Document:

EXHIBIT 10.22
-------------

                         AMENDED AND RESTATED

               $250,000,000 (EXPANDABLE TO $300,000,000)

                           CREDIT AGREEMENT

                     DATED AS OF NOVEMBER 15, 2000

                                 among

                   AMLI RESIDENTIAL PROPERTIES, L.P.

                        AMLI MANAGEMENT COMPANY

                   AMLI RESIDENTIAL CONSTRUCTION LLC

                       The Banks Listed Herein,

                         WACHOVIA BANK, N.A.,
                        as Administrative Agent

                             BANK ONE, NA,
                         as Syndication Agent

                    PNC BANK, NATIONAL ASSOCIATION
                        as Documentation Agent

                    HARRIS TRUST AND SAVINGS BANK,
                       as Senior Managing Agent

                   COMMERZBANK AG, NEW YORK BRANCH,
                           as Managing Agent

                                  and

     WACHOVIA SECURITIES, INC. and BANC ONE CAPITAL MARKETS, INC.,
             as Co-Lead Arrangers and Joint Book Managers

<PAGE>

                           TABLE OF CONTENTS

                 AMENDED AND RESTATED CREDIT AGREEMENT
                 -------------------------------------

                                                                 PAGE
                                                                 ----

   ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . .       1
       SECTION 1.01.  Definitions.. . . . . . . . . . . . . .       1
       SECTION 1.02.  Accounting Terms and Determinations.. .      12
       SECTION 1.03.  References. . . . . . . . . . . . . . .      12
       SECTION 1.04.  Use of Defined Terms. . . . . . . . . .      12
       SECTION 1.05.  Terminology.. . . . . . . . . . . . . .      12

   ARTICLE II THE CREDITS . . . . . . . . . . . . . . . . . .      18
       SECTION 2.01.  Commitments to Lend Syndicated Loans. .      18
       SECTION 2.02.  Method of Borrowing Syndicated Loans. .      19
       SECTION 2.03.  Money Market Loans. . . . . . . . . . .      21
       SECTION 2.04.  Notes.. . . . . . . . . . . . . . . . .      24
       SECTION 2.05.  Maturity of Loans.. . . . . . . . . . .      25
       SECTION 2.06.  Interest Rates. . . . . . . . . . . . .      25
       SECTION 2.07.  Fees. . . . . . . . . . . . . . . . . .      27
       SECTION 2.08.  Optional Termination or Reduction
           of Commitments.. . . . . . . . . . . . . . . . . .      27
       SECTION 2.09.  Mandatory Reduction and
           Termination of Commitments.. . . . . . . . . . . .      27
       SECTION 2.10.  Optional Prepayments. . . . . . . . . .      27
       SECTION 2.11.  Mandatory Prepayments.. . . . . . . . .      28
       SECTION 2.12.  General Provisions as to Payments.. . .      29
       SECTION 2.13.  Computation of Interest and Fees. . . .      30
       SECTION 2.14.  Expansion of Facility.. . . . . . . . .      30

   ARTICLE III CONDITIONS TO BORROWINGS . . . . . . . . . . .      31
       SECTION 3.01.  Conditions to First Borrowing and
           Effectiveness of this Agreement. . . . . . . . . .      31
       SECTION 3.02.  Conditions to All Borrowings. . . . . .      33

   ARTICLE IV REPRESENTATIONS AND WARRANTIES. . . . . . . . .      34
       SECTION 4.01.  Partnership, Trust and
           Corporate Existence and Power. . . . . . . . . . .      34
       SECTION 4.02.  Corporate and Governmental
           Authorization; No Contravention. . . . . . . . . .      35
       SECTION 4.03.  Binding Effect. . . . . . . . . . . . .      35
       SECTION 4.04.  Financial Information.. . . . . . . . .      35
       SECTION 4.05.  No Litigation.. . . . . . . . . . . . .      36
       SECTION 4.06.  Compliance with ERISA.. . . . . . . . .      36
       SECTION 4.07.  Compliance with Laws; Payment of Taxes.      36
       SECTION 4.08.  Subsidiaries, Co-Investment
           Partnerships and Service Companies.. . . . . . . .      36
       SECTION 4.09.  Investment Company Act. . . . . . . . .      36
       SECTION 4.10.  Public Utility Holding Company Act. . .      37
       SECTION 4.11.  Ownership of Property; Liens. . . . . .      37
       SECTION 4.12.  No Default. . . . . . . . . . . . . . .      37
       SECTION 4.13.  Full Disclosure.. . . . . . . . . . . .      37
       SECTION 4.14.  Environmental Matters.. . . . . . . . .      37
       SECTION 4.15.  Capital Stock.. . . . . . . . . . . . .      38
       SECTION 4.16.  Margin Stock. . . . . . . . . . . . . .      38
       SECTION 4.17.  Insolvency. . . . . . . . . . . . . . .      38
       SECTION 4.18.  Insurance.. . . . . . . . . . . . . . .      39
       SECTION 4.19.  Real Estate Investment Trust;
           Sole General Partner.. . . . . . . . . . . . . . .      39

   ARTICLE V COVENANTS. . . . . . . . . . . . . . . . . . . .      39
       SECTION 5.01.  Information.. . . . . . . . . . . . . .      39
       SECTION 5.02.  Inspection of Property, Books
           and Records. . . . . . . . . . . . . . . . . . . .      40

<PAGE>

                                                                 PAGE
                                                                 ----

       SECTION 5.03.  Maintenance of Existence. . . . . . . .      41
       SECTION 5.04.  Dissolution.. . . . . . . . . . . . . .      41
       SECTION 5.05.  Consolidations, Mergers and Sales
           of Assets. . . . . . . . . . . . . . . . . . . . .      41
       SECTION 5.06.  Use of Proceeds.. . . . . . . . . . . .      42
       SECTION 5.07.  Compliance with Laws; Payment of Taxes.      42
       SECTION 5.08.  Insurance.. . . . . . . . . . . . . . .      42
       SECTION 5.09.  Change in Fiscal Year.. . . . . . . . .      42
       SECTION 5.10.  Maintenance of Property.. . . . . . . .      42
       SECTION 5.11.  Environmental Notices.. . . . . . . . .      43
       SECTION 5.12.  Environmental Matters.. . . . . . . . .      43
       SECTION 5.13.  Environmental Release.. . . . . . . . .      43
       SECTION 5.14.  Transactions with Affiliates. . . . . .      43
       SECTION 5.15.  Restricted Payments.. . . . . . . . . .      43
       SECTION 5.16.  Loans or Advances.. . . . . . . . . . .      44
       SECTION 5.17.  Investments.. . . . . . . . . . . . . .      44
       SECTION 5.18.  Liens on Eligible Property. . . . . . .      45
       SECTION 5.19.  Restrictions on Ability of
           Guarantors to Pay Dividends. . . . . . . . . . . .      45
       SECTION 5.20.  Ratio of Total Consolidated Liabilities
           to Undepreciated Book Asset Value. . . . . . . . .      45
       SECTION 5.21.  Ratio of Total Secured Debt to
           Gross Asset Value. . . . . . . . . . . . . . . . .      45
       SECTION 5.22.  Ratio of EBITDA to Consolidated
           Interest Expense.. . . . . . . . . . . . . . . . .      46
       SECTION 5.23.  Ratio of Unencumbered Assets to
           Unsecured Funded Debt. . . . . . . . . . . . . . .      46
       SECTION 5.24.  Ratio of Unsecured Net Operating Income
           to Unsecured Interest Expense. . . . . . . . . . .      46
       SECTION 5.25.  Ratio of EBITDA to
           Consolidated Fixed Charges.. . . . . . . . . . . .      46
       SECTION 5.26.  Co-Investment Partnerships
           Depreciated Book Value.. . . . . . . . . . . . . .      46
       SECTION 5.27.  Status as a REIT. . . . . . . . . . . .      46
       SECTION 5.28.  New Subsidiaries to Become Guarantors..      46
       SECTION 5.29.  Service Company Distributions.. . . . .      47
       SECTION 5.30.  Additional Debt.. . . . . . . . . . . .      47

   ARTICLE VI DEFAULTS. . . . . . . . . . . . . . . . . . . .      47
       SECTION 6.01.  Events of Default.. . . . . . . . . . .      47
       SECTION 6.02.  Notice of Default.. . . . . . . . . . .      49

   ARTICLE VII THE ADMINISTRATIVE AGENT . . . . . . . . . . .      49
       SECTION 7.01.  Appointment; Powers and Immunities. . .      49
       SECTION 7.02.  Reliance by Administrative Agent. . . .      50
       SECTION 7.03.  Defaults. . . . . . . . . . . . . . . .      50
       SECTION 7.04.  Rights of Administrative Agent and
           its Affiliates as a Bank.. . . . . . . . . . . . .      51
       SECTION 7.05.  Indemnification.. . . . . . . . . . . .      51
       SECTION 7.06.  Consequential Damages.. . . . . . . . .      51
       SECTION 7.07.  Payee of Note Treated as Owner. . . . .      52
       SECTION 7.08.  Nonreliance on Administrative Agent
           and Other Banks. . . . . . . . . . . . . . . . . .      52
       SECTION 7.09.  Failure to Act. . . . . . . . . . . . .      52
       SECTION 7.10.  Resignation or Removal of
           Administrative Agent.. . . . . . . . . . . . . . .      52
       SECTION 7.11.  Syndication Agent and Documentation Agent.   53

   ARTICLE VIII CHANGE IN CIRCUMSTANCES; COMPENSATION . . . .      53
       SECTION 8.01.  Basis for Determining Interest Rate
           Inadequate or Unfair.. . . . . . . . . . . . . . .      53
       SECTION 8.02.  Illegality. . . . . . . . . . . . . . .      54
       SECTION 8.03.  Increased Cost and Reduced Return.. . .      54
       SECTION 8.04.  Base Rate Loans Substituted for Euro-
           Dollar Loans.. . . . . . . . . . . . . . . . . . .      55
       SECTION 8.05.  Compensation. . . . . . . . . . . . . .      55

<PAGE>

                                                                 PAGE
                                                                 ----

   ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . . . . . .      56
       SECTION 9.01.  Notices.. . . . . . . . . . . . . . . .      56
       SECTION 9.02.  No Waivers. . . . . . . . . . . . . . .      56
       SECTION 9.03.  Expenses; Documentary Taxes.. . . . . .      56
       SECTION 9.04.  Indemnification.. . . . . . . . . . . .      57
       SECTION 9.05.  Setoff; Sharing of Setoffs. . . . . . .      57
       SECTION 9.06.  Amendments and Waivers. . . . . . . . .      58
       SECTION 9.07.  No Margin Stock Collateral. . . . . . .      59
       SECTION 9.08.  Successors and Assigns. . . . . . . . .      59
       SECTION 9.09.  Confidentiality.. . . . . . . . . . . .      61
       SECTION 9.10.  Representation by Banks.. . . . . . . .      62
       SECTION 9.11.  Obligations Several.. . . . . . . . . .      62
       SECTION 9.12.  Georgia Law.. . . . . . . . . . . . . .      62
       SECTION 9.13.  Severability. . . . . . . . . . . . . .      62
       SECTION 9.14.  Interest. . . . . . . . . . . . . . . .      62
       SECTION 9.15.  Interpretation. . . . . . . . . . . . .      63
       SECTION 9.16.  Waiver of Jury Trial; Consent
           to Jurisdiction. . . . . . . . . . . . . . . . . .      63
       SECTION 9.17.  Counterparts. . . . . . . . . . . . . .      64
       SECTION 9.18.  Source of Funds -- ERISA. . . . . . . .      64
       SECTION 9.19.  Exculpation.. . . . . . . . . . . . . .      64
       SECTION 9.20.  No Bankruptcy Proceedings.. . . . . . .      64

<PAGE>

     EXHIBIT A-1 Form of Syndicated Loan Note (Parent)

     EXHIBIT A-2 Form of Swing Loan Note (Parent)

     EXHIBIT A-3 Form of Money Market Loan Note (Parent)

     EXHIBIT A-4 Form of Syndicated Loan Note (Service Company Borrowers)

     EXHIBIT A-5 Form of Swing Loan Note (Service Company Borrowers)

     EXHIBIT A-6 Form of Money Market Loan Note
                 (Service Company Borrowers)

     EXHIBIT B   Form of Opinion of Counsel for the Borrower

     EXHIBIT C   Form of Opinion of Special Counsel for the
                 Administrative Agent

     EXHIBIT D   Form of Assignment and Acceptance

     EXHIBIT E-1 Form of Notice of Borrowing (Parent)

     EXHIBIT E-2 Form of Notice of Borrowing (Service Company Borrowers)

     EXHIBIT F   Form of Compliance Certificate

     EXHIBIT G   Form of Closing Certificate

     EXHIBIT H   Form of Officer's Certificate and Agreement for
                 the General Partner of the Borrower

     EXHIBIT I   Form of Borrowing Base Certificate

     EXHIBIT J   List of Eligible Properties

     EXHIBIT K   Form of Guaranty

     EXHIBIT L   Form of Contribution Agreement

     EXHIBIT M   Form of Money Market Quote Request

     EXHIBIT N   Form of Money Market Quote

     EXHIBIT P   Form of Bank Joinder Agreement

     EXHIBIT Q   Form of Designation Agreement

     Schedule 4.08    Subsidiaries and Co-Investment Partnerships

     Schedule 4.14    Environmental Matters

     Schedule 5.17    Existing Investments

<PAGE>

                 AMENDED AND RESTATED CREDIT AGREEMENT
                 -------------------------------------

     AMENDED AND RESTATED CREDIT AGREEMENT dated as of November 15, 2000
among AMLI RESIDENTIAL PROPERTIES, L.P., a Delaware limited partnership,
AMLI MANAGEMENT COMPANY, a Delaware corporation ("AMLI Management"), AMLI
RESIDENTIAL CONSTRUCTION LLC, a Delaware limited liability company ("AMLI
Construction"), the BANKS listed on the signature pages hereof, WACHOVIA
BANK, N.A., as Administrative Agent, BANK ONE, NA, as Syndication Agent and
PNC Bank, National Association, as Documentation Agent.

     The parties hereto agree as follows:

     This Amended and Restated Credit Agreement is an amendment and
restatement of the $250,000,000 Credit Agreement dated as of October 12,
1999, among AMLI Residential Properties, L.P., the Banks listed therein,
Wachovia Bank, N.A., as Administrative Agent, Bank One, NA, as Syndication
Agent, PNC Bank, National Association, as Documentation Agent, Harris Trust
and Savings Bank, as Senior Managing Agent, Commerzbank AG, New York
Branch, as Managing Agent, and Wachovia Securities, Inc. and Banc One
Capital  Markets, Inc., as Co-Lead Arrangers and Joint Book Managers, as
amended by that certain First Amendment to Credit Agreement dated as of
January 18, 2000 (as so amended, the "Original Credit Agreement").

                               ARTICLE I

                              DEFINITIONS

     SECTION 1.01.  DEFINITIONS.

     The terms as defined in this Section 1.01 shall, for all purposes of
this Agreement and any amendment hereto (except as herein otherwise
expressly provided or unless the context otherwise requires), have the
meanings set forth herein:

     "Adjusted London Interbank Offered Rate" has the meaning set forth in
Section 2.06(c).

     "Administrative Agent" means Wachovia Bank, N.A., a national banking
association organized under the laws of the United States of America, in
its capacity as administrative agent for the Banks hereunder, and its
successors and permitted assigns in such capacity.

     "Affiliate" of any relevant Person means (i) any Person that
directly, or indirectly through one or more intermediaries, controls the
relevant Person (a "Controlling Person"), (ii) any Person (other than the
relevant Person or a Subsidiary of the relevant Person) which is controlled
by or is under common control with a Controlling Person, or (iii) any
Person (other than a Subsidiary of the relevant Person) of which the
relevant Person owns, directly or indirectly, 20% or more of the common
stock or equivalent equity interests.  As used herein, the term "control"
means possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.

     "Agreement" means this Credit Agreement, together with all amendments
and supplements hereto.

     "Applicable Margin" has the meaning set forth in Section 2.06(a).

<PAGE>

     "Approved Collateral Value" means the total value of any Qualified
Letters of Credit or any other asset delivered to the Parent as collateral
in connection with the acquisition or development of multi-family
properties reasonably anticipated by the Parent to become Properties;
provided, however, the Approved Collateral Value of (i) any Qualified
Letter(s) of Credit that individually or together with other Qualified
Letters of Credit exceed $20,000,000, and (ii) any asset that is not a
Qualified Letter of Credit, shall be $0 until such asset or Qualified
Letter of Credit is approved by the Required Banks, in their sole
discretion.

     "Assignee" has the meaning set forth in Section 9.08(c).

     "Assignment and Acceptance" means an Assignment and Acceptance
executed in accordance with Section 9.08(c) in the form attached hereto as
EXHIBIT D.

     "Authority" has the meaning set forth in Section 8.02.

     "Bank" means each bank listed on the signature pages hereof, or in a
Bank Joinder Agreement executed and delivered to the Administrative Agent
pursuant to Section 2.14, as having a Commitment, and its successors and
assigns and the Designated Banks, if any; provided, however, that the term
"Bank" shall exclude each Designated Bank when used in reference to a
Syndicated Loan, the Commitments or terms relating to the Syndicated Loans
(except as noted above) and the Commitments.

     "Bank Joinder Agreement" means an agreement in substantially the form
of EXHIBIT P, pursuant to which a new Bank becomes a Bank hereunder in
accordance with the provisions of Section 2.14.

     "Base Rate" means for any Base Rate Loan for any day, the rate per
annum equal to the higher as of such day of (i) the Prime Rate, or
(ii) one-half of one percent above the Federal Funds Rate.  For purposes of
determining the Base Rate for any day, changes in the Prime Rate or the
Federal Funds Rate shall be effective on the date of each such change.

     "Base Rate Borrowing" means a Borrowing consisting of Base Rate
Loans.

     "Base Rate Loan" means a Syndicated Loan which bears or is to bear
interest at a rate based upon the Base Rate, and is to be made as a Base
Rate Loan pursuant to the applicable Notice of Borrowing, Section 2.02(f),
or Article VIII, as applicable.

     "Borrowers" means any one, or more or all, as the context shall
require, of the Parent and the Service Company Borrowers, and their
respective successors and permitted assigns, PROVIDED, HOWEVER, that the
Service Company Borrowers shall be subject to the Service Company Borrowing
Limitations, and FURTHER PROVIDED that the Service Company Borrowers shall
have several, and not joint, liability with respect to the Borrowings, so
that each Service Company Borrower is only liable with respect to its own
Borrowings, and not with respect to Borrowings by Parent or the other
Subsidiary Borrower.

     "Borrowing" means a borrowing hereunder consisting of (i) Syndicated
Loans made to the Borrowers at the same time by all of the Banks, in the
case of a Syndicated Borrowing, (ii) Money Market Loans made separately by
one or more Banks, in the case of a Money Market Borrowing, or (iii) a
Swing Loan made by Wachovia, in each case pursuant to Article II.  A
Borrowing is a "Euro-Dollar Borrowing" if such Borrowing consists of Euro-
Dollar Loans.  A Borrowing is a "Base Rate Borrowing" if such Borrowing
consists of Base Rate Loans. A Borrowing is a "Transaction Rate Borrowing"
if such Borrowing consists of Transaction Rate Loans.  A Borrowing is a
"Syndicated Loan Borrowing" if such Borrowing consists of Syndicated Loans.

A Borrowing is a "Swing Loan Borrowing" if such Borrowing consists of Swing

<PAGE>

Loans.  A Borrowing is a "Money Market Borrowing" if such Borrowing
consists of Money Market Loans.  A Borrowing is a "Fixed Rate Borrowing" if
such Borrowing consists of Fixed Rate Loans.

     "Borrowing Base" means the sum of each of the following, as
determined by reference to the most recent Borrowing Base Certificate
furnished pursuant to Section 3.01(h) or Section 5.01(h), as applicable
(and with respect to any Eligible Property which consists of phases, each
phase thereof shall be separately categorized into clause (i), (ii) or
(iii) below, as appropriate, so long as such phase could be separately
financed on a stand-alone basis):

           (i)   an amount equal to the product of: (x) the quotient of
(1) the Net Operating Income for the 3 month period ending on the last day
of the Fiscal Quarter just ended prior to the date of determination, from
each Eligible Unencumbered Stabilized Property, divided by (2) 0.09 (which
is the capitalization rate); times (y) 4 (which is the annualization
factor); times (z) 0.60 (which is the advance rate); plus

           (ii)  an amount equal to the lesser of: (A) the product of
(x) 0.50 (which is the advance rate), times (y) the book value of
Construction in Progress on the last day of the Fiscal Quarter just ended
on all Eligible Properties not subject to a Mortgage and (B) $50,000,000;
plus

           (iii) an amount equal to the lesser of: (A) the product of
(x) 0.40 (which is the advance rate), times (y) the cost of land acquired
for the purpose of apartment community development and (B) $15,000,000.

     "Borrowing Base Certificate" means a certificate substantially in the
form of EXHIBIT I, duly executed by an Executive Officer of the General
Partner, setting forth in reasonable detail the calculations for each
component of the Borrowing Base.

     "Capital Stock" means the Partnership Interests in the Parent and any
nonredeemable capital stock, whether common or preferred, or partner
interests, whether general or limited, in any Consolidated Entity (to the
extent issued to a Person other than the Parent).

     "CERCLA" means the Comprehensive Environmental Response Compensation
and Liability Act, 42 U.S.C. Section 9601 et. seq. and its implementing
regulations and amendments.

     "CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Inventory System established pursuant to CERCLA.

     "Change in Control" means: (i) any Person or two or more Persons
other than the General Partner acting in concert shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
and Exchange Commission under the Securities Exchange Act of 1934) of 20%
or more of the outstanding Partnership Interests; or (ii) as of any date a
majority of the Board of Directors of the Parent consists of individuals
who were not either (A) directors of the Parent as of the corresponding
date of the previous year, (B) selected or nominated to become directors by
the Board of Directors of the Parent of which a majority consisted of
individuals described in clause (A), or (C) selected or nominated to become
directors by the Board of Directors of the Parent of which a majority
consisted of individuals described in clause (A) and individuals described
in clause (B).

<PAGE>

     "Change of Law" shall have the meaning set forth in Section 8.02.
"Closing Certificate" has the meaning set forth in Section 3.01(e).

     "Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code.

     "Co-Investment Partnerships" means any Person which is not a
Consolidated Entity and which is owned (i) in part by the Parent or any
Consolidated Entity and (ii) in part by another Person which is not an
Affiliate of the Parent or any Consolidated Entity.

     "Co-Lead Arrangers" means Wachovia Securities, Inc. and Banc One
Capital Markets, Inc.

     "Commitment" means, with respect to each Bank, (i) the  amount set
forth opposite the name of such Bank on the signature pages hereof or in a
Bank Joinder Agreement executed and delivered to the Administrative Agent
pursuant to Section 2.14, and (ii) as to any Bank which enters into any
Assignment and Acceptance (whether as transferor Bank or as Assignee
thereunder), the amount of such Bank's Commitment after giving effect to
such Assignment and Acceptance, in each case as such amount may be reduced
from time to time pursuant to Sections 2.08 and 2.09.

     "Compliance Certificate" has the meaning set forth in
Section 5.01(c).

     "Consolidated Entity" means at any date any Subsidiary or Service
Company the accounts of which, in accordance with GAAP, are consolidated
with those of the Parent in its consolidated financial statements as of
such date.

     "Consolidated Fixed Charges" means at any time the sum of the
following, determined on a consolidated basis for the Parent and each
Consolidated Entity, at the end of each Fiscal Quarter, for the Fiscal
Quarter just ended and the 3 immediately preceding Fiscal Quarters: (i)
Consolidated Interest Expense; plus (ii) all dividends paid, or declared
but not yet paid, by the Parent on preferred stock; plus (iii) the
aggregate amount of scheduled principal amortization paid, as reflected on
the Parent's most recent quarterly financial statement submitted to the
Banks, but excluding any principal payments under this Agreement and any
balloon payments on other Debt.

     "Consolidated Interest Expense" for any period means interest
currently expensed under GAAP in respect of Debt of the Parent or any of
the Consolidated Entities.

     "Consolidated Liabilities" means the sum of (i) all liabilities that,
in accordance with GAAP, should be classified as liabilities on a
consolidated balance sheet of Parent and the Consolidated Entities, and
(ii) to the extent not included in clause (i) of this definition, all
Redeemable Preferred Stock.

     "Consolidated Net Income" means, for any period, the Net Income of
the Parent and its Consolidated Subsidiaries determined on a consolidated
basis, but excluding (i) extraordinary income or expense items and (ii) any
equity interests of the Parent or any Subsidiary in the unremitted earnings
of any Person that is not a Subsidiary.

     "Construction in Progress" means, any Property in the process of
being developed as an apartment community but is not a Stabilized Property,
calculated on a consolidated basis for the Parent and the Guarantors, the
construction-in-progress as shown from time to time on the books and
records of the Parent and the Guarantors, maintained in accordance with
GAAP.

<PAGE>

     "Contribution Agreement" means the Contribution Agreement of even
date herewith in substantially the form of EXHIBIT L to be executed by the
Parent and each of the Guarantors pursuant to Section 5.28.

     "Control" means, with respect to any Person, the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities or otherwise.

     "Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Parent, are
treated as a single employer under Section 414 of the Code.

     "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 under
capital leases, (v) all obligations of such Person to reimburse any bank or
other Person in respect  of amounts payable under a banker's acceptance,
(vi) all Redeemable Preferred Stock of such Person (in the event such
Person is a corporation), (vii) all obligations of such Person to reimburse
any bank or other Person in respect of amounts paid or to be paid or to be
paid under a letter of credit or similar instrument, (viii) all Debt of
others secured by a Lien on any asset of such Person, whether or not such
Debt is assumed by such Person, and (ix) all Debt of others Guaranteed by
such Person.

     "Debt Rating" means at any time the published rating of a Person's
senior unsecured, unenhanced debt (or, if no such debt exists, its issuer
credit rating for debt of such type) by Moody's, S&P or Duff & Phelps
(PROVIDED, (i) that in the event of a double or greater split rating, the
rating immediately below the highest rating shall apply), and (ii) if only
one of them rates the Person's senior unsecured, unenhanced debt, such
rating must be issued by Moody's or S&P.

     "Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.

     "Default Rate" means, with respect to any Loan, on any day, the sum
of 2% plus the highest interest rate (including the Applicable
Margin) which may be applicable to any Loans hereunder (irrespective of
whether any such type of Loans are actually outstanding hereunder).

     "Designated Bank" means a special purpose corporation owned and
controlled by its Designating Bank that is identified as such on the
signature pages hereto next to the caption "Designated Bank" as well as
each special purpose corporation owned and controlled or sponsored by its
Designating Bank that (i) shall have become a party to this Agreement
pursuant to Section 9.08(g), and (ii) is not otherwise a Bank.

     "Designated Bank Note" means a Money Market Loan Note, evidencing the
obligation of a Borrower to repay Money Market Loans made by a Designated
Bank, and "Designated Bank Notes" means any all such Money Market Loan
Notes to Designated Banks issued hereunder.

     "Designating Bank" shall mean each Bank that is identified as such on
the signature pages hereto next to the caption "Designating Bank" and
immediately below the signature of its Designated Bank as well as each Bank
that shall designate a Designated Bank pursuant to Section 9.08(g).

<PAGE>

     "Designation Agreement" means a designation agreement in
substantially the form of Exhibit Q attached hereto, entered into by a Bank
and a Designated Bank and acknowledged by the Borrowers and the
Administrative Agent.

     "Dividends" means for any period the sum of all dividends and other
distributions paid or declared during such period in respect of any Capital
Stock and Redeemable Preferred Stock (other than dividends paid or payable
in the form of additional Capital Stock).

     "Dollars" or "$" means dollars in lawful currency of the United
States of America.

     "Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in Georgia are authorized by law to
close.

     "EBITDA"  means at any time the sum of the following, determined on a
consolidated basis for the Parent and each Consolidated Entity, at the end
of each Fiscal Quarter, for the applicable measuring period:
(i) Consolidated Net Income; PLUS (ii) Consolidated Interest Expense; PLUS
(iii) taxes on income; PLUS (iv) depreciation; PLUS (v) amortization; PLUS
(vi) other non-cash charges.

     "Economic Percentage" means the Parent's percentage of ownership of
all preferred and common stock of any of the Service Companies at any time.

     "Eligible Property" means any Property which is either (i) listed on
EXHIBIT J or (ii) which has been approved as an Eligible Property by the
Required Banks at the request of the Parent, taking into account the
following information concerning the Property provided to the
Administrative Agent and the Banks by the Parent: information regarding its
age, location and occupancy and an operating statement for the most recent
Fiscal Quarter; PROVIDED, HOWEVER, that any Eligible Property shall be
released in writing by the Administrative Agent as an Eligible Property
upon the written request of the Parent, to enable the Parent to sell or
obtain financing on such Eligible Property, so long as no Default or Event
of Default is in existence or would be caused thereby, and upon such
release, such Property shall no longer constitute Eligible Property.

     "Eligible Unencumbered Stabilized Property" means any Eligible
Property which (i) is not subject to a Mortgage, and (ii) is a Stabilized
Property.

     "Environmental Authority" means any foreign, federal, state, local or
regional government that exercises any form of jurisdiction or authority
under any Environmental Requirement.

     "Environmental Authorizations" means all licenses, permits, orders,
approvals, notices, registrations or other legal prerequisites for
conducting the businesses of the Borrowers or any Subsidiary required by
any Environmental Requirement.

     "Environmental Judgments and Orders" means all judgments, decrees or
orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent, or written agreements
with an Environmental Authority or other entity arising from or in any way
associated with any Environmental Requirement, whether or not incorporated
in a judgment, decree or order.

     "Environmental Liabilities" means any liabilities, whether accrued,
contingent or otherwise, arising from and in any way associated with any
Environmental Requirements.

<PAGE>

     "Environmental Notices" means notice from any Environmental Authority
or by any other person or entity, of possible or alleged noncompliance with
or liability under any Environmental Requirement, including without
limitation any complaints, citations, demands or requests from any
Environmental Authority or from any other person or entity for correction
of any violation of any Environmental Requirement or any investigations
concerning any violation of any Environmental Requirement.

     "Environmental Proceedings" means any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.

     "Environmental Releases" means releases as defined in CERCLA or under
any applicable state or local environmental law or regulation.

     "Environmental Requirements" means any legal requirement relating to
health, safety or the environment and applicable to the Borrowers, any
Subsidiary or the Properties, including but not limited to any such
requirement under CERCLA or similar state legislation and all federal,
state and local laws, ordinances, regulations, orders, writs, decrees and
common law.

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law.  Any reference to any
provision of ERISA shall also be deemed to be a reference to any successor
provision or provisions thereof.

     "Euro-Dollar Borrowing" means a Borrowing consisting of Euro-Dollar
Loans.

     "Euro-Dollar Business Day" means any Domestic Business Day on which
dealings in Dollar deposits are carried out in the London interbank market.

     "Euro-Dollar Loan" means a Syndicated Loan which bears or is to bear
interest at a rate based upon the Euro-Dollar Rate, and to be made as a
Euro-Dollar Loan pursuant to the applicable Notice of Borrowing.

     "Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 2.06(c).

     "Event of Default" has the meaning set forth in Section 6.01.

     "Executive Officer" refers to an executive officer of the General
Partner, and means the Chairman, the Vice Chairman, the President, the
Chief Financial Officer or the Treasurer of the General Partner.

     "Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the next higher 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the
Domestic Business Day next succeeding such day, PROVIDED that (i) if the
day for which such rate is to be determined is not a Domestic Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Domestic Business Day as so published on the next
succeeding Domestic Business Day, and (ii) if such rate is not so published
for any day, the Federal Funds Rate for such day shall be the average rate
charged to the Administrative Agent on such day on such transactions, as
determined by the Administrative Agent.

     "Fiscal Month" means any fiscal month of the Parent.

<PAGE>

     "Fiscal Quarter" means any fiscal quarter of the Parent or the
General Partner.

     "Fiscal Year" means any fiscal year of the Parent or the General
Partner.

     "Fixed Rate Borrowing" means a Euro-Dollar Borrowing or a Transaction
Rate Borrowing, or either of them, as the context requires.
"Fixed Rate Loan" means any Euro-Dollar Loan, Transaction Rate Loan or
Money Market Loan, or any or all of them, as the context shall require.

     "Funds From Operations" has the meaning ascribed to such term in
preparation of financial statements for real estate investment trusts as
required by NAREIT from time to time, subject to Section 1.02.

     "GAAP" means generally accepted accounting principles applied on a
basis consistent with those which, in accordance with Section 1.02, are to
be used in making the calculations for purposes of determining compliance
with the terms of this Agreement.

     "General Partner" means AMLI Residential Properties Trust, a Maryland
real estate investment trust, the sole general partner of the Parent.

     "Gross Asset Value" means, on a consolidated basis for the Parent and
the Consolidated Entities, the sum of:

           (i)   an amount equal to the product of: (x) the quotient of
(1) the Net Operating Income for the 3 month period ending on the last day
of the Fiscal Quarter just ended prior to the date of determination, from
each Property (other than Property owned by a Co-Investment Partnership and
Property owned by Parent for less than three months), divided by (2) 0.09
(which is the  capitalization rate); times (y) 4 (which is the
annualization factor); plus

           (ii)  an amount equal to the book value of (A) Construction in
Progress plus (B)  Properties (other than Properties owned by a Co-
Investment Partnership) consisting of unimproved land, as determined on the
last day of the Fiscal Quarter just ended; plus

           (iii) an amount equal to the acquisition cost of improved
Properties (other than Properties owned by a Co-Investment Partnership)
owned by Parent less than three months, as determined on the last day of
the Fiscal Quarter just ended; plus

           (iv)  an amount equal to the sum of all unrestricted balances
on deposit with banks or other financial institutions, plus the market
value of Investments permitted under Section 5.17(i), (ii), (iii) and (iv);
plus

           (v)   an amount equal to the quotient of (x) the sum of the
Economic Percentage of all earnings before interest and taxes of all
Service Companies for the 3 month period ending on the last day of the
month just ended prior to the date of determination, divided by (y) 0.15
(which is the capitalization rate) times (z) 4 (which is the annualization
rate).

     "Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or
other obligation of any other Person and, without limiting the generality
of the foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to secure, purchase or pay (or advance or
supply funds for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to provide
collateral security, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring

<PAGE>

in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part), PROVIDED that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
The term "Guarantee" used as a verb has a corresponding meaning.

     "Guarantors" means any one, or more or all, as the context shall
require, of the Parent and each Subsidiary which becomes a Guarantor
pursuant to Section 5.28, subject to the provisions of the last sentence of
Section 5.05.

