEHOLDER

         Section 17.1 Repurchase of Notes by the Company at Option of the
Noteholder. Notes shall be purchased by the Company pursuant to the terms of the
Notes at the option of the Noteholder on September 1, 2008, September 1, 2013
and September 1, 2018 (each a "Repurchase Date"), at a purchase price of 100% of
the principal amount, plus accrued and

                                       81
<PAGE>

unpaid interest to, but excluding, the Repurchase Date (subject to the right of
the Noteholder as of the immediate preceding record date to receive such accrued
and unpaid interest if the Repurchase Date is an interest payment date) (the
"Repurchase Price"). Repurchases of Notes under this Section 17.1 shall be made,
at the option of the Noteholder thereof, upon:

                  (a)      delivery to the Trustee (or other paying agent
         appointed by the Company) by a Noteholder of a duly completed notice
         (the "Repurchase Notice") in the form set forth on the reverse of the
         form of Note, attached as Exhibit A to this Indenture, during the
         period beginning at any time from the opening of business on the date
         that is 20 Business Days prior to the Repurchase Date until the close
         of business on the Repurchase Date; and

                  (b)      delivery or book-entry transfer of the Notes to the
         Trustee (or other paying agent appointed by the Company) prior to, on
         or at any time after delivery of the Repurchase Notice (together with
         all necessary endorsements) at the Corporate Trust Office, or any other
         office, of the Trustee (or other paying agent appointed by the Company)
         in the Borough of Manhattan, the City of New York, as provided in
         Section 5.2, such delivery being a condition to receipt by the
         Noteholder of the Repurchase Price therefor; provided that such
         purchase price shall be so paid pursuant to this Section 17.1 only if
         the Note so delivered to the Trustee (or other paying agent appointed
         by the Company) shall conform in all respects to the description
         thereof in the related Repurchase Notice.

         The Notes to be repurchased on the Repurchase Date pursuant to this
Section 17.1 will be paid for in cash. The Company shall purchase from the
Noteholder thereof, pursuant to this Section 17.1, the Notes or any portion
thereof (in the principal amount of $1,000 or a whole multiple of $1,000).
Provisions of this Indenture that apply to the purchase of all of a Note also
apply to the purchase of such portion of such Note.

         Any purchase by the Company contemplated pursuant to the provisions of
this Section 17.1 shall be consummated by the delivery of the consideration to
be received by the Noteholder promptly following the later of the Repurchase
Date and the time of the book-entry transfer or delivery of the Note.

         Notwithstanding anything herein to the contrary, any Noteholder
delivering to the Trustee (or other paying agent appointed by the Company) the
Repurchase Notice contemplated by this Section 17.1 shall have the right to
withdraw such Repurchase Notice at any time prior to the close of business on
the Repurchase Date by delivery of a written notice of withdrawal to the Trustee
(or other paying agent appointed by the Company) in accordance with Section
17.4. The Trustee (or other paying agent appointed by the Company) shall
promptly notify the Company of the receipt by it of any Repurchase Notice or
written notice of withdrawal thereof.

         Section 17.2 Company Repurchase Notice.

                  (a)      In connection with any repurchase of Notes, the
         Company shall, no less than 20 Business Days prior to each Repurchase
         Date (the "Company Repurchase Notice Date"), give notice to Noteholders
         at their addresses shown in the Note register setting

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<PAGE>

         forth information specified in this Section 17.2(a) (the "Company
         Repurchase Notice"). The Company will also give notice to beneficial
         owners as required by applicable law.

                  Each Company Repurchase Notice shall:

                           (1)      state the repurchase price and the
                  Repurchase Date to which the Company Repurchase Notice
                  relates;

                           (2)      include a form of Repurchase Notice;

                           (3)      state the name and address of the Trustee
                  (or other paying agent appointed by the Company);

                           (4)      state that the Repurchase Notice must be
                  delivered to the Trustee (or other paying agent appointed by
                  the Company) and the Notes must be surrendered to the Trustee
                  (or other paying agent appointed by the Company) to collect
                  the purchase price;

                           (5)      if the Notes are then convertible, state
                  that Notes as to which a Repurchase Notice has been given may
                  be converted only if the Repurchase Notice is withdrawn in
                  accordance with the terms of this Indenture; and

                           (6)      state the CUSIP number of the Notes.

                  (b)      Company Repurchase Notices may be given by the
         Company or, at the Company's request, the Trustee shall give such
         Company Repurchase Notice in the Company's name and at the Company's
         expense.

                  (c)      At least five (5) Business Days before the Company
         Repurchase Notice Date, the Company shall deliver an Officers'
         Certificate to the Trustee specifying:

                  (i)      the information required by Section 17.2(b) in the
                           Company Repurchase Notice, and

                  (ii)     whether the Company desires the Trustee to give the
                           Company Repurchase Notice required by Section
                           17.2(b).

                  (d)      The Company will comply with the provisions of Rule
         13e-4 and any other tender offer rules under the Exchange Act to the
         extent then applicable in connection with the repurchase rights of the
         holders of Notes.