     "Guaranty" means the Guaranty in substantially the form of EXHIBIT K
to be executed by the Parent and by each Subsidiary which becomes a
Guarantor pursuant to Section 5.28, pursuant to which the Parent and each
such Subsidiary unconditionally and jointly and severally Guarantees
payment of the Loans, the Notes and all other obligations of the Borrowers,

to the Administrative Agent and the Banks hereunder, including without
limitation all principal, interest, fees, costs, and compensation and
indemnification amounts.

     "Hazardous Materials" includes, without limitation, (a) solid or
hazardous waste, as defined in the Resource Conservation and Recovery Act
of 1980, 42 U.S.C. Section 6901 et seq. and its implementing regulations
and amendments, or in any applicable state or local law or regulation,
(b) "hazardous substance", "pollutant", or "contaminant" as defined in
CERCLA, or in any applicable state or local law or regulation,
(c) gasoline, or any other petroleum product or by-product, including,
crude oil or any fraction thereof, (d) toxic substances, as defined in the
Toxic Substances Control Act of 1976, or in any applicable state or local
law or regulation and (e) insecticides, fungicides, or rodenticides, as
defined in the Federal Insecticide, Fungicide, and Rodenticide Act of 1975,
or in any applicable state or local law or regulation, as each such Act,
statute or regulation may be amended from time to time.

     "Hedging Agreement" means any agreement to which any Borrower or any
Guarantor is a party consisting of interest rate protection agreements,
foreign currency exchange agreements or other hedging arrangements.
"Interest Period" means:

     (1)   with respect to each Euro-Dollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the first, second, third or sixth month thereafter, as

a Borrower may elect in the applicable Notice of Borrowing; PROVIDED that:

           (a)   any Interest Period (subject to paragraph
(c) below) which would otherwise end on a day which is not a Euro-Dollar
Business Day shall be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in another calendar month,
in which case such Interest Period shall end on the next preceding Euro-
Dollar Business Day;

           (b)   any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the appropriate subsequent calendar
month) shall, subject to paragraph (c) below, end on the last Euro-Dollar
Business Day of the appropriate subsequent calendar month; and

           (c)   no Interest Period may be selected which begins before
the Termination Date and would otherwise end after the Termination Date;
and

<PAGE>

     (2)   with respect to each Base Rate Borrowing, the period commencing
on the date of such Borrowing and ending 30 days thereafter; PROVIDED that:

           (a)   any Interest Period (subject to paragraph
(b) below) which would otherwise end on a day which is not a Domestic
Business Day shall be extended to the next succeeding Domestic Business
Day; and

           (b)   no Interest Period which begins before the Termination
Date and would otherwise end after the Termination Date may be selected;
and

     (3)   with respect to each Transaction Rate Borrowing, any period up
to 14 days mutually agreeable to the relevant Borrower and Wachovia which
ends on or prior to the Termination Date.

     (4)   with respect to each Money Market Borrowing, the period
commencing on the date of such Borrowing and ending on the Stated Maturity
Date or such other date or dates as may be specified in the applicable
Money Market Quote; provided that:

           (a)   any Interest Period (subject to clause (b) below) which
would otherwise end on a day which is not a Domestic Business Day shall be
extended to the next succeeding Domestic Business Day; and

           (b)   no Interest Period may be selected which would end after
the Termination Date.

     "Investment" means any investment in any Person, whether by means of
purchase or acquisition of obligations or securities of such Person,
capital contribution to such Person, loan or advance to such Person, making
of a time deposit with such Person, or assumption of any obligation of such
Person or otherwise.

     "Investment Grade Debt Rating" means, a Debt Rating equal or higher
than Baa3 if such Debt Rating is issued by Moody's, BBB- if such Debt
Rating is issued by S&P, and BBB- if such Debt Rating is issued by Duff &
Phelps.

     "Lending Office" means, as to each Bank, its office located at its
address set forth on the signature pages hereof (or identified on the
signature pages hereof as its Lending Office) or such other office as such
Bank may hereafter designate as its Lending Office by notice to the
Borrowers and the Administrative Agent.

     "Lien" means, with respect to any asset, any mortgage, deed to secure
debt, deed of trust, lien, pledge, charge, security interest, security
title, preferential arrangement which has the practical effect of
constituting a security interest, encumbrance or servitude of any kind in
respect of such asset to secure or assure payment of a Debt or a Guarantee,
whether by consensual agreement or by operation of statute or other law, or
by any agreement, contingent or otherwise, to provide any of the foregoing.

For the purposes of this Agreement, any Borrower 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.

<PAGE>

     "Liquidity Bank" means for any Designated Bank, at any date of
determination, the collective reference to the financial institutions which
at such date are providing liquidity or credit support facilities to or for
the account of such Designated Bank to fund such Designated Bank's
obligations hereunder or to support the securities, if any, issued by such
Designated Bank to fund such obligations.

     "Loan" means a Base Rate Loan, Euro-Dollar Loan, Syndicated Loan,
Transaction Rate Loan or Money Market Loan, and "Loans" means Base Rate
Loans, Euro-Dollar Loans, Syndicated Loans, Money Market Loans, Transaction
Rate Loans, or any or all of them, as the context shall require.

     "Loan Documents" means this Agreement, the Notes, the Guaranty, the
Contribution Agreement, any other document evidencing, relating to or
securing the Loans, and any other document or instrument delivered to the
Administrative Agent or the Banks from time to time in connection with this
Agreement, the Notes or the Loans, as such documents and instruments may be
amended or supplemented from time to time.

     "London Interbank Offered Rate" has the meaning set forth in
Section 2.06(c).

     "Margin Stock" means "margin stock" as defined in Regulations T, U or
X.

     "Material Adverse Effect" means, with respect to any event, act,
condition or occurrence of whatever nature (including  any adverse
determination in any litigation, arbitration, or governmental investigation
or proceeding), whether singly or in conjunction with any other event or
events, act or acts, condition or conditions, occurrence or occurrences,
whether or not related, a material adverse change in, or a material adverse
effect upon, any of (a) the financial condition, operations, business,
properties or prospects of the General Partner, or of the Parent and the
Consolidated Entities taken as a whole, (b) the rights and remedies of the
Administrative Agent or the Banks under the Loan Documents, or the ability
of the Parent or the Consolidated Entities to perform its obligations under
the Loan Documents to which it is a party, as applicable, or (c) the
legality, validity or enforceability of any Loan Document.

     "Money Market Borrowing Date" has the meaning specified in
Section 2.03.

     "Money Market Facility Limit" means an amount equal to fifty percent
(50%) of the aggregate Commitments, as such Commitments may be increased or
reduced from time to time.

     "Money Market Loan" means a Loan made by a Bank pursuant to
Section 2.03 which bears interest at the Money Market Rate.

     "Money Market Loan Notes" means, individually and collectively, as
the context shall require, the promissory notes of the Parent,
substantially in the form of EXHIBIT A-3, and the promissory notes of the
Service Company Borrowers in the form of EXHIBIT A-6, each evidencing the
obligation of the relevant Borrower to repay the Money Market Loans,
together with all amendments, consolidations, modifications, renewals and
supplements thereto.

     "Money Market Quote" has the meaning specified in Section 2.03(c)(i).

     "Money Market Quote Request" has the meaning specified in
Section 2.03(b).

<PAGE>

     "Money Market Rate" has the meaning specified in
Section 2.03(c)(ii)(C).

     "Moody's" means Moody's Investor Service, Inc.

     "Mortgage" means, with respect to any referenced Property, a
mortgage, deed to secure debt, deed of trust or similar instrument
encumbering such Property.

     "Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.

     "NAREIT" means the National Association of Real Estate Investment
Trusts.

     "Net Income" means, as applied to any Person for any period, the
aggregate amount of net income of such Person for such period, as
determined in accordance with GAAP.

     "Net Operating Income" means,  for any Property, calculated on a
consolidated basis for the Parent and the Consolidated Entities, the sum of
the following derived from such Property: (i) Property revenues, less
(ii) Property expenses (excluding depreciation, amortization and debt
service), less (iii) an assumed management fee equal to 4% of gross rental
income (less any management fees included in Property expenses under clause
(ii)) and less (iv) an annual capital reserve equal to $150 for each Unit.

     "New Bank" has the meaning set forth in Section 2.14.

     "Non-Recourse Mortgage Debt" means Debt secured by a Mortgage on
Property, which the Administrative Agent has determined in good faith
contains satisfactory exculpation provisions, except for customary
exclusions for environmental liability, misapplication or fraudulent
application of rent after default, insurance proceeds and condemnation
awards and other customary exclusions.

     "Notes" means the Syndicated Loan Notes, the Swing Loan Note, or
Money Market Loan Notes, or any one, or more, or all of them, as the
context shall require.

     "Notice of Borrowing" has the meaning set forth in Section 2.02.
"Officer's Certificate and Agreement" has the meaning set forth in
Section 3.01(f).

     "Original Agents' Letter Agreement" means that certain letter
agreement, dated as of  August 4, 1999, among the Parent, Administrative
Agent, the Syndication Agent, and Wachovia Securities, Inc. and Bank One
Capital Markets, Inc., relating to the structure of the Loans, and certain
fees from time to time payable by the Parent to such Agents, together with
all amendments and supplements thereto.

     "Original Closing Date" means October 12, 1999.

     "Original Credit Agreement" has the meaning set forth in the preamble
hereto.

     "Parent" means AMLI Residential Properties, L.P., a Delaware limited
partnership, and its successors and its permitted assigns.

     "Participant" has the meaning set forth in Section 9.08(b).

     "Partner" means the owner of a Partnership Interest.

<PAGE>

     "Partner Conversions" means the exchange by any limited partner of
the Parent of any of its limited partner interests in the Parent to shares
in the General Partner, on 1 for 1 ratio, pursuant to the provisions of the
Limited Partnership Agreement.

     "Partnership Interests" means any partner interests in the Parent,
whether general or limited.

     "PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.

     "Performance Pricing Determination Date" has the meaning set forth in
Section 2.06(a).

     "Person" means an individual, a corporation, a partnership, an
unincorporated association, a limited liability company, a limited
liability partnership, a trust or any other entity or organization,
including, but not limited to, a government or political subdivision or an
agency or instrumentality thereof.

     "Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and is either (i) maintained by a member of
the Controlled Group for employees of any member of the Controlled Group or
(ii) maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to
which a member of the Controlled Group is then making or accruing an
obligation to make contributions or has within the preceding 5 plan years
made contributions.

     "Pre-Existing Credit Agreement" means the Amended and Restated Credit
Agreement dated as of July 27, 1998 among the Parent, the Banks party
thereto, Wachovia Bank, N.A., as Agent, The First National Bank of Chicago,
as Documentation Agent, Dresdner Bank AG, New York and Grand Cayman
Branches, as Co-Agent, which Pre-Existing Credit Agreement was in effect
prior to and was replaced by (and was the "Existing Credit Agreement" as
defined in) the Original Credit Agreement.

     "Prime Rate" refers to that interest rate so denominated and set by
Wachovia from time to time as an interest rate basis for borrowings.  The
Prime Rate is but one of several interest rate bases used by Wachovia.
Wachovia lends at interest rates above and below the Prime Rate.

     "Properties" means all real property owned, leased or otherwise used
or occupied by the General Partner, the Borrowers or any Guarantor,
wherever located.

     "Qualified Letter of Credit" means a Letter of Credit (i) issued by a
bank or financial institution with a Debt Rating of "A" or higher (or the
equivalent), (ii) issued for the benefit of a Borrower, and (iii) that is
irrevocable, unconditional (other than the presentment of required
documents), and drawn on site.

     "Quarterly Period" means a 3 month period (or portion thereof) ending
on each March 31, June 30, September 30 and December 31 after the Original
Closing Date, and prior to the Termination Date.

     "Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is at any time prior to the Termination Date
either (i) mandatorily redeemable (by sinking fund or similar payments or
otherwise) or (ii) redeemable at the option of the holder thereof.

<PAGE>

     "Refunding Loan" means a new Syndicated Loan made on the day on which
an outstanding Syndicated Loan is maturing or a Base Rate Borrowing is
being converted to a Euro-Dollar Borrowing, if and to the extent that the
proceeds thereof are used entirely for the purpose of paying such maturing
Loan or Loan being converted, excluding any difference between the amount
of such maturing Syndicated Loan or Syndicated Loan being converted and any
greater amount being borrowed on such day and actually either being made
available to the Borrowers pursuant to Section 2.02(c) or remitted to the
Administrative Agent as provided in Section 2.12, in each case as
contemplated in Section 2.02(d).

     "Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.

     "Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.

     "Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.

     "Related Fund" means, with respect to any Bank that is a fund that
invests in bank loans, any other fund that invests in bank loans and is
advised or managed by the same investment advisor as such Bank.

     "Required Banks" means at any time Banks having at least 66 2/3% of
the aggregate amount of the Commitments or, if the Commitments are no
longer in effect, Banks holding at least 66 2/3% of the aggregate
outstanding principal amount of the sum of the (i) Syndicated Loans and
(ii) Money Market Loans.

     "Restatement Agent's Letter Agreement" means that certain letter
agreement, dated as of October 16, 2000, among the Parent, the
Administrative Agent and Wachovia Securities, Inc., relating to the
structure of the Loans, and certain fees from time to time payable by the
Borrowers to the Administrative Agent and Wachovia Securities, Inc.,
together with all amendments and supplements thereto.

     "Restatement Closing Date" means November 15, 2000.

     "Restricted Payment" means (i) any dividend or other distribution on
any shares of the Parent's Capital Stock (except dividends payable solely
in shares of its Capital Stock) or (ii) any payment on account of the
purchase, redemption, retirement or acquisition of (a) any shares of the
Parent's Capital Stock (except shares acquired upon the conversion thereof
into other shares of its Capital Stock) or (b) any option, warrant or other
right to acquire shares of the Parent's Capital Stock.

     "S&P" means Standard & Poor's Ratings Group, a division of McGraw-
Hill, Inc.

     "Service Companies" means AMLI Institutional Advisors, Inc., a
Delaware corporation, AMLI Management and AMLI Construction.

     "Service Company Borrowers" means, one, or both , as the context
shall require, of AMLI Management and AMLI Construction.

     "Service Company Borrowing Limitations" has the meaning set forth in
Section 3.02(e).

<PAGE>

     "Stabilized Property" means at any time any apartment community
Property owned by the Parent (i) which is at least 90% leased and
economically occupied (pursuant to written leases which have been signed by
both landlord and tenant, but including any month to month occupancy by any
such tenant after the expiration of such written lease) or (ii) with
respect to which a permanent certificate of occupancy was issued at least 3
months prior to the date of measurement.

     "Stated Maturity Date" means, with respect to any Money Market Loan,
the Stated Maturity Date therefor specified by the Bank in the applicable
Money Market Quote.

     "Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by the
Parent or the General Partner; EXCLUDING, however, the Co-Investment
Partnerships.  The Service Companies are not Subsidiaries.

     "Swing Loan" means a Loan made by Wachovia pursuant to
Section 2.01(b), which must be a Base Rate Loan or a Transaction Rate Loan.

     "Swing Loan Note" means , individually and collectively, as the
context shall require, the promissory notes of the Parent, substantially in
the form of EXHIBIT A-2, and the promissory notes of the Service Company
Borrowers in the form of EXHIBIT A-4, each evidencing the obligation of the
relevant Borrower to repay the Swing Loans, together with all amendments,
consolidations, modifications, renewals, and supplements thereto.

     "Syndicated Loans" means Base Rate Loans or Euro-Dollar Loans made
pursuant to the terms and conditions set forth in Section 2.01.

     "Syndicated Loan Notes" means, individually and collectively, as the
context shall require,  the promissory notes of the Parent, substantially
in the form of EXHIBIT A-1, and the promissory notes of the Service Company
Borrowers in the form of EXHIBIT A-4, each evidencing the obligation of the
relevant Borrower to repay Syndicated Loans, together with all amendments,
consolidations, modifications, renewals and supplements thereto.

     "Taxes" has the meaning set forth in Section 2.12(c).

     "Termination Date" means whichever is applicable of (i) November 11,
2003, (ii) such later date to which it is extended by the Banks pursuant to
Section 2.05(b), in their sole and absolute discretion, (iii) the date the
Commitments are terminated pursuant to Section 6.01 following the
occurrence of an Event of Default, or (iv) the date the Parent terminates
the Commitments entirely pursuant to Section 2.08.

     "Third Parties" means all lessees, sublessees, licensees and other
users of the Properties, excluding those users of the Properties in the
ordinary course of the Borrowers' businesses and on a temporary basis.

     "Total Consolidated Liabilities" means at any time, for the Parent
and the Consolidated Entities, determined on a consolidated basis, but
without duplication, the sum of (i) Consolidated Liabilities, plus (ii) all
Debt Guaranteed by the Parent or any Consolidated Entity, plus (iii) the
face amount of all letters of credit issued for the account of the Parent
or any Consolidated Entity, minus (iv) Approved Collateral Value.

     "Total Secured Debt" means at any time, for the Parent and the
Consolidated Entities, determined on a consolidated basis, but without
duplication, the sum of the following, but only if any Property, or
ownership interest of the owner thereof, is subject to a Mortgage with
respect thereto: (i) all indebtedness for borrowed money; (ii) the deferred
purchase price of Property; (iii) all capital leases; (iv) all obligations
to reimburse any bank or other Person in respect of amounts paid or to be
paid under a letter of credit or similar instrument; and (v) all Guarantees
of Debt of Persons other than the Parent and the Consolidated Entities.

<PAGE>

     "Transaction Rate" has the meaning set forth in Section 2.01(b)(ii).

     "Transaction Rate Loan" means a Swing Loan to be made as a
Transaction Rate Loan pursuant to Section 2.01(b).

     "Transaction Rate Request" has the meaning set forth in
Section 2.01(b)(ii).

     "Transferee" has the meaning set forth in Section 9.08(d).

     "Undepreciated Book Asset Value" means at any time, for the Parent
and the Subsidiaries, the sum of (x) the original cost of all real estate
assets plus the cost of capital improvements thereon, without deduction for
accumulated depreciation and amortization incurred in connection therewith,
plus (y) the book value of all other tangible assets determined in
accordance with GAAP, minus (z) Approved Collateral Value.

     "Unencumbered Assets" means at any time, for the Parent and the
Guarantors, determined on a consolidated basis, the sum of the following:
(i) an amount equal to (x) the Net Operating Income for the 3 month period
ending on the last day of the Fiscal Quarter just ended prior to the date
of determination, from each Property (other than Properties owned by a Co-
Investment Partnership) not subject to a Mortgage, divided by (y) 0.09
(which is the capitalization factor), times (z) 4 (which is the
annualization factor); plus (ii) the book value of Construction in Progress
on all Property (other than Properties owned by a Co-Investment
Partnership) not subject to a Mortgage plus Properties (other than
Properties owned by a Co-Investment Partnership) consisting of unimproved
land not subject to a Mortgage.

     "Unencumbered Stabilized Properties" means at any time, all
Stabilized Properties not subject to a Mortgage.

     "Unfunded Vested Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all vested
nonforfeitable benefits under such Plan exceeds (ii) the fair market value
of all Plan assets allocable to such benefits, all determined as of the
then most recent valuation date for such Plan, but only to the extent that
such excess represents a potential liability of a member of the Controlled
Group to the PBGC or the Plan under Title IV of ERISA.

     "Unit" means an individual apartment unit located in a Property.

     "Unsecured Net Operating Income" means at any time all Net Operating
Income (but without giving effect to clauses (iii) and (iv) of the
definition thereof) attributable to Unencumbered Stabilized Properties.

     "Unsecured Funded Debt" means at any time, for the Parent and the
Consolidated Entities, determined on a consolidated basis, the sum of the
following, but only if any Property, or ownership interest of the owner
thereof, is not subject to a Mortgage with respect thereto: (i) all
indebtedness for borrowed money; (ii) the deferred purchase price of
Property; (iii) all capital leases; (iv) all obligations to reimburse any
bank or other Person in respect of amounts paid or to be paid under a
letter of credit or similar instrument; and (v) all Guarantees of Debt of
Persons other than the Parent and the Consolidated Entities.

<PAGE>

     "Unsecured Interest Expense" means at any time that portion of
Consolidated Interest Expense attributable to Unsecured Funded Debt.

     "Unused Commitment" means at any date, with respect to any Bank, an
amount equal to its Commitment less the aggregate outstanding principal
amount of its Syndicated Loans (but not its Money Market Loans, or, with
respect to Wachovia, its Swing Loans).

     "Wachovia" means Wachovia Bank, N.A., a national banking association,
and its successors.

     "Wholly Owned Subsidiary" means any Subsidiary all of the shares of
capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the
Parent or the General Partner.

SECTION 1.02.  ACCOUNTING TERMS AND DETERMINATIONS.

     Unless otherwise specified herein, all terms of an accounting
character used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to be
delivered hereunder shall be prepared, in accordance with GAAP, or with
respect to the calculation of Funds From Operations, as required by NAREIT,
applied on a basis consistent (except for changes concurred in by the
General Partner's independent public accountants or otherwise required by a
change in GAAP) with the most recent audited consolidated financial
statements of the General Partner or the Parent and its Consolidated
Subsidiaries delivered to the Banks unless with respect to any such change
concurred in by the General Partner's independent public accountants or
required by GAAP or, with respect to the calculation of Funds From
Operations, as required by NAREIT, in determining compliance with any of
the provisions of this Agreement or any of the other Loan Documents:
(i) the Parent shall have objected to determining such compliance on such
basis at the time of delivery of such financial statements, or (ii) the
Required Banks shall so object in writing within 30 days after the delivery
of such financial statements, in either of which events such calculations
shall be made on a basis consistent with those used in the preparation of
the latest financial statements as to which such objection shall not have
been made (which, if objection is made in respect of the first financial
statements delivered under Section 5.01 hereof, shall mean the financial
statements referred to in Section 4.04).

SECTION 1.03.  REFERENCES.

     Unless otherwise indicated, references in this Agreement to
"Articles", "Exhibits", "Schedules", "Sections" and other Subdivisions are
references to articles, exhibits, schedules, sections and other
subdivisions hereof.

SECTION 1.04.  USE OF DEFINED TERMS.

     All terms defined in this Agreement shall have the same defined
meanings when used in any of the other Loan Documents, unless otherwise
defined therein or unless the context shall require otherwise.

SECTION 1.05.  TERMINOLOGY.

     All personal pronouns used in this Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural, and the plural shall include the
singular.  Titles of Articles and Sections in this Agreement are for
convenience only, and neither limit nor amplify the provisions of this
Agreement.

<PAGE>

                              ARTICLE II

                              THE CREDITS

SECTION 2.01.  COMMITMENTS TO LEND SYNDICATED LOANS.

     (a)   SYNDICATED LOANS.  Each Bank severally agrees, on the terms and
conditions set forth herein, to make Syndicated Loans to the Borrowers from
time to time before the Termination Date; PROVIDED that,

           (i)   immediately after each such Syndicated Loan is made, the
aggregate outstanding principal amount of Syndicated Loans by such Bank
shall not exceed the amount of its Commitment, and

           (ii)  the aggregate outstanding amount of all Syndicated Loans,
Money Market Loans and Swing Loans shall not exceed the lesser of (A) the
aggregate amount of the Commitments and (B) the Borrowing Base.

     Each Syndicated Borrowing under this Section shall be in an aggregate
principal amount of (x) for Base Rate Loans, $1,000,000 or any larger
integral multiple of $500,000, and (y) for Euro-Dollar Loans, $1,000,000 or
any larger integral multiple of $500,000 (except that in each case any such
Borrowing may be in the aggregate amount of the Unused Commitments) and
shall be made from the several Banks ratably in proportion to their
respective Commitments.  Within the foregoing limits, the Borrowers may
borrow under this Section, repay or, to the extent permitted by
Section 2.09, prepay Syndicated Loans and reborrow under this Section at
any time before the Termination Date.

     (b)   SWING LOANS.

           (i)   In addition to the foregoing, Wachovia shall from time to
time, upon the request of a Borrower, if the applicable conditions
precedent in Article III have been satisfied, make Swing Loans to the
Borrower in an aggregate principal amount at any time outstanding not
exceeding $15,000,000; PROVIDED that, immediately after such Swing Loan is
made, the outstanding amount of the Syndicated Loans, Money Market Loans,
and Swing Loans shall not exceed the lesser of (A) the aggregate amount of
the Commitments and (B) the Borrowing Base.  Within the foregoing limits, a
Borrower may borrow under this Section 2.01(b), prepay and reborrow under
this Section 2.01(b) at any time before the Termination Date.  All Swing
Loans shall be made as either Base Rate Loans or, subject to the provisions
of clause (ii) below, Transaction Rate Loans.

           (ii)  Swing Loans may be Transaction Rate Loans, if the
Administrative Agent shall have determined that such Transaction Rate Loan,
including the principal amount thereof, the Interest Period and the
Transaction Rate applicable thereto, has been expressly agreed to by the
relevant Borrower and Wachovia (such agreement may be obtained by
telephone, confirmed promptly to the Administrative Agent in
writing) pursuant to the following procedures.  If the relevant Borrower
desires a Transaction Rate Loan, (a) the Borrower shall provide Wachovia,
with a copy to the Administrative Agent, with notice of a request (a
"Transaction Rate Request") for a quote for a Transaction Rate Borrowing
prior to 1:00 p.m. (Atlanta, Georgia time) on the date (which shall be a
Domestic Business Day) of the proposed Transaction Rate Borrowing, which
Transaction Rate Request shall include the principal amount and proposed
Interest Period of the relevant Transaction Rate Borrowing, (b) prior to
1:30 p.m. (Atlanta, Georgia time) on such date, Wachovia shall furnish the
Borrower, with a copy to the Administrative Agent, with its rate quote (a
"Transaction Rate Quote") via facsimile transmission, (c) the Borrower
shall immediately inform Wachovia and the Administrative Agent of its
decision as to whether to request a Transaction Rate Borrowing at the
Transaction Rate specified in such

<PAGE>

     Transaction Rate Quote (a "Transaction Rate") (which may be done by
telephone and promptly confirmed in writing, and which decision shall be
irrevocable), and (d) if the Borrower has so informed Wachovia and the
Administrative Agent that it does desire a Transaction Rate Borrowing at
the Transaction Rate specified in such Transaction Rate Quote, then by 2:00
p.m. (Atlanta, Georgia time) on the date of such decision, Wachovia shall
make such Transaction Rate Borrowing, with interest accruing thereon at
such Transaction Rate, available to the Administrative Agent in accordance
with the procedures set forth herein. The Administrative Agent shall notify
the Banks of any Transaction Rate Borrowing pursuant hereto.

           (iii) At any time on or after the occurrence of an Event of
Default, upon the request of Wachovia, each Bank other than Wachovia shall,
on the third Domestic Business Day after such request is made, purchase a
participating interest in Swing Loans in an amount equal to its ratable
share (based upon its respective Commitment) of such Swing Loans, and
Wachovia shall furnish each Bank with a certificate evidencing such
participating interest.  On such third Domestic Business Day, each Bank
will immediately transfer to Wachovia, in immediately available funds, the
amount of its participation.  Whenever, at any time after Wachovia has
received from any such Bank its participating interest in a Swing Loan, the
Administrative Agent receives any payment on account thereof, the
Administrative Agent will distribute to such Bank its participating
interest in such amount (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Bank's
participating interest was outstanding and funded); PROVIDED, HOWEVER, that
in the event that such payment received by the Administrative Agent is
required to be returned, such Bank will return to the Administrative Agent
any portion thereof previously distributed by the Administrative Agent to
it.  Each Bank's obligation to purchase such participating interests shall
be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation:  (1) any set-off,
counterclaim, recoupment, defense or other right which such Bank or any
other Person may have against Wachovia requesting such purchase or any
other Person for any reason whatsoever; (2) the occurrence or continuance
of a Default or an Event of Default or the termination of the Commitments;
(3) any adverse change in the condition (financial or otherwise) of the
Borrowers or the Guarantors; (4) any breach of this Agreement by the
Borrowers or any other Bank; or (5) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing.

SECTION 2.02.  METHOD OF BORROWING SYNDICATED LOANS.

     For all Loans other than Transaction Rate Loans or Money Market Loans
(which shall be governed by the provisions of Sections 2.01(b)(ii) and
2.03, respectively):

     (a)   The relevant Borrower shall give the Administrative Agent
notice (a "Notice of Borrowing"), which shall be substantially in the form
of EXHIBIT E-1, if the Borrowing is by the Parent, or EXHIBIT E-2, if the
Borrowing is by a Service Company Borrower, prior to 11:00 A.M. (Atlanta,
Georgia time) on the same Domestic Business Day as each Base Rate Borrowing
and at least 3 Euro-Dollar Business Days before each Euro-Dollar Borrowing,
specifying:

           (i)   the date of such Syndicated Borrowing, which shall be a
Domestic Business Day in the case of a Base Rate Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing,

           (ii)  the aggregate amount of such Syndicated Borrowing,

<PAGE>

           (iii) whether the Syndicated Loans comprising such Borrowing
are to be Syndicated Loans or Swing Loans, and whether they are to be Base
Rate Loans or Euro-Dollar Loans;

           (iv)  in the case of a Euro-Dollar Borrowing, the duration of
the Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.

     (b)   Upon receipt of a Notice of Borrowing, the Administrative Agent
shall promptly and in any event on the same business day notify each Bank
of the contents thereof and of such Bank's ratable share of such Syndicated
Borrowing and such Notice of Borrowing, once received by the Administrative
Agent, shall not thereafter be revocable by the relevant Borrower.

     (c)   Not later than 11:00 A.M. (Atlanta, Georgia time) for Euro-
Dollar Loans, and 2:00 P.M. (Atlanta, Georgia time) for Base Rate Loans, on
the date of each Syndicated Borrowing, each Bank (or Wachovia, with respect
to Swing Loans) shall (except as provided in paragraph (d) of this
Section) make available its ratable share of such Syndicated Borrowing, in
Federal or other funds immediately available in Atlanta, Georgia, to the
Administrative Agent at its address determined pursuant to Section 9.01.
Unless the Administrative Agent determines that any applicable condition
specified in Article III has not been satisfied, the Administrative Agent
will make the funds so received from the Banks available to the relevant
Borrower at the Administrative Agent's aforesaid address.  Unless the
Administrative Agent receives notice from a Bank, at the Administrative
Agent's address referred to in or specified pursuant to Section 9.01, no
later than 4:00 P.M. (local time at such address) on the Domestic Business
Day before the date of a Syndicated Borrowing stating that such Bank will
not make a Syndicated Loan in connection with such Syndicated Borrowing,
the Administrative Agent shall be entitled to assume that such Bank will
make a Syndicated Loan in connection with such Syndicated Borrowing and, in
reliance on such assumption, the Administrative Agent may (but shall not be
obligated to) make available such Bank's ratable share of such Syndicated
Borrowing to the relevant Borrower for the account of such Bank.  If the
Administrative Agent makes such Bank's ratable share available to the
relevant Borrower and such Bank does not in fact make its ratable share of
such Syndicated Borrowing available on such date, the Administrative Agent
shall be entitled to recover such Bank's ratable share from such Bank or
the relevant Borrower (and for such purpose shall be entitled to charge
such amount to any account of the relevant Borrower maintained with the
Administrative Agent), together with interest thereon for each day during
the period from the date of such Syndicated Borrowing until such sum shall
be paid in full at a rate per annum equal to the rate at which the
Administrative Agent determines that it obtained (or could have obtained)
overnight Federal funds to cover such amount for each such day during such
period, PROVIDED that (i) any such payment by the relevant Borrower of such
Bank's ratable share and interest thereon shall be without prejudice to any
rights that the relevant Borrower may have against such Bank and (ii) until
such Bank has paid its ratable share of such Syndicated Borrowing, together
with interest pursuant to the foregoing, it will have no interest in or
rights with respect to such Syndicated Borrowing for any purpose hereunder.

If the Administrative Agent does not exercise its option to advance funds
for the account of such Bank, it shall forthwith notify the relevant
Borrower of such decision.

     (d)   If any Bank makes a new Syndicated Loan hereunder on a day on
which a Borrower is to repay all or any part of an outstanding Syndicated
Loan from such Bank, such Bank shall apply the proceeds of its new
Syndicated Loan to make such repayment as a Refunding Loan and only an
amount equal to the difference (if any) between the amount being borrowed
and the amount of such Refunding Loan shall be made available by such Bank
to the Administrative Agent as provided in paragraph (c) of this Section,
or remitted by the relevant Borrower to the Administrative Agent as
provided in Section 2.12, as the case may be.

<PAGE>

     (e)   Notwithstanding anything to the contrary contained in this
Agreement, no Fixed Rate Borrowing may be made if there shall have occurred
a Default or an Event of Default, which Default or Event of Default shall
not have been cured or waived, and all Refunding Loans shall be made as
Base Rate Loans (but shall bear interest at the Default Rate, if
applicable).

     (f)   In the event that a Notice of Borrowing fails to specify
whether the Syndicated Loans comprising such Syndicated Borrowing are to be
Base Rate Loans or Euro-Dollar Loans, such Syndicated Loans shall be made
as Base Rate Loans.  If the relevant Borrower is otherwise entitled under
this Agreement to repay any Syndicated Loans maturing at the end of an
Interest Period applicable thereto with the proceeds of a new Borrowing,
and the relevant Borrower fails to repay such Syndicated Loans using its
own moneys and fails to give a Notice of Borrowing in connection with such
new Syndicated Borrowing, a new Syndicated Borrowing shall be deemed to be
made on the date such Syndicated Loans mature in an amount equal to the
principal amount of the Syndicated Loans so maturing, and the Syndicated
Loans comprising such new Syndicated Borrowing shall be Base Rate Loans.

     (g)   Notwithstanding anything to the contrary contained herein,
there shall not be a total of more than 8 Euro-Dollar Borrowings and Money
Market Loans outstanding at any given time.

SECTION 2.03.  MONEY MARKET LOANS.

     (a)   In addition to making Syndicated Borrowings, a Borrower may, as
set forth in this Section 2.03, request the Banks to make offers to make
Money Market Borrowings available to the Borrower.  The Banks may, but
shall have no obligation to, make such offers and the relevant Borrower
may, but shall have no obligation to, accept any such offers in the manner
set forth in this Section 2.03, PROVIDED that:

           (i)   the number of Money Market Loans which may be outstanding
at any given time is subject to the provisions of Section 2.02(g);

           (ii)  the aggregate principal amount of all Money Market Loans,
(A) do not exceed the Money Market Facility Limit, and (B) together with
the aggregate principal amount of all Syndicated Loans and all Swing Loans,
at any one time outstanding shall not exceed the aggregate amount of the
Commitments of all of the Banks at such time;

           (iii) the Money Market Loans of any Bank will be deemed to be
usage of the Commitments for the purpose of calculating availability
pursuant to Sections 2.01(a)(ii), 2.01(b)(i) and 2.03(a)(ii) and fees
pursuant to Section 2.07, but will not reduce such Bank's obligation to
lend its pro rata share of the remaining Unused Commitment;

           (iv)  the Parent's Debt Rating is Investment Grade or higher;
and

           (v)   the aggregate of all Money Market Loans outstanding at
any time is subject to the Service Company Borrowing Limitations.