         Section 17.3 Effect of Repurchase Notice. Upon receipt by the Trustee
(or other paying agent appointed by the Company) of the Repurchase Notice
specified in Section 17.1, the Noteholder of the Note in respect of which such
Repurchase Notice was given shall (unless such Repurchase Notice is validly
withdrawn) thereafter be entitled to receive solely the Repurchase Price with
respect to such Note. Such Repurchase Price shall be paid to such Noteholder,
subject to receipt of funds by the Trustee (or other paying agent appointed by
the Company), promptly following the later of (x) the Repurchase Date with
respect to such Note (provided the

                                       83
<PAGE>

Noteholder has satisfied the conditions in Section 17.1) and (y) the time of
delivery of such Note to the Trustee (or other paying agent appointed by the
Company) by the Noteholder thereof in the manner required by Section 17.1. Notes
in respect of which a Repurchase Notice has been given by the Noteholder thereof
may not be converted pursuant to Article XV hereof on or after the date of the
delivery of such Repurchase Notice unless such Repurchase Notice has first been
validly withdrawn before the close of business on the last business day before
the Repurchase Date.

         Section 17.4 Withdrawal of Purchase Notice. A Repurchase Notice may be
withdrawn by means of a written notice of withdrawal delivered to the office of
the Trustee (or other paying agent appointed by the Company) in accordance with
the Repurchase Notice at any time prior to the close of business on the
Repurchase Date, specifying:

                  (a)      the principal amount of the Note with respect to
         which such notice of withdrawal is being submitted;

                  (b)      the certificate number, if any, of the Note in
         respect of which such notice of withdrawal is being submitted, or the
         appropriate Depositary information if the Note in respect of which such
         notice of withdrawal is being submitted is represented by a Global
         Note; and

                  (c)      the principal amount, if any, of such Note which
         remains subject to the original Repurchase Notice and which has been or
         will be delivered for purchase by the Company.

         A written notice of withdrawal of a Repurchase Notice may be in the
form set forth in the preceding paragraph or may be in the form of a conditional
withdrawal contained in a Repurchase Notice pursuant to the terms of Section
17.1(a).

         Section 17.5 Deposit of Purchase Price.

                  (a)      Promptly following the Repurchase Date, the Company
         shall deposit with the Trustee (or other paying agent appointed by the
         Company; or, if the Company or a Subsidiary or an Affiliate of either
         of them is acting as the paying agent, shall segregate and hold in
         trust as provided in Section 5.4) an amount of cash (in immediately
         available funds if deposited on such Business Day), sufficient to pay
         the aggregate purchase price of all the Notes or portions thereof that
         are to be purchased as of the Repurchase Date.

                  (b)      If, and upon the date that, the Trustee or other
         paying agent appointed by the Company, or the Company or a Subsidiary
         or Affiliate of either of them, if such entity is acting as the paying
         agent, holds cash sufficient to pay the aggregate purchase price of all
         the Notes, or portions thereof that are to be purchased as of the
         Repurchase Date, (i) the Notes will cease to be outstanding, and (ii)
         all other rights of the holders of such Notes will terminate, whether
         or not book-entry transfer of the Notes has been made or the Notes have
         been delivered to the Trustee or paying agent, other than the right to
         receive the Repurchase Price upon delivery of the Notes; provided that
         such date is no earlier than the Repurchase Date.

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<PAGE>

         Section 17.6 Notes Repurchased in Part. Upon presentation of any Note
repurchased only in part, the Company shall execute and the Trustee shall
authenticate and make available for delivery to the Noteholder thereof, at the
expense of the Company, a new Note or Notes, of any authorized denomination, in
aggregate principal amount equal to the unrepurchased portion of the Notes
presented.

         Section 17.7 Repayment to the Company. The Trustee (or other paying
agent appointed by the Company) shall return to the Company any cash that
remains unclaimed for a period of three years after such amounts have become due
and payable, together with interest, if any, thereon, held by them for the
payment of the purchase price; provided that to the extent that the aggregate
amount of cash deposited by the Company pursuant to Section 17.5 exceeds the
aggregate Repurchase Price of the Notes or portions thereof which the Company is
obligated to purchase as of the Repurchase Date then, unless otherwise agreed in
writing with the Company, promptly after the Business Day following the
Repurchase Date, the Trustee shall return any such excess to the Company
together with interest, if any, thereon.

                                 ARTICLE XVIII

                            MISCELLANEOUS PROVISIONS

         Section 18.1 Provisions Binding on Company's Successors. All the
covenants, stipulations, promises and agreements of the Company in this
Indenture contained shall bind its successors and assigns whether so expressed
or not.

         Section 18.2 Official Acts by Successor Corporation. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the lawful sole successor
of the Company.

         Section 18.3 Addresses for Notices, Etc. Any notice or demand which by
any provision of this Indenture is required or permitted to be given or served
by the Trustee or by the holders of Notes on the Company shall be deemed to have
been sufficiently given or made, for all purposes if given or served by being
deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company with the
Trustee) to Alkermes, Inc., 88 Sidney Street, Cambridge, MA 02139-4136,
Attention: Chief Financial Officer. Any notice, direction, request or demand
hereunder to or upon the Trustee shall be deemed to have been sufficiently given
or made, for all purposes, if given or served by being deposited postage prepaid
by registered or certified mail in a post office letter box addressed to the
Corporate Trust Office.

         The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications.

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<PAGE>

         Any notice or communication mailed to a Noteholder shall be mailed to
him by first class mail, postage prepaid, at his address as it appears on the
Note register and shall be sufficiently given to him if so mailed within the
time prescribed.

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

         SECTION 18.4 GOVERNING LAW. THIS INDENTURE AND EACH NOTE SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF NEW YORK, AND FOR ALL PURPOSES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK.

         Section 18.5 Evidence of Compliance with Conditions Precedent;
Certificates to Trustee. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, 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 have been complied
with.

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

         Section 18.6 Legal Holidays. In any case where the date of maturity or
interest on or principal of the Notes or the date fixed for redemption of any
Note will not be a Business Day, then payment of such interest on or principal
of the Notes 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 date of
maturity or the date fixed for redemption, and no interest shall accrue for the
period from and after such date.

         Section 18.7 No Security Interest Created. Nothing in this Indenture or
in the Notes, expressed or implied, shall be construed to constitute a security
interest under the Uniform Commercial Code or similar legislation, as now or
hereafter enacted and in effect, in any jurisdiction.

         Section 18.8 Trust Indenture Act. This Indenture is hereby made subject
to, and shall be governed by, the provisions of the Trust Indenture Act required
to be part of and to govern indentures qualified under the Trust Indenture Act;
provided, however, that, unless otherwise required by law, notwithstanding the
foregoing, this Indenture and the Notes issued hereunder

                                       86

<PAGE>

shall not be subject to the provisions of subsections (a)(1), (a)(2), and (a)(3)
of Section 314 of the Trust Indenture Act as now in effect as hereafter amended
or modified; provided further that this Section 18.8 shall not require that this
Indenture or the Trustee be qualified under the Trust Indenture Act prior to the
time such qualification is in fact required under the terms of the Trust
Indenture Act, nor shall it constitute any admission or acknowledgment by any
party hereto that any such qualification is required prior to the time such
qualification is in fact required under the terms of the Trust Indenture Act. If
any provision hereof limits, qualifies or conflicts with another provision
hereof which is required to be included in an indenture qualified under the
Trust Indenture Act, such required provision shall control.

         Section 18.9 Benefits of Indenture. Nothing in this Indenture or in the
Notes, expressed or implied, shall give to any person, other than the parties
hereto, any paying agent, any authenticating agent, any Note registrar and their
successors hereunder, the holders of Notes and the holders of Senior
Indebtedness, any benefit or any legal or equitable right, remedy or claim under
this Indenture.

         Section 18.10 Table of Contents, Headings, Etc. The table of contents
and the titles and headings of the articles and sections of this Indenture have
been inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.

         Section 18.11 Authenticating Agent. The Trustee may appoint an
authenticating agent which shall be authorized to act on its behalf and subject
to its direction in the authentication and delivery of Notes in connection with
the original issuance thereof and transfers and exchanges of Notes hereunder,
including under Sections 2.4, 2.5, 2.6, 2.7 and 3.3, as fully to all intents and
purposes as though the authenticating agent had been expressly authorized by
this Indenture and those Sections to authenticate and deliver Notes. For all
purposes of this Indenture, the authentication and delivery of Notes by the
authenticating agent shall be deemed to be authentication and delivery of such
Notes "by the Trustee" and a certificate of authentication executed on behalf of
the Trustee by an authenticating agent shall be deemed to satisfy any
requirement hereunder or in the Notes for the Trustee's certificate of
authentication. Such authenticating agent shall at all times be a person
eligible to serve as trustee hereunder pursuant to Section 8.9.

         Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the parties hereto or the authenticating agent or such successor
corporation.

         Any authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any authenticating agent by giving written notice
of termination 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
any authenticating agent shall cease to be eligible under this Section, the
Trustee

                                       87

<PAGE>

shall promptly appoint a successor authenticating agent (which may be the
Trustee), shall give written notice of such appointment to the Company and shall
mail notice of such appointment to all holders of Notes as the names and
addresses of such holders appear on the Note register.

         The Trustee agrees to pay to the authenticating agent from time to time
reasonable compensation for its services (to the extent pre-approved by the
Company in writing), and the Trustee shall be entitled to be reimbursed for such
pre-approved payments, subject to Section 8.6.

         The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this Section 18.11
shall be applicable to any authenticating agent.

         Section 18.12 Execution in Counterparts. This Indenture may be executed
in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.

         U.S. Bank National Association hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.

                                       88

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly signed, and their respective corporate seals to be hereunto affixed and
attested, all as of the date first written above.

                                                  ALKERMES, INC.