     (b)   When a Borrower wishes to request offers to make Money Market
Loans, it shall give the Administrative Agent (which shall promptly notify
the Banks) notice substantially in the form of EXHIBIT M hereto (a "Money
Market Quote Request") so as to be received no later than 11:00 A.M.
(Atlanta, Georgia time) at least 3 Domestic Business Days prior to the date
of the Money Market Borrowing proposed therein (or such other time and date
as the relevant Borrower and the Administrative Agent, with the consent of
the Required Banks, may agree), specifying:

               (i)    the proposed date of such Money Market Borrowing,
which shall be a Euro-Dollar Business Day (the "Money Market Borrowing
Date");

<PAGE>

           (ii)  the maturity date (or dates) (each a "Stated Maturity
Date") for repayment of each Money Market Loan to be made as part of such
Money Market Borrowing (which Stated Maturity Date shall be that date
occurring not less than 7 days but not more than 180 days from the date of
such Money Market Borrowing); PROVIDED that the Stated Maturity Date for
any Money Market Loan may not extend beyond the Termination Date (as in
effect on the date of such Money Market Quote Request); and

           (iii) the aggregate amount of principal to be requested by the
Borrower as a result of such Money Market Borrowing, which shall be at
least $1,000,000 (and in larger integral multiples of $500,000) but shall
not cause the limits specified in Section 2.03(a) to be violated.

     A Borrower may request offers to make Money Market Loans having up to
2 different Stated Maturity Dates in a single Money Market Quote Request;
PROVIDED that the request for each separate Stated Maturity Date shall be
deemed to be a separate Money Market Quote Request for a separate Money
Market Borrowing.  Except as otherwise provided in the immediately
preceding sentence, after the first Money Market Quote Request has been
given hereunder, no Money Market Quote Request shall be given until at
least 5 Domestic Business Days after all prior Money Market Quote Requests
have been fully processed by the Administrative Agent, the Banks and the
relevant Borrower pursuant to this Section 2.03.

     (c)   (i)   Each Bank may, but shall have no obligation to, submit a
response containing an offer to make a Money Market Loan substantially in
the form of EXHIBIT N hereto (a "Money Market Quote") in response to any
Money Market Quote Request; PROVIDED that, if a Borrower's request under
Section 2.03(b) specified more than 1 Stated Maturity Date, such Bank may,
but shall have no obligation to, make a single submission containing a
separate offer for each such Stated Maturity Date and each such separate
offer shall be deemed to be a separate Money Market Quote.  Each Money
Market Quote must be submitted to the Administrative Agent not later than
10:00 A.M. (Atlanta, Georgia time) on the Money Market Borrowing Date;
PROVIDED that any Money Market Quote submitted by Wachovia may be
submitted, and may only be submitted, if Wachovia notifies the relevant
Borrower of the terms of the offer contained therein not later than
9:45 A.M. (Atlanta, Georgia time) on the Money Market Borrowing Date (or 15
minutes prior to the time that the other Banks are required to have
submitted their respective Money Market Quotes).  Subject to Section 6.01,
any Money Market Quote so made shall be irrevocable except with the written
consent of the Administrative Agent given on the instructions of the
relevant Borrower.

           (ii)  Each Money Market Quote shall specify:

                 (A)  the proposed Money Market Borrowing Date and the
Stated Maturity Date therefor;

                 (B)  the principal amounts of the Money Market Loan
which the quoting Bank is willing to make for the applicable Money Market
Quote, which principal amounts (x) may be greater than or less than the
Commitment of the quoting Bank, (y) shall be at least $1,000,000 or a
larger integral multiple of $500,000, and (z) may not exceed the principal
amount of the Money Market Borrowing for which offers were requested;

                 (C)  the rate of interest per annum (rounded upwards, if
necessary, to the nearest 1/100th of 1%) offered for each such Money Market
Loan (such amounts being hereinafter referred to as the "Money Market
Rate"); and

                 (D)  the identity of the quoting Bank.

<PAGE>

     Unless otherwise agreed by the Administrative Agent and the relevant
Borrower, no Money Market Quote shall contain qualifying, conditional or
similar language or propose terms other than or in addition to those set
forth in the applicable Money Market Quote Request (other than setting
forth the principal amounts of the Money Market Loan which the quoting Bank
is willing to make for the applicable Interest Period) and, in particular,
no Money Market Quote may be conditioned upon acceptance by the relevant
Borrower of all (or some specified minimum) of the principal amount of the
Money Market Loan for which such Money Market Quote is being made.

     (d)   The Administrative Agent shall as promptly as practicable after
the Money Market Quote is submitted (but in any event not later than 10:30
A.M. (Atlanta, Georgia time)) on the Money Market Borrowing Date, notify
the relevant Borrower of the terms (i) of any Money Market Quote submitted
by a Bank that is in accordance with Section 2.03(c) and (ii) of any Money
Market Quote that amends, modifies or is otherwise inconsistent with a
previous Money Market Quote submitted by such Bank with respect to the same
Money Market Quote Request.  Any such subsequent Money Market Quote shall
be disregarded by the Administrative Agent unless such subsequent Money
Market Quote is submitted solely to correct a manifest error in such former
Money Market Quote.  The Administrative Agent's notice to the relevant
Borrower shall specify (A) the principal amounts of the Money Market
Borrowing for which offers have been received and (B) the respective
principal amounts and Money Market Rates so offered by each Bank
(identifying the Bank that made each Money Market Quote).

     (e)   Not later than 11:00 A.M. (Atlanta, Georgia time) on the Money
Market Borrowing Date, the relevant Borrower shall notify the
Administrative Agent of its acceptance or nonacceptance of the offers so
notified to it pursuant to Section 2.03(d) and the Administrative Agent
shall promptly notify each Bank which submitted an offer.  In the case of
acceptance, such notice shall specify the aggregate principal amount of
offers (for each Stated Maturity Date) that are accepted.  The relevant
Borrower may accept any Money Market Quote in whole or in part; PROVIDED
that:

           (i)   the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the related
Money Market Quote Request;

           (ii)  the aggregate principal amount of each Money Market Loan
comprising a Money Market Borrowing shall be at least $1,000,000 (and in
larger integral multiples of $500,000) but shall not cause the limits
specified in Section 2.03(a) to be violated;

           (iii) acceptance of offers may only be made in ascending order
of Money Market Rates; and

           (iv)  the relevant Borrower may not accept any offer where the
Administrative Agent has advised such Borrower that such offer fails to
comply with Section 2.03(c)(ii) or otherwise fails to comply with the
requirements of this Agreement (including without limitation,
Section 2.03(a)).

     If offers are made by 2 or more Banks with the same Money Market
Rates for a greater aggregate principal amount than the amount in respect
of which offers are accepted for the related Stated Maturity Date, the
principal amount of Money Market Loans in respect of which such offers are
accepted shall be allocated by the relevant Borrower among such Banks as
nearly as possible in proportion to the aggregate principal amount of such
offers.  Determinations by the relevant Borrower of the amounts of Money
Market Loans shall be conclusive in the absence of manifest error.

     (f)   Any Bank whose offer to make any Money Market Loan has been
accepted shall, not later than 2:00 P.M. (Atlanta, Georgia time) on the
Money Market Borrowing Date, make the amount of such Money Market Loan
allocated to it available to the Administrative Agent at its address
referred to in Section 9.01 in immediately available funds.  The amount so

<PAGE>

received by the Administrative Agent shall, subject to the terms and
conditions of this Agreement, be made available to the relevant Borrower on
such date by depositing the same, in immediately available funds, not later
than 4:00 P.M. (Atlanta, Georgia time), in an account of such Borrower
maintained with Wachovia.

     (g)   After any Money Market Loan has been funded, the Administrative
Agent shall notify the Banks of the aggregate principal amount of the Money
Market Quotes received and the highest and lowest rates included in such
Money Market Quotes.

     (h)   MONEY MARKET LOANS BY DESIGNATED BANKS.  For any Bank which is
a Designating Bank, any Money Market Loan to be made by such Bank may from
time to time be made by its Designated Bank in such Designated Bank's sole
discretion, and nothing herein shall constitute a commitment to make Money
Market Loans by such Designated Bank; PROVIDED, that if any Designated Bank
elects not to, or fails to, make any such Money Market Loan that has been
accepted by the relevant Borrower in accordance with the foregoing, its
Designating Bank hereby agrees that it shall make such Money Market Loan
pursuant to the terms hereof.

SECTION 2.04.  NOTES.

     (a)   The Syndicated Loans of each Bank shall be evidenced by a
single Syndicated Loan Note payable to the order of such Bank for the
account of its Lending Office in an amount equal to the original principal
amount of such Bank's Commitment.  The Swing Loans shall be evidenced by a
single Swing Loan Note payable to the order of Wachovia in the original
principal amount of $15,000,000.  The Money Market Loans made by any Bank
to a Borrower shall be evidenced by a single Money Market Loan Note payable
to the order of such Bank for the account of its Lending Office in an
amount equal to the Money Market Facility Limit.

     (b)   Upon receipt of each Bank's Syndicated Loan Notes, Money Market
Loan Notes, and Wachovia's Swing Loan Note pursuant to Section 3.01, the
Administrative Agent shall deliver such Syndicated Loan Notes and Money
Market Loan Notes to such Bank and the Swing Loan Note to Wachovia. Each
Bank, as to the Syndicated Loans and Money Market Loan Notes (or Wachovia,
as to the Swing Loans), shall record, and prior to any transfer of its
Syndicated Loan Notes or Money Market Loan Notes (or Swing Loan Note) shall
endorse on the schedules forming a part thereof appropriate notations to
evidence, the date, amount and maturity of, and effective interest rate
for, each Syndicated Loan or Money Market Loan Notes (or Swing Loan) made
by it, the date and amount of each payment of principal made by the
relevant Borrower with respect thereto, and such schedules of each such
Bank's Syndicated Loan Notes or Money Market Loan Notes (or Wachovia's
Swing Loan Note) shall constitute rebuttable presumptive evidence of the
respective principal amounts owing and unpaid on such Bank's Syndicated
Loan Notes or Money Market Loan Notes (or Wachovia's Swing Loan Note);
PROVIDED that the failure of any Bank (or Wachovia) to make, or error in
making, any such recordation or endorsement shall not affect the obligation
of the relevant Borrower hereunder or under the Syndicated Loan Notes or
Money Market Loan Notes (or Swing Loan Note) or the ability of any Bank to
assign its Syndicated Loan Notes or Money Market Loan Notes or Wachovia to
assign its Swing Loan Note.  Each Bank (and Wachovia, with respect to the
Swing Loan) is hereby irrevocably authorized by the Borrowers so to endorse
its Syndicated Loan Notes or Money Market Loan Notes (or Swing Loan
Note) and to attach to and make a part of any Syndicated Loan Note or Money
Market Loan Notes (or Swing Loan Note) a continuation of any such schedule
as and when required.

<PAGE>

SECTION 2.05.  MATURITY OF LOANS.

     (a)   Each Loan included in any Borrowing shall mature, and the
principal amount thereof shall be due and payable, on the last day of the
Interest Period applicable to such Borrowing.

     (b)   Notwithstanding the foregoing, the outstanding principal amount
of the Loans, if any, together with all accrued but unpaid interest
thereon, if any, shall be due and payable on November 11, 2003, unless the
Termination Date is otherwise extended by the Banks, in their sole and
absolute discretion.  Upon the written request of the Borrowers, which
request shall be delivered to the Administrative Agent at least 60 days
prior to each Extension Date (as such term is hereinafter defined), the
Banks shall have the option (without any obligation whatsoever so to do) of
extending the Termination Date for an additional one-year period on
November 11, 2001 (the "Extension Date").  In the event that a Bank chooses
to extend the Termination Date for such an additional one-year period,
notice shall be given by such Bank to the Borrowers and the Administrative
Agent at least 30 days prior to the relevant Extension Date; provided, that
the Termination Date shall not be extended with respect to any of the Banks
unless the Required Banks are willing to extend the Termination Date and on
the then existing Termination Date (without giving effect to such
extension) (x) the remaining Banks shall purchase ratable assignments
(without any obligation so to do) from any terminating Bank (in the form of
an Assignment and Acceptance) in accordance with their respective
percentage of the remaining Aggregate Commitments; PROVIDED, THAT, such
Banks shall be provided such opportunity (which opportunity shall allow
such Banks at least 5 Domestic Business Days in which to make a
decision) prior to the Borrowers finding another bank pursuant to the
immediately succeeding clause (y); and, PROVIDED, FURTHER, THAT, should any
of the remaining Banks elect not to purchase such an assignment, then, such
other remaining Banks shall be entitled  to purchase an assignment from any
Terminating Bank which includes the ratable interest that was otherwise
available to such non-purchasing remaining Bank or Banks, as the case may
be, (y) the Borrowers shall find another bank, acceptable to the
Administrative Agent, willing to accept an assignment from such terminating
Bank (in the form of an Assignment and Acceptance) and/or (z) the Borrowers
shall reduce the aggregate Commitments in an amount equal to the Commitment
of any such terminating Bank which is not purchased pursuant to clause
(x) or (y).  In the event of any extension pursuant to the foregoing, on an
Extension Date, the Borrowers shall pay to the Administrative Agent, for
the ratable account of the Banks, an extension fee equal to 0.125% of the
aggregate amount of the Commitments in effect on such Extension Date.  In
the event of any extension pursuant to the foregoing, on the Extension
Date, the Borrowers shall pay to the Agent, for the ratable account of the
Banks, an extension fee equal to 0.125% of the aggregate amount of the
Commitments in effect on such Extension Date.

SECTION 2.06.  INTEREST RATES.

     (a)   "Applicable Margin" means: (i) until the Parent receives a Debt
Rating, (x) for any Base Rate Loan, 0.00%, and (y) for each Euro-Dollar
Loan 1.30%; and (ii) from and after the date the Parent receives a Debt
Rating, (x) for any Base Rate Loan, 0.00% and (y) for each Euro-Dollar
Loan, the percentage determined on each Performance Pricing Determination
Date by reference to the table set forth below and the Parent's Debt Rating
on such Performance Pricing Determination Date; PROVIDED, that if the
Parent has no Debt Rating, the Applicable Margin for Euro-Dollar Loans
shall be based upon Level IV of the table below.

           LEVEL I          LEVEL II         LEVEL III        LEVEL IV
DEBT
RATING     Greater than     BBB              BBB-             less than
           or equal         or               or               BBB- or
           to BBB+ or       Baa2             Baa3             Baa3
           Baa1

LIBOR +    0.75%            0.90%            1.05%            1.30%

<PAGE>

     In determining the amounts to be paid by a Borrower pursuant to
Section 2.06(b), such Borrower and the Banks shall refer to the Parent's
Debt Rating from time to time.  For purposes hereof, "Performance Pricing
Determination Date" shall mean each date on which the Parent's Debt Rating
changes.  Each change in interest and fees as a result of a change in the
Parent's Debt Rating shall be effective only for Loans (including Refunding
Loans) which are made on or after the relevant Performance Pricing
Determination Date.  All determinations hereunder shall be made by the
Administrative Agent unless the Required Banks shall object to any such
determination. The Parent shall promptly notify the Administrative Agent of
any change in the Parent's Debt Rating.

     (b)   Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made
until it becomes due, at a rate per annum equal to the Base Rate for such
day plus the Applicable Margin.  Such interest shall be payable for each
Interest Period on the last day thereof.  Any overdue principal of and, to
the extent permitted by applicable law, overdue interest on any Base Rate
Loan shall bear interest, payable on demand, for each day until paid at a
rate per annum equal to the Default Rate.

     (c)   Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a
rate per annum equal to the sum of the Applicable Margin plus the
applicable Adjusted London Interbank Offered Rate for such Interest Period.

Such interest shall be payable for each Interest Period on the last day
thereof and, if such Interest Period is longer than 3 months, at intervals
of 3 months after the first day thereof.  Any overdue principal of and, to
the extent permitted by law, overdue interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day until paid at a rate per
annum equal to the Default Rate.

     The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum  equal to the quotient obtained
(rounded upwards, if necessary, to the next higher 1/100th of 1%) by
dividing (i) the applicable London Interbank Offered Rate for such Interest
Period by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.

     The "London Interbank Offered Rate" applicable to any Euro-Dollar
Loan means for the Interest Period of such Euro-Dollar Loan, the rate per
annum determined on the basis of the offered rate for deposits in Dollars
of amounts equal or comparable to the principal amount of such Euro-Dollar
Loan offered for a term comparable to such Interest Period, which rates
appear on the Dow Jones Markets, Inc. Page 3750 effective as of 11:00 A.M.,
London time, 2 Euro-Dollar Business Days prior to the first day of such
Interest Period, PROVIDED that if no such offered rates appear on such
page, the "London Interbank Offered Rate" for such Interest Period will be
the arithmetic average (rounded upward, if necessary, to the next higher
1/100th of 1%) of rates quoted by not less than 2 major banks in New York
City, selected by the Administrative Agent, at approximately 10:00 A.M.,
New York City time, 2 Euro-Dollar Business Days prior to the first day of
such Interest Period, for deposits in Dollars offered by leading European
banks for a period comparable to such Interest Period in an amount
comparable to the principal amount of such Euro-Dollar Loan.

     "Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by
the Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the
Federal Reserve System in respect of "Eurocurrency liabilities" (or in
respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar Loans is determined or
any category of extensions of credit or other assets which includes loans
by a non-United States office of any Bank to United States residents).  The
Adjusted London Interbank Offered Rate shall be adjusted automatically on
and as of the effective date of any change in the Euro-Dollar Reserve
Percentage.

<PAGE>

     (a)   Each Money Market Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Money Market Loan
is made until it becomes due, at a rate per annum equal to the applicable
Money Market Rate set forth in the relevant Money Market Quote.  Such
interest shall be payable on the Stated Maturity Date thereof, and, if the
Stated Maturity Date occurs more than 90 days after the date of the
relevant Money Market Loan, at intervals of 90 days after the first day
thereof. Any overdue principal of and, to the extent permitted by law,
overdue interest on any Money Market Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the Default
Rate.

     (b)   The Administrative Agent shall determine each interest rate
applicable to the Loans hereunder.  The Administrative Agent shall give
prompt notice to the relevant Borrower and the Banks by telecopier of each
rate of interest so determined, and its determination thereof shall be
conclusive in the absence of manifest error.

     (c)   After the occurrence and during the continuance of an Event of
Default, the principal amount of the Loans (and, to the extent permitted by
applicable law, all accrued interest thereon) may, at the election of the
Required Banks, bear interest at the Default Rate.

SECTION 2.07.  FEES.

     (a)   Commencing on the Original Closing Date, the Parent shall pay
to the Administrative Agent, for the ratable account of each Bank, a
facility fee, calculated on the aggregate amount of such Bank's Commitment
(without taking into account the amount of the outstanding Loans made by
such Bank), at the rate of 0.20% per annum.  Such fees shall be payable in
arrears on each March 31, June 30, September 30 and December 31 and on the
Termination Date.

     (b)    The Borrowers shall pay to the Administrative Agent, for the
account and sole benefit of the Administrative Agent and Wachovia
Securities, Inc., as applicable, such fees and other amounts at such times
as set forth in the Restatement Agent's Letter Agreement.

SECTION 2.08.  OPTIONAL TERMINATION OR REDUCTION OF COMMITMENTS.

     The Parent may, upon at least 3 Domestic Business Days' notice (or
same Domestic Business Days' notice as to Swing Loans) to the
Administrative Agent, terminate at any time, or proportionately reduce the
Unused Commitments from time to time by an aggregate amount of at least
$10,000,000 or any larger integral multiple of $1,000,000.  If the
Commitments are terminated in their entirety, all accrued fees (as provided
under Section 2.07) shall be due and payable on the effective date of such
termination.

SECTION 2.09.  MANDATORY REDUCTION AND TERMINATION OF COMMITMENTS.

     The Commitments shall terminate on the Termination Date, or on any
earlier date pursuant to the provisions of and under the circumstances
provided in Section 2.11(d), and in either case any Loans then outstanding
(together with accrued interest thereon and, in the case of a termination
pursuant to Section 2.11(d), any other amounts payable pursuant to such
Section 2.11(d)) shall be due and payable on such date.

SECTION 2.10.  OPTIONAL PREPAYMENTS.

     (a)   A Borrower may, upon at least 1 Domestic Business Days' notice
to the Administrative Agent, prepay any Base Rate Borrowing in whole at any
time, or from time to time in part in amounts aggregating at least
$1,000,000 or any larger integral multiple of $500,000 for Base Rate
Borrowings which are Syndicated Borrowings (with no minimum payment as to
Swing Loan Borrowings), by paying the principal amount to be prepaid
together with accrued interest thereon to the date of prepayment.  Each
such optional prepayment shall be applied to prepay ratably the Base Rate
Loans of the several Banks (or of Wachovia, as to Swing Loans) included in
such Base Rate Borrowing.

     (b)   Subject to any payments required pursuant to the terms of
Article VIII for such Fixed Rate Loan, upon 3 Domestic Business Day's prior
written notice (or same Domestic Business Days' notice as to Swing
Loans) to the Administrative Agent, a Borrower may prepay in minimum
amounts of $1,000,000 or any larger integral multiple of $500,000 as to
Euro-Dollar Borrowings (with no minimum payment as to Swing Loan
Borrowings) all or any portion of the principal amount of any Fixed Rate
Loan prior to the maturity thereof. Each such optional prepayment shall be
applied to prepay ratably the Fixed Rate Loans of the several Banks (or of
Wachovia, as to Swing Loans) included in such Fixed Rate Borrowing.

     (c)   Each such payment or prepayment shall be applied to the Swing
Loans or ratably to the Loans of the Banks outstanding on the date of
payment or prepayment in the following order of priority: (i) first, to
Swing Loans which are Base Rate Loans; (ii) second, to Transaction Rate
Loans; (iii) third, to Syndicated Loans which are Base Rate Loans;
(iv) fourth, to Euro-Dollar Loans; and (v) last, to Money Market Loans.

     (d)   Upon receipt of a notice of prepayment pursuant to this
Section 2.10, the Administrative Agent shall promptly notify each Bank of
the contents thereof and of such Bank's ratable share of such prepayment
and such notice, once received by the Administrative Agent, shall not
thereafter be revocable by the relevant Borrower.

SECTION 2.11.  MANDATORY PREPAYMENTS.

     (a)   On each date on which the Commitments are reduced pursuant to
Section 2.08 or Section 2.09, the Borrowers shall repay or prepay such
principal amount of the outstanding Loans, if any (together with interest
accrued thereon and any amount due under Section 8.05(a)), as may be
necessary so that after such payment the aggregate unpaid principal amount
of the Loans does not exceed the aggregate amount of the Commitments as
then reduced.

     (b)   On each date on which the aggregate principal amount of the
Loans outstanding exceeds the Borrowing Base on such date, the Borrowers
shall repay or prepay such principal amount of the outstanding Loans
(together with interest thereon and any amount due under
Section 8.05(a)) as may be necessary so that after such payment the
aggregate unpaid principal amount of the Loans does not exceed the
Borrowing Base on such date.

     (c)   Each such payment or prepayment pursuant to paragraph (a),
(b) or (d) shall be applied ratably to the Loans of the Banks outstanding
on the date of payment or prepayment in the following order of priority:
(i) first, to Swing Loans, (ii) secondly to Syndicated Loans which are Base
Rate Loans; (iii) thirdly, to Euro-Dollar Loans; and (iv) lastly, to Money
Market Loans.

     (d)   In the event of a Change in Control, the Parent shall notify
the Administrative Agent and the Banks thereof within 3 Business Days of
the occurrence thereof, and shall include in such notification relevant
information pertaining thereto.  Within 14 Business Days after demand by
the Administrative Agent, made in writing at the request of the Required
Banks within 60 days of the Administrative Agent's receipt of the aforesaid
notice from the Parent, the Borrowers shall prepay in full the aggregate
unpaid principal amount of the Loans, all accrued and unpaid interest
thereon, any amounts due under Section 8.05(a), and all other accrued and
unpaid amount hereunder, and the Commitments thereupon shall terminate
pursuant to Section 2.08.

<PAGE>

SECTION 2.12.  GENERAL PROVISIONS AS TO PAYMENTS.

     (a)   The Borrowers shall make each payment of principal of, and
interest on, the Loans and of fees hereunder, not later than 11:00 A.M.
(Atlanta, Georgia time) on the date when due, in Federal or other funds
immediately available in Atlanta, Georgia, to the Administrative Agent at
its address referred to in Section 9.01.  The Administrative Agent will
promptly distribute to each Bank its ratable share of each such payment
received by the Administrative Agent for the account of the Banks, and to
Wachovia such payment received by the Administrative Agent on account of
the Swing Loans.

     (b)   Whenever any payment of principal of, or interest on, the Base
Rate Loans, Money Market Loans or of fees hereunder shall be due on a day
which is not a Domestic Business Day, the date for payment thereof shall be
extended to the next succeeding Domestic Business Day.  Whenever any
payment of principal of or interest on, the Euro-Dollar Loans shall be due
on a day which is not a Euro-Dollar Business Day, the date for payment
thereof shall be extended to the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next preceding Euro-
Dollar Business Day.

     (c)   All payments of principal, interest and fees and all other
amounts to be made by the Borrowers pursuant to this Agreement with respect
to any Loan or fee relating thereto shall be paid without deduction for,
and free from, any tax, imposts, levies, duties, deductions, or
withholdings of any nature now or at anytime hereafter imposed by any
governmental authority or by any taxing authority thereof or therein
excluding in the case of each Bank, taxes imposed on or measured by its net
income, and franchise taxes imposed on it, by the jurisdiction under the
laws of which such Bank is organized or any political subdivision thereof
and, in the case of each Bank, taxes imposed on its income, and franchise
taxes imposed on it, by the jurisdiction of such Bank's applicable Lending
Office or any political subdivision thereof (all such non-excluded taxes,
imposts, levies, duties, deductions or withholdings of any nature being
"Taxes").  In the event that a Borrower is required by applicable law to
make any such withholding or deduction of Taxes with respect to any Loan or
fee or other amount, such Borrower shall pay such deduction or withholding
to the applicable taxing authority, shall promptly furnish to any Bank in
respect of which such deduction or withholding is made all receipts and
other documents evidencing such payment and shall pay to such Bank
additional amounts as may be necessary in order that the amount received by
such Bank after the required withholding or other payment shall equal the
amount such Bank would have received had no such withholding or other
payment been made.  No Bank will charge Borrowers for taxes or other fees
pursuant to this Section 2.12 or, if such taxes or fees are charged, at a
higher rate, than such Bank, charges its other similarly situated borrowers
or customers.

     Each Bank which is not organized under the laws of the United States
or any state thereof agrees, as soon as practicable after receipt by it of
a request by a Borrower to do so, to file all appropriate forms and take
other appropriate action to obtain a certificate or other appropriate
document from the appropriate governmental authority in the jurisdiction
imposing the relevant Taxes, establishing that it is entitled to receive
payments of principal and interest under this Agreement and the Notes
without deduction and free from withholding of any Taxes imposed by such
jurisdiction; PROVIDED that if it is unable, for any reason, to establish
such exemption, or to file such forms and, in any event, during such period
of time as such request for exemption is pending, the Borrowers shall
nonetheless remain obligated under the terms of the immediately preceding
paragraph.

<PAGE>

     In the event any Bank receives a refund of any Taxes paid by a
Borrower pursuant to this Section 2.12(c), it will pay to such Borrower the
amount of such refund promptly upon receipt thereof; PROVIDED that if at
any time thereafter it is required to return such refund, such Borrower
shall promptly repay to it the amount of such refund.

     Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers and
the Banks contained in this Section 2.12(c) shall be applicable with
respect to any Participant, Assignee or other Transferee, and any
calculations required by such provisions (i) shall be made based upon the
circumstances of such Participant, Assignee or other Transferee, and
(ii) constitute a continuing agreement and shall survive the termination of
this Agreement and the payment in full or cancellation of the Notes.

SECTION 2.13.  COMPUTATION OF INTEREST AND FEES.

     Interest on Base Rate Loans shall be computed on the basis of a year
of 365 days and paid for the actual number of days elapsed (including the
first day but excluding the last day).  Interest on Euro-Dollar Loans,
Money Market Loans and Transaction Rate Loans shall be computed on the
basis of a year of 360 days and paid for the actual number of days elapsed,
calculated as to each Interest Period from and including the first day
thereof to but excluding the last day thereof.  Facility fees and any other
fees payable hereunder shall be computed on the basis of a year of 360 days
and paid for the actual number of days elapsed (including the first day but
excluding the last day).

SECTION 2.14.  EXPANSION OF FACILITY.

     At the request of the Parent, the aggregate amount of the Commitments
may be increased at any time prior to the Termination Date to an aggregate
amount not in excess of $300,000,000 without any amendment to this
Agreement and without consent of the Banks, by the execution and delivery
by any new Bank which has been approved by the Parent and the Co-Lead
Arrangers (a "Joining Bank") of a Bank Joinder Agreement. On the effective
date of such joinder: (i) the Administrative Agent shall notify all other
Banks thereof, including the name, notice address and amount of Commitment
of the Joining Bank; (ii) each of the Borrowers shall execute and deliver
to the Administrative Agent, for re-delivery to the Banks, as appropriate,
a Syndicated Loan Note payable to the Joining Bank in the amount of its
Commitment, and a New Money Market Loan Note payable to each Bank in the
amount of the Money Market Limit, after giving effect to such joinder; and
(iii) the Joining Bank shall purchase from each other Bank a pro rata
participation in such other Bank's existing Syndicated Loans (but not its
Money Market Loans), including in any right of payment pursuant to Section
8.05 with respect thereto, so that, after giving effect thereto, each Bank
(including the Joining Bank) will have risk for such existing Loans equal
to its pro rata share of the Commitments, after giving effect to the
Commitment of the Joining Bank.  Loans made after the effective date of
such joinder shall not be subject to the foregoing, and the Joining Bank
shall fund its ratable share thereof in accordance with its commitment.

<PAGE>

                              ARTICLE III

                       CONDITIONS TO BORROWINGS

SECTION 3.01.  CONDITIONS TO FIRST BORROWING AND EFFECTIVENESS
     OF THIS AGREEMENT.

     (a)   CONDITIONS TO FIRST BORROWING.  The obligation of each Bank to
make a Loan on the occasion of the first Borrowing under the Original
Credit Agreement (or any amendment thereof, as applicable) was satisfied by
the satisfaction of each of the conditions set forth in Section 3.02 on the
date of such first Borrowing (or amendment) and receipt by the Agent of the
documents described below in this paragraph (a):

           (i)   from each of the parties to the Original Credit Agreement
of either (A) a duly executed counterpart of the Original Credit Agreement
signed by such party or (B) a facsimile transmission of such executed
counterpart (with the original to be sent to the Administrative Agent by
overnight courier);

           (ii)  a duly executed Syndicated Loan Note and a duly executed
Money Market Loan Note for the account of each Bank and a duly executed
Swing Loan Note for the account of Wachovia complying with the provisions
of Section 2.03;

           (iii) an opinion letter of Pircher, Nichols and Meeks, counsel
for the Parent and the Guarantors, dated as of the Original Closing Date,
substantially in the form of EXHIBIT B and covering such additional matters
relating to the transactions contemplated hereby as the Administrative
Agent or any Bank may reasonably request;

           (iv)  an opinion of Jones, Day, Reavis & Pogue, special counsel
for the Administrative Agent, dated as of the Original Closing Date,
substantially in the form of EXHIBIT C and covering such additional matters
relating to the transactions contemplated hereby as the Administrative
Agent may reasonably request;

           (v)   a certificate (the "Closing Certificate") substantially
in the form of EXHIBIT G), dated as of the Original Closing Date, signed by
an Executive Officer of the General Partner, to the effect that, (A) no
Default has occurred and is continuing on the date of the first Borrowing
and (B) the representations and warranties of the Parent and each Guarantor
contained in Article IV are true on and as of the date of the first
Borrowing hereunder;

           (vi)  all documents which the Administrative Agent or any Bank
may reasonably request relating to the existence of the Parent, the
partnership authority for and the validity of the Original Credit
Agreement, the Notes and any other matters relevant hereto, all in form and
substance satisfactory to the Administrative Agent, including, without
limitation, a certificate and agreement of the General Partner as of the
Original Closing Date substantially in the form of EXHIBIT H (the
"Officer's Certificate and Agreement"), signed by an Executive Officer of
the General Partner, and certified copies of the following respective items
for the Parent and the General Partner: (A) its Certificate of Declaration
of Trust, or Certificate of Limited Partnership, (B) its Declaration of
Trust, Partnership Agreement, (C) a certificate of the Secretary of State
of the State of its incorporation or creation as to its good standing as a
real estate investment trust or partnership created therein, and (D) the
action taken by its Board of Trustees of the General Partner authorizing
the execution, delivery and performance of the Loan Documents to which it
is a party;

<PAGE>

           (vii) a Notice of Borrowing or notification pursuant to
Section 2.03(e) of acceptance of one or more Money Market Quotes, as
applicable;

           (viii) receipt of the Borrowing Base Certificate for the Fiscal
Quarter ending on June 30, 1999;

           (ix)  receipt of the upfront fee payable to the Banks pursuant
to separate agreement between the Administrative Agent and the Parent;

           (x)   payment of all amounts payable under and termination of
the Pre-Existing Credit Agreement (but if any Euro-Dollar Loans are
outstanding under the Pre-Existing Credit Agreement on the Original Closing
Date, then (1) if there is to be a funding of a Syndicated Loan on the
Original Closing Date, any such Bank may net out from such funding the
amount of its existing Syndicated Loan, and such amount shall be deemed to
be due and payable under its Syndicated Loan Note for an Interest Period
equal to the remaining Interest Period under its outstanding Euro-Dollar
Loan under the Pre-Existing Credit Agreement);

           (xi)  payment of all fees payable on the Original Closing Date
to the Administrative Agent, the Syndication Agent and the Co-Lead
Arrangers under the Original Agents' Letter Agreement; and

           (xii) in addition, if the Parent desired funding of a Fixed
Rate Loan on the Original Closing Date, the Administrative Agent shall have
received, the requisite number of days prior to the Original Closing Date,
a funding indemnification letter satisfactory to it, pursuant to which
(i) the Administrative Agent and the Parent shall have agreed upon the
interest rate, amount of Borrowing and Interest Period for such Fixed Rate
Loan, and (ii) the Parent shall indemnify the Banks from any loss or
expense arising from the failure to close on the anticipated Original
Closing Date identified in such letter or the failure to borrow such Fixed
Rate Loan on such date.