                                                  By: __________________________
                                                      Name:_____________________
                                                      Title:____________________

Attest:

______________________________
Name: ________________________
Title:________________________
[seal]

                                                  U.S. BANK NATIONAL ASSOCIATION
                                                  as Trustee

                                                  By: __________________________
                                                      Name:_____________________
                                                      Title:____________________

<PAGE>

                                                                       EXHIBIT A

                                  FACE OF NOTE

                            GLOBAL SECURITIES LEGEND

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

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF.

THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND
MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT); (2)
AGREES THAT IT WILL NOT, WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THE
NOTE EVIDENCED HEREBY, RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR
THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY
OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (D)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH
TRANSFER); AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE
EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(D)
ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH
ANY TRANSFER OF THE NOTE EVIDENCED HEREBY WITHIN TWO YEARS AFTER THE ORIGINAL
ISSUANCE OF SUCH NOTE (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(D) ABOVE), THE
HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING
TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO U.S. BANK NATIONAL
ASSOCIATION, AS TRUSTEE. IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE 2(C)
ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO U.S. BANK NATIONAL
ASSOCIATION, AS TRUSTEE, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER
IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED
UPON THE EARLIER OF THE TRANSFER OF THE NOTE EVIDENCED HEREBY PURSUANT TO CLAUSE
2(C) or 2(D) ABOVE OR THE EXPIRATION OF TWO YEARS FROM THE ORIGINAL ISSUANCE
NOTE EVIDENCED HEREBY.

                                      A-2

<PAGE>

No.                                                    CUSIP No. _______________

                                 ALKERMES, INC.
                      2-1/2% CONVERTIBLE SUBORDINATED NOTE
                                    DUE 2023

         Alkermes, Inc., a corporation duly organized and validly existing under
the laws of the Commonwealth of Pennsylvania (the "Company," which term includes
any successor corporation under the Indenture referred to on the reverse side
hereof), for value received promises to pay to Cede & Co. or registered assigns,
the principal sum indicated on Schedule A hereof on September 1, 2023, and to
pay interest thereon in the manner set forth on the reverse hereof accruing from
August 22, 2003 at the rate of 2-1/2% per annum.

Interest Payment Dates:        March 1 and September 1, commencing March 1, 2004

Record Dates:                  February 15 and August 15

         Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, including, without limitation, provisions
subordinating the payment of principal of and premium, if any, and interest on
this Note to the prior payment in full of all Senior Indebtedness as defined in
the Indenture and provisions giving the holder of this Note the right to convert
this Note into Common Stock of the Company on the terms and subject to the
limitations referred to on the reverse side hereof and as more fully specified
in the Indenture. Such further provisions shall for all purposes have the same
effect as if set forth at this place.

         THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF SAID STATE.

         This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been manually signed by the
Trustee or a duly authorized authenticating agent under the Indenture.

                                      A-3

<PAGE>

         IN WITNESS WHEREOF, Alkermes, Inc. has caused this Note to be signed
manually or by facsimile by its duly authorized officers.

                                                 ALKERMES, INC.

Dated:__________________________                 By: ___________________________
                                                 Name:
                                                 Title:

                                                 Attest:
                                                 _______________________________
                                                 Name:
                                                 Title:

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

         This is one of the 2-1/2% Convertible Subordinated Notes due 2023
described in the within-mentioned Indenture.

                                                 U.S. Bank National Association,
                                                 as Trustee

                                                 By:____________________________
                                                        Authorized Signatory

                                      A-4

<PAGE>

                                 ALKERMES, INC.

                  2-1/2% CONVERTIBLE SUBORDINATED NOTE DUE 2023

1.       Interest. Alkermes, Inc., a corporation duly organized and validly
existing under the laws of the Commonwealth of Pennsylvania (the "Company" which
term includes any successor corporation under the Indenture referred to on the
reverse hereof), is the issuer of this 2-1/2% Convertible Subordinated Note due
2023 (the "Note"). The Company promises to pay interest on the Note in cash
semiannually on each March 1 and September 1, commencing on March 1, 2004, to
holders of record on the immediately preceding February 15 and August 15.

Interest on the Note will accrue from the most recent date to which interest has
been paid, or if no interest has been paid, from August 22, 2003. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.

2.       Method of Payment. The Company will pay interest on the Note (except
defaulted interest) to the person who is registered holder of the Note entitled
to such payments at the close of business on the record date for the next
interest payment date even though the Note is canceled after the record date and
on or before the interest payment date. The Noteholder hereof must surrender the
Note to a Paying Agent to collect principal payments. The Company will pay
principal and interest in money of the United States that at the time of payment
is legal tender for payment of public and private debts. However, the Company
may pay principal and interest by check payable in such money. It may mail an
interest check to the registered address of the person entitled to thereto;
provided further that, with respect to the holder of the Note with an aggregate
principal amount equal to or in excess of $2 million, at the request of such
holder in writing to the Company, interest on the Note shall be paid by wire
transfer in immediately available funds in accordance with the wire instruction
supplied by such holder to the Trustee and Paying Agent (if different from the
Trustee).

3.       Paying Agent and Registrar. The Trustee will act as Paying Agent,
Registrar and Conversion Agent. The Company may change any Paying Agent,
Registrar, co-registrar or Conversion Agent without prior notice. The Company or
any of its Affiliates may act in any such capacity.

4.       Indenture. The Company issued the Notes under an Indenture, dated as of
August 22, 2003 (the "Indenture"), between the Company and U.S. Bank National
Association, as Trustee. The terms of this Note include those stated in the
Indenture (which is incorporated hereby as though fully set forth herein) and
those made part of the Indenture by the Trust Indenture Act of 1939 (15 U.S.
Code Sections 77aaa-77bbbb) as in effect on the date of the Indenture. The Note
is subject to, and ratified by, all such terms, certain of which are summarized
herein, and Noteholder is referred to the Indenture and such Act for a statement
of such terms. The Note is an unsecured obligation of the Company limited to
(except as otherwise provided in the Indenture) up to an aggregate principal
amount of $100,000,000 (or $125,000,000 if the option to purchase additional
Notes granted to the Initial Purchaser (as defined herein) pursuant to the
Purchase Agreement (as defined herein) is exercised in full) and is subordinated
in right of payment to all existing and future Senior Indebtedness of the
Company as provided in the Indenture. The Indenture does not limit the ability
of the Company or any of its Subsidiaries to

                                      A-5

<PAGE>

incur indebtedness or to grant security interests or liens in respect of their
assets. Any holder of this Note shall be deemed to have agreed to and be bound
by all the terms and conditions contained in the Indenture applicable to a
holder of a Note. All capitalized terms herein that are not otherwise defined
shall have the meaning ascribed thereto in the Indenture.

5.       Optional Redemption. The Note is not subject to redemption at the
Company's option prior to September 6, 2006. On such date and thereafter, the
Note will be subject to redemption from time to time on any date prior to
maturity at the option of the Company, in whole or in part (in any integral
multiple of $1,000), upon not less than twenty (20) nor more than sixty (60)
days' notice by mail prior to the redemption date at the following redemption
price (expressed as a percentage of the principal amount set forth below):

<TABLE>
<CAPTION>
                                                                                  REDEMPTION
                      PERIOD                                                        PRICE
                      ------                                                        -----
<S>                                                                               <C>
September 6, 2006 to August 31, 2007................................               101.00%
September 1, 2007 to August 31, 2008...............................                100.50%
September 1, 2008 to September 1, 2023.............................                 100.0%
</TABLE>

in each case together with accrued and unpaid interest up to but not including
the redemption date (subject to the right of holder of record on the relevant
record date to receive interest due on an interest payment date). Unless the
Company defaults in making such redemption payment, or the Paying Agent is
prohibited from making such payment pursuant to the Indenture, interest will
cease to accrue on the Note or portions of it called for redemption on and after
the redemption date.

6.       Notice of Redemption. Notice of redemption will be mailed at least
twenty (20) days but not more than sixty (60) days before the redemption date to
the holder of this Note to be redeemed at its address of record. Any portion of
this Note in denominations larger than $1,000 may be redeemed in part but only
in integral multiples of $1,000. In the event less than all of the Note is to be
redeemed, the Trustee will choose the Notes for redemption in accordance with
the Indenture.

7.       Mandatory Redemption. The Company will not be required to make
mandatory redemption payments with respect to the Note. There are no sinking
fund payments with respect to the Note.

8.       Repurchase at Option of Holder Upon a Repurchase Event. If at any time
prior to the maturity date there shall occur a Repurchase Event, then the
Noteholder will have the right, at its option, to require the Company to
repurchase this Note or any portion thereof (in principal amounts of $1,000 or
integral multiples thereof) at a repurchase price equal to 105% of the principal
amount of the Note submitted to the Company for repurchase, plus accrued and
unpaid interest to but excluding the Event Repurchase Date (as subsequently
defined). If this Note is subject to a Repurchase Event, a notice of the
Repurchase Event will be mailed to the holder from the Company. The Company will
be required to repurchase all or any portion of the Note tendered by the holder
on a date (the "Event Repurchase Date") that is forty (40) days after the

                                      A-6

<PAGE>

Company mails the notice of Repurchase Event to the holder. The Noteholder has
the right to withdraw its election by delivering a written notice of withdrawal
to the Paying Agent in accordance with the terms of the Indenture. The Company
may pay the repurchase price in cash or Common Stock, at its option. If the
Company elects to pay the repurchase price in Common Stock, the Company will
deliver that number of shares of Common Stock valued at 95% of the average of
the closing price for each of the five Trading Days immediately preceding the
second Trading Day prior to the Event Repurchase Date.