     (b)   CONDITIONS TO EFFECTIVENESS OF THIS AGREEMENT.  All Loans
outstanding under the Original Credit Agreement on the Restatement Closing
Date shall continue in effect.  The effectiveness of this Agreement is
subject to the satisfaction of the conditions set forth below in this
paragraph (b) (as to the items described in clauses (i), (ii) and (iii), in
sufficient number of counterparts for delivery of a counterpart to each
Bank and retention of one counterpart by the Agent):

           (i)   from each of the parties hereto of either (A) a duly
executed counterpart of this Agreement signed by such party or (B) a
facsimile transmission of such executed counterpart (with the original to
be sent to the Administrative Agent by overnight courier);

           (ii)  from the Parent, a duly executed Guaranty in the form of
EXHIBIT K and from each of the Service Company Borrowers duly executed
Notes in the form of EXHIBITS A-3, A-4 and A-5  (all Loans made to the
Parent shall continue to be evidenced by the Notes of the Parent executed
and delivered pursuant to the Original Credit Agreement);

           (iii) an opinion letter of Pircher, Nichols and Meeks, counsel
for the Parent and the Service Company Borrowers, dated as of the
Restatement Closing Date, substantially in the form of EXHIBIT B, but
updated to cover this Agreement and the Service Company Borrowers, the
Notes of the Service Company Borrowers and the Guaranty executed by the
Parent and covering such additional matters relating to the transactions
contemplated hereby as the Administrative Agent or any Bank may reasonably
request;

<PAGE>

           (iv)  a Closing Certificate substantially in the form of
EXHIBIT G hereto, but updated to cover this Agreement and the Service
Company Borrowers, dated as of the Restatement Closing Date, signed by an
Executive Officer of the General Partner and an authorized officer of each
of the Service Company Borrowers, to the effect that, (A) no Default has
occurred and is continuing as of the Restatement Closing Date and (B) the
representations and warranties of the Borrowers and each Guarantor
contained in Article IV of this Agreement are true on and as of the
Restatement Closing Date;

           (v)   all documents which the Administrative Agent or any Bank
may reasonably request relating to the existence of the Borrowers, the
partnership or corporate authority for and the validity of this Agreement
and any other matters relevant hereto, all in form and substance
satisfactory to the Administrative Agent, including, without limitation, an
Officer's Certificate and Agreement substantially in the form of EXHIBIT H
hereto, but updated to cover this Agreement and the Service Company
Borrowers, from each of the General Partner and the executive officers each
of the Service Company Borrowers as of the Restatement Closing Date, signed
by an Executive Officer of the General Partner or an authorized officer of
the Service Company Borrowers, as applicable, and certified copies of the
following respective items for the Borrowers and the General Partner:
(A) for the General Partner and the Parent, stating that the Declaration of
Trust of the General Partner and Articles of Limited Partnership and
Partnership Agreement of the Parent have not been amended since the
Original Closing Date, or, if such documents have been amended since the
Original Closing Date, a copy of such amendments shall be attached to such
Officer's Certificate and Agreement; (b) as to the Service Company
Borrowers, its Certificate of Formation or Articles of Incorporation and
Operating Agreement or bylaws; (C) for all Borrowers, a certificate of the
Secretary of State of the State of incorporation or creation as to good
standing as a real estate investment trust, limited liability company,
partnership or corporation created therein, and (D) for all Borrowers, the
action taken by Board of Trustees of the General Partner or the Board of
Directors of the Service Company Borrowers authorizing the execution,
delivery and performance of this Agreement; and

           (vi)  payment of all fees payable on the Restatement Closing
Date to the Administrative Agent and Wachovia Securities, Inc. under the
Restatement Agent's Letter Agreement.

SECTION 3.02.  CONDITIONS TO ALL BORROWINGS.

     The obligation of each Bank to make a Loan on the occasion of each
Borrowing is subject to the satisfaction of the following conditions except
as expressly provided in the last sentence of this Section 3.02:

     (a)   receipt by the Administrative Agent of a Notice of Borrowing or

acceptance of a Transaction Rate Quote or notification pursuant to
Section 2.03(e) of acceptance of one or more Money Market Quotes, as
applicable;

     (b)   the fact that, immediately before and after such Borrowing, no
Default shall have occurred and be continuing;

     (c)   the fact that the representations and warranties of each
Borrower and each Guarantor contained in Article IV of this Agreement shall
be true on and as of the date of such Borrowing;

     (d)   the fact that, immediately after such Borrowing, the conditions
set forth in clauses (i) and (ii) of Section 2.01(a) shall have been
satisfied; and

<PAGE>

     (e)   the fact that, if such Borrowing is a Borrowing  by a Service
Company Borrower:

           (i) such Borrowing does not exceed the sum of:

                 (A)  20% of the lesser of (x) the Borrowing Base and (y)
the aggregate Commitments, less

                 (B)  the aggregate outstanding principal amount of the
Loans at the time of the proposed Borrowing by such Service Company
Borrower;  and

           (ii)  immediately after such Borrowing, the aggregate
Borrowings by the Service Company Borrowers does not exceed 20% of the
aggregate Commitments (the conditions set forth in clauses (i) and (ii)
being, collectively, the "Service Company Borrowing Limitations").

     Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrowers on the date of such Borrowing as to the truth and
accuracy of the facts specified in paragraphs (b), (c), (d) and (e) of this
Section.

                              ARTICLE IV

                    REPRESENTATIONS AND WARRANTIES

     The Borrowers and (by incorporation by reference in the Guaranty) the
Guarantors, as expressly stated, each represents and warrants that:

SECTION 4.01.  PARTNERSHIP, TRUST AND CORPORATE EXISTENCE AND POWER.

     (a)   Each Borrower a limited partnership, corporation or partnership
duly organized or incorporated, validly existing and in good standing under
the laws of the jurisdiction of its creation, is duly qualified to transact
business in every jurisdiction where, by the nature of its business, such
qualification is necessary, and has all partnership or corporate powers and
all governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted, except where any failure does
not have and would not reasonably be expected to cause a Material Adverse
Effect.

     (b)   The General Partner is a real estate investment trust duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its creation, is duly qualified to transact business in
every jurisdiction where, by the nature of its business, such qualification
is necessary, and has all trust powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as
now conducted, except where any failure does not have and would not
reasonably be expected to cause a Material Adverse Effect.  The only
general partner of  the Parent is and shall be AMLI Residential Properties
Trust.  The only assets of the General Partner (other than cash held for
distribution to its shareholders) are and shall be its interest in the
Parent and its interest in various partnerships in which it owns, directly
or indirectly, not more than 1% of the partnership interests and in which
Parent owns, directly or indirectly, all of the remaining partnership
interests.

     (c)   Each Guarantor is a corporation or partnership duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its creation, is duly qualified to transact business in every jurisdiction
where, by the nature of its business, such qualification is necessary, and
has all corporate powers and all governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted,
except where any failure does not have and would not reasonably be expected
to cause a Material Adverse Effect.

<PAGE>

SECTION 4.02.  CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO CONTRAVENTION.

     The execution, delivery and performance by each Borrower of this
Agreement, the Notes and the other Loan Documents to which it is a party
and by the Guarantors of the Guaranty and the Contribution Agreement
(i) are within each such Borrower's or such Guarantor's partnership or
corporate powers, (ii) have been duly authorized by all necessary
partnership or corporate action, (iii) require no action by or in respect
of or filing with, any governmental body, agency or official, (iv) do not
contravene, or constitute a default under, any provision of applicable law
or regulation or of the certificate of incorporation, certificate of
limited partnership, partnership agreement, or by-laws of any Borrower or
any Guarantor or of any agreement, judgment, injunction, order, decree or
other instrument binding upon the Borrowers or any Guarantor except where
such contravention or default does not have and would not reasonably be
expected to cause a Material Adverse Effect, and (v) do not result in the
creation or imposition of any Lien on any asset of the Borrowers or any of
Guarantor.

SECTION 4.03.  BINDING EFFECT.

     This Agreement constitutes a valid and binding agreement of the
Borrowers enforceable in accordance with its terms, and the Notes, the
Guaranty and the other Loan Documents, when executed and delivered in
accordance with this Agreement, will constitute valid and binding
obligations of the Borrowers and the Guarantor parties thereto, enforceable
in accordance with their respective terms, provided that the enforceability
hereof and thereof is subject in each case to general principles of equity
and to bankruptcy, insolvency and similar laws affecting the enforcement of
creditors' rights generally.

SECTION 4.04.  FINANCIAL INFORMATION.

     (a)   The balance sheet of the General Partner and the consolidated
balance sheet of the Parent as of December 31, 1999 and the related
consolidated statements of income, shareholders' equity and cash flows for
the Fiscal Year then ended, reported on by KPMG Peat Marwick LLP,  and the
unaudited consolidated financial statements of the Parent for the interim
period ended June 30, 2000, copies of which have been delivered to each of
the Banks, fairly present, in conformity with GAAP, the financial position
of the General Partner and the consolidated financial position of the
Parent and its Consolidated Subsidiaries as of such dates and the (with
respect to the Parent, its consolidated) results of operations and cash
flows for such periods stated.

     (b)   Since December 31, 1999 there has been no event, act, condition
or occurrence having a Material Adverse Effect.

SECTION 4.05.  NO LITIGATION.

     There is no action, suit or proceeding pending, or to the knowledge
of the Borrowers threatened, against or affecting the Borrowers or any of
the Subsidiaries before any court or arbitrator or any governmental body,
agency or official which could have a Material Adverse  Effect or which in
any manner draws into question the validity of or could impair the ability
of the Borrowers to perform its obligations under, this Agreement, the
Notes or any of the other Loan Documents.

<PAGE>

SECTION 4.06.  COMPLIANCE WITH ERISA.

     (a)   The Borrowers and each member of the Controlled Group have
fulfilled their obligations under the minimum funding standards of ERISA
and the Code with respect to each Plan and are in compliance in all
material respects with the presently applicable provisions of ERISA and the
Code, and have not incurred any liability to the PBGC or a Plan under Title
IV of ERISA.

     (b)   None of the Borrowers nor any member of the Controlled Group is
or ever has been obligated to contribute to any Multiemployer Plan.

SECTION 4.07.  COMPLIANCE WITH LAWS; PAYMENT OF TAXES.

     To the best of the Borrowers' knowledge, the Borrowers and the
Subsidiaries are in compliance with all applicable laws, regulations and
similar requirements of governmental authorities, except where such
compliance is being contested in good faith through appropriate
proceedings, except where (i) such compliance is being contested in good
faith through appropriate proceedings or (ii) any failure does not have and
would not reasonably be expected to cause a Material Adverse Effect.  There
have been filed on behalf of the Borrowers and the Subsidiaries all
material Federal, state and local income, excise, property and other tax
returns which are required to be filed by them and all taxes due pursuant
to such returns or pursuant to any assessment received by or on behalf of
the Borrowers or any Subsidiary have been paid, except:  (A) ad valorem
taxes not due and payable; and (B) other liabilities, if (1) they are being
contested in good faith and against which the relevant Borrower, Guarantor
or Subsidiary has set up reserves in accordance with GAAP, or (2) the
aggregate amount involved is not in excess of $5,000,000.  The charges,
accruals and reserves on the books of each Borrower and the Subsidiaries in
respect of taxes or other governmental charges are, in the opinion of the
Borrowers, adequate.  United States income tax returns of the General
Partner, the Borrowers and the Subsidiaries have not been examined.

SECTION 4.08.  SUBSIDIARIES, CO-INVESTMENT PARTNERSHIPS
     AND SERVICE COMPANIES.

     Each of the Parent's Subsidiaries, Co- Investment Partnerships and
Service Companies is a corporation, partnership or limited liability
company duly organized, validly existing and in good standing under the
laws of its jurisdiction of creation, is duly qualified to transact
business in every jurisdiction where, by the nature of its business, such
qualification is necessary, and has all corporate or partnership powers and
all governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted, except where any failure does
not have and would not reasonably be expected to cause a Material Adverse
Effect.  As of the Restatement Closing Date, the Parent has no Subsidiaries
or Co-Investment Partnerships except for those Subsidiaries and Co-
Investment Partnerships listed on Schedule 4.08, which accurately sets
forth each such Subsidiary's and Co-Investment Partnership's complete name
and jurisdiction of creation.  The Parent will promptly notify the
Administrative Agent of the creation of any new Subsidiary, and each such
new Subsidiary shall be subject to the provisions of Section 5.28.

SECTION 4.09.  INVESTMENT COMPANY ACT.

     None of the Borrowers or the Subsidiaries is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.

<PAGE>

SECTION 4.10.  PUBLIC UTILITY HOLDING COMPANY ACT.

     Neither the General Partner, any of the Borrowers nor any of the
Subsidiaries is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", as such terms are defined in
the Public Utility Holding Company Act of 1935, as amended.

SECTION 4.11.  OWNERSHIP OF PROPERTY; LIENS.

     Each of the General Partner, the Borrowers and the Parent's
Consolidated Subsidiaries has title to its properties sufficient for the
conduct of its business, and none of such property which constitutes
Eligible Property is subject to any Lien except as permitted in
Section 5.18.

SECTION 4.12.  NO DEFAULT.

     None of the General Partner, the Borrowers or any of the Parent's
Consolidated Subsidiaries is in default under or with respect to any
agreement, instrument or undertaking to which it is a party or by which it
or any of its property is bound which could have or cause a Material
Adverse Effect.  No Default or Event of Default has occurred and is
continuing.

SECTION 4.13.  FULL DISCLOSURE.

     All information heretofore furnished by the Borrowers to the
Administrative Agent or any Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Borrowers to the Administrative
Agent or any Bank will be, true, accurate and complete in every material
respect or based on reasonable estimates on the date as of which such
information is stated or certified.  The Borrowers have disclosed to the
Banks in writing any and all facts which could have or cause a Material
Adverse Effect.

SECTION 4.14.  ENVIRONMENTAL MATTERS.

     (a)   Except as set forth in Schedule 4.14 (and, as approved by the
Administrative Agent and the Banks in writing, as such Schedule 4.14 is
amended or supplemented from time to time by the Borrowers), to the best of
the Borrowers' knowledge, none of the Borrowers and none of the Parent's
Subsidiaries is subject to any Environmental Liability which could have or
cause a Material Adverse Effect and none of the Borrowers or the Parent's
Subsidiaries has been designated as a potentially responsible party under
CERCLA or under any state statute similar to CERCLA, which designation or
all such designations in effect at any time, taken as a whole, could have
or would cause a Material Adverse Effect.  None of the Properties has been
identified on any current or proposed (i) National Priorities List under 40
C.F.R. Section 300, (ii) CERCLIS list or (iii) any list arising from a
state statute similar to CERCLA.

     (b)   Except as set forth in Schedule 4.14 (and, as approved by the
Administrative Agent and the Banks in writing, as such Schedule 4.14 is
amended or supplemented from time to time by the Borrowers), to the best of
the Borrowers' knowledge, no Hazardous Materials have been or are being
used, produced, manufactured, processed, treated, recycled, generated,
stored, disposed of, managed or otherwise handled at, or shipped or
transported to or from the Properties or are otherwise present at, on, in
or under the Properties, or, to the best of the knowledge of the Borrowers,

<PAGE>

at or from any adjacent site or facility, except for Hazardous Materials,
such as cleaning solvents, pesticides, petroleum product and other
materials used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed of, managed, or otherwise handled in the
ordinary course of business in material compliance with all applicable
Environmental Requirements.

     (c)   Each of the Borrowers and each of the Parent's Subsidiaries and
Affiliates has procured all Environmental Authorizations necessary for the
conduct of its business, and is in compliance with all Environmental
Requirements in connection with the operation of the Properties and the
respective businesses of each Borrower and of each of the Parent's
Subsidiaries and Affiliates, except where any such non-compliance would not
have a Material Adverse Effect.

SECTION 4.15.  CAPITAL STOCK.

     All Capital Stock, beneficial interests, debentures, bonds, notes and
all other securities of the General Partner, the Parent and the
Subsidiaries presently issued and outstanding are validly and properly
issued in all material respects in accordance with all applicable laws,
including, but not limited to, the "Blue Sky" laws of all applicable states
and the federal securities laws.  The issued shares of Capital Stock of the
Parent's Wholly Owned Subsidiaries are owned by the Parent free and clear
of any Lien or adverse claim.  At least a majority of the issued shares of
Capital Stock of each of the Parent's other Subsidiaries (other than Wholly
Owned Subsidiaries) is owned by the Parent, and all such shares which are
owned by the Parent are owned by it free and clear of any Lien or adverse
claim.

SECTION 4.16.  MARGIN STOCK.

     None of the Borrowers and none of the Subsidiaries is engaged
principally, or as a significant part of its business, in the business of
purchasing or carrying any Margin Stock, and no part of the proceeds of any
Loan will be used to purchase or carry any Margin Stock or to extend credit
to others for the purpose of purchasing or carrying any Margin Stock, or be
used for any purpose which violates, or which is inconsistent with, the
provisions of Regulation T, U or X.

SECTION 4.17.  INSOLVENCY.

     After giving effect to the execution and delivery of the Loan
Documents and the making of the Loans under this Agreement: (i) none of the
Borrowers will (x) be "insolvent," within the meaning of such term as used
in O.C.G.A. Section 18-2-22 or as defined in Section 101 of the "Bankruptcy
Code", or Section 2 of either the "UFTA" or the "UFCA", or as defined or
used in any "Other Applicable Law" (as those terms are defined below), or
(y) be unable to pay its debts generally as such debts become due within
the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA or
Section 6 of the UFCA, or (z) have an unreasonably small capital to engage
in any business or transaction, whether current or contemplated, within the
meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA or
Section 5 of the UFCA; and (ii) none of the obligations of any of the
Borrowers under the Loan Documents and with respect to the Loans will be
rendered avoidable under any Other Applicable Law. For purposes of this
Section 4.17, "Bankruptcy Code" means Title 11 of the United States Code,
"UFTA" means the Uniform Fraudulent Transfer Act, "UFCA" means the Uniform
Fraudulent Conveyance Act, and "Other Applicable Law" means any other
applicable law pertaining to fraudulent transfers or acts voidable by
creditors, in each case as such law may be amended from time to time.

<PAGE>

SECTION 4.18.  INSURANCE.

     Each of the Borrowers and the Subsidiaries has (either in the name of
such Borrower's or such Subsidiary's own name), with financially sound and
reputable insurance companies, all-risk insurance in at least such amounts
as are usually obtained in the same general area by companies of
established repute engaged in the same or similar business.

SECTION 4.19.  REAL ESTATE INVESTMENT TRUST; SOLE GENERAL PARTNER.

     The General Partner is qualified under the Code as a real estate
investment trust and is the sole general partner of the Parent.

                               ARTICLE V

                               COVENANTS

     The Borrowers and (by incorporation by reference in the Guaranty) the
Guarantors agree that, so long as any Bank has any Commitment hereunder or
any amount payable hereunder or under any Note remains unpaid:

SECTION 5.01.  INFORMATION.

     The relevant Borrowers will deliver to each of the Banks:

     (a)   as soon as available and in any event within 90 days after the
end of each Fiscal Year, a consolidated balance sheet of the General
Partner and a consolidated balance sheet of the Parent and the Guarantors
as of the end of such Fiscal Year and the related (with respect to the
Parent, its consolidated) statements of income, shareholders' equity and
cash flows for such Fiscal Year, setting forth in each case in comparative
form the figures for the previous fiscal year, in either case audited by
KPMG Peat Marwick LLP or other independent public accountants of nationally
recognized standing, with such audit opinion to be free of material
exceptions and qualifications not acceptable to the Required Banks;

     (b)   as soon as available and in any event within 45 days after the
end of each of the first 3 Fiscal Quarters of each Fiscal Year, a (with
respect to the Parent, its consolidated) balance sheet of the Parent and
the Guarantors as of the end of such Fiscal Quarter and the related
statement of income and statement of cash flows for such Fiscal Quarter and
for the portion of the Fiscal Year ended at the end of such Fiscal Quarter,
setting forth in each case in comparative form the figures for the
corresponding Fiscal Quarter and the corresponding portion of the previous
Fiscal Year, all certified (subject to normal year-end adjustments) as to
fairness of presentation, GAAP and consistency by an Executive Officer of
the General Partner;

     (c)   simultaneously with the delivery of each set of financial
statements referred to in paragraphs (a) and (b) above, a certificate,
substantially in the form of EXHIBIT F (a "Compliance Certificate"), of an
Executive Officer of the General Partner (i) setting forth in reasonable
detail the calculations required to establish whether the Parent was in
compliance with the requirements of Sections 5.05, 5.15, 5.16, 5.17, and
5.20 through 5.26, inclusive, on the date of such financial statements and
(ii) stating whether any Default exists on the date of such certificate
and, if any Default then exists, setting forth the details thereof and the
action which the Parent is taking or proposes to take with respect thereto;

<PAGE>

     (d)   within 5 Domestic Business Days after any Borrower becomes
aware of the occurrence of any Default, a certificate of the chief
financial officer or the chief accounting officer of the relevant Borrower
setting forth the details thereof and the action which the relevant
Borrower is taking or proposes to take with respect thereto, which
certificate shall indicate that it is a "Notice of Default";

     (e)   promptly upon the mailing thereof to the shareholders of the
Parent generally, copies of all financial statements, reports and proxy
statements so mailed;

     (f)   promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and annual, quarterly or monthly reports
which the Parent shall have filed with the Securities and Exchange
Commission;

     (g)   if and when any member of the Controlled Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined
in Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is required to give
notice of any such reportable event; (ii) receives notice of complete or
partial withdrawal liability under Title IV of ERISA; (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to terminate or appoint
a trustee to administer any Plan; or (iv) contributes to or becomes
obligated to contribute to a Multiemployer Plan, or incurs any withdrawal
liability with respect to a Multiemployer Plan; THEN a copy of any such
notice referred to in clauses (i) through (iii) of this paragraph, and a
detailed description of the amount and the circumstances of such
contribution or withdrawal liability obligation referred to in clause
(iv) of this paragraph;

     (h)   within 60 days after the end of each Fiscal Quarter, and more
frequently, at the election of the Parent, a Borrowing Base Certificate as
of the last day of the Fiscal Quarter just ended;

     (i)   simultaneously with the delivery of each set of financial
statements referred to in paragraphs (a) and (b) above, operating
statements for each Eligible Property for the period covered by such
financial statements; and

     (j)   from time to time such additional information regarding the
financial position or business of the Parent and the Guarantors as the
Administrative Agent, at the request of any Bank, may reasonably request.

SECTION 5.02.  INSPECTION OF PROPERTY, BOOKS AND RECORDS.

     The Borrowers, the Guarantors and the General Partner will (i) keep
proper books of record and account in which full, true and correct entries
in conformity with GAAP shall be made of all dealings and transactions in
relation to its business and activities; and (ii) permit representatives of
any Bank at such Bank's expense prior to the occurrence of a Default and at
the Borrowers' expense after the occurrence of a Default to visit and
inspect any of their respective properties, to examine and make abstracts
from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants.  The Borrowers, the General
Partner and the Guarantors agree to cooperate and assist in such visits and
inspections, in each case at such reasonable times and as often as may
reasonably be desired.

<PAGE>

SECTION 5.03.  MAINTENANCE OF EXISTENCE.

     The Borrowers, the General Partner and the Guarantors will, subject
to Sections 5.04 and 5.05, each maintain its respective partnership,
corporate and trust existence and carry on its respective business in
substantially the same manner and in substantially the same fields as such
business is now carried on and maintained.

SECTION 5.04.  DISSOLUTION.

     None of the Borrowers and none of the Guarantors shall suffer or
permit dissolution or liquidation either in whole or in part or redeem or
retire any shares of its own stock or that of any Guarantor, except for
Partner Conversions.

SECTION 5.05.  CONSOLIDATIONS, MERGERS AND SALES OF ASSETS.

     Neither any of the Borrowers, the General Partner nor any of the
Guarantors will consolidate or merge with or into, or acquire all or
substantially all of the assets or stock of any other Person, or sell,
lease or otherwise transfer all or any substantial part of its assets to,
any other Person, PROVIDED that:

           (i)   the Parent may merge with another Person if (x) such
Person was organized under the laws of the United States of America or one
of its states, (y) the Parent is the limited partnership surviving such
merger and (z) immediately after giving effect to such merger, no Default
shall have occurred and be continuing;

           (ii)  Guarantors which are Subsidiaries may merge with one
another and may sell, lease or otherwise transfer assets to the Parent;

           (iii) the foregoing limitation on the acquisition of all or
substantially all the assets or stock of another Person shall not prohibit,
during any Fiscal Quarter, the acquisition of all or substantially all of
the assets or stock of another Person unless the aggregate assets or stock
acquired in a single acquisition or series of related acquisitions of all
or substantially all of the assets or stock of another Person by the
Borrowers, the General Partner and the Guarantors during such Fiscal
Quarter constituted more than 20% of Gross Asset Value at the end of the
most recent Fiscal Quarter immediately preceding such Fiscal Quarter; and

           (iv)  the foregoing limitation on the sale, lease or other
transfer of assets shall not prohibit, during any Fiscal Quarter, a
transfer of assets (in a single transaction or in a series of related
transactions) unless the aggregate assets to be so transferred, when
combined with all other assets transferred, by the Borrowers, the General
Partner and the Guarantors during such Fiscal Quarter and the immediately
preceding 3 Fiscal Quarters, constituted more than 20% of Gross Asset Value
at the end of the most recent Fiscal Year immediately preceding such Fiscal
Quarter.

     In the case of any Guarantor that is a Subsidiary and which transfers
substantially all of its assets pursuant to clause (iv) of the preceding
sentence, and in the case of any Guarantor that is a Subsidiary the stock
of which is being sold and with respect to which clause (iv) would have
been satisfied if the transaction had been a sale of assets of such
Guarantor, such Subsidiary Guarantor may dissolve and shall be entitled to
obtain from the Administrative Agent a written release from the Guaranty,
PROVIDED that it can demonstrate to the reasonable satisfaction of the
Administrative Agent that (A) it has repaid in full all Debt owed to the
Borrowers or any other Guarantor and (B) such sale was for cash and in the

<PAGE>

case of an asset transfer, the net cash proceeds received in connection
therewith are being distributed to the Borrowers as part of such
dissolution, and upon obtaining such written release, it shall no longer be
a Guarantor for any purpose hereunder.

SECTION 5.06.  USE OF PROCEEDS.

     The proceeds of the Loans may be used for construction financing,
acquisitions, working capital and general commercial purposes; PROVIDED,
HOWEVER, that no portion of the proceeds of the Loans will be used by any
Borrower or any Subsidiary (i) in connection with, whether directly or
indirectly, any tender offer for, or other acquisition of, stock of any
corporation with a view towards obtaining control of such other
corporation, unless such tender offer or other acquisition is to be made on
a negotiated basis with the approval of the Board of Directors of the
Person to be acquired, and the provisions of Section 5.17 would not be
violated, (ii) directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any Margin Stock, or
(iii) for any purpose in violation of any applicable law or regulation.

SECTION 5.07.  COMPLIANCE WITH LAWS; PAYMENT OF TAXES.

     The Borrowers, the General Partner and the Guarantors will, and will
cause each member of the Controlled Group to, comply with applicable laws
(including but not limited to ERISA), regulations and similar requirements
of governmental authorities (including but not limited to PBGC), except
where (i) the necessity of such compliance is being contested in good faith
through appropriate proceedings diligently pursued or (ii) any failure does
not have and would not reasonably be expected to cause a Material Adverse
Effect.  The Borrowers, the General Partner and the Guarantors will pay
promptly when due all taxes, assessments, governmental charges, claims for
labor, supplies, rent and other obligations which, if unpaid, might become
a lien against the Property of a Borrower or any Guarantor, except
(i) liabilities being contested in good faith and against which, if
requested by the Administrative Agent, the relevant Borrower will set up
reserves in accordance with GAAP, or (2) the aggregate amount involved is
not in excess of $5,000,000.

SECTION 5.08.  INSURANCE.

     The Borrowers, the General Partner and the Guarantors will maintain
(either in the name of the Parent, the General Partner or in such
Guarantor's own name), with financially sound and reputable insurance
companies, all-risk insurance on all its property in at least such amounts
as are usually obtained in the same general area by companies of
established repute engaged in the same or similar business.

SECTION 5.09.  CHANGE IN FISCAL YEAR.

     Each of the Borrowers and each of the Guarantors agrees that it will
not change its Fiscal Year without the consent of the Required Banks.

SECTION 5.10.  MAINTENANCE OF PROPERTY.

     Each Borrower, the General Partner and each Guarantor shall maintain
in all material respects all of its Properties and assets in good
condition, repair and working order, ordinary wear and tear excepted.

<PAGE>

SECTION 5.11.  ENVIRONMENTAL NOTICES.

     Each Borrower and each Guarantor shall furnish to the Banks and the
Administrative Agent prompt written notice of all Environmental
Liabilities, pending, threatened or anticipated Environmental Proceedings,
Environmental Notices, Environmental Judgments and Orders, and
Environmental Releases at, on, in, under or in any way affecting the
Properties or any adjacent property, and all facts, events, or conditions
that could lead to any of the foregoing, which has had or would reasonably
be expected to cause a Material Adverse Effect.

SECTION 5.12.  ENVIRONMENTAL MATTERS.

     The Borrowers and the Guarantors will not, and will not permit any
Third Party to, use, produce, manufacture, process, treat, recycle,
generate, store, dispose of, manage at, or otherwise handle, or ship or
transport to or from the Properties any Hazardous Materials except for
Hazardous Materials such as cleaning solvents, pesticides and other similar
materials used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed, managed, or otherwise handled in minimal
amounts in the ordinary course of business in compliance with all
applicable Environmental Requirements, except where any failure does not
have and would not reasonably be expected to cause a Material Adverse
Effect.

SECTION 5.13.  ENVIRONMENTAL RELEASE.

     Each Borrower and each Guarantor agrees that upon the occurrence of
an Environmental Release at or on any of the Properties it will act
immediately to investigate the extent of, and to take appropriate remedial
action to eliminate, such Environmental Release, whether or not ordered or
otherwise directed to do so by any Environmental Authority, except where
any Environmental Release does not have and would not reasonably be
expected to cause a Material Adverse Effect.

SECTION 5.14.  TRANSACTIONS WITH AFFILIATES.

     Neither the General Partner, any of the Borrowers nor any of the
Guarantors shall enter into, or be a party to, any transaction with any
Affiliate of such Borrower or such Guarantor (which Affiliate is not the
General Partner, a Borrower or a Guarantor), except as permitted by law and
in the ordinary course of business and pursuant to reasonable terms and are
no less favorable to the General Partner, such Borrower or such Subsidiary
than would be obtained in a comparable arm's length transaction with a
Person which is not an Affiliate.

SECTION 5.15.  RESTRICTED PAYMENTS.

     The Parent's Restricted Payments in any calendar year shall not
exceed 95% of Funds From Operations for such period, unless (i) the Parent
must pay out an amount in excess of 95% of Funds From Operations to permit
the General Partner to preserve its status as a real estate investment
trust under the applicable provision of the Code, or (ii) the Parent
declares one or more capital gains dividends within such calendar year (in
which event the amount of additional Restricted Payments that may be made
as a result of such declaration as provided in this clause (ii) shall not
exceed the greater of (A) the income tax liability of the Parent's partners
with respect thereto and (B) $1,500,000).  In the event that the General
Partner receives an Investment Grade Debt Rating and so long as that rating
(or a better rating) is affirmed during each year, the Parent's Restricted
Payments in any calendar year will be limited to 100% of Funds from
Operations for such calendar year with the same exceptions contained in
clauses (i) and (ii) of this Section 5.15.

<PAGE>

SECTION 5.16.  LOANS OR ADVANCES.

     Neither any of the Borrowers, the General Partner nor any of the
Guarantors shall make loans or advances to any Person except as permitted
by Section 5.17 and except:

           (i)   deposits required by government agencies or public
utilities;

           (ii)  loans or advances from the Parent to a Guarantor or from
a Guarantor to a Parent or another Guarantor;

           (iii) loans and advances made to (A) AMLI Institutional
Advisors, Inc. as part of its initial capital structure in the amount of
$500,000, and (B) AMLI Management Company as part of its initial capital
structure in the amount of $3,000,000;

           (iv)  loans or advances to employees, officers and directors
not exceeding $1,000,000 in the aggregate principal amount outstanding at
any time, in each case made in the ordinary course of business, but
excluding loans and advances described in clause (v);

           (v)   loans and advances to employees, officers and directors
to enable them to buy partnership units in the Parent or stock in the
General Partner which are secured by a pledge of such stock, so long as the
aggregate amount of all such loans does not exceed $10,000,000;

           (vi)  working capital loans and advances to AMLI Residential
Construction, Inc. for use in the ordinary course of business and
consistent with past practices, so long as the aggregate principal amount
outstanding at any time for all such loans and advances is not in excess of
$15,000,000;

           (vii) loans and advances to Co-Investment Partnerships in an
aggregate amount which, together with Investments in Co-Investment
Partnerships, does not exceed 30% of Gross Asset Value; and/or

           (viii) other loans and advances by the Borrowers, the General
Partner and the Guarantors to any Person other than a Co-Investment
Partnership which (x) are evidenced by notes (and, if requested by the
Administrative Agent, acting at the direction of the Required Banks, with
such notes, together with any related mortgage, have been assigned to and
pledged with the Administrative Agent, for the benefit of itself and the
Banks, as security for the payment of all obligations of the Borrowers to
the Administrative Agent and the Banks hereunder) and (y) are in an amount
which, together with Investments permitted by clause (vii) of Section 5.17,
do not exceed 5% of Gross Asset Value as of the end of the most recent
Fiscal Quarter;

PROVIDED that after giving effect to the making of any loans, advances or
deposits permitted by this Section, no Default shall be in existence or be
created thereby.

SECTION 5.17.  INVESTMENTS.

     Investments of the Parent as of the Restatement Closing Date (other
than in Subsidiaries and Co-Investment Partnerships, which are set forth in
Schedule 4.08), are set forth on Schedule 5.17.  Neither any of the
Borrowers, the General Partner nor any of the Guarantors shall make
Investments after the Restatement Closing Date in any Person except as
permitted by Section 5.16 and except Investments in:

           (i)   direct obligations of the United States Government
maturing within one year;

<PAGE>

           (ii)  certificates of deposit issued by a commercial bank whose
credit is satisfactory to the Administrative Agent;

           (iii) commercial paper rated A1 or the equivalent thereof by
S&P or P1 or the equivalent thereof by Moody's and in either case maturing
within 6 months after the date of acquisition;

           (iv)  tender bonds the payment of the principal of and interest
on which is fully supported by a letter of credit issued by a United States
bank whose long-term certificates of deposit are rated at least A or the
equivalent thereof by S&P and A or the equivalent thereof by Moody's;

           (v)   Investments consisting of the acquisition of all or
substantially all of the assets or stock of another Person permitted by
Section 5.05(iii);

           (vi)  Investments in Co-Investment Partnerships permitted by
Section 5.26; and/or

           (vii) other Investments by the Borrowers, the General Partner
and the Guarantors, other than in Co-Investment Partnerships, in an amount
which, together with loans and advances permitted by clause (viii) of
Section 5.16, do not exceed 5% of Gross Asset Value as of the end of the
most recent Fiscal Quarter;

PROVIDED, HOWEVER, immediately after giving effect to the making of any
Investment, no Default shall have occurred and be continuing.

SECTION 5.18.  LIENS ON ELIGIBLE PROPERTY.

     Neither any Borrower nor any Guarantor will create, assume or suffer
to exist any Lien on any Eligible Property now owned or hereafter acquired
by it, except: (i) Liens incidental to the conduct of its business or the
ownership of its assets which (x) do not secure Debt and (y) do not in the
aggregate materially detract from the value of its assets or materially
impair the use thereof in the operation of its business; and (ii) as
permitted by the proviso contained in the definition of Eligible Property.

SECTION 5.19.  RESTRICTIONS ON ABILITY OF GUARANTORS TO PAY DIVIDENDS.

     The Parent shall not permit any Guarantor to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective any
contractual encumbrance or restriction on the ability of any such Guarantor
to (i) pay any dividends or make any other distributions on its Capital
Stock or any other interest or (ii) make or repay any loans or advances to
the Borrowers or the parent of such Guarantor.

SECTION 5.20.  RATIO OF TOTAL CONSOLIDATED LIABILITIES TO
     UNDEPRECIATED BOOK ASSET VALUE.

     The ratio of Total Consolidated Liabilities to Undepreciated Book
Asset Value shall at all times be equal to or less than 0.60 to 1.0.

SECTION 5.21.  RATIO OF TOTAL SECURED DEBT TO GROSS ASSET VALUE.

     The ratio of Total Secured Debt to Gross Asset Value shall at all
times be equal to or less than 0.45 to 1.0.

<PAGE>

SECTION 5.22.  RATIO OF EBITDA TO CONSOLIDATED INTEREST EXPENSE.

     The ratio of EBITDA to Consolidated Interest Expense for the Fiscal
Quarter just ended will not be less than 2.0 to 1.0, calculated at the end
of each Fiscal Quarter.

SECTION 5.23.  RATIO OF UNENCUMBERED ASSETS TO UNSECURED FUNDED DEBT.

     The ratio of Unencumbered Assets to Unsecured Funded Debt shall at
all times be equal to or greater than 1.75 to 1.00.

SECTION 5.24.  RATIO OF UNSECURED NET OPERATING INCOME TO
     UNSECURED INTEREST EXPENSE.

     The ratio of Unsecured Net Operating Income to Unsecured Interest
Expense shall at all times be equal to or greater than 2.0 to 1.0.

SECTION 5.25.  RATIO OF EBITDA TO CONSOLIDATED FIXED CHARGES.

     The ratio of EBITDA to Consolidated Fixed Charges for the Fiscal
Quarter just ended and the 3 immediately preceding Fiscal Quarters will not
be less than 1.75 to 1.0, calculated at the end of each Fiscal Quarter.

SECTION 5.26.  CO-INVESTMENT PARTNERSHIPS DEPRECIATED BOOK VALUE.

     The amount of the depreciated book value set forth on the line item
designated as "Investments in Partnerships" on the Parent's consolidated
balance sheet, together with the aggregate amount of loans and advances to
Co-Investment Partnerships permitted by clause (vii) of Section 5.16, shall
not at any time exceed 30% of Gross Asset Value.

SECTION 5.27.  STATUS AS A REIT.

     The General Partner shall at all times maintain its status as a real
estate investment trust under the Code and remain sole general partner of
the Parent. Neither the Parent nor the General Partner will agree to amend
or otherwise modify the provisions of Section 3.2 of the limited
partnership agreement of the Parent, as in effect on the date of this
Agreement, without the prior written consent of the Required Banks (which
consent the Banks hereby agree not to unreasonably withhold or delay).

SECTION 5.28.  NEW SUBSIDIARIES TO BECOME GUARANTORS.

     Any Subsidiary acquired or created after June 27, 1997, (other than
Co-Investment Partnerships), must become a Guarantor promptly upon its
acquisition or creation, in each case by (x) executing and delivering to
the Administrative Agent a counterpart of the Guaranty and a counterpart of
the Contribution Agreement or a joinder agreement with respect thereto,
thereby becoming a party to each of them, (y) delivering to the
Administrative Agent an opinion of counsel to such Subsidiary, in
substantially the form and substance of EXHIBIT B, but limited to such
Subsidiary and the Guaranty and Contribution Agreement, and excluding
paragraph 2 thereof, and (z) delivering to the Administrative Agent
documents pertaining to the Subsidiary reasonably requested by the
Administrative Agent of the types described in paragraph (f) of
Section 3.01, but relating to the Guaranty and the Contribution Agreement.

<PAGE>

SECTION 5.29.  SERVICE COMPANY DISTRIBUTIONS.

     The Parent agrees that (i) it shall not amend or otherwise modify any
corporate charter of or similar agreement relating to any Service Company
which would decrease the amount of preferred stock dividends or yield with
respect thereto which would be received by the Parent, and (ii) shall hold
at all times an Economic Percentage in each Service Company equal to at
least 75%.

SECTION 5.30.  ADDITIONAL DEBT.

     Neither any Borrower, the General Partner nor any Guarantor will
create, incur, assume or suffer to exist any Debt except (i) Debt in
existence on June 27, 1997; (ii) Debt of any Guarantor to a Borrower,
(iii) publicly held debt having a maturity later than the Termination Date,
and (iv) other Debt which is privately held and which does not constitute
revolving credit.

                              ARTICLE VI

                               DEFAULTS

SECTION 6.01.  EVENTS OF DEFAULT.

     If one or more of the following events ("EVENTS OF DEFAULT") shall
have occurred and be continuing:

     (a)   any Borrower shall fail to pay when due any principal of any
Loan or shall fail to pay any interest on any Loan within 5 Domestic
Business Days after such interest shall become due, or shall fail to pay
any fee or other amount payable hereunder within 5 Domestic Business Days
after such fee or other amount becomes due; or

     (b)   any Borrower or the General Partner shall fail to observe or
perform any covenant contained in Sections 5.01(d), 5.01(h), 5.02(ii), 5.03
through 5.06, inclusive, Sections 5.16 through 5.28, inclusive, or

     (c)   any Borrower, the General Partner or any Guarantor shall fail
to observe or perform any covenant or agreement contained or incorporated
by reference in this Agreement (other than those covered by paragraph
(a) or (b) above) or the Guaranty and such failure shall not have been
cured within 30 days after the earlier to occur of (i) written notice
thereof has been given to the Parent, the relevant Borrower, the General
Partner or such Guarantor by the Administrative Agent at the request of any
Bank or (ii) the Parent, the relevant Borrower, the General Partner or such
Guarantor otherwise becomes aware of any such failure; or

     (d)   any representation, warranty, certification or statement made
by any of the Borrowers, the General Partner or any Guarantor in Article IV
of this Agreement or the Guaranty or in any certificate, financial
statement or other document delivered pursuant to this Agreement or the
Guaranty shall prove to have been incorrect or misleading in any material
respect when made (or deemed made); or

     (e)   any Borrower, the General Partner or any Guarantor shall fail
to make any payment in respect of Debt in an aggregate principal amount
outstanding in excess of $10,000,000 (other than the Notes), or under any
Hedging Agreement with a termination value in excess of $10,000,000
(computed in accordance with a method approved by the International Swap
Dealers Association and agreed to by such Person in the applicable Hedging
Agreement) when due or within any applicable grace period; PROVIDED,
HOWEVER, that there shall be excluded from the foregoing any Non-Recourse
Mortgage Debt which, on a cumulative basis since June 27, 1997, does not
exceed $25,000,000 in aggregate principal amount; or

<PAGE>

     (f)   any event or condition shall occur which results in the
acceleration of the maturity of Debt (other than the voluntary termination
of a credit facility, by a Borrower or the creditor thereunder, while no
uncured "default" or "event of default" (as defined therein) has occurred
and then exists) in an aggregate principal amount outstanding in excess of
$10,000,000 of any Borrower, the General Partner or any Guarantor
(including, without limitation, any required mandatory prepayment or "put"
of such Debt to any Borrower, the General Partner or any Guarantor) or
enables (or, with the giving of notice or lapse of time or both, would
enable) the holders of such Debt or commitment or any Person acting on such
holders' behalf to accelerate the maturity thereof or terminate any such
commitment (including, without limitation, any required mandatory
prepayment or "put" of such Debt to any Borrower, the General Partner or
any Guarantor); PROVIDED, HOWEVER, that there shall be excluded from the
foregoing any Non-Recourse Mortgage Debt which does not exceed $25,000,000
in aggregate principal amount; or

     (g)   any Borrower, the General Partner or any 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 admit in writing its inability or failure generally, to
pay its debts as they become due, or shall take any action to authorize any
of the foregoing; or

     (h)   an involuntary case or other proceeding shall be commenced
against the Borrower, the General Partner or any 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 any Borrower, the General Partner or any Guarantor
under the federal bankruptcy laws as now or hereafter in effect; or

     (i)   any Borrower, the General Partner, any Guarantor or any member
of the Controlled Group shall fail to pay when due any material amount
which it shall have become liable to pay to the PBGC or to a Plan under
Title IV of ERISA; or notice of intent to terminate a Plan or Plans shall
be filed under Title IV of ERISA by any Borrower, the General Partner, any
Guarantor or any member of the Controlled Group, any plan administrator or
any combination of the foregoing; or the PBGC shall institute proceedings
under Subsection (c) of Section 4041 of ERISA to terminate or to cause a
trustee to be appointed to administer any such Plan or Plans or a
proceeding shall be instituted by a fiduciary of any such Plan or Plans to
enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall not
have been dismissed within 30 days thereafter; or a condition shall exist
by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any such Plan or Plans must be terminated; or

     (j)   one or more judgments or orders for the payment of money in an
aggregate amount in excess of $10,000,000 shall be rendered against any
Borrower, the General Partner or any Guarantor and such judgment or order
shall continue unsatisfied and unstayed for a period of 30 days; or

     (k)   a federal tax lien shall be filed against any Borrower, the
General Partner or any Guarantor under Section 6323 of the Code or a lien
of the PBGC shall be filed against any Borrower, the General Partner or any
Guarantor under Section 4068 of ERISA and in either case such lien shall
remain undischarged for a period of 25 days after the date of filing; or

<PAGE>

     (l)   the occurrence of any event, act, occurrence, or condition
which the Required Banks determine either does or has a reasonable
probability of causing a Material Adverse Effect.

then, and in every such event, (i) the Administrative Agent shall, if
requested by the Required Banks, by notice to the Borrowers terminate the
Commitments and the obligation to make Swing Loans and they shall thereupon
terminate, (ii) any Bank may terminate its obligation to fund a Money
Market Loan in connection with any relevant Money Market Quote, and
(iii) the Administrative Agent shall, if requested by the Required Banks,
by notice to the Borrowers declare the Notes (together with accrued
interest thereon), and all other amounts payable hereunder and under the
other Loan Documents, to be, and the Notes (together with accrued interest
thereon), and all other amounts payable hereunder and under the other Loan
Documents shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrowers together with interest at the Default Rate
accruing on the principal amount thereof from and after the date of such
Event of Default; PROVIDED that if any Event of Default specified in
paragraph (g) or (h) above occurs with respect to a Borrower, without any
notice to such Borrower or the Parent or any other act by the
Administrative Agent or the Banks, the Commitments and the obligations to
make Swing Loans shall thereupon terminate and the Notes (together with
accrued interest thereon) and all other amounts payable hereunder and under
the other Loan Documents shall automatically and without notice become
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrowers
together with interest thereon at the Default Rate accruing on the
principal amount thereof from and after the date of such Event of Default.
Notwithstanding the foregoing, the Administrative Agent shall have
available to it all other remedies at law or equity, and shall exercise any
one or all of them at the request of the Required Banks.

SECTION 6.02.  NOTICE OF DEFAULT.

     The Administrative Agent shall give notice to the Borrowers of any
Default under Section 6.01(c) promptly upon being requested to do so by any
Bank and shall thereupon notify all the Banks thereof.

                              ARTICLE VII

                       THE ADMINISTRATIVE AGENT

SECTION 7.01.  APPOINTMENT; POWERS AND IMMUNITIES.

     Each Bank hereby irrevocably appoints and authorizes the
Administrative Agent to act as its administrative agent hereunder and under
the other Loan Documents with such powers as are specifically delegated to
the Administrative Agent by the terms hereof and thereof, together with
such other powers as are reasonably incidental thereto.  The Administrative
Agent: (a) shall have no duties or responsibilities except as expressly set
forth in this Agreement and the other Loan Documents, and shall not by
reason of this Agreement or any other Loan Document be a trustee for any
Bank; (b) shall not be responsible to the Banks for any recitals,
statements, representations or warranties contained in this Agreement or
any other Loan Document, or in any certificate or other document referred
to or provided for in, or received by any Bank under, this Agreement or any
other Loan Document, or for the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document
or any other document referred to or provided for herein or therein or for
any failure by any Borrower to perform any of its obligations hereunder or
thereunder; (c) shall not be required to initiate or conduct any litigation

<PAGE>

or collection proceedings hereunder or under any other Loan Document except
to the extent requested by the Required Banks, and then only on terms and
conditions satisfactory to the Administrative Agent, and (d) shall not be
responsible for any action taken or omitted to be taken by it hereunder or
under any other Loan Document or any other document or instrument referred
to or provided for herein or therein or in connection herewith or
therewith, except for its own gross negligence or willful misconduct.  The
Administrative Agent may employ agents and attorneys-in-fact and shall not
be responsible for the negligence or misconduct of any such agents  or
attorneys-in-fact selected by it with reasonable care.  The provisions of
this Article VII are solely for the benefit of the Administrative Agent and
the Banks, and no Borrower shall have any rights as a third party
beneficiary of any of the provisions hereof.  In performing its functions
and duties under this Agreement and under the other Loan Documents, the
Administrative Agent shall act solely as agent of the Banks and does not
assume and shall not be deemed to have assumed any obligation towards or
relationship of agency or trust with or for any Borrower.  The duties of
the Administrative Agent shall be ministerial and administrative in nature,
and the Administrative Agent shall not have by reason of this Agreement or
any other Loan Document a fiduciary relationship in respect of any Bank.

SECTION 7.02.  RELIANCE BY ADMINISTRATIVE AGENT.

     The Administrative Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopier, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper
Person or Persons, and upon advice and statements of legal counsel,
independent accountants or other experts selected by the Administrative
Agent.  As to any matters not expressly provided for by this Agreement or
any other Loan Document, the Administrative Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and
thereunder in accordance with instructions signed by the Required Banks,
and such instructions of the Required Banks in any action taken or failure
to act pursuant thereto shall be binding on all of the Banks.

SECTION 7.03.  DEFAULTS.

     The Administrative Agent shall not be deemed to have knowledge of the
occurrence of a Default or an Event of Default (other than the nonpayment
of principal of or interest on the Loans) unless the Administrative Agent
has received notice from a Bank or any Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default".  In
the event that the Administrative Agent receives such a notice of the
occurrence of a Default or an Event of Default, the Administrative Agent
shall give prompt notice thereof to the Banks.  The Administrative Agent
shall give each Bank prompt notice of each nonpayment of principal of or
interest on the Loans whether or not it has received any notice of the
occurrence of such nonpayment.  The Administrative Agent shall (subject to
Section 9.06) take such action hereunder with respect to such Default or
Event of Default as shall be directed by the Required Banks, PROVIDED that,
unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to
such Default or Event of Default as it shall deem advisable in the best
interests of the Banks.

<PAGE>

SECTION 7.04.  RIGHTS OF ADMINISTRATIVE AGENT AND ITS AFFILIATES AS A BANK.

     With respect to the Loans made by the Administrative Agent and any
Affiliate of the Administrative Agent, Wachovia in its capacity as a Bank
hereunder and any Affiliate of the Administrative Agent or such Affiliate
in its capacity as a Bank hereunder shall have the same rights and powers
hereunder as any other Bank and may exercise the same as though Wachovia
were not acting as the Administrative Agent, and the term "Bank" or "Banks"
shall, unless the context otherwise indicates, include Wachovia in its
individual capacity and any Affiliate of the Administrative Agent in its
individual capacity.  The Administrative Agent and any Affiliate of the
Administrative Agent may (without having to account therefor to any
Bank) accept deposits from, lend money to and generally engage in any kind
of banking, trust or other business with the General Partner or any
Borrower (and any of the Borrowers' Affiliates) as if Wachovia were not
acting as the Administrative Agent, and the Administrative Agent and any
Affiliate of the Administrative Agent may accept fees and other
consideration from the Borrowers (in addition to any agency fees and
arrangement fees heretofore agreed to between the Borrowers and the
Administrative Agent) for services in connection with this Agreement or any
other Loan Document or otherwise without having to account for the same to
the Banks.

SECTION 7.05.  INDEMNIFICATION.

     Each Bank severally agrees to indemnify the Administrative Agent and
the Syndication Agent, to the extent the Administrative Agent, the
Syndication Agent and the Documentation Agent, shall not have been
reimbursed by the Borrowers, ratably in accordance with its Commitment, for
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including, without limitation, counsel
fees and disbursements) or disbursements of any kind and nature whatsoever
which may be imposed on, incurred by or asserted against the Administrative
Agent, the Syndication Agent or the Documentation Agent in any way relating
to or arising out of this Agreement or any other Loan Document or any other
documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (excluding, unless an Event of
Default has occurred and is continuing, the normal administrative costs and
expenses incident to the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof or thereof or any such other
documents; PROVIDED that no Bank shall be liable for any of the foregoing
to the extent they arise from the gross negligence or willful misconduct of
the Administrative Agent, the Syndication Agent or the Documentation Agent;
and provided further that no Designated Bank shall be liable for any
payment under this Section 7.05 so long as, and to the extent that, its
Designating Bank makes such payments.  If any indemnity furnished to the
Administrative Agent, the Syndication Agent or the Documentation Agent for
any purpose shall, in the opinion of the Administrative Agent, the
Syndication Agent or the Documentation Agent, be insufficient or become
impaired, the Administrative Agent, the Syndication Agent or the
Documentation Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional
indemnity is furnished.

SECTION 7.06.  CONSEQUENTIAL DAMAGES.

     NEITHER THE ADMINISTRATIVE AGENT, THE SYNDICATION AGENT, THE
DOCUMENTATION AGENT NOR ANY BANK SHALL BE RESPONSIBLE OR LIABLE TO ANY
BANK, ANY BORROWER OR ANY OTHER PERSON OR ENTITY FOR ANY PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.

<PAGE>

SECTION 7.07.  PAYEE OF NOTE TREATED AS OWNER.

     The Administrative Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a written notice
of the assignment or transfer thereof shall have been filed with the
Administrative Agent and the provisions of Section 9.08(c) have been
satisfied.  Any requests, authority or consent of any Person who at the
time of making such request or giving such authority or consent is the
holder of any Note shall be  conclusive and binding on any subsequent
holder, transferee or assignee of that Note or of any Note or Notes issued
in exchange therefor or replacement thereof.

SECTION 7.08.  NONRELIANCE ON ADMINISTRATIVE AGENT AND OTHER BANKS.

     Each Bank agrees that it has, independently and without reliance on
the Administrative Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of
each Borrower and decision to enter into this Agreement and that it will,
independently and without reliance upon the Administrative Agent or any
other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Loan
Documents.  The Administrative Agent shall not be required to keep itself
(or any Bank) informed as to the performance or observance by the Borrowers
of this Agreement or any of the other Loan Documents or any other document
referred to or provided for herein or therein or to inspect the properties
or books of the Borrowers or any other Person.  Except for notices, reports
and other documents and information expressly required to be furnished to
the Banks by the Administrative Agent hereunder or under the other Loan
Documents, the Administrative Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Borrowers or
any other Person (or any of their Affiliates) which may come into the
possession of the Administrative Agent.

SECTION 7.09.  FAILURE TO ACT.

     Except for action expressly required of the Administrative Agent
hereunder or under the other Loan Documents, the Administrative Agent shall
in all cases be fully justified in failing or refusing to act hereunder and
thereunder unless it shall receive further assurances to its satisfaction
by the Banks of their indemnification obligations under Section 7.05
against any and all liability and expense which may be incurred by the
Administrative Agent by reason of taking, continuing to take, or failing to
take any such action.

SECTION 7.10.  RESIGNATION OR REMOVAL OF ADMINISTRATIVE AGENT.

     Subject to the appointment and acceptance of a successor
Administrative Agent as provided below, the Administrative Agent may resign
at any time by giving notice thereof to the Banks and the Parent and the
Administrative Agent may be removed at any time with or without cause by
the Required Banks.  Upon any such resignation or removal, the Required
Banks shall have the right to appoint a successor Administrative Agent,
subject to the consent of the Parent (which shall not be unreasonably
withheld or delayed), except that no such consent shall be required during
the continuance of a Default. If no successor Administrative Agent shall
have been so appointed by the Required Banks and shall have accepted such
appointment within 30 days after the retiring Administrative Agent's notice
of resignation or the Required Banks' removal of the retiring Administra-
tive Agent, then the retiring Administrative Agent may, on behalf of the
Banks, appoint a successor  Administrative Agent, subject to the consent of

<PAGE>

the Parent (which shall not be unreasonably withheld or delayed), except
during the continuance of a Default.  Any successor Administrative Agent
shall be a bank which has a combined capital and surplus of at least
$500,000,000.  Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its
duties and obligations hereunder.  After any retiring Administrative
Agent's resignation or removal hereunder as Administrative Agent, the
provisions of this Article VII shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was
acting as the Administrative Agent hereunder.

SECTION 7.11.  SYNDICATION AGENT AND DOCUMENTATION AGENT.

     The Syndication Agent and the Documentation Agent, in their
respective capacities as such, shall have no duties or responsibilities
under this Agreement or any of the other Loan Documents.

                             ARTICLE VIII

                 CHANGE IN CIRCUMSTANCES; COMPENSATION

SECTION 8.01.  BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR.

     If on or prior to the first day of any Interest Period:

     (a)   the Administrative Agent determines that deposits in Dollars
(in the applicable amounts) are not being offered in the relevant market
for such Interest Period, or

     (b)   the Required Banks advise the Administrative Agent that the
London Interbank Offered Rate as determined by the Administrative Agent
will not adequately and fairly reflect the cost to such Banks of funding
the Euro-Dollar Loans for such Interest Period, the Administrative Agent
shall forthwith give notice thereof to the Borrowers and the Banks,
whereupon until the Administrative Agent notifies the Borrowers that the
circumstances giving rise to such suspension no longer exist, the
obligations of the Banks to make Euro-Dollar Loans specified in such notice
shall be suspended.  Unless a Borrower notifies the Administrative Agent at
least 2 Domestic Business Days before the date of any Borrowing of such
Euro-Dollar Loans for which a Notice of Borrowing has previously been given
that it elects not to borrow on such date, such Borrowing shall instead be
made as a Base Rate Borrowing.

SECTION 8.02.  ILLEGALITY.

     If, after the date hereof, the adoption of any applicable law, rule
or regulation, or any change therein or any existing or future law, rule or
regulation, or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof (any such agency being
referred to as an "Authority" and any such event being referred to as a
"Change  of Law"), or compliance by any Bank (or its Lending Office) with
any request or directive (whether or not having the force of law) of any
Authority shall make it unlawful or impossible for any Bank (or its Lending
Office) to make, maintain or fund its Euro-Dollar Loans and such Bank shall
so notify the Administrative Agent, the Administrative Agent shall
forthwith give notice thereof to the other Banks and the Borrowers,
whereupon until such Bank notifies the Borrowers and the Administrative

<PAGE>

Agent that the circumstances giving rise to such suspension no longer
exist, the obligation of such Bank to make Euro-Dollar Loans shall be
suspended.  Before giving any notice to the Administrative Agent pursuant
to this Section, such Bank shall designate a different Lending Office if
such designation will avoid the need for giving such notice and will not,
in the judgment of such Bank, be otherwise disadvantageous to such Bank.
If such Bank shall determine that it may not lawfully continue to maintain
and fund any of its outstanding Euro-Dollar Loans to maturity and shall so
specify in such notice, the Borrowers shall immediately prepay in full the
then outstanding principal amount of each Euro-Dollar Loan of such Bank,
together with accrued interest thereon and any amount due such Bank
pursuant to Section 8.05(a).  Concurrently with prepaying each such Euro-
Dollar Loan, the Borrowers shall borrow a Base Rate Loan in an equal
principal amount from such Bank (on which interest and principal shall be
payable contemporaneously with the related Euro-Dollar Loans of the other
Banks), and such Bank shall make such a Base Rate Loan.

SECTION 8.03.  INCREASED COST AND REDUCED RETURN.

     (a)   If after the date hereof, a Change of Law or compliance by any
Bank (or its Lending Office) with any request or directive (whether or not
having the force of law) of any Authority:

           (i)   shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation, any
such requirement imposed by the Board of Governors of the Federal Reserve
System, but excluding with respect to any Euro-Dollar Loan any such
requirement included in an applicable Euro-Dollar Reserve
Percentage) against assets of, deposits with or for the account of, or
credit extended by, any Bank (or its Lending Office); or

           (ii)  shall impose on any Bank (or its Lending Office) or on
the United States market for certificates of deposit or the London
interbank market any other condition affecting its Fixed Rate Loans, its
Notes or its obligation to make Fixed Rate Loans;

and the result of any of the foregoing is to increase the cost to such Bank
(or its Lending Office) of making or maintaining any Loan, or to reduce the
amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Notes with respect thereto, by an
amount deemed by such Bank to be material, then, within 15 days after
demand by such Bank (with a copy to the Administrative Agent), the
Borrowers shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction.

     (b)   If any Bank shall have determined that after the date hereof
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof, or compliance by any Bank (or its Lending
Office) with any request or directive regarding capital adequacy (whether
or not having the force of law) of any Authority, has or would have the
effect of reducing the rate of return on such Bank's capital as a
consequence of its obligations hereunder to a level below that which such
Bank could have achieved but for such adoption, change or compliance
(taking into consideration such Bank's policies with respect to capital
adequacy) by an amount deemed by such Bank to be material, then from time
to time, within 15 days after demand by such Bank, the Borrowers shall pay
to such Bank such additional amount or amounts as will compensate such Bank
for such reduction.

<PAGE>

     (c)   Each Bank will promptly notify the Borrowers and the
Administrative Agent of any event of which it has knowledge, occurring
after the date hereof, which will entitle such Bank to compensation
pursuant to this Section and will designate a different Lending Office if
such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank.  A certificate of any Bank claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error.  In determining such amount, such Bank may use any
reasonable averaging and attribution methods.

     (d)   he provisions of this Section 8.03 shall be applicable with
respect to any Participant, Assignee or other Transferee, and any
calculations required by such provisions shall be made based upon the
circumstances of such Participant, Assignee or other Transferee.

     (e)   No Bank, Assignee or other Transferee will charge any Borrower
for increased costs or reduced returns pursuant to Sections 8.03(a) or
(b) at a higher rate than such Bank, Assignee or other Transferee charges
its other similarly situated borrowers or customers.

SECTION 8.04.  BASE RATE LOANS SUBSTITUTED FOR EURO- DOLLAR LOANS.

     If (i) the obligation of any Bank to make or maintain any Euro-Dollar
Loans has been suspended pursuant to Section 8.02 or (ii) any Bank has
demanded compensation under Section 8.03, and the Borrowers shall, by at
least 5 Euro-Dollar Business Days' prior notice to such Bank through the
Administrative Agent, have elected that the provisions of this
Section shall apply to such Bank, then, unless and until such Bank notifies
the Borrowers that the circumstances giving rise to such suspension or
demand for compensation no longer apply:

     (a)   all Loans which would otherwise be made by such Bank as Euro-
Dollar Loans shall be made instead as Base Rate Loans (in all cases
interest and principal on such Loans shall be payable contemporaneously
with the related Euro-Dollar Loans of the other Banks), and

     (b)   after each of its Euro-Dollar Loans has been repaid, all
payments of principal which would otherwise be applied to repay such Euro-
Dollar Loans shall be applied to repay its Base Rate Loans instead.

SECTION 8.05.  COMPENSATION.

     Upon the request of any Bank, delivered to the Borrowers and the
Administrative Agent, the Borrowers shall pay to such Bank such amount or
amounts as shall compensate such Bank for any loss, cost or expense
incurred by such Bank as a result of:

     (a)   any payment or prepayment (pursuant to Section 2.10, 2.11,
6.01, 8.02 or otherwise) of a Fixed Rate Loan on a date other than the last
day of an Interest Period for such Loan; or

     (b)   any failure by a Borrower to prepay a Fixed Rate Loan on the
date for such prepayment specified in the relevant notice of prepayment
hereunder; or

     (c)   any failure by a Borrower to borrow a Fixed Rate Loan on the
date for the Fixed Rate Borrowing of which such Fixed Rate Loan is a part
specified in the applicable Notice of Borrowing delivered pursuant to
Section 2.02 or notification of acceptance of Money Market Quotes pursuant
to Section 2.03(e);

<PAGE>

such compensation to include, without limitation, an amount equal to the
excess, if any, of (x) the amount of interest which would have accrued on
the amount so paid or prepaid or not prepaid or borrowed for the period
from the date of such payment, prepayment or failure to prepay or borrow to
the last day of the then current Interest Period for such Fixed Rate Loan
(or, in the case of a failure to prepay or borrow, the Interest Period for
such Fixed Rate Loan which would have commenced on the date of such failure
to prepay or borrow) at the applicable rate of interest for such Fixed Rate
Loan provided for herein over (y) the amount of interest (as reasonably
determined by such Bank) such Bank would have paid on deposits in Dollars
of comparable amounts having terms comparable to such period placed with it
by leading banks in the London interbank market (if such Fixed Rate Loan is
a Euro-Dollar Loan).

                              ARTICLE IX

                             MISCELLANEOUS

SECTION 9.01.  NOTICES.

     All notices, requests and other communications to any party hereunder
shall be in writing (including telecopier or similar writing, except as
hereafter expressly provided) and shall be given to such party at its
address or telecopier number set forth on the signature pages hereof or
such other address or telecopier number as such party may hereafter specify
for the purpose by notice to each other party.  Each such notice, request
or other communication shall be effective (i) if given by telecopier, when
such telecopy is transmitted to the telecopier number specified in this
Section and the confirmation is received, (ii) if given by mail, 72 hours
after such communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or (iii) if given by any other means, when
delivered at the address specified in this Section; PROVIDED that notices
to the Administrative Agent under Article II or Article VIII shall not be
effective until received.  Notwithstanding the foregoing, notices pursuant
to Section 6.01 and service of process pursuant to Section 9.16(d) shall
not be given by telecopier.

SECTION 9.02.  NO WAIVERS.

     No failure or delay by the Administrative Agent or any Bank in
exercising any right, power or privilege hereunder or under any Note or
other Loan Document shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.  The rights and
remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.

SECTION 9.03.  EXPENSES; DOCUMENTARY TAXES.

     The Borrowers shall pay (i) all out-of-pocket expenses of the
Administrative Agent, including fees and disbursements of special counsel
for the Administrative Agent, in connection with the preparation of this
Agreement and the other Loan Documents, any waiver or consent hereunder or
thereunder or any amendment hereof or thereof or any Default or alleged
Default hereunder or thereunder and (ii) if a Default occurs, all out-of-
pocket expenses incurred by the Administrative Agent and the Banks,
including fees and disbursements of counsel, in connection with such
Default and collection and  other enforcement proceedings resulting
therefrom, including out-of-pocket expenses incurred in enforcing this
Agreement and the other Loan Documents.  The Borrowers shall indemnify the
Administrative Agent and each Bank against any transfer taxes, documentary
taxes, assessments or charges made by any Authority by reason of the
execution and delivery of this Agreement or the other Loan Documents.

<PAGE>

SECTION 9.04.  INDEMNIFICATION.

     The Borrowers shall indemnify the Administrative Agent, the
Syndication Agent,  the Documentation Agent, the Banks and each Affiliate
thereof and their respective directors, officers, employees and agents
from, and hold each of them harmless against, any and all losses,
liabilities, claims or damages to which any of them may become subject,
insofar as such losses, liabilities, claims or damages arise out of or
result from any actual or proposed use by the Borrowers of the proceeds of
any extension of credit by any Bank hereunder or breach by any Borrower of
this Agreement or any other Loan Document or from any investigation,
litigation (including, without limitation, any actions taken by the
Administrative Agent or any of the Banks to enforce this Agreement or any
of the other Loan Documents) or other proceeding (including, without
limitation, any threatened investigation or proceeding) relating to the
foregoing, and the Borrowers shall reimburse the Administrative Agent, the
Syndication Agent, the Documentation Agent and each Bank, and each
Affiliate thereof and their respective directors, officers, employees and
agents, upon demand for any expenses (including, without limitation, legal
fees) incurred in connection with any such investigation or proceeding; but
excluding any such losses, liabilities, claims, damages or expenses
incurred by reason of the gross negligence or willful misconduct of the
Person to be indemnified.

SECTION 9.05.  SETOFF; SHARING OF SETOFFS.

     (a)   Each Borrower hereby grants to the Administrative Agent and
each Bank (and Wachovia, as to the Swing Loans) a lien for all indebtedness
and obligations owing to them from the Borrowers upon all deposits or
deposit accounts, of any kind, or any interest in any deposits or deposit
accounts thereof, now or hereafter pledged, mortgaged, transferred or
assigned to the Administrative Agent or any such Bank or otherwise in the
possession or control of the Administrative Agent or any such Bank for any
purpose for the account or benefit of the Borrowers and including any
balance of any deposit account or of any credit of the Borrowers with the
Administrative Agent or any such Bank, whether now existing or hereafter
established hereby authorizing the Administrative Agent and each Bank at
any time or times with or without prior notice to apply such balances or
any part thereof to such of the indebtedness and obligations owing by the
Borrowers to the Banks and/or the Administrative Agent then past due and in
such amounts as they may elect, and whether or not the collateral, if any,
or the responsibility of other Persons primarily, secondarily or otherwise
liable may be deemed adequate.  For the purposes of this paragraph, all
remittances and property shall be deemed to be in the possession of the
Administrative Agent or any such Bank as soon as the same may be put in
transit to it by mail or carrier or by other bailee.