9.       Repurchase of the Notes at the Option of the Noteholder. Subject to the
terms and conditions of the Indenture, the Company shall become obligated to
purchase, at the option of the Noteholder, all or any portion of the Notes held
by such Noteholder on September 1, 2008, September 1, 2013 and September 1, 2018
(each, a "Repurchase Date") in whole multiples of $1,000 at a purchase price of
100% of the principal amount, plus accrued and unpaid interest to, but
excluding, the Repurchase Date, on such Note. To exercise such right, a
Noteholder shall deliver to the Company such Note with the form entitled
"Repurchase Notice" on the reverse thereof duly completed, together with the
Note, duly endorsed for transfer, at any time from the opening of business on
the date that is twenty (20) Business Days prior to such Repurchase Date until
the close of business on the Repurchase Date, and shall deliver the Notes to the
Trustee (or other paying agent appointed by the Company) as set forth in the
Indenture.

Holders have the right to withdraw any Repurchase Notice by delivering to the
Trustee (or other paying agent appointed by the Company) a written notice of
withdrawal up to the close of business on the Repurchase Date, all as provided
in the Indenture.

If, and upon the date that, cash, sufficient to pay the purchase price of all
Notes or portions thereof to be purchased as of the Repurchase Date is deposited
with the Trustee (or other paying agent appointed by the Company), such Note
will cease to be outstanding and all other rights of the Noteholder will
terminate, other than the right to receive the purchase price upon surrender of
such Note; provided that such date is no earlier than the Repurchase Date.

10.      Subordination. The payment of the principal of, premium, if any,
interest on, or any other amounts due on the Note is subordinated in right of
payment to all existing and future Senior Indebtedness of the Company, as
described in the Indenture. The Noteholder, by accepting this Note, agrees to
such subordination and authorizes and directs the Trustee on its behalf to take
such action as may be necessary or appropriate to effectuate the subordination
so provided and appoints the Trustee as its attorney-in-fact for such purpose.

11.      Conversion. The holder of this Note has the right at any time prior to
the close of business (New York time) on a redemption date or maturity date, to
convert the principal amount hereof (or any portion hereof that is an integral
multiple of $1,000) into shares of Common Stock at the initial Conversion Price
of $13.85, subject to adjustment under certain circumstances as more fully
described in the Indenture, except that if the Note is called for redemption,
the conversion right will terminate at the close of business on the Business Day
immediately preceding the date fixed for redemption.

To convert this Note, the holder must (1) complete and sign a notice of election
to convert substantially in the form set forth below, (2) surrender the Note to
the Conversion Agent, (3) furnish appropriate endorsements or transfer documents
if required by the Registrar or

                                      A-7

<PAGE>

Conversion Agent and (4) pay any transfer or similar tax, if required. Upon
conversion, no adjustment or payment will be made for interest or dividends, but
if the Noteholder surrenders the Note for conversion after the close of business
on the record date for the payment of an installment of interest and prior to
the opening of business on the next interest payment date, then, notwithstanding
such conversion, the interest payable on such interest payment date will be paid
to the registered holder of the Note on such record date. In such event, this
Note, when surrendered for conversion, must be accompanied by payment in funds
acceptable to the Company of an amount equal to the interest payable on such
interest payment date on the portion so converted (unless the Company has
elected to automatically convert such Note or portion thereof and has issued an
Automatic Conversion Notice in accordance with Indenture and such automatic
conversion, as the case may be, will occur prior to such interest payment date).
The number of shares of Common Stock issuable upon conversion of this Note is
determined by dividing the principal amount of the Note converted by the
Conversion Price in effect on the Conversion Date. No fractional shares will be
issued upon conversion but a cash adjustment will be made for any fractional
interest.

The portion of this Note in respect of which the holder has delivered an "Option
of Noteholder to Elect Purchase" or "Repurchase Notice" form appearing below
exercising the option of the holder to require the Company to purchase such
portion of this Note may be converted only if the notice of exercise is
withdrawn as provided above and in accordance with the terms of the Indenture.
The above description of conversion of the Note is qualified by reference to,
and is subject in its entirety by, the more complete description thereof
contained in the Indenture.

12.      Automatic Conversion by Company. If at any time the Closing Price of
the Company's Common Stock exceeds 150% of the Conversion Price for at least 20
Trading Days during a 30-day Trading Day period ending within five Trading Days
prior to the notice of Automatic Conversion, the Company may elect to
automatically convert the Note pursuant to the terms of the Indenture, provided
however, that, during the two year period commencing on the date of the last
delivery of the Notes under the Indenture, the Company may only automatically
convert the Notes if, in accordance with the terms of the Registration Rights
Agreement, a registration statement registering the resale of the Notes and
Common Stock issuable upon conversion of the Notes is declared effective under
the Securities Act prior to the date of the Automatic Conversion Notice and such
registration statement remains effective on the date selected for Automatic
Conversion. In the event that the date that the Note will be automatically
converted occurs on or prior to September 1, 2006, the Company will pay to the
holder the Make-Whole Interest Payment in cash or, at the Company's option, in
Common Stock, equal to three full years of interest on the Note, less any
interest actually paid or provided for on the Note. If the Company elects to pay
the Make-Whole Interest Payment, if any, on the Note in Common Stock, the shares
of Common Stock will be valued at 97.5% of the average of the Closing Price for
each of the five Trading Days immediately preceding the second Trading Day prior
to date of Automatic Conversion.