     (b)   Each Bank agrees that if it shall, by exercising any right of
setoff or counterclaim or resort to collateral security or otherwise,
receive payment of a proportion of the aggregate amount of principal and
interest owing with respect to the Note held by it which is greater than
the proportion received by any other Bank in respect of the aggregate
amount of all principal and interest owing with respect to the Note held by
such other Bank, the Bank receiving such proportionately greater payment
shall purchase such participations in the Notes held by the other Banks
owing to such other Banks, and such other adjustments shall be made, as may
be required so that all such payments of principal and interest with
respect to the Notes held by the Banks owing to such other Banks shall be
shared by the Banks pro rata; PROVIDED that (i) nothing in this
Section shall impair the right of any Bank to exercise any right of setoff
or counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of the Borrowers other than its
indebtedness under the Notes, and (ii) if all or  any portion of such
payment received by the purchasing Bank is thereafter recovered from such
purchasing Bank, such purchase from each other Bank shall be rescinded and

<PAGE>

such other Bank shall repay to the purchasing Bank the purchase price of
such participation to the extent of such recovery together with an amount
equal to such other Bank's ratable share (according to the proportion of
(x) the amount of such other Bank's required repayment to (y) the total
amount so recovered from the purchasing Bank) of any interest or other
amount paid or payable by the purchasing Bank in respect of the total
amount so recovered.  Each Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a participation
in a Note, whether or not acquired pursuant to the foregoing arrangements,
may exercise rights of setoff or counterclaim and other rights with respect
to such participation as fully as if such holder of a participation were a
direct creditor of each Borrower in the amount of such participation.

SECTION 9.06.  AMENDMENTS AND WAIVERS.

     (a)   Any provision of this Agreement, the Notes or any other Loan
Documents may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrowers and the Required Banks
(and, if the rights or duties of the Administrative Agent are affected
thereby, by the Administrative Agent); provided that, no such amendment or
waiver shall, unless signed by all Banks, (i) change the Commitment of any
Bank or subject any Bank to any additional obligation, (ii) change the
principal of or rate of interest on any Loan or any fees (other than fees
payable to the Administrative Agent) hereunder, (iii) change the date fixed
for any payment of principal of or interest on any Loan or any fees
hereunder, (iv) change the amount of principal, interest or fees due on any
date fixed for the payment thereof, (v) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Notes, or
the percentage of Banks, which shall be required for the Banks or any of
them to take any action under this Section or any other provision of this
Agreement, (vi) change the manner of application of any payments made under
this Agreement or the Notes, (vii) release or substitute all or any
substantial part of the collateral (if any) held as security for the Loans,
or (viii) release any Guarantee given to support payment of the Loans, or
(ix) change the definition of "Borrowing Base", or (x) change any provision
of Section 9.06(a).

     (b)   The Borrowers will not solicit, request or negotiate for or
with respect to any proposed waiver or amendment of any of the provisions
of this Agreement except through the Administrative Agent, unless each Bank
shall be informed thereof by the Borrowers and shall be afforded an
opportunity of considering the same and shall be supplied by the Borrowers
with sufficient information to enable it to make an informed decision with
respect thereto.  Executed or true and correct copies of any waiver or
consent effected pursuant to the provisions of this Agreement shall be
delivered by the Borrowers to each Bank forthwith following the date on
which the same shall have been executed and delivered by the requisite
percentage of Banks.  The Borrowers will not, directly or indirectly, pay
or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, to any Bank (in its capacity as
such) as consideration for or as an inducement to the entering into by such
Bank of any waiver or amendment of any of the terms and provisions of this
Agreement unless such remuneration is concurrently paid, on the same terms,
ratably to all such Banks.

     (c)   The Designated Bank hereby appoints Designating Bank as
Designated Bank's agent and attorney in fact and grants to the Designating
Bank an irrevocable power of attorney, coupled with an interest, to receive
payments made for the benefit of the Designated Bank under this Agreement,
to deliver and receive all communications and notices under this Agreement
and other Loan Documents and to exercise on the Designated Bank's behalf
all rights to vote and to grant and make approvals, waivers, consent of
amendments to or under this Agreement or other Loan Documents.  Any
document executed by such agent on the Designated Bank's behalf in
connection with this Agreement or other Loan Documents shall be binding on
the Designated Bank.  Each of the Borrowers, the Administrative Agent and
each of the Banks may rely on and are beneficiaries of the preceding
provisions.

<PAGE>

SECTION 9.07.  NO MARGIN STOCK COLLATERAL.

     Each of the Banks represents to the Administrative Agent and each of
the other Banks that it in good faith is not, directly or indirectly (by
negative pledge or otherwise), relying upon any Margin Stock as collateral
in the extension or maintenance of the credit provided for in this
Agreement.

SECTION 9.08.  SUCCESSORS AND ASSIGNS.

     (a)   The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns; PROVIDED that none of the Borrowers may assign or otherwise
transfer any of its rights under this Agreement.

     (b)   Any Bank may at any time sell to one or more Persons (each a
"Participant") participating interests in any Loan owing to such Bank, any
Note held by such Bank, any Commitment hereunder or any other interest of
such Bank hereunder.  In the event of any such sale by a Bank of a
participating interest to a Participant, such Bank's obligations under this
Agreement shall remain unchanged, such Bank shall remain solely responsible
for the performance thereof, such Bank shall remain the holder of any such
Note for all purposes under this Agreement, and the Borrowers and the
Administrative Agent shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under this
Agreement.  In no event shall a Bank that sells a participation be
obligated to the Participant to take or refrain from taking any action
hereunder except that such Bank may agree that it will not (except as
provided below), without  the consent of the Participant, agree to (i) the
change of any date fixed for the payment of principal of or interest on the
related loan or loans, (ii) the change of the amount of any principal,
interest or fees due on any date fixed for the payment thereof with respect
to the related loan or loans, (iii) the change of the principal of the
related loan or loans, (iv) any change in the rate at which either interest
is payable thereon or (if the Participant is entitled to any part
thereof) fee is payable hereunder from the rate at which the Participant is
entitled to receive interest or fee (as the case may be) in respect of such
participation, (v) the release or substitution of all or any substantial
part of the collateral (if any) held as security for the Loans, or (vi) the
release of any Guarantee given to support payment of the Loans.  Each Bank
selling a participating interest in any Loan, Note, Commitment or other
interest under this Agreement, other than a Money Market Loan or Money
Market Note or participating interest therein, shall, within 10 Domestic
Business Days of such sale, provide the relevant Borrower and the
Administrative Agent with written notification stating that such sale has
occurred and identifying the Participant and the interest purchased by such
Participant.  The Borrowers agree that each Participant shall be entitled
to the benefits of Article VIII with respect to its participation in Loans
outstanding from time to time.

     (c)   Any Bank may at any time assign to one or more banks or
financial institutions (each an "Assignee") all or a proportionate part of
its rights and obligations under this Agreement, the Notes and the other
Loan Documents, and such Assignee shall assume all such rights and
obligations, pursuant to an Assignment and Acceptance, executed by such
Assignee, such transferor Bank and the Administrative Agent (and, in the
case of an Assignee that is not then a Bank, subject to clause (iii) below,
by the Parent); PROVIDED that (i) no interest may be sold by a Bank
pursuant to this paragraph (c) unless the Assignee shall agree to assume
ratably equivalent portions of the transferor Bank's Commitment, (ii) if a
Bank is assigning only a portion of its Commitment, then, the amount of the
Commitment being assigned (determined as of the effective date of the
assignment) shall be in an amount not less than $5,000,000, (iii) except
during the continuance of a Default, no interest may be sold by a Bank
pursuant to this paragraph (c) to any Assignee that is not then a Bank (or

<PAGE>

an Affiliate or Related Fund of a Bank) without the consent of the Parent
and the Administrative Agent, which consent shall not be unreasonably
withheld, and (iv) a Bank may not have more than 3 Assignees that are not
then Banks (or an Affiliate or Related Fund thereof) at any one time.  Upon
(A) execution of the Assignment and Acceptance by such transferor Bank,
such Assignee, the Administrative Agent and (if applicable) the Parent,
(B) delivery of an executed copy of the Assignment and Acceptance to the
Parent and the Administrative Agent, (C) payment by such Assignee to such
transferor Bank of an amount equal to the purchase price agreed between
such transferor Bank and such Assignee, and (D) payment of a processing and
recordation fee of $2,500 to the Administrative Agent, such Assignee shall
for all purposes be a Bank party to this Agreement and shall have all the
rights and obligations of a Bank under this Agreement to the same extent as
if it were an original party hereto with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from
its obligations hereunder to a corresponding extent, and no further consent
or action by the Parent, the Banks or the Administrative Agent shall be
required.  Upon the consummation of any transfer to an Assignee pursuant to
this paragraph (c), the transferor Bank, the Administrative Agent and the
Parent shall make appropriate arrangements so that, if required, a new Note
is issued to each of such Assignee and such transferor Bank.

     (d)   Subject to the provisions of Section 9.09, each Borrower
authorizes each Bank to disclose to any Participant, Assignee or other
transferee (each a "Transferee") and any prospective Transferee any and all
financial information in such Bank's possession concerning the relevant
Borrower which has been delivered to such Bank by the Borrowers pursuant to
this Agreement or which has been delivered to such Bank by the Borrowers in
connection with such Bank's credit evaluation prior to entering into this
Agreement.

     (e)   No Transferee shall be entitled to receive any greater payment
under Section 8.03 than the transferor Bank would have been entitled to
receive with respect to the rights transferred, unless such transfer is
made with a Borrower's prior written consent or by reason of the provisions
of Section 8.02 or 8.03 requiring such Bank to designate a different
Lending Office under certain circumstances or at a time when the
circumstances giving rise to such greater payment did not exist.

     (f)   Anything in this Section 9.08 to the contrary notwithstanding,
any Bank may assign and pledge all or any portion of the Loans and/or
obligations owing to it to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any Operating Circular issued
by such Federal Reserve Bank, PROVIDED that any payment in respect of such
assigned Loans and/or obligations made by a Borrower to the assigning
and/or pledging Bank in accordance with the terms of this Agreement shall
satisfy such Borrower's obligations hereunder in respect of such assigned
Loans and/or obligations to the extent of such payment.  No such assignment
shall release the assigning and/or pledging Bank from its obligations
hereunder.

     (g)   Any Bank may at any time designate not more than one Designated
Bank to fund Money Market Loans on behalf of such Designating Bank subject
to the terms of Section 9.08(c), and the provisions of Section 9.08(c)
shall not apply to such designation.  No Bank may have more than one
Designated Bank at any time.  Such designation may occur either by the
execution of the signature pages hereof by such Bank and Designated Bank
next to the appropriate "Designating Bank" and "Designated Bank" captions,
or by execution by such parties of a Designation Agreement subsequent to
the date hereof; provided, that any Bank and its Designated Bank executing
the signatures pages hereof as "Designating Bank" and "Designated Bank",
respectively, on the date hereof shall be deemed to have executed a
Designation Agreement, and shall be bound by the respective
representations, warranties and covenants contained therein, and such
designation shall be conclusively deemed to be acknowledged by the relevant

<PAGE>

Borrower and the Administrative Agent.  The parties to each such
designation occurring subsequent to the execution date hereof shall execute
and deliver to the Administrative Agent and the relevant Borrower for their
acknowledgment a Designation Agreement.  Upon such receipt of an
appropriately completed Designation Agreement executed by a Designating
Bank and a designee representing that it is a Designated Bank and
acknowledgment by the relevant Borrower, the Administrative Agent will
acknowledge such Designation Agreement and will give prompt notice thereof
to the relevant Borrower and the other Banks, whereupon, (i) the relevant
Borrower shall execute and deliver to the Designating Bank a Designated
Bank Note payable to the order of the Designated Bank, (ii) from and after
the effective date specified in the Designation Agreement, the Designated
Bank shall become a party to this Agreement with a right to make Money
Market Loans on behalf of its Designating Bank pursuant to Section 2.03(h),
and (iii) the Designated Bank shall not be required to make payments with
respect to any obligations in this Agreement except to the extent of excess
cash flow of such Designated Bank which is not otherwise required to repay
obligations of such Designated Bank which are then due and payable;
provided, however, that regardless of such designation and assumption by
the Designated Bank, the Designating Bank shall be and remain obligated to
the relevant Borrower, the Administrative Agent and the Banks for each and
every obligation of the Designating Bank and its related Designated Bank
with respect to this Agreement, including, without limitation, any
indemnification obligations under Section 7.05 and any sums otherwise
payable to the relevant Borrower by the Designated Bank.  Each Designating
Bank, or a specified branch or affiliate thereof, shall serve as the
administrative agent of its Designated Bank and shall on behalf of its
Designated Bank: (i) receive any and all payments made for the benefit of
such Designated Bank and (ii) give and receive all communications and
notices and take all actions hereunder, including, without limitation,
votes, approvals, waivers, consents and amendments under or relating to
this Agreement and the other Loan Documents.  Any such notice,
communication, vote, approval, waiver, consent or amendment shall be signed
by a Designating Bank, or specified branch or affiliate thereof, as
administrative agent for its Designated Bank and need not be signed by such
Designated Bank on its own behalf.  The relevant Borrower, the
Administrative Agent and the Banks may rely thereon without any requirement
that the Designated Bank sign or acknowledge the same.  No Designated Bank
may assign or transfer all or any portion of its interest hereunder or
under any other Loan Document, other than via an assignment to its
Designating Bank or Liquidity Bank (but any assignment to a Liquidity Bank
shall not curtail or affect the appointment or rights of the Designating
Bank pursuant to Section 9.06(c) or Section 4 of the Designation Agreement,
which appointment and rights are irrevocable), if any, or otherwise in
accordance with the provisions of Section 2.03(h).

SECTION 9.09.  CONFIDENTIALITY.

     Each Bank agrees to exercise commercially reasonable efforts to keep
any information delivered or  made available by the Borrowers to it which
is clearly indicated to be confidential information, confidential from
anyone other than persons employed or retained by such Bank who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loans; provided that nothing herein shall prevent any
Bank from disclosing such information (i) to any other Bank, (ii) upon the
order of any court or administrative agency, (iii) upon the request or
demand of any regulatory agency or authority having jurisdiction over such
Bank, (iv) which has been publicly disclosed, (v) to the extent reasonably
required in connection with any litigation to which the Administrative
Agent, any Bank or their respective Affiliates may be a party, (vi) to the
extent reasonably required in connection with the exercise of any remedy
hereunder, (vii) to such Bank's Affiliates, legal counsel and independent
auditors, (viii) to any actual or proposed Participant, Assignee or other
Transferee of all or part of its rights hereunder which has agreed in
writing to be bound by the provisions of this Section 9.09 and (ix) by any
Designated Bank to any rating agency, commercial paper dealer, or provider
of a surety, guaranty or credit or liquidity enhancement to such Designated

<PAGE>

Bank which has agreed in writing to be bound by the provisions of this
Section 9.09; PROVIDED that should disclosure of any such confidential
information be required by virtue of clause (ii) of the immediately
preceding sentence, to the extent permitted by law, any relevant Bank shall
promptly notify the relevant Borrower of same so as to allow the relevant
Borrower to seek a protective order or to take any other appropriate
action; PROVIDED, FURTHER, THAT, no Bank shall be required to delay
compliance with any directive to disclose any such information so as to
allow the relevant Borrower to effect any such action.

SECTION 9.10.  REPRESENTATION BY BANKS.

     Each Bank hereby represents that it is a commercial lender or
financial institution which makes loans in the ordinary course of its
business and that it will make its Loans hereunder for its own account in
the ordinary course of such business; PROVIDED that, subject to
Section 9.08, the disposition of the Note or Notes held by that Bank shall
at all times be within its exclusive control.

SECTION 9.11.  OBLIGATIONS SEVERAL.

     The obligations of each Bank hereunder are several, and no Bank shall
be responsible for the obligations or commitment of any other Bank
hereunder.  Nothing contained in this Agreement and no action taken by the
Banks pursuant hereto shall be deemed to constitute the Banks to be a
partnership, an association, a joint venture or any other kind of entity.
The amounts payable at any time hereunder to each Bank shall be a separate
and independent debt, and each Bank shall be entitled to protect and
enforce its rights arising out of this Agreement or any other Loan Document
and it shall not be necessary for any other Bank to be joined as an
additional party in any proceeding for such purpose.

SECTION 9.12.  GEORGIA LAW.

     This Agreement and each Note shall be construed in accordance with
and governed by the law of the State of Georgia.

SECTION 9.13.  SEVERABILITY.

     In case any one or more of the provisions contained in this
Agreement, the Notes or any of the other Loan Documents should be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby and shall be enforced
to the greatest extent permitted by law.

SECTION 9.14.  INTEREST.

     In no event shall the amount of interest, and all charges, amounts or
fees contracted for, charged or collected pursuant to this Agreement, the
Notes or the other Loan Documents and deemed to be interest under
applicable law (collectively, "Interest") exceed the highest rate of
interest allowed by applicable law (the "Maximum Rate"), and in the event
any such payment is inadvertently received by any Bank, then the excess sum
(the "Excess") shall be credited as a payment of principal, unless the
relevant Borrower shall notify such Bank in writing that it elects to have
the Excess returned forthwith.  It is the express intent hereof that the
Borrowers not pay and the Banks not receive, directly or indirectly in any
manner whatsoever, interest in excess of that which may legally be paid by
the Borrowers under applicable law.  The right to accelerate maturity of
any of the Loans does not include the right to accelerate any interest that

<PAGE>

has not otherwise accrued on the date of such acceleration, and the
Administrative Agent and the Banks do not intend to collect any unearned
interest in the event of any such acceleration.  All monies paid to the
Administrative Agent or the Banks hereunder or under any of the Notes or
the other Loan Documents, whether at maturity or by prepayment, shall be
subject to rebate of unearned interest as and to the extent required by
applicable law.  By the execution of this Agreement, each Borrower
covenants, to the fullest extent permitted by law, that (i) the credit or
return of any Excess shall constitute the acceptance by each Borrower of
such Excess, and (ii) none of the Borrowers shall seek or pursue any other
remedy, legal or equitable, against the Administrative Agent or any Bank,
based in whole or in part upon contracting for charging or receiving any
Interest in excess of the Maximum Rate.  For the purpose of determining
whether or not any Excess has been contracted for, charged or received by
the Administrative Agent or any Bank, all interest at any time contracted
for, charged or received from the Borrowers in connection with this
Agreement, the Notes or any of the other Loan Documents shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and
spread in equal parts throughout the full term of the Commitments.  The
Borrowers, the Administrative Agent and each Bank shall, to the maximum
extent permitted under applicable law, (i) characterize any non-principal
payment as an expense, fee or premium rather than as Interest and
(ii) exclude voluntary prepayments and the effects thereof.  The provisions
of this Section shall be deemed to be incorporated into each Note and each
of the other Loan Documents (whether or not any provision of this
Section is referred to therein).  All such Loan Documents and
communications relating to any Interest owed by the Borrowers and all
figures set forth therein shall, for the sole purpose of computing the
extent of obligations hereunder and under the Notes and the other Loan
Documents be automatically recomputed by the Borrowers, and by any court
considering the same, to give effect to the adjustments or credits required
by this Section.

SECTION 9.15.  INTERPRETATION.

     No provision of this Agreement or any of the other Loan Documents
shall be construed against or interpreted to the disadvantage of any party
hereto  by any court or other governmental or judicial authority by reason
of such party having or being deemed to have structured or dictated such
provision.

SECTION 9.16.  WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION.

     Each Borrower (a) and each of the Banks and the Administrative Agent
irrevocably waives, to the fullest extent permitted by law, any and all
right to trial by jury in any legal proceeding arising out of this
Agreement, any of the other Loan Documents, or any of the transactions
contemplated hereby or thereby, (b) submits to the nonexclusive personal
jurisdiction in the State of Georgia, the courts thereof and the United
States District Courts sitting therein, for the enforcement of this
Agreement, the Notes and the other Loan Documents, (c) waives any and all
personal rights under the law of any jurisdiction to object on any basis
(including, without limitation, inconvenience of forum) to jurisdiction or
venue within the State of Georgia for the purpose of litigation to enforce
this Agreement, the Notes or the other Loan Documents, and (d) agrees that
service of process may be made upon it in the manner prescribed in
Section 9.01 for the giving of notice to the Borrowers.  Nothing herein
contained, however, shall prevent the Administrative Agent from bringing
any action or exercising any rights against any security and against any
Borrower personally, and against any assets of any Borrower, within any
other state or jurisdiction.

<PAGE>

SECTION 9.17.  COUNTERPARTS.

     This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.

SECTION 9.18.  SOURCE OF FUNDS -- ERISA.

     Each of the Banks hereby severally (and not jointly) represents to
the Borrowers that no part of the funds to be used by such Bank to fund the
Loans hereunder from time to time constitutes (i) assets allocated to any
separate account maintained by such Bank in which any employee benefit plan
(or its related trust) has any interest nor (ii) any other assets of any
employee benefit plan.  As used in this Section, the terms "employee
benefit plan" and "separate account" shall have the respective meanings
assigned to such terms in Section 3 of ERISA.

SECTION 9.19.  EXCULPATION.

     Neither the General Partner nor any other partner of the Parent, nor
any officer or trustee of any of them, shall have any obligation or
liability for payment of the Loans, and holders of the Notes will have no
claims or other recourse against the General Partner or any other partner
of the Parent or any officer or trustee of any of them, or against any
assets of the General Partner or any other partner of the Parent or any
officer or trustee of any of them, in respect of the Loans; and the holders
of the Notes shall not have any right to enforce any obligations of a
partner to make a contribution to the Parent under any provision of the
Agreement of Limited Partnership of the Parent.  Neither the General
Partner nor any other partner of the Parent nor any officer or trustee of
any of them nor any of their respective assets shall be subject to any
lien, levy, execution or any other enforcement procedure relating directly
or indirectly to the Loans or any obligations thereunder; PROVIDED,
HOWEVER, that in the event of a dissolution of the Parent, any assets of
the Parent that are received by the General Partner in such dissolution
shall be subject to the claims of the holders of the Notes for the
enforcement of payment thereof.

SECTION 9.20.  NO BANKRUPTCY PROCEEDINGS.

     Each of the Borrowers, the Banks, the Administrative Agent, the
Syndication Agent and the Documentation Agent agrees that it will not
institute against any Designated Bank or join any other Person in
instituting against any Designated Bank any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding under any federal or
state bankruptcy or similar law, for one year and one day after the payment
in full of the latest maturing commercial paper note issued by such
Designated Bank.

          [Signatures are contained on the following pages.]

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, under seal, by their respective authorized officers as of
the day and year first above written.

                      AMLI RESIDENTIAL PROPERTIES, L.P.,
                      a Delaware Limited Partnership

                      By:   AMLI Residential Properties Trust,
                            a Maryland real estate investment trust,
                            its General Partner

                            By:
                            Title:

                      AMLI Residential Properties, L.P.
                      125 South Wacker Dr., Suite 3100
                      Chicago, Illinois 60606
                      Attention: President
                      Telecopier Number:   312-443-0909
                      Confirmation Number:  312-443-1477

                      AMLI MANAGEMENT COMPANY, a Delaware corporation

                      By:
                      Title:

                      Address:

                      AMLI RESIDENTIAL CONSTRUCTION LLC,
                      a Delaware limited liability company

                      By:
                      Title:

                      Address:

<PAGE>

                              COMMITMENTS
                              -----------

$40,000,000

     WACHOVIA BANK, N.A.,
     as Administrative Agent and as a Bank
     (SEAL)

     By:
     Title:

     LENDING OFFICE
     --------------

     Wachovia Bank, N.A.
     191 Peachtree Street, N.E.
     Atlanta, Georgia 30303-1757
     Attention:  Syndications Group
     Telecopier Number:   404-332-4005
     Confirmation Number:  404-332-6971

<PAGE>

$40,000,000

     BANK ONE, NA,
     as Syndication Agent and as a Bank
     (SEAL)

     By:
     Title:

     LENDING OFFICE
     --------------

     Bank One, NA
     Main Office (Chicago)
     1 Bank One Plaza
     Chicago, Illinois  60670-0315
     Attention:  Timothy J. Carew
     Telecopier Number:  312-732-1117
     Confirmation Number:  312-732-5419

<PAGE>

$35,000,000

     PNC BANK, NATIONAL ASSOCIATION,
     as Documentation Agent and as a Bank (SEAL)

     By:
     Title:

     LENDING OFFICE
     --------------

     PNC Bank, National Association
     One PNC Plaza
     249 Fifth Avenue
     Mail Stop: P1-POPP-19-2
     Pittsburgh, Pennsylvania  15222-2707
     Attention:  Michael Smith
     Telecopier Number:  412-762-6500
     Confirmation Number: 412-768-9135

<PAGE>

$35,000,000

     HARRIS TRUST AND SAVINGS BANK,
     as Senior Managing Agent and as a Bank
     (SEAL)

     By:
     Title:

     LENDING OFFICE
     --------------

     Harris Trust and Savings Bank
     111 West Monroe, 5th Floor West
     Chicago, Illinois 60603
     Attention: Gregory M. Bins
     Telecopier Number:  312-461-2968
     Confirmation Number:  312-461-2203

<PAGE>

$30,000,000

     COMMERZBANK AG, NEW YORK BRANCH,
     as Managing Agent and as  a Bank
     (SEAL)

     By:
     Title:

     By:
     Title:

     LENDING OFFICE
     --------------

     Commerzbank AG, New York Branch
     2 World Financial Center
     New York, New York 10281-1050
     Attention: Douglas P. Traynor
     Telecopier Number: 212-266-7685
     Confirmation Number: 212-266-7569

<PAGE>

$25,000,000

     LASALLE BANK, NATIONAL ASSOCIATION
     as a Bank   (SEAL)

     By:
     Title:

     LENDING OFFICE
     --------------

     LaSalle Bank, National Association
     135 South LaSalle Street
     Suite 1225
     Chicago, Illinois  60603
     Attention:  J. Jay Palmer
     Telecopier Number:  312-904-6467
     Confirmation Number:  312-904-7211

<PAGE>

$25,000,000

     SOUTHTRUST BANK,
     as a Bank   (SEAL)

     By:
     Title:

     LENDING OFFICE
     --------------

     SouthTrust Bank
     420 North 20th Street, 11th Floor
     Birmingham, Alabama 35203
     Attention: Lynn Feuerlein
     Telecopier Number:  205-254-8270
     Confirmation Number: 205-254-5870

<PAGE>

$20,000,000

     FIRSTAR BANK, NATIONAL ASSOCIATION,
     as a Bank
     (SEAL)

     By:
     Title:

     LENDING OFFICE
     --------------

     Firstar Bank
     425 Walnut Street, CN-WN-10CR
     Cincinnati, Ohio 45202
     Attention: Maureen A. Dunne
     Telecopier Number:  513-632-5590
     Confirmation Number: 513-632-3903

TOTAL COMMITMENTS:
$250,000,000

<PAGE>

                              EXHIBIT A-1
                              -----------

SYNDICATED LOAN NOTE

Atlanta, Georgia

October 12, 1999

     For value received, AMLI RESIDENTIAL PROPERTIES, L.P., a Delaware
limited partnership (the "Borrower"), promises to pay to the order of
_________________, a ____________________ (the "Bank"), for the account of
its Lending Office, the principal sum of
___________________________________ AND NO/100 DOLLARS ($________), or such
lesser amount as shall equal the unpaid principal amount of each Syndicated
Loan made by the Bank to the Borrower pursuant to the Credit Agreement
referred to below, on the dates and in the amounts provided in the Credit
Agreement.  The Borrower promises to pay interest on the unpaid principal
amount of this Note on the dates and at the rate or rates provided for in
the Credit Agreement.  Interest on any overdue principal of and, to the
extent permitted by law, overdue interest on the principal amount hereof
shall bear interest at the Default Rate, as provided for in the Credit
Agreement.  All such payments of principal and interest shall be made in
lawful money of the United States in Federal or other immediately available
funds at the office of Wachovia Bank, N.A., 191 Peachtree Street, N.E.,
Atlanta, Georgia 30303-1757, or such other address as may be specified from
time to time pursuant to the Credit Agreement.

     All Syndicated Loans made by the Bank, the respective maturities
thereof, the interest rates from time to time applicable thereto, and all
repayments of the principal thereof shall be recorded by the Bank and,
prior to any transfer hereof, endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder
or under the Credit Agreement.

     This Note is one of the Syndicated Loan Notes referred to in the
Credit Agreement dated as of October 12, 1999 among the Borrower, the Banks
listed on the signature pages thereof, Wachovia Bank, N.A., as
Administrative Agent, Bank One, NA, as Syndication Agent and PNC Bank,
National Association, as Documentation Agent (as the same may be amended
and modified from time to time, the "Credit Agreement").  Terms defined in
the Credit Agreement are used herein with the same meanings.  Reference is
made to the Credit Agreement for provisions for the optional and mandatory
prepayment and the repayment hereof and the acceleration of the maturity
hereof, as well as the obligation of the Borrower to pay all costs of
collection, including reasonable attorneys fees, in the event this Note is
collected by law or through an attorney at law.

     The Borrower hereby waives presentment, demand, protest, notice of
demand, protest and nonpayment and any other notice required by law
relative hereto, except to the extent as otherwise may be expressly
provided for in the Credit Agreement.

     This Note and the rights and claims of the Bank hereunder are subject
in all respects to the provisions of Section 9.19 of the Credit Agreement,
which contains exculpation provisions with respect to the liability of the
general and limited partners of Borrower with respect to the liabilities of
the Borrower hereunder.

<PAGE>

     IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed, under seal, by its duly authorized officer as of the day and year
first above written.

                      AMLI RESIDENTIAL PROPERTIES, L.P.,
                      a Delaware limited partnership
                      (SEAL)

                      By:   AMLI Residential Properties Trust,
                            a Maryland real estate investment trust,
                            its General Partner

                            By:
                            Title:

<PAGE>

SYNDICATED LOAN NOTE (cont'd)

              SYNDICATED LOANS AND PAYMENTS OF PRINCIPAL

           Base
           Rate or                 Amount
           Euro-      Amount         of
           Dollar       of        Principal  Maturity   Notation
Date       Loan        Loan         Repaid     Date     Made By
----       -------    ------      ---------  --------   --------

<PAGE>

                              EXHIBIT A-2
                              -----------

SWING LOAN NOTE

Atlanta, Georgia

October 12, 1999

     For value received, AMLI RESIDENTIAL PROPERTIES, L.P., a Delaware
limited partnership (the "Borrower"), promises to pay to the order of
WACHOVIA BANK, N.A. (the "Bank"), for the account of its Lending Office,
the principal sum of FIFTEEN MILLION AND NO/100 DOLLARS ($15,000,000), or
such lesser amount as shall equal the unpaid principal amount of each Swing
Loan made by the Bank to the Borrower pursuant to the Credit Agreement
referred to below, on the dates and in the amounts provided in the Credit
Agreement.  The Borrower promises to pay interest on the unpaid principal
amount of this Swing Loan Note at the rate provided for Base Rate Loans or
Transaction Rate Loans, as the case may be, on the dates provided for in
the Credit Agreement.  Interest on any overdue principal of and, to the
extent permitted by law, overdue interest on the principal amount hereof
shall bear interest at the Default Rate, as provided for in the Credit
Agreement.  All such payments of principal and interest shall be made in
lawful money of the United States in Federal or other immediately available
funds at the office of Wachovia Bank, N.A., 191 Peachtree Street, N.E.,
Atlanta, Georgia 30303-1757, or such other address as may be specified from
time to time pursuant to the Credit Agreement.

     All Swing Loans made by the Bank, the respective maturities thereof,
the interest rates from time to time applicable thereto, and all repayments
of the principal thereof shall be recorded by the Bank and, prior to any
transfer hereof, endorsed by the Bank on the schedule attached hereto, or
on a continuation of such schedule attached to and made a part hereof;
provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or
under the Credit Agreement.

     This Note is one of the Swing Loan Notes referred to in the Credit
Agreement dated as of October 12, 1999 among the Borrower, the Banks listed
on the signature pages thereof, Wachovia Bank, N.A., as Administrative
Agent, Bank One, NA, as Syndication Agent and PNC Bank, National
Association, as Documentation Agent (as the same may be amended and
modified from time to time, the "Credit Agreement").  Terms defined in the
Credit Agreement are used herein with the same meanings.  Reference is made
to the Credit Agreement for provisions for the optional and mandatory
prepayment and the repayment hereof and the acceleration of the maturity
hereof, as well as the obligation of the Borrower to pay all costs of
collection, including reasonable attorneys fees, in the event this Note is
collected by law or through an attorney at law.

     The Borrower hereby waives presentment, demand, protest, notice of
demand, protest and nonpayment and any other notice required by law
relative hereto, except to the extent as otherwise may be expressly
provided for in the Credit Agreement.

     This Note and the rights and claims of the Bank hereunder are subject
in all respects to the provisions of Section 9.19 of the Credit Agreement,
which contains exculpation provisions with respect to the liability of the
general and limited partners of Borrower with respect to the liabilities of
the Borrower hereunder.

<PAGE>

     IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed, under seal, by its duly authorized officer as of the day and year
first above written.

                      AMLI RESIDENTIAL PROPERTIES, L.P.,
                      a Delaware limited partnership
                      (SEAL)

                      By:   AMLI Residential Properties Trust,
                            a Maryland real estate investment trust,
                            its General Partner

                            By:
                            Title:

<PAGE>

SWING LOAN NOTE (cont'd)

                 SWING LOANS AND PAYMENTS OF PRINCIPAL

           Base
           Rate or                 Amount
           Euro-      Amount         of
           Dollar       of        Principal  Maturity   Notation
Date       Loan        Loan         Repaid     Date     Made By
----       -------    ------      ---------  --------   --------

<PAGE>

                              EXHIBIT A-3
                              -----------

MONEY MARKET LOAN NOTE

October 12, 1999

     For value received, AMLI RESIDENTIAL PROPERTIES, L.P., a Delaware
Limited Partnership (the "Borrower"), promises to pay to the order of
_____________________, a _______________ (the "Bank"), for the account of
its Lending Office, the principal sum of ONE HUNDRED FIFTY MILLION AND
NO/100 DOLLARS ($150,000,000), or such lesser amount as shall equal the
unpaid principal amount of each Money Market Loan made by the Bank to the
Borrower pursuant to the Credit Agreement referred to below, on the dates
and in the amounts provided in the Credit Agreement.  The Borrower promises
to pay interest on the unpaid principal amount of this Money Market Loan
Note on the dates and at the rate or rates provided for in the Credit
Agreement referred to below.  Interest on any overdue principal of and, to
the extent permitted by law, overdue interest on the principal amount
hereof shall bear interest at the Default Rate, as provided for in the
Credit Agreement.  All such payments of principal and interest shall be
made in lawful money of the United States in Federal or other immediately
available funds at the office of Wachovia Bank, N.A., 191 Peachtree Street,
N.E., Atlanta, Georgia 30303-1757, or such other address as may be
specified from time to time pursuant to the Credit Agreement.

     All Money Market Loans made by the Bank, the respective maturities
thereof, the interest rates from time to time applicable thereto, and all
repayments of the principal thereof shall be recorded by the Bank and,
prior to any transfer hereof, endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder
or under the Credit Agreement.

     This Money Market Loan Note is one of the Money Market Loan Notes
referred to in the Credit Agreement dated as of October 12, 1999 among the
Borrower, the Banks listed on the signature pages thereof, Wachovia Bank,
N.A., as Administrative Agent, Bank One, NA, as Syndication Agent and PNC
Bank, National Association, as Documentation Agent (as  the same may be
amended and modified from time to time, the "Credit Agreement").  Terms
defined in the Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the optional
and mandatory prepayment and the repayment hereof and the acceleration of
the maturity hereof, as well as the obligation of the Borrower to pay all
costs of collection, including reasonable attorneys fees, in the event this
Money Market Loan Note is collected by law or through an attorney at law.
The Borrower hereby waives presentment, demand, protest, notice of demand,
protest and nonpayment and any other notice required by law relative
hereto, except to the extent as otherwise may be expressly provided for in
the Credit Agreement.

     This Note and the rights and claims of the Bank hereunder are subject
in all respects to the provisions of Section 9.19 of the Credit Agreement,
which contains exculpation provisions with respect to the liability of the
general and limited partners of Borrower with respect to the liabilities of
the Borrower hereunder.

<PAGE>

     IN WITNESS WHEREOF, the Borrower has caused this Money Market Loan
Note to be duly executed, under seal, by its duly authorized officer as of
the day and year first above written.

                      AMLI RESIDENTIAL PROPERTIES, L.P.,
                      a Delaware Limited Partnership

                      By:   AMLI Residential Properties Trust,
                            a Maryland real estate investment trust,
                            its General Partner

                            By:
                            Title:

<PAGE>

MONEY MARKET LOAN NOTE (cont'd)

             MONEY MARKET LOANS AND PAYMENTS OF PRINCIPAL

           Base
           Rate or                 Amount
           Euro-      Amount         of
           Dollar       of        Principal  Maturity   Notation
Date       Loan        Loan         Repaid     Date     Made By
----       -------    ------      ---------  --------   --------

<PAGE>

                              EXHIBIT A-4
                              -----------

SYNDICATED LOAN NOTE

Atlanta, Georgia

November 15, 2000

     For value received, [AMLI MANAGEMENT COMPANY, a Delaware corporation]
[AMLI RESIDENTIAL CONSTRUCTION LLC,  a Delaware limited liability company]
(the "Borrower"), promises to pay to the order of _________________, a
____________________ (the "Bank"), for the account of its Lending Office,
the principal sum not to exceed the lesser of (i) twenty percent (20%) of
the amount by which the lesser of the Borrowing Base and the aggregate
Commitments exceeds the aggregate outstanding principal amount of the Loans
as of the date hereof and (ii) twenty percent (20%) of the aggregate
Commitments as of the date hereof, or such lesser amount as shall equal the
unpaid principal amount of each Syndicated Loan made by the Bank to the
Borrower pursuant to the Credit Agreement referred to below, on the dates
and in the amounts provided in the Credit Agreement.  The Borrower promises
to pay interest on the unpaid principal amount of this Note on the dates
and at the rate or rates provided for in the Credit Agreement.  Interest on
any overdue principal of and, to the extent permitted by law, overdue
interest on the principal amount hereof shall bear interest at the Default
Rate, as provided for in the Credit Agreement.  All such payments of
principal and interest shall be made in lawful money of the United States
in Federal or other immediately available funds at the office of Wachovia
Bank, N.A., 191 Peachtree Street, N.E., Atlanta, Georgia 30303-1757, or
such other address as may be specified from time to time pursuant to the
Credit Agreement.

     All Syndicated Loans made by the Bank, the respective maturities
thereof, the interest rates from time to time applicable thereto, and all
repayments of the principal thereof shall be recorded by the Bank and,
prior to any transfer hereof, endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder
or under the Credit Agreement.

     This Note is one of the Syndicated Loan Notes referred to in the
Amended and Restated Credit Agreement dated as of November 15, 2000 among
AMLI Management Company, AMLI Residential Construction LLC, AMLI
Residential Properties, L.P., the Banks listed on the signature pages
thereof, Wachovia Bank, N.A., as Administrative Agent, Bank One, NA, as
Syndication Agent and PNC Bank, National Association, as Documentation
Agent (as the same may be amended and modified from time to time, the
"Credit Agreement").  Terms defined in the Credit Agreement are used herein
with the same meanings.  Reference is made to the Credit Agreement for
provisions for the optional and mandatory prepayment and the repayment
hereof and the acceleration of the maturity hereof, as well as the
obligation of the Borrower to pay all costs of collection, including
reasonable attorneys fees, in the event this Note is collected by law or
through an attorney at law.

     The Borrower hereby waives presentment, demand, protest, notice of
demand, protest and nonpayment and any other notice required by law
relative hereto, except to the extent as otherwise may be expressly
provided for in the Credit Agreement.

     This Note and the rights and claims of the Bank hereunder are subject
in all respects to the provisions of Section 9.19 of the Credit Agreement,
which contains exculpation provisions with respect to the liability of the
general and limited partners of Borrower with respect to the liabilities of
the Borrower hereunder.

<PAGE>

     IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed, under seal, by its duly authorized officer as of the day and year
first above written.

                      [AMLI MANAGEMENT COMPANY, a Delaware corporation

                      [AMLI RESIDENTIAL CONSTRUCTION LLC,
                      a Delaware limited liability company]

                      By:
                      Title:

<PAGE>

SYNDICATED LOAN NOTE (cont'd)

              SYNDICATED LOANS AND PAYMENTS OF PRINCIPAL

           Base
           Rate or                 Amount
           Euro-      Amount         of
           Dollar       of        Principal  Maturity   Notation
Date       Loan        Loan         Repaid     Date     Made By
----       -------    ------      ---------  --------   --------

<PAGE>

                              EXHIBIT A-5
                              -----------

SWING LOAN NOTE

Atlanta, Georgia

November 15, 2000

     For value received, [AMLI MANAGEMENT COMPANY, a Delaware corporation]
[AMLI RESIDENTIAL CONSTRUCTION LLC,  a Delaware limited liability company]
(the "Borrower"), promises to pay to the order of WACHOVIA BANK, N.A. (the
"Bank"), for the account of its Lending Office, a principal amount not
exceed the lesser of (i) twenty percent (20%) of the amount by which the
lesser of the Borrowing Base and the aggregate Commitments exceeds the
aggregate outstanding principal amount of the Loans as of the date hereof
and (ii) twenty percent (20%) of the aggregate Commitments as of the date
hereof, or such lesser amount as shall equal the unpaid principal amount of
each Swing Loan made by the Bank to the Borrower pursuant to the Credit
Agreement referred to below, on the dates and in the amounts provided in
the Credit Agreement.  The Borrower promises to pay interest on the unpaid
principal amount of this Swing Loan Note at the rate provided for Base Rate
Loans or Transaction Rate Loans, as the case may be, on the dates provided
for in the Credit Agreement.  Interest on any overdue principal of and, to
the extent permitted by law, overdue interest on the principal amount
hereof shall bear interest at the Default Rate, as provided for in the
Credit Agreement.  All such payments of principal and interest shall be
made in lawful money of the United States in Federal or other immediately
available funds at the office of Wachovia Bank, N.A., 191 Peachtree Street,
N.E., Atlanta, Georgia 30303-1757, or such other address as may be
specified from time to time pursuant to the Credit Agreement.

     All Swing Loans made by the Bank, the respective maturities thereof,
the interest rates from time to time applicable thereto, and all repayments
of the principal thereof shall be recorded by the Bank and, prior to any
transfer hereof, endorsed by the Bank on the schedule attached hereto, or
on a continuation of such schedule attached to and made a part hereof;
provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or
under the Credit Agreement.

     This Note is one of the Swing Loan Notes referred to in the Amended
and Restated Credit Agreement dated as of November 15, 2000 among AMLI
Management Company, AMLI Residential Construction LLC, AMLI Residential
Properties, L.P., the Banks listed on the signature pages thereof, Wachovia
Bank, N.A., as Administrative Agent, Bank One, NA, as Syndication Agent and
PNC Bank, National Association, as Documentation Agent (as the same may be
amended and modified from time to time, the "Credit Agreement").  Terms
defined in the Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the optional
and mandatory prepayment and the repayment hereof and the acceleration of
the maturity hereof, as well as the obligation of the Borrower to pay all
costs of collection, including reasonable attorneys fees, in the event this
Note is collected by law or through an attorney at law.

     The Borrower hereby waives presentment, demand, protest, notice of
demand, protest and nonpayment and any other notice required by law
relative hereto, except to the extent as otherwise may be expressly
provided for in the Credit Agreement.

     This Note and the rights and claims of the Bank hereunder are subject
in all respects to the provisions of Section 9.19 of the Credit Agreement,
which contains exculpation provisions with respect to the liability of the
general and limited partners of Borrower with respect to the liabilities of
the Borrower hereunder.

<PAGE>

     IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed, under seal, by its duly authorized officer as of the day and year
first above written.

                      [AMLI MANAGEMENT COMPANY, a Delaware corporation

                      [AMLI RESIDENTIAL CONSTRUCTION LLC,
                      a Delaware limited liability company]

                      By:
                      Title:

<PAGE>

SWING LOAN NOTE (cont'd)

                 SWING LOANS AND PAYMENTS OF PRINCIPAL

           Base
           Rate or                 Amount
           Euro-      Amount         of
           Dollar       of        Principal  Maturity   Notation
Date       Loan        Loan         Repaid     Date     Made By
----       -------    ------      ---------  --------   --------

<PAGE>

                              EXHIBIT A-6
                              -----------

MONEY MARKET LOAN NOTE

November 15, 2000

     For value received, [AMLI MANAGEMENT COMPANY, a Delaware corporation]
[AMLI RESIDENTIAL CONSTRUCTION LLC,  a Delaware limited liability company]
(the "Borrower"), promises to pay to the order of _____________________, a
_______________ (the "Bank"), for the account of its Lending Office, the
principal sum not to exceed the lesser of (i) twenty percent (20%) of the
amount by which the lesser of the Borrowing Base and the aggregate
Commitments exceeds the aggregate outstanding principal amount of the Loans
as of the date hereof and (ii) twenty percent (20%) of the aggregate
Commitments as of the date hereof, or such lesser amount as shall equal the
unpaid principal amount of each Money Market Loan made by the Bank to the
Borrower pursuant to the Credit Agreement referred to below, on the dates
and in the amounts provided in the Credit Agreement.  The Borrower promises
to pay interest on the unpaid principal amount of this Money Market Loan
Note on the dates and at the rate or rates provided for in the Credit
Agreement referred to below.  Interest on any overdue principal of and, to
the extent permitted by law, overdue interest on the principal amount
hereof shall bear interest at the Default Rate, as provided for in the
Credit Agreement.  All such payments of principal and interest shall be
made in lawful money of the United States in Federal or other immediately
available funds at the office of Wachovia Bank, N.A., 191 Peachtree Street,
N.E., Atlanta, Georgia 30303-1757, or such other address as may be
specified from time to time pursuant to the Credit Agreement.

     All Money Market Loans made by the Bank, the respective maturities
thereof, the interest rates from time to time applicable thereto, and all
repayments of the principal thereof shall be recorded by the Bank and,
prior to any transfer hereof, endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder
or under the Credit Agreement.

     This Money Market Loan Note is one of the Money Market Loan Notes
referred to in the Amended and Restated Credit Agreement dated as of
November 15, 2000 among AMLI Management Company, AMLI Residential
Construction LLC, AMLI Residential Properties, L.P., the Banks listed on
the signature pages thereof, Wachovia Bank, N.A., as Administrative Agent,
Bank One, NA, as Syndication Agent and PNC Bank, National Association, as
Documentation Agent (as  the same may be amended and modified from time to
time, the "Credit Agreement").  Terms defined in the Credit Agreement are
used herein with the same meanings.  Reference is made to the Credit
Agreement for provisions for the optional and mandatory prepayment and the
repayment hereof and the acceleration of the maturity hereof, as well as
the obligation of the Borrower to pay all costs of collection, including
reasonable attorneys fees, in the event this Money Market Loan Note is
collected by law or through an attorney at law.

     The Borrower hereby waives presentment, demand, protest, notice of
demand,  protest and nonpayment and any other notice required by law
relative hereto, except to the extent as otherwise may be expressly
provided for in the Credit Agreement.

     This Note and the rights and claims of the Bank hereunder are subject
in all respects to the provisions of Section 9.19 of the Credit Agreement,
which contains exculpation provisions with respect to the liability of the
general and limited partners of Borrower with respect to the liabilities of
the Borrower hereunder.

<PAGE>

     IN WITNESS WHEREOF, the Borrower has caused this Money Market Loan
Note to be duly executed, under seal, by its duly authorized officer as of
the day and year first above written.

                            [AMLI MANAGEMENT COMPANY,
                            a Delaware corporation

                            [AMLI RESIDENTIAL CONSTRUCTION LLC,
                            a Delaware limited liability company]

                            By:
                            Title:

<PAGE>

MONEY MARKET LOAN NOTE (cont'd)

             MONEY MARKET LOANS AND PAYMENTS OF PRINCIPAL

           Base
           Rate or                 Amount
           Euro-      Amount         of
           Dollar       of        Principal  Maturity   Notation
Date       Loan        Loan         Repaid     Date     Made By
----       -------    ------      ---------  --------   --------

<PAGE>

                               EXHIBIT B
                               ---------

OPINION OF

COUNSEL FOR THE BORROWER

[Dated as provided in Section 3.01 of the Credit Agreement]

To the Banks and the Administrative Agent
Referred to Below
c/o Wachovia Bank, N.A.,
as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia  30303-1757
Attn:  Syndications Group

Dear Sirs:

We have acted as counsel for AMLI RESIDENTIAL PROPERTIES, L.P., a Delaware
limited partnership (the "Borrower") in connection with the Credit
Agreement (the "Credit Agreement") dated as of October 12, 1999, among the
Borrower, the banks listed on the signature pages thereof, Wachovia Bank,
N.A., as Administrative Agent, Bank One, NA, as Syndication Agent and PNC
Bank, National Association, as Documentation Agent.  Terms defined in the
Credit Agreement are used herein as therein defined.

We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records, trust records,
partnership records, certificates of public officials and other instruments
and have conducted such other investigations of fact and law as we have
deemed necessary or advisable for purposes of this opinion.  We have
assumed for purposes of our opinions set forth below that the execution and
delivery of the Credit Agreement by each Bank and by the Administrative
Agent have been duly authorized by each Bank and by the Administrative
Agent.

Upon the basis of the foregoing, we are of the opinion that:

1.   The Borrower is a limited partnership duly created, validly existing
and in good standing under the laws of Delaware and has all partnership
powers required to carry on its business as now conducted.

2.   The execution, delivery and performance by the Borrower of the Credit
Agreement the Notes (i) are within its partnership powers, (ii) have been
duly authorized by all necessary partnership action, (iii) require no
action by  or in respect of, or filing with, any governmental body, agency
or official, (iv) do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate of limited
partnership or partnership agreement of the Borrower or of the declaration
of trust of the General Partner, or of any agreement, judgment, injunction,
order, decree or other instrument which to our knowledge is binding upon
the Borrower and (v) to our knowledge, except as provided in the Credit
Agreement, do not result in the creation or imposition of any Lien on any
asset of the Borrower or any of the Subsidiaries.

<PAGE>

3.   The Credit Agreement constitutes a valid and binding agreement of the
Borrower, enforceable against it in accordance with its terms, and the
Notes constitute valid and binding obligations of the Borrower, enforceable
in accordance with its terms, except as such enforceability may be limited
by: (i) bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity.

4.   To our knowledge, there is no action, suit or proceeding pending, or
threatened, against or affecting the Borrower before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could materially
adversely affect the business, consolidated financial position or
consolidated results of operations of the Borrower or which in any manner
questions the validity or enforceability of the Credit Agreement or any
Note.

5.   The Borrower is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.

6.   The Borrower is not a "holding company", or a "subsidiary company" of
a "holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", as such terms are defined in
the Public Utility Holding Company Act of 1935, as amended.

We are qualified to practice in the State of Illinois and do not purport to
be experts on any laws other than the laws of the United States, the State
of Illinois and the revised Uniform Limited Partnership Act as in effect in
the State of Delaware, and this opinion is rendered only with respect to
such laws.  For purposes of the opinion contained in Paragraph 3 above, we
have assumed that the laws of the State of Georgia are the same as those of
the State of Illinois.  We have made no independent investigation of the
laws of any other jurisdiction.

This opinion is delivered to you in connection with the transaction
referenced above and may only be relied upon by you, any Assignee,
Participant or other Transferee under the Credit Agreement, and Jones, Day,
Reavis & Pogue without our prior written consent.

                      Very truly yours,

<PAGE>

                               EXHIBIT C
                               ---------

OPINION OF

JONES, DAY, REAVIS & POGUE, SPECIAL COUNSEL
FOR THE ADMINISTRATIVE AGENT_______

[Dated as provided in Section 3.01 of the Credit Agreement]

To the Banks and the Administrative Agent
Referred to Below
c/o Wachovia Bank, N.A.,
as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-175
Attention: Syndications Group

Dear Sirs:

     We have participated in the preparation of the Credit Agreement (the
"Credit Agreement") dated as of October 12, 1999, among AMLI Residential
Properties, L.P., a Delaware limited partnership (the "Borrower"), the
banks listed on the signature pages thereof (the "Banks"), Wachovia Bank,
N.A., as Administrative Agent, Bank One, NA, as Syndication Agent and PNC
Bank, National Association, as Documentation Agent, and have acted as
special counsel for the Administrative Agent for the purpose of rendering
this opinion pursuant to Section 3.01(d) of the Credit Agreement.  Terms
defined in the Credit Agreement are used herein as therein defined.

     This opinion letter is limited by, and is in accordance with, the
January 1, 1992 edition of the Interpretive Standards applicable to Legal
Opinions to Third Parties in Corporate Transactions adopted by the Legal
Opinion Committee of the Corporate and Banking Law Section of the State Bar
of Georgia which Interpretive Standards are incorporated herein by this
reference.

     We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.

     Upon the basis of the foregoing, and assuming the due authorization,
execution and delivery of the Credit Agreement and each of the Notes by or
on behalf of the Borrower, we are of the opinion that the Credit Agreement
constitutes a valid and binding agreement of the Borrower, each Note
constitutes valid and binding obligations of the Borrower, enforceable in
accordance with its terms except as: (i) the enforceability thereof may be
affected by bankruptcy, insolvency, reorganization, fraudulent conveyance,
voidable preference, moratorium or similar laws applicable to creditors'
rights or the collection of debtors' obligations generally; (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability; and (iii) the enforceability
of certain of the remedial, waiver and other provisions of the Credit
Agreement and the Notes may be further limited by the laws of the State of
Georgia; PROVIDED that such additional laws do not, in our opinion,
substantially interfere with the practical realization of the benefits
expressed in the Credit Agreement or the Notes, except for the economic
consequences of any procedural delay which may result from such laws.

<PAGE>

     In giving the foregoing opinion, we express no opinion as to the
effect (if any) of any law of any jurisdiction except the State of Georgia.

We express no opinion as to the effect of the compliance or noncompliance
of the Administrative Agent or any of the Banks with any state or federal
laws or regulations applicable to the Administrative Agent or any of the
Banks by reason of the legal or regulatory status or the nature of the
business of the Administrative Agent or any of the Banks.
This opinion is delivered to you in connection with the transaction
referenced above and may only be relied upon by you and any Assignee,
Participant or other Transferee under the Credit Agreement without our
prior written consent.

                      Very truly yours,

<PAGE>

                               EXHIBIT D
                               ---------

                       ASSIGNMENT AND ACCEPTANCE

Dated ___________, ____

     Reference is made to the Amended And Restated Credit Agreement dated
as of November 15, 2000 (together with all amendments and modifications
thereto, the "Credit Agreement") among AMLI Residential Properties, L.P., a
Delaware limited partnership,  AMLI Management Company, a Delaware
corporation, AMLI Residential Construction LLC, a Delaware limited
liability company (collectively, the "Borrowers"), the Banks (as defined in
the Credit Agreement), Wachovia Bank, N.A., as Administrative Agent, Bank
One, NA, as Syndication Agent and PNC Bank, National Association, as
Documentation Agent.  Terms defined in the Credit Agreement are used herein
with the same meaning.

     _________________________ (the "Assignor") and ______________________
(the "Assignee") agree as follows:

1.   The Assignor hereby sells and assigns to the Assignee, without
recourse to the Assignor, and the Assignee hereby purchases and assumes
from the Assignor, a ____% interest in and to all of the Assignor's rights
and obligations under the Credit Agreement as of the Effective Date (as
defined below) (including, without limitation, a ____% interest (which on
the Effective Date hereof is $_______) in the Assignor's Commitment and a
_____ interest (which on the Effective Date hereof is $_______) in the
Syndicated Loans [and Swing Loans] [and Money Market Loans] owing to the
Assignor and a ____% interest in the Syndicated Loan Notes [and Swing Loan
Note]s [and Money Market Loan Notes] held by the Assignor (which on the
Effective Date hereof is $________) [and $________, respectively].

2.   The Assignor (i) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other instrument or document furnished
pursuant thereto, other than that it is the legal and beneficial owner of
the interest being assigned by it hereunder, that such interest is free and
clear of any adverse claim and that as of the date hereof its Commitment
(without giving effect to assignments thereof which have not yet become
effective) is $______ and the aggregate outstanding principal amount of
Syndicated Loans [and Swing Loans] [and Money Market Loans] owing to it
(without giving effect to assignments thereof which have not yet become
effective) is $_________ [and $_________, respectively]; (ii) makes no
representation or warranty and assumes no responsibility with respect to
the financial condition of any of the Borrowers or the performance or
observance by any Borrower of any of its obligations under the Credit
Agreement or any other instrument or document furnished pursuant thereto;
and (iii) attaches the Note[s] referred to in Paragraph 1 above and
requests that the Administrative Agent exchange such Note[s] [for new
Syndicated Loan Note dated _________, ____ in the principal amount of
$____________ payable to the order of the Assignee, new Swing Loan Notes
dated ___________, ____ in the principal amount of $____________ payable to
the order of the Assignee, [and for new Notes as follows:  (i) Syndicated
Loan Notes dated ___________, ____ in the principal amount of $___________
payable to the order of the Assignor, (ii) Swing Loan Notes dated
____________, ____ in the principal amount of $__________ payable to

<PAGE>

     the order of the Assignor], and (iii) Money Market Loan Notes dated
____________, ____ in the principal amount of $__________ payable to the
order of the Assignor].

3.   The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 4.04(a) thereof (or any more recent financial statements of the
Parent delivered pursuant to Section 5.01(a) or (b) thereof) and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance;
(ii) agrees that it will, independently and without reliance upon the
Administrative Agent, the Assignor or any other Bank and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under the Credit Agreement; (iii) confirms that it is a bank or financial
institution; (iv) appoints and authorizes the Administrative Agent to take
such action as agent on its behalf and to exercise such powers under the
Credit Agreement as are delegated to the Administrative Agent by the terms
thereof, together with such powers as are reasonably incidental thereto;
(v) agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Bank; (vi) specifies as its Lending Office (and
address for notices) the office set forth beneath its name on the signature
pages hereof, (vii) represents and warrants that the execution, delivery
and performance of this Assignment and Acceptance are within its powers and
have been duly authorized by all necessary action, (viii) makes the
representation and warranty contained in Section 9.18 of the Credit
Agreement, and (ix) attaches the forms prescribed by the Internal Revenue
Service of the United States certifying as to the Assignee's status for
purposes of determining exemption from United States withholding taxes with
respect to all payments to be made to the Assignee under the Credit
Agreement and the Notes.

4.   The Effective Date for this Assignment and Acceptance shall be
___________, ____ (the "Effective Date").  Following the execution of this
Assignment and Acceptance, it will be delivered to the Administrative Agent
for execution and acceptance by the Administrative Agent and to the
relevant Borrower for execution by the relevant Borrower.

5.   Upon such execution and acceptance by the Administrative Agent, and
execution by the relevant Borrower, if required by the Credit Agreement,
from and after the Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent rights and obligations have been
transferred to it by this Assignment and Acceptance, have the rights and
obligations of a Bank thereunder and (ii) the Assignor shall, to the extent
its rights and obligations have been transferred to the Assignee by this
Assignment and Acceptance, relinquish its rights (other than under Sections
8.03, 9.03 and 9.04 of the Credit Agreement) and be released from its
obligations under the Credit Agreement, except as expressly provided
therein.

6.   Upon such execution and acceptance by the Administrative Agent, and
execution by the relevant Borrower, if required by the Credit Agreement,
from and after the Effective Date, the Administrative Agent shall make all
payments in respect of the interest assigned hereby to the Assignee.  The
Assignor and Assignee shall make all appropriate adjustments in payments
for periods prior to such acceptance by the Administrative Agent directly
between themselves.

<PAGE>

     This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Georgia.

                            [NAME OF ASSIGNOR]

                            By:
                            Title:

                            [NAME OF ASSIGNEE]

                            By:
                            Title:

                            Lending Office:
                            [Address]

                            WACHOVIA BANK, N.A.,
                            As Administrative Agent

                            By:
                            Title:

                            AMLI RESIDENTIAL PROPERTIES, L.P.,
                            a Delaware limited partnership

                            By:  AMLI Residential Properties Trust,
                                  a Maryland real estate investment
     trust, its General Partner
                                  [If required by the Credit Agreement]

<PAGE>

                              EXHIBIT E-1
                              -----------

NOTICE OF BORROWING

(Parent)

_______________, ____

Wachovia Bank, N.A., as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia  30303-1757
Attention: Syndications Group

Re:  Amended And Restated Credit Agreement dated as of November 15,
     2000 (together with all amendments and modifications thereto,
     the "Credit Agreement") among AMLI Residential Properties, L.P.,
     a Delaware limited partnership,  AMLI Management Company,
     a Delaware corporation, AMLI Residential Construction LLC,
     a Delaware limited liability company (collectively, the
     "Borrowers"), the Banks (as defined in the Credit Agreement),
     Wachovia Bank, N.A., as Administrative Agent, Bank One, NA,
     as Syndication Agent and PNC Bank, National Association,
     as Documentation Agent.

Gentlemen:

     Unless otherwise defined herein, capitalized terms used herein shall
have the meanings attributable thereto in the Credit Agreement.

     This Notice of Borrowing is delivered to you pursuant to Section 2.02
of the Credit Agreement.
The undersigned Borrower hereby requests a [Euro-Dollar Borrowing]
[Syndicated Loan Borrowing at a Base Rate] [Swing Loan Borrowing] in the
aggregate principal amount of $_______(1) to be made on _____________,
_____, and for interest to accrue thereon at the rate established by the
Credit Agreement for [Euro-Dollar Loans] [Base Rate Loans].  The duration
of the Interest Period with respect thereto shall be [1 month] [2 months]
[3 months] [6 months] [30 days].

     The amount available to be borrowed under Section 2.01 of the Credit
Agreement, net of amounts to be paid with the proceeds of this Borrowing,
is as follows:

     (a)   Aggregate amount of Commitments         $______________

     (b)   Borrowing Base per most recent
           Borrowing Base Certificate              $______________

     (c)   Principal amount outstanding
           under Syndicated Loans                  $______________

     (d)   Principal amount outstanding under
           Swing Loans                             $______________

     (e)   Principal amount outstanding under
           Money Market Loans                      $______________

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

  (1)  Not to exceed the amount available to be borrowed as set forth in
the next paragraph.

<PAGE>

     (f)   Amount available to be borrowed
           (lesser of (a) or (b), less sum of
           (c), (d) and (e) $______                $______________

     The undersigned Borrower has caused this Notice of Borrowing to be
executed and delivered by its duly authorized officer this ____ day off
__________, ___.

                      AMLI RESIDENTIAL PROPERTIES, L.P.,
                      a Delaware limited partnership

                      By:   AMLI Residential Properties Trust,
                            a Maryland real estate investment trust,
                            its General Partner

                            By:
                            Title:

<PAGE>

                              EXHIBIT E-1
                              -----------

NOTICE OF BORROWING

(Service Company Borrower)

_______________, ____

Wachovia Bank, N.A., as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia  30303-1757
Attention: Syndications Group

Re:  Amended And Restated Credit Agreement dated as of November 15,
     2000 (together with all amendments and modifications thereto,
     the "Credit Agreement") among AMLI Residential Properties, L.P.,
     a Delaware limited partnership,  AMLI Management Company,
     a Delaware corporation, AMLI Residential Construction LLC,
     a Delaware limited liability company (collectively, the
     "Borrowers"), the Banks (as defined in the Credit Agreement),
     Wachovia Bank, N.A., as Administrative Agent, Bank One, NA,
     as Syndication Agent and PNC Bank, National Association,
     as Documentation Agent.

Gentlemen:

     Unless otherwise defined herein, capitalized terms used herein shall
have the meanings attributable thereto in the Credit Agreement.

     This Notice of Borrowing is delivered to you pursuant to Section 2.02
of the Credit Agreement.

     The undersigned Borrower hereby requests a [Euro-Dollar Borrowing]
[Syndicated Loan Borrowing at a Base Rate] [Swing Loan Borrowing] in the
aggregate principal amount of $_______(1) to be made on _____________,
_____, and for interest to accrue thereon at the rate established by the
Credit Agreement for [Euro-Dollar Loans] [Base Rate Loans].  The duration
of the Interest Period with respect thereto shall be [1 month] [2 months]
[3 months] [6 months] [30 days].

     The amount available to be borrowed under Section 2.01 of the Credit
Agreement, net of amounts to be paid with the proceeds of this Borrowing,
is as follows:

     (a)   Aggregate amount of Commitments   $______________

     (b)   Borrowing Base per most recent
           Borrowing Base Certificate
           $______________ lesser of (a)
           and (b) $______________ 20%
           of (c)                            $______________

     (c)   Principal amount outstanding
           under Syndicated Loans of the
           undersigned                       $______________

     (d)   Principal amount outstanding
           under Swing Loans of the
           undersigned                       $______________
--------------------
  (1)  Not to exceed the amount available to be borrowed as set forth in
the next paragraph.

<PAGE>

     (e)   Principal amount outstanding
           under Money Market Loans of
           the undersigned                   $______________

     (f)   Amount available to be borrowed:
           (d) less sum of (e), (f) and
           (g) $______                       $______________

     The undersigned Borrower has caused this Notice of Borrowing to be
executed and delivered by its duly authorized officer this ____ day off
__________, ___.

                      [AMLI RESIDENTIAL PROPERTIES, L.P.,
                      a Delaware limited partnership

                      By:   AMLI Residential Properties Trust,
                            a Maryland real estate investment trust,
                            its General Partner]

                            By:
                            Title:

                      [AMLI MANAGEMENT COMPANY, a Delaware corporation]

                      By:
                      Title:

                      [AMLI RESIDENTIAL CONSTRUCTION LLC,
                      a Delaware limited liability company]

                      By:
                      Title:

<PAGE>

                               EXHIBIT F
                               ---------

COMPLIANCE CERTIFICATE

     Reference is made to the Amended And Restated Credit Agreement dated
as of November 15, 2000 (together with all amendments and modifications
thereto, the "Credit Agreement") among AMLI Residential Properties, L.P., a
Delaware limited partnership,  AMLI Management Company, a Delaware
corporation, AMLI Residential Construction LLC, a Delaware limited
liability company (collectively, the "Borrowers"), the Banks (as defined in
the Credit Agreement), Wachovia Bank, N.A., as Administrative Agent, Bank
One, NA, as Syndication Agent and PNC Bank, National Association, as
Documentation Agent.  Capitalized terms used herein shall have the meanings
ascribed thereto in the Credit Agreement; all amounts shown herein, unless
expressly set forth to the contrary, shall be without duplication.

     Pursuant to Section 5.01(c) of the Credit Agreement, _____________,
the duly authorized __________ of the undersigned Borrower, hereby
(i) certifies to the Administrative Agent and the Banks that the
information contained in the Compliance Check List attached hereto is true,
accurate and complete as of _________, _____, and that no Default is in
existence on and as of the date hereof and (ii) restates and reaffirms that
the representations and warranties contained in Article IV of the Credit
Agreement are true on and as of the date hereof as though restated on and
as of this date.

                      [AMLI RESIDENTIAL PROPERTIES, L.P.,
                      a Delaware limited partnership

                      By:   AMLI Residential Properties Trust,
                            a Maryland real estate investment trust,
                            its General Partner]

                      [AMLI MANAGEMENT COMPANY, a Delaware corporation

                      [AMLI RESIDENTIAL CONSTRUCTION LLC,
                      a Delaware limited liability company]

                      By:
                      Title:

<PAGE>

                         COMPLIANCE CHECK LIST
                         ---------------------

[AMLI RESIDENTIAL PROPERTIES, L.P.]

[AMLI MANAGEMENT COMPANY]
[AMLI RESIDENTIAL CONSTRUCTION LLC]

_______________________________

_________________, ______

1.   CONSOLIDATIONS, MERGERS AND SALES OF ASSETS (SECTION 5.05)

     Neither any of the Borrowers, the General Partner nor any of the
Guarantors will consolidate or merge with or into, or acquire all or
substantially all of the assets or stock of any other Person, or sell,
lease or otherwise transfer all or any substantial part of its assets to,
any other Person, provided that:

           (i)   the Parent may merge with another Person if (x) such
Person was organized under the laws of the United States of America or one
of its states, (y) the Borrower is the limited partnership surviving such
merger and (z) immediately after giving effect to such merger, no Default
shall have occurred and be continuing;

           (ii)  Guarantors which are Subsidiaries may merge with one
another and may sell, lease or otherwise transfer assets to the Parent;

           (iii) the foregoing limitation on the acquisition of all or
substantially all the assets or stock of another Person shall not prohibit,
during any Fiscal Quarter, the acquisition of all or substantially all of
the assets or stock of another Person unless the aggregate assets or stock
acquired in a single acquisition or series of related acquisitions of all
or substantially all of the assets or stock of another Person by the
Borrowers, the General Partner and the Guarantors during such Fiscal
Quarter constituted more than 20% of Gross Asset Value at the end of the
most recent Fiscal Quarter immediately preceding such Fiscal Quarter; and

           (iv)  the foregoing limitation on the sale, lease or other
transfer of assets shall not prohibit, during any Fiscal Quarter, a
transfer of assets (in a single transaction or in a series of related
transactions) unless the aggregate assets to be so transferred, when
combined with all other assets transferred, by the Borrowers, the General
Partner and the Guarantors during such Fiscal Quarter and the immediately
preceding 3 Fiscal Quarters, constituted more than 20% of Gross Asset Value
at the end of the most recent Fiscal Year immediately preceding such Fiscal
Quarter.