13.      Denominations, Transfer, Exchange. The Note is in global form, without
coupons, in denominations of $1,000 and integral multiples of $1,000. The
transfer of the Note may be registered, and the Note may be exchanged, as
provided in the Indenture. The Registrar may require the Noteholder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture. The

                                      A-8

<PAGE>

Registrar need not exchange or register the transfer of the Note or portion of
the Note selected for redemption (except the unredeemed portion of the Note
being redeemed in part). Also, the Registrar need not exchange or register the
transfer of the Note for a period of 15 days before a selection of the Notes to
be redeemed.

14.      Defaults and Remedies. The Note shall have the Events of Default as set
forth in Section 7.1 of the Indenture. Subject to certain limitations in the
Indenture, if an Event of Default occurs and is continuing, the Trustee by
notice to the Company or the Noteholders of at least 25% in aggregate principal
amount of the then outstanding Notes by notice to the Company and the Trustee
may declare all the Notes to be due and payable immediately, except that in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, all unpaid principal, interest accrued on the Notes shall become due
and payable immediately without further action or notice.

The Noteholders of a majority in aggregate principal amount of the Notes then
outstanding by written notice to the Company and the Trustee may rescind an
acceleration and its consequences if (i) no judgment or decree for the payment
of the monies due shall have been obtained or entered, (ii) the Company pays, or
deposits with the Trustee a sum sufficient to pay, all matured installments of
interest upon all Notes, the principal of and premium, if any, on Notes which
shall have become due otherwise than by acceleration, and amounts due to the
Trustee under Section 8.6 of the Indenture, and (iii) if all existing Events of
Default have been cured or waived except nonpayment of principal or interest
that has become due solely because of the acceleration. Noteholders may not
enforce the Indenture or the Notes except as provided in the Indenture. Subject
to certain limitations, Noteholders of a majority in principal amount of the
then outstanding Notes issued under the Indenture may direct the Trustee in its
exercise of any trust or power. The Company must furnish compliance certificates
to the Trustee annually. The above description of Events of Default and remedies
is qualified by reference to, and subject in its entirety by, the more complete
description thereof contained in the Indenture.

15.      Amendments, Supplements and Waivers. Subject to certain exceptions set
forth in the Indenture, (i) the Company and the Trustee, with the consent of the
holders of not less than a majority of the aggregate principal amount of the
Notes at the time outstanding, evidenced as provided in the Indenture, may
execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the holders of
the Notes and (ii) the holders of a majority in aggregate principal amount of
the Notes at the time outstanding may on behalf of the holders of all of the
Notes waive a past default or Event of Default under the Indenture and its
consequences. Without the consent of any Noteholder, the Indenture or the Notes
may be amended, among other things, to cure any ambiguity or correct or
supplement any provision contained in the Indenture or any supplement thereto if
such amendment does not materially adversely affect the interests of the
Noteholders and to qualify the Indenture under the TIA.

16.      Trustee Dealings with the Company. The Trustee, in its individual or
any other capacity, may become the owner or pledgee of Notes and may otherwise
deal with the Company or an Affiliate with the same rights it would have if it
were not Trustee, subject to certain limitations provided for in the Indenture
and in the TIA. Any Agent may do the same with like rights.

                                      A-9

<PAGE>

17.      No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Note or the Indenture or for any claim
based on, in respect of or by reason of such obligations. The Noteholder, by
accepting this Note, waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Note.

18.      Authentication. The Note shall not be valid until authenticated by the
manual signature of an authorized officer of the Trustee or an authenticating
agent.

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

                                      A-10

<PAGE>

                          TO BE ATTACHED TO GLOBAL NOTE

                                   SCHEDULE A

The initial principal amount at maturity of this Global Note shall be
$100,000,000. The following increases or decreases in the principal amount of
this Global Note have been made:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
                                                                                                      SIGNATURE OF
                                                                       PRINCIPAL AMOUNT OF             AUTHORIZED
                AMOUNT OF INCREASE                                         THIS GLOBAL                 OFFICER OF
               IN PRINCIPAL AMOUNT        AMOUNT OF DECREASE IN           NOTE FOLLOWING               TRUSTEE OR
   DATE           OF THIS GLOBAL           PRINCIPAL AMOUNT OF           SUCH DECREASE OR              SECURITIES
   MADE                NOTE                 THIS GLOBAL NOTE                 INCREASE                  CUSTODIAN
-------------------------------------------------------------------------------------------------------------------
<S>            <C>                        <C>                          <C>                            <C>
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</TABLE>

                                      A-11

<PAGE>

                     OPTION OF NOTEHOLDER TO ELECT PURCHASE

If you want to elect to have this Note or a portion thereof repurchased by the
Company pursuant to Section 16.2 of the Indenture, check the box: [ ]

If the purchase is in part, indicate the portion (in denominations of $1,000 or
any integral multiple thereof) to be purchased:________________

Your Signature: ________________________________________________________________
              (Sign exactly as your name appears on the other side of this Note)

Date: _______________

Signature Guarantee:(1)_________________________________________________________

___________________
(1)  Signature must be guaranteed by a commercial bank, trust company or
     member firm of the New York Stock Exchange.

                                      A-12

<PAGE>

                               ELECTION TO CONVERT

To:  Alkermes, Inc.

The undersigned owner of $________ in principal amount of Alkermes, Inc.'s
2-1/2% Convertible Subordinated Notes due 2023 (the "Notes") hereby irrevocably
exercises the option to convert the Notes, or the portion below designated, into
Common Stock of Alkermes, Inc. in accordance with the terms of the Indenture
referred to in the Notes, and directs that the shares issuable and deliverable
upon conversion, together with any check in payment for fractional shares, be
issued in the name of and delivered to the undersigned, unless a different name
has been indicated in the assignment below. If shares are to be issued in the
name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto.

Date:

                                               Amount of Notes to
                                               be converted ($1,000 or integral
                                               multiples thereof);
                                               $_________________

                                               Signature (for conversion only)

                                               _________________________________
                                               Please Print or Typewrite
                                               Name and Address, Including
                                               Zip Code, and Social Security or
                                               Other Identifying Number:

                                               _________________________________

                                               _________________________________

                                               _________________________________

                                               _________________________________

                                               _________________________________

                                               _________________________________

                                               Signature Guarantee(2)

__________________
(2)  Signature must be guaranteed by a commercial bank, trust company or
     member firm of the New York Stock Exchange.

                                      A-13

<PAGE>

                                   ASSIGNMENT

         For value received____________________________________________ hereby
sell(s), assign(s) and transfer(s) unto (Please insert social security or
Taxpayer Identification Number of assignee) the Note, and hereby irrevocably
constitutes and appoints_____________________________________ attorney to
transfer the said Note on the books of the Company, with full power of
substitution in the premises.

         In connection with any transfer of the Note occurring within two years
of the original issuance of such Note (unless such Note is being transferred
pursuant to a registration statement that has been declared effective under the
Securities Act), the undersigned confirms that such Note is being transferred:

        [ ]       To Alkermes, Inc. or a subsidiary thereof; or

        [ ]       Pursuant to and in compliance with Rule 144A under the
                  Securities Act of 1933, as amended; or

        [ ]       Pursuant to and in compliance with Rule 144 under the
                  Securities Act of 1933, as amended;

and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate").

        [ ]       The transferee is an Affiliate of the Company.

Dated:_______________________________________

________________________________________________

________________________________________________
Signature(s)

                                      A-14

<PAGE>

Signature(s) must be guaranteed by an
eligible Guarantor Institution (banks,
stock brokers, savings and loan
associations and credit unions) with
membership in an approved signature
guarantee medallion program pursuant to
Securities and Exchange Commission Rule
17AD-15 if shares of Common Stock are to
be issued, or Notes are to be delivered,
other than to and in the name of the
registered holder.

_____________________________________________
Signature Guarantee

NOTICE: The signature on the conversion notice, the repurchase notice or the
assignment must correspond with the name as written upon the face of the Note in
every particular without alteration or enlargement or any change whatever.

                                      A-15

<PAGE>

                                REPURCHASE NOTICE

TO:      Alkermes, Inc.
         U.S. Bank National Association

The undersigned registered owner of this Note hereby irrevocably acknowledges
receipt of a notice from Alkermes, Inc. (the "Company") regarding the right of
holders to elect to require the Company to repurchase the Notes and requests and
instructs the Company to repay the entire principal amount of this Note, or the
portion thereof (which is $1,000 or an integral multiple thereof) below
designated, in accordance with the terms of the Indenture at the price of 100%
of such entire principal amount or portion thereof, together with accrued and
unpaid interest to, but excluding, the Repurchase Date, to the registered
Noteholder hereof. Capitalized terms used herein but not defined shall have the
meanings ascribed to such terms in the Indenture. The Notes shall be repurchased
by the Company as of the Repurchase Date pursuant to the terms and conditions
specified in the Indenture. If the Company elects to pay the purchase price, in
whole or in part, in shares of Common Stock but such portion of the purchase
price shall ultimately be paid to such Noteholder entirely in cash because any
of the conditions to payment of the purchase price in shares of Common Stock is
not satisfied prior to the close of business on the applicable Repurchase Date,
the undersigned registered owner elects:

        [ ]       to withdraw this Repurchase Notice as to $[_________________]
                  principal amount of the Notes to which this Repurchase Notice
                  relates (Certificate
                  Numbers:____________________________________), or

        [ ]       to receive cash in respect of $[____________] principal amount
                  of the Notes to which this Repurchase Notice relates.

Dated:___________________________________

Signature(s):____________________________

NOTICE: The above signatures of the Noteholder(s) hereof must correspond with
the name as written upon the face of the Note in every particular without
alteration or enlargement or any change whatever.

Note Certificate Number (if applicable):______________________

Principal amount to be repurchased (if less than all):_________________________

Social Security or Other Taxpayer Identification Number:_______________________

                                      A-16

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