In the case of any Guarantor that is a Subsidiary which transfers
substantially all of its assets pursuant to clause (iv) of the preceding
sentence, and in the case of any Guarantor that is a Subsidiary the stock
of which is being sold and with respect to which clause (iv) would have
been satisfied if the transaction had been a sale of assets of such
Guarantor, such Guarantor may dissolve and shall be entitled to obtain from
the Administrative Agent a written release from the Guaranty, PROVIDED that
it can demonstrate to the reasonable satisfaction of the Administrative
Agent that (A) it has repaid in full all Debt owed to the Borrowers or any
other Guarantor and (B) such sale was for cash and in the case of an asset
transfer, the net cash proceeds received in connection therewith are being
distributed to the Borrowers as part of such dissolution, and upon
obtaining such written release, it shall no longer be a Guarantor for any
purpose hereunder.

<PAGE>

     (a)   Aggregate amount of assets or
           stock acquired in a single acquisition
           or series of related acquisitions
           during Fiscal Quarter just ended  $___________

     (b)   Gross Asset Value Schedule 1      $___________

     (c)   20% of (b)
           Limitation:  (a) may not exceed (c)$___________

     (d)   Aggregate amount of assets sold
           during Fiscal Quarter just ended  $___________

     (e)   Aggregate amount of assets sold
           during 3 prior Fiscal Quarters    $___________

     (f)   Sum of (d) and (e)
           Limitation: (f) may not exceed (c)$___________

2.   RESTRICTED PAYMENTS (SECTION 5.15) (1)

     The Parent's Restricted Payments in any calendar year shall not
exceed 95% of Funds From Operations for such period, unless (i) the Parent
must pay out an amount in excess of 95% of Funds From Operations to permit
the General Partner to preserve its status as a real estate investment
trust under the applicable provision of the Code, or (ii) the Parent
declares one or more capital gains dividends within such calendar year (in
which event the amount of additional Restricted Payments that may be made
as a result of such declaration as provided in this clause (ii) shall not
exceed the greater of (A) the income tax liability of the Parent's partners
with respect thereto and (B) $1,500,000).  In the event that the Parent
receives an Investment Grade Debt Rating and so long as that rating (or a
better rating) is affirmed during each year, the Parent's Restricted
Payments in any calendar year will be limited to 100% of Funds from
Operations for such calendar year with the same exceptions contained in
clauses (i) and (ii) of this Section 5.15.

     (a)   Restricted Payments for current
           calendar year                     $___________

     (b)   Funds From Operations for
           current calendar year Schedule 2  $___________

     (c)   Maximum Restricted Payments
           Generally: [95%] [100%] of (b)    $___________

     (d)   Additional Restricted Payments
           permitted by clause (i)           $___________

     (e)   Additional Restricted Payments
           permitted by clause (ii), not
           to exceed greater of partners'
           income tax liability and
           $1,500,000                        $___________

     (f)   Calendar year distributions
           to date                           $___________

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

   (1)  Include this paragraph 2 and Schedule 2 only with the first
Compliance Certificate furnished after the end of each Fiscal Year.

<PAGE>

3.   LOANS OR ADVANCES (SECTION 5.16)

     Neither any of the Borrowers, the General Partner nor any of the
Guarantors shall make loans or advances to any Person except as permitted
by Section 5.17 and except:

           (i)   deposits required by government agencies or public
utilities;

           (ii)  loans or advances from the Parent to a Guarantor or from
a Guarantor to a Parent or another Guarantor;

           (iii) loans and advances made to (A) AMLI Institutional
Advisors, Inc. as part of its initial capital structure in the amount of
$500,000, and (B) AMLI Management Company as part of its initial capital
structure in the amount of $3,000,000;

           (iv)  loans or advances to employees, officers and directors
not exceeding $1,000,000 in the aggregate principal amount outstanding at
any time, in each case made in the ordinary course of business, but
excluding loans and advances described in clause (v);

           (v)   loans and advances to employees, officers and directors
to enable them to buy partnership units in the Parent or stock in the
General Partner which are secured by a pledge of such stock, so long as the
aggregate amount of all such loans does not exceed $10,000,000;

           (vi)  working capital loans and advances to AMLI Residential
Construction, Inc. for use in the ordinary course of business and
consistent with past practices, so long as the aggregate principal amount
outstanding at any time for all such loans and advances is not in excess of
$15,000,000;

           (vii) loans and advances to Co-Investment Partnerships in an
aggregate amount which, together with Investments in Co-Investment
Partnerships, does not exceed 30% of Gross Asset Value; and/or

           (viii) other loans and advances by the Borrowers, the General
Partner and the Guarantors to any Person other than a Co-Investment
Partnership which (x) are evidenced by notes (and, if requested by the
Administrative Agent, acting at the direction of the Required Banks, with
such notes, together with any related mortgage, have been assigned to and
pledged with the Administrative Agent, for the benefit of itself and the
Banks, as security for the payment of all obligations of the Borrowers to
the Administrative Agent and the Banks hereunder) and (y) are in an amount
which, together with Investments permitted by clause (vii) of Section 5.17,
do not exceed 5% of Gross Asset Value as of the end of the most recent
Fiscal Quarter;

     PROVIDED that after giving effect to the making of any loans,
advances or deposits permitted by this Section, no Default shall be in
existence or be created thereby.

     (a)   Loans and advances to employees,
           officers and directors, excluding
           stock purchase loans Limitation   $___________
                                             $1,000,000

     (b)   Loans and advances to employees,
           officers and directors for the
           purchase of, and  secured by,
           stock in the General Partner
           Limitation                        $___________
                                             $10,000,000

<PAGE>

     (c)   working capital loans to AMLI
           Residential Construction, Inc.
           for construction in progress
           Limitation                        $___________
                                             $15,000,000

     (d)   Loans and advances to Co-Invest-
           ment Partnerships                 $___________

     (e)   See line (e) and "Limitation"
           of paragraph 4 below              $___________

     (f)   other loans and advances evidenced
           by notes (and, if required,
           pledged with Administrative Agent)
           and not permitted by clauses
           (i) through (vii)                 $___________

     (g)   See line (i) and "Limitation" of
           paragraph 4 below                 $___________

4.   INVESTMENTS (SECTION 5.17)

     Investments of the Parent as of the Restatement Closing Date (other
than in Subsidiaries and Co-Investment Partnerships, which are set forth in
Schedule 4.08), are set forth on Schedule 5.17.  Neither any of the
Borrowers, the General Partner nor any of the Guarantors shall make
Investments after the Restatement Closing Date in any Person except as
permitted by Section 5.16 and except Investments in:

           (i)   direct obligations of the United States Government
maturing within one year;

           (ii)  certificates of deposit issued by a commercial bank whose
credit is satisfactory to the Administrative Agent;

           (iii) commercial paper rated A1 or the equivalent thereof by
S&P or P1 or the equivalent thereof by Moody's and in either case maturing
within 6 months after the date of acquisition;

           (iv)  tender bonds the payment of the principal of and interest
on which is fully supported by a letter of credit issued by a United States
bank whose long-term certificates of deposit are rated at least A or the
equivalent thereof by S&P and A or the equivalent thereof by Moody's;

           (v)   Investments consisting of the acquisition of all or
substantially all of the assets or stock of another Person permitted by
Section 5.05(iii);

           (vi)  Investments in Co-Investment Partnerships permitted by
Section 5.26; and/or

           (vii) other Investments by the Borrowers, the General Partner
and the Guarantors, other than in Co-Investment Partnerships, in an amount
which, together with loans and advances permitted by clause (viii) of
Section 5.16, do not exceed 5% of Gross Asset Value as of the end of the
most recent Fiscal Quarter;

     PROVIDED, HOWEVER, immediately after giving effect to the making of
any Investment, no Default shall have occurred and be continuing.

     (a)   Investments in Co-Investment
           Partnerships                      $___________

     (b)   line (e) of paragraph 3 above     $___________

<PAGE>

     (c)   sum of (a) and (b)                $___________

     (d)   Gross Asset Value  Schedule 1     $___________

     (e)   30% of line (d)                   $___________
           Limitation: (c) may not exceed (e)

     (f)   Line (f) of paragraph 3 above     $___________

     (g)   Other Investments not permitted
           by clauses (i) through (vi)       $___________

     (h)   Sum of (f) and (g)                $___________

     (i)   5% of (d)
           Limitation: (h) may not exceed (i)$___________

5.   RATIO OF CONSOLIDATED TOTAL LIABILITIES TO UNDEPRECIATED
     BOOK ASSET VALUE (SECTION 5.20)

     The ratio of Total Consolidated Liabilities to Undepreciated Book
Asset Value shall at all times be equal to or less than 0.60 to 1.0.

     (a)   Total Consolidated Liabilities
           Schedule 3                        $___________
     (b)   Original cost of all real estate
           assets plus the cost of capital
           improvements thereon, without deduction
           for accumulated depreciation and
           amortization incurred in connection
           therewith                         $___________

     (c)   Book value of all other tangible
           assets determined in accordance
           with GAAP                         $___________

     (d)   Approved Collateral Value         $___________

     (e)   Undepreciated Book Asset Value
           (sum of (b) plus (c) minus (d))   $___________

     (f)   Actual ratio of (a) to (e)
           Maximum Ratio                     _______ to 1.0
                                             0.60 to 1.0

6    RATIO OF TOTAL SECURED DEBT TO GROSS ASSET VALUE (SECTION 5.21)

     The ratio of Total Secured Debt to Gross Asset Value shall at all
times be equal to or less than 0.45 to 1.0.

     (a)   Total Secured Debt  Schedule 4    $___________

     (b)   Gross Asset Value  Schedule 1     $___________

     (c)   Actual ratio of (a) to (b)
           Minimum Ratio                     _____ to 1.0
                                             0.45 to 1.0

7.   RATIO OF EBITDA TO CONSOLIDATED INTEREST EXPENSE (SECTION 5.22)

     The ratio of EBITDA to Consolidated Interest Expense for the Fiscal
Quarter just ended will not be less than 2.0 to 1.00, calculated at the end
of each Fiscal Quarter.

     (a)   EBITDA  Schedule 5                $___________

     (b)   Consolidated Interest Expense     $___________

<PAGE>

     (c)   Ratio of (a) to (b) to 1.0
           Minimum Ratio                     _____ to 1.0
                                             2.0 to 1.0

8.   RATIO OF UNENCUMBERED ASSETS TO UNSECURED FUNDED DEBT (SECTION 5.23)

     The ratio of Unencumbered Assets to Unsecured Funded Debt shall at
all times be equal to or greater than 1.75 to 1.00.

     (a)   Net Operating Income from each
           Property (other than Properties
           owned by a Co-Investment
           Partnership) not subject to
           a Mortgage Schedule 6             $___________

     (b)   (a) divided by 0.09               $___________

     (c)   4 times (b)                       $___________

     (d)   book value of all Construction
           in Progress and unimproved land
           not subject to a Mortgage (in
           each case excluding Properties
           owned by a Co-Investment
           Partnership)                      $___________

     (e)   sum of (c) and (d)                $___________

     (f)   Unsecured Funded Debt  Schedule 7 $___________

     (g)   Actual ratio of (e) to (f)
           Minimum Ratio                     _____ to 1.0
                                             1.75 to 1.0

9.   RATIO OF UNSECURED NET OPERATING INCOME TO UNSECURED INTEREST
EXPENSE (SECTION 5.24)

     The ratio of Unsecured Net Operating Income to Unsecured Interest
Expense shall at all times be equal to or greater than 2.0 to 1.0.

     (a)   Unsecured Net Operating Income
           Schedule 6                        $___________

     (b)   Unsecured Interest Expense (2)    $___________

     (c)   Actual ratio of (a) to (b)
           Minimum Ratio                     _____ to 1.0
                                             2.0 to 1.0

10.  RATIO OF EBITDA TO CONSOLIDATED FIXED CHARGES (SECTION 5.30)

     The ratio of EBITDA to Consolidated Fixed Charges for the Fiscal
Quarter just ended and the 3 immediately preceding Fiscal Quarters will not
be less than 1.75 to 1.00, calculated at the end of each Fiscal Quarter.

     (a)   EBITDA   Schedule 5               $___________

     (b)   Consolidated Fixed Charges
           Schedule 8                        $___________

     (c)   Ratio of (a) to (b) to 1.0
           Minimum Ratio                     _____ to 1.0
                                             1.75 to 1.0

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

   (2)  Include only Consolidated Interest Expense attributable to
Unsecured Funded Debt.

<PAGE>

11.  CO-INVESTMENT PARTNERSHIPS DEPRECIATED BOOK VALUE (SECTION 5.26)

     The amount of the depreciated book value set forth on the line item
designated as "Investments in Partnerships" on the Parent's consolidated
balance sheet, together with the aggregate amount of loans and advances to
Co-Investment Partnerships permitted by clause (vii) of Section 5.16, shall
not at any time exceed 30% of Gross Asset Value.

     (a)   depreciated book value of
           Co-Investment Partnerships per
           Borrower's consolidated balance
           sheet                             $___________

     (b)   Gross Asset Value Schedule 1
           Limitation (a) may not exceed
           30% of (b)                        $___________

<PAGE>

                              SCHEDULE 1
                              ----------

GROSS ASSET VALUE

(a)  Net Operating Income for the 3 month
     period ending on the last day of the
     month just ended prior to the date of
     determination, from each Property (other
     than Properties owned by a Co-Investment
     Partnership) owned for three months or longer $___________

(b)  (a) divided by 0.09                           $___________

(c)  4 times (b)                                   $___________

(d)  book value of Construction in Progress
     (other than Properties owned by a
     Co-Investment Partnership) and
     unimproved land                               $___________

(e)  acquisition cost of improved Property
     (other than Properties owned by a
     Co-Investment Partnership) owned by
     Parent for less than three months             $___________

(f)  sum of unrestricted cash on deposit
     and market value of Investments permitted
     under Section 5.17(i), (ii), (iii) and (iv)   $___________

(g)  sum of all earnings before interest and
     taxes of the Service Companies for the
     3 month period ending on the last day of
     the month just ended                          $___________

(h)  4 times (g)                                   $___________

(i)  (h) divided by 0.15                           $___________

     GROSS ASSET VALUE (sum of (c), (d),
     (e) (f) and (i))                              $___________

<PAGE>

                              SCHEDULE 2
                              ----------

FUNDS FROM OPERATIONS

(for Fiscal Year just ended) (1)

1.   Net income                                    $___________
           plus depreciation and amortization

2.   of real estate assets                         $___________

3.         plus net loss/(gain) on real estate sales$___________

4.         plus loss/(gains) on extraordinary
                 items plus depreciation of
                 real estate assets held in
                 unconsolidated entities           $___________

5.   FUNDS FROM OPERATIONS                         $___________

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

   (1)  The calculation is subject to change as required by NAREIT, subject
to the provisions of Section 1.02.

<PAGE>

                              SCHEDULE 3
                              ----------

TOTAL CONSOLIDATED LIABILITIES

1.   Consolidated Liabilities                      $___________

2.   Debt Guaranteed by Borrowers or any Guarantor $___________

3.   Face amount of all letters of credit
     issued for the account of the Borrowers
     or any Guarantor                              $___________

4.   Approved Collateral Value                     $___________

TOTAL CONSOLIDATED LIABILITIES
     (sum of (a)through (c) minus (d)              $___________

<PAGE>

                              SCHEDULE 4
                              ----------

TOTAL SECURED DEBT (1)

                          INTEREST       FINAL
                           RATE(2)      MATURITY      TOTAL
                          --------      --------    ---------
MONEY BORROWED
--------------

    Total Money Borrowed

DEFERRED PURCHASE PRICE (3)
---------------------------

    Total Deferred Purchase Price

CAPITAL LEASES IN WHICH BORROWERS
ARE THE TENANTS
---------------------------------

    Total Capital Leases

LETTER OF CREDIT REIMBURSEMENT
OBLIGATIONS
------------------------------

    Total Letter of Credit
    Reimbursement Obligations

GUARANTEE OF DEBT OF PERSONS OTHER
THAN BORROWERS AND GUARANTOR
-----------------------------------

    TOTAL SECURED DEBT

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

   (1)  Include only Debt secured by a Mortgage.
   (2)  If rate is fixed, insert contract rate.  If rate is floating, state
that.
   (3)  Exclude trade accounts payable in the ordinary course of business.

<PAGE>

                              SCHEDULE 5
                              ----------

EBITDA

_____ quarter _____

consolidated net income            $_________

less extraordinary gains          ($_________)

plus extraordinary losses          $_________

plus Consolidated Interest Expense $_________

plus taxes on income               $_________

plus depreciation and amortization $_________

plus other non-cash charges        $_________

     Total                         $_________

     EBITDA                        $
                                   ==========

<PAGE>

                              SCHEDULE 6
                              ----------

UNSECURED NET OPERATING INCOME AND NET OPERATING INCOME (1)
-----------------------------------------------------------

(for Fiscal Quarter just ended)

_____ quarter _____

(a)  Property Revenues                       $___________

(b)  Property expenses
     (excluding depreciation, amortization
     and debt service and actual
     management fees)                        $___________

(c)  UNSECURED NET OPERATING INCOME
     (sum of  (a) less (b)                   $___________

(d)  management fee (4% of gross rental
     income, excluding percentage rents and
     less any management fees included in (b))$___________

(e)  capital reserve ($150 per Unit)         $___________

(f)  NET OPERATING INCOME (sum of
     (c) less (d) less (e)                   $___________

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

   (1)  Include only Properties not subject to a Mortgage.

<PAGE>

                              SCHEDULE 7
                              ----------

UNSECURED FUNDED DEBT (1)

                          INTEREST       FINAL
                           RATE(2)      MATURITY      TOTAL
                          --------      --------    ---------
MONEY BORROWED
--------------

    Total Money Borrowed

DEFERRED PURCHASE PRICE (3)
---------------------------

    Total Deferred Purchase Price

CAPITAL LEASES IN WHICH BORROWERS
ARE THE TENANTS
---------------------------------

    Total Capital Leases

LETTER OF CREDIT REIMBURSEMENT
OBLIGATIONS
------------------------------

    Total Letter of Credit
    Reimbursement Obligations

GUARANTEE OF DEBT OF PERSONS OTHER
THAN BORROWERS AND GUARANTOR
-----------------------------------

    TOTAL SECURED DEBT

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

   (1)  Include only Debt secured by a Mortgage.
   (2)  If rate is fixed, insert contract rate.  If rate is floating, state
that.
   (3)  Exclude trade accounts payable in the ordinary course of business.

<PAGE>

                              SCHEDULE 8
                              ----------

CONSOLIDATED FIXED CHARGES

_____ quarter _____

Consolidated Interest Expense                $_________

plus dividends paid or declared but not paid
     on preferred stock                      $_________

plus scheduled principal amortization paid (1)$_________

plus other non-cash charges                  $_________

     Total                                   $_________

_____ quarter _____

Consolidated Interest Expense                $_________

plus dividends paid or declared but not paid
     on preferred stock                      $_________

plus scheduled principal amortization paid   $_________

plus other non-cash charges                  $_________

     Total                                   $_________

_____ quarter _____

Consolidated Interest Expense                $_________

plus dividends paid or declared but not paid
     on preferred stock                      $_________

plus scheduled principal amortization paid (1)$_________

plus other non-cash charges                  $_________

     Total                                   $_________

_____ quarter _____

Consolidated Interest Expense                $_________

plus dividends paid or declared but
     not paid on preferred stock             $_________

plus scheduled principal amortization paid (1)$_________

plus other non-cash charges                  $_________

     Total                                   $_________

     Consolidated Fixed Charges              $
                                             ==========

<PAGE>

                               EXHIBIT G
                               ---------

AMLI RESIDENTIAL PROPERTIES, L.P.

CLOSING CERTIFICATE

     Reference is made to the Credit Agreement (the "Credit
Agreement") dated as of October 12, 1999, among AMLI Residential
Properties, L.P., the Banks listed therein, Wachovia Bank, N.A., as
Administrative Agent, Bank One, NA, as Syndication Agent and PNC Bank,
National Association, as Documentation Agent.  Capitalized terms used
herein have the meanings ascribed thereto in the Credit Agreement.

     Pursuant to Section 3.01(e) of the Credit Agreement, _______________,
the duly authorized Executive Officer of AMLI Residential Properties Trust,
the General Partner of AMLI Residential Properties, L.P., hereby certifies
to the Administrative Agent and the Banks that, to the best of my
knowledge, (i) no Default has occurred and is continuing as of the date
hereof, and (ii) the representations and warranties contained in Article IV
of the Credit Agreement are true on and as of the date hereof.
Certified as of October 12, 1999.

By:
Printed Name:

           [Chairman] [Vice Chairman] [President] [Treasurer]
           [Chief Financial Officer]

<PAGE>

                               EXHIBIT H
                              ----------

AMLI RESIDENTIAL PROPERTIES TRUST

OFFICER'S CERTIFICATE

     The undersigned, ___________________,  the [Chairman] [Vice Chairman]
[President] [Treasurer][Chief Financial Officer] of AMLI RESIDENTIAL
PROPERTIES TRUST, general partner of AMLI RESIDENTIAL PROPERTIES L.P., a
Delaware limited partnership (the "Borrower"), hereby certifies that [s]he
has been duly elected, qualified and is acting in such capacity and that,
as such, [s]he is familiar with the facts herein certified and is duly
authorized to certify the same, and hereby further certifies, in connection
with the Credit Agreement dated as of October 12, 1999 (as amended from
time to time, the "Credit Agreement") among the Borrower, Wachovia Bank,
N.A., as Administrative Agent, Bank One, NA, as Syndication Agent and PNC
Bank, National Association, as Documentation Agent, and certain other Banks
listed on the signature pages thereof, that:

     1.    Attached hereto as Exhibit A is a complete and correct copy of
the Declaration of Trust of AMLI Residential Properties Trust (the
"Trust") as in full force and effect on the date hereof.

     2.    Attached hereto as Exhibit B is a complete and correct copy of
the Certificate of Limited Partnership as certified by the Secretary of
State of the State of Delaware, the Borrower's state of creation.

     3.    Attached hereto as Exhibit C is a complete and correct copy of
the Partnership Agreement of the Borrower as in full force and effect on
the date hereof.

     4.    The General Partner incorporates herein by reference as fully
as if set forth herein all of the representations and warranties pertaining
to the General Partner contained in Article IV of the Credit Agreement
(which representations and warranties shall be deemed to have been renewed
by the General Partner upon each Borrowing under the Credit Agreement, and
the General Partner will fully comply with those covenants set forth in
Article V of the Credit Agreement pertaining to the General Partner, and
the General Partner incorporates herein by reference as fully as if set
forth herein all of such covenants.

     5.    As [Chairman] [Vice Chairman] [President] [Treasurer] [Chief
Financial Officer] I have been duly authorized by all proper and necessary
action to execute and deliver the Credit Agreement and the other Loan
Documents (defined in the Credit Agreement) on behalf of the Trust, as
general partner of the Borrower and (with respect to Paragraph 4 hereof) on
behalf of the Trust, and no consent or approval of any beneficiaries or
trustors under the Trust is required as a condition thereto.

     IN WITNESS WHEREOF, the undersigned has hereunto set [his/her] hand
as of July ___, 1998.

     [Chairman] [Vice Chairman]
     [President] [Treasurer][Chief Financial Officer]

<PAGE>

                               EXHIBIT I
                               ---------

BORROWING BASE CERTIFICATE

     Reference is made to the Amended And Restated Credit Agreement dated
as of November 15, 2000 (together with all amendments and modifications
thereto, the "Credit Agreement") among AMLI Residential Properties, L.P., a
Delaware limited partnership,  AMLI Management Company, a Delaware
corporation, AMLI Residential Construction LLC, a Delaware limited
liability company (collectively, the "Borrowers"), the Banks (as defined in
the Credit Agreement), Wachovia Bank, N.A., as Administrative Agent, Bank
One, NA, as Syndication Agent and PNC Bank, National Association, as
Documentation Agent.  Capitalized terms used herein shall have the meanings
ascribed thereto in the Credit Agreement.

     Pursuant to Section 5.01(h) of the Credit Agreement, ______________,
the duly authorized __________________ of the Parent, hereby (i) certifies
to the Administrative Agent and the Banks that the calculation of the
Borrowing Base contained in this Borrowing Base Certificate is true,
accurate and complete in all material respects as of __________, ______.
The calculation of the Borrowing Base is as follows:

(a)  Net Operating Income for the 3 month
     period ending on the last day of the
     Fiscal Quarter just ended prior to
     the date of determination, from each
     Eligible Unencumbered Stabilized Property$___________

(b)  (a) divided by 0.09                     $___________

(c)  4 times (b)                             $___________

(d)  0.60 times (c)                          $___________

(e)  book value of Construction in Progress
     on all Eligible Properties              $___________

(f)  0.50 times (e)                          $___________

(g)  lesser of (f) and $50,000,000           $___________

(h)  cost of land acquired for apartment
     community development                   $___________

(i)  0.40 times (h)                          $___________

(j)  lesser of (i) and $15,000,000           $___________

BORROWING BASE: sum of (d), PLUS (g), PLUS (j)$___________

                      AMLI RESIDENTIAL PROPERTIES, L.P.,
                      a Delaware limited partnership

                      By:   AMLI Residential Properties Trust,
                            a Maryland real estate investment trust,
                            its General Partner

<PAGE>

                               EXHIBIT J
                               ---------

                      LIST OF ELIGIBLE PROPERTIES

Property                    Location

AMLI at Autumn Chase        Carrollton, Texas
AMLI at Autumn Chase II     Carrollton, Texas
AMLI at Autumn Chase III    Carrollton, Texas
AMLI at Chase Oaks          Plano, Texas
AMLI at Gleneagles          Dallas, Texas
AMLI at Gleneagles II       Dallas, Texas
AMLI at Paces Vinings       Atlanta, Georgia
AMLI at Paces Vinings II    Atlanta, Georgia
AMLI at West Paces          Atlanta, Georgia
AMLI at Alvamar             Lawrence, Kansas
AMLI at Spring Creek I-IV   Atlanta, Georgia
AMLI at Arboretum           Austin, Texas
AMLI at Bent Tree           Dallas, Texas
AMLI at Bent Tree II        Dallas, Texas
AMLI at Lantana Ridge       Austin, Texas
AMLI at Martha's Vineyard   Austin, Texas
AMLI at Town Center         Overland Park, Kansas
AMLI at Killian Creek       Snellville, Georgia
AMLI at Rosemeade           Dallas, Texas
AMLI at Centennial Park     Overland Park, Kansas
AMLI at Lexington Farms     Overland Park, Kansas
AMLI at Eagle Creek         Indianapolis, Indiana
AMLI at Stone Hollow        Austin, Texas
AMLI at King's Harbour      Houston, Texas
AMLI at Prairie Lakes       Indianapolis, Indiana

<PAGE>

                               EXHIBIT K
                               ---------

GUARANTY

     THIS GUARANTY (this "Guaranty") is made as of November 15, 2000 by
AMLI Residential Properties, L.P., a Delaware limited partnership (the
"Guarantor"; the terms "Guarantor" and "Guarantors" shall also include any
Subsidiary of AMLI Residential Properties L.P. which becomes a Guarantor
pursuant to Section 15 hereof and Section 5.28 of the Credit Agreement
referred to below, and the liability of all of the Guarantors shall be
joint and several) in favor of the Administrative Agent, for the ratable
benefit of the Banks, under the Credit Agreement referred to below;

                         W I T N E S S E T H :

     WHEREAS, AMLI Residential Properties, L.P., a Delaware limited
partnership,  AMLI Management Company, a Delaware corporation, AMLI
Residential Construction LLC, a Delaware limited liability company
(collectively, the "Borrowers"), Wachovia Bank, N.A., as Administrative
Agent (the "Administrative Agent"), Bank One, NA, as Syndication Agent, PNC
Bank, National Association, as Documentation Agent and certain other Banks
from time to time party thereto have entered into a certain Amended and
Restated Credit Agreement dated as November 15, 2000 (as amended as of the
date hereof and as it may be amended or modified further from time to time,
the "Credit Agreement"), providing, subject to the terms and conditions
thereof, for extensions of credit to be made by the Banks to the Borrowers
which will the benefit the Guarantors;

     WHEREAS, it is required under Section 5.28 of the Credit Agreement,
that the Guarantor execute and deliver this Guaranty whereby it and,
together with the other Guarantors which are or become such as contemplated
in such Section and in Section 15 hereof, shall guarantee the payment when
due of all principal, interest and other amounts that shall be at any time
payable by the any Borrower under the Credit Agreement, the Notes and the
other Loan Documents; and

     WHEREAS, in consideration of the financial and other support that the
Borrowers have provided, and such financial and other support as the
Borrowers may in the future provide, to the Guarantors, whether directly or
indirectly, and in order to induce the Banks and the Administrative Agent
to enter into and maintain the credit facilities under the Credit
Agreement, the Guarantors are willing to guarantee the obligations of the
Borrowers under the Credit Agreement, the Notes, and the other Loan
Documents;

     NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

SECTION 1.  DEFINITIONS.

     Terms defined in the Credit Agreement and not otherwise defined
herein have, as used herein, the respective meanings provided for therein.

SECTION 2.  REPRESENTATIONS AND WARRANTIES.

     The Guarantors incorporate herein by reference as fully as if set
forth herein all of the representations and warranties pertaining to the
Guarantors contained in Article IV of the Credit Agreement (which
representations and warranties shall be deemed to have been renewed by the
Guarantors upon each Borrowing under the Credit Agreement).

<PAGE>

SECTION 3.  COVENANTS.

     The Guarantors covenant that, so long as any Bank has any Commitment
outstanding under the Credit Agreement or any amount payable under the
Credit Agreement or any Note shall remain unpaid, the Guarantors will fully
comply with those covenants set forth in Article V of the Credit Agreement
pertaining to the Guarantors, and the Guarantors incorporate herein by
reference as fully as if set forth herein all of such covenants.

SECTION 4.  THE GUARANTY.

     The Guarantors hereby unconditionally and jointly and severally
guarantee (i) the full and punctual payment (whether at stated maturity,
upon acceleration or otherwise) of the principal of and interest on each
Note issued by the Borrowers pursuant to the Credit Agreement, and the full
and punctual payment of all other amounts payable by the Borrowers under
the Credit Agreement, including, without limitation, all Syndicated Loans
and Swing Loans and interest thereon, all compensation and indemnification
amounts and fees payable pursuant to the Credit Agreement and the
Restatement Agent's Letter Agreement, and (ii) the timely performance of
all other obligations of the Borrowers under the Credit Agreement and the
other Loan Documents (all of the foregoing obligations being referred to
collectively as the "Guaranteed Obligations").  Upon failure by any
Borrower to pay punctually any such amount or perform such obligations,
each of the Guarantors agrees that it shall forthwith on demand pay the
amount not so paid at the place and in the manner specified in the Credit
Agreement, the relevant Note or the relevant Loan Document, as the case may
be, or perform such obligation in accordance with the terms and conditions
therefor specified in the Credit Agreement or the other Loan Documents, and
pay all costs of collection, including reasonable attorneys fees; PROVIDED
THAT, notwithstanding the provisions of O.C.G.A. Section 13-1-11(a)(2) to
the contrary, the Guarantors shall not be obligated to pay more than the
attorneys fees actually incurred in connection with such collection.

SECTION 5.  GUARANTY UNCONDITIONAL.

     The obligations of the Guarantors hereunder shall be unconditional
and absolute and, without limiting the generality of the foregoing, shall
not be released, discharged or otherwise affected by:

           (i)   any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrowers under the Credit
Agreement, any Note, or any other Loan Document, by operation of law or
otherwise or any obligation of any other guarantor of any of the Guaranteed
Obligations;

           (ii)  any modification or amendment of or supplement to the
Credit Agreement, any Note, or any other Loan Document;

           (iii) any release, nonperfection or invalidity of any direct or
indirect security, if any, for any obligation of any Borrower under the
Credit Agreement, any Note, any Loan Document, or any obligations of any
other guarantor of any of the Guaranteed Obligations;

           (iv)  any change in the partnership structure, corporate
structure or ownership of any Borrower or any Guarantor or any other
guarantor of any of the Guaranteed Obligations, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting any
Borrower, or any Guarantor or any other guarantor of the Guaranteed
Obligations, or its assets or any resulting release or discharge of any
obligation of any Borrower, or any Guarantor or any other guarantor of any
of the Guaranteed Obligations;

<PAGE>

           (v)   the existence of any claim, setoff or other rights which
the Guarantors may have at any time against any Borrower, any other
Guarantor or any other guarantor of any of the Guaranteed Obligations, the
Administrative Agent, any Bank or any other Person, whether in connection
herewith or any unrelated transactions, provided that nothing herein shall
prevent the assertion of any such claim by separate suit or compulsory
counterclaim;

           (vi)  any invalidity or unenforceability relating to or against
any Borrower, or any other Guarantor or any other guarantor of any of the
Guaranteed Obligations, for any reason related to the Credit Agreement, any
other Loan Document, or any other Guaranty, or any provision of applicable
law or regulation purporting to prohibit the payment by any Borrower, or
any Guarantor or any other guarantor of the Guaranteed Obligations, of the
principal of or interest on any Note or any other amount payable by any
Borrower under the Credit Agreement, the Notes, or any other Loan Document;
or

           (vii) any other act or omission to act or delay of any kind by
any Borrower, any other Guarantor or any other guarantor of the Guaranteed
Obligations, the Administrative Agent, any Bank or any other Person or any
other circumstance whatsoever which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of any Guarantor's
obligations hereunder.

SECTION 6.  DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT
     IN CERTAIN CIRCUMSTANCES.

     The Guarantors' obligations hereunder shall remain in full force and
effect until all Guaranteed Obligations shall have been paid in full and
the Commitments under the Credit Agreement shall have terminated or
expired.  If at any time any payment of the principal of or interest on any
Note or any other amount payable by any Borrower under the Credit Agreement
or any other Loan Document is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization of any Borrower
or otherwise, the Guarantors' obligations hereunder with respect to such
payment shall be reinstated as though such payment had been due but not
made at such time.

SECTION 7.  WAIVER OF NOTICE BY THE GUARANTORS.

     The Guarantors irrevocably waive acceptance hereof, presentment,
demand, protest and, to the fullest extent permitted by law, any notice not
provided for herein, as well as any requirement that at any time any action
be taken by any Person against any Borrower, any other Guarantor or any
other guarantor of the Guaranteed Obligations, or any other Person.

SECTION 8.  STAY OF ACCELERATION.

     If acceleration of the time for payment of any amount payable by any
Borrower under the Credit Agreement, any Note or any other Loan Document is
stayed upon the insolvency, bankruptcy or reorganization of any Borrower,
all such amounts otherwise subject to acceleration under the terms of the
Credit Agreement, any Note or any other Loan Document shall nonetheless be
payable by the Guarantors hereunder forthwith on demand by the
Administrative Agent made at the request of the Required Banks.

<PAGE>

SECTION 9.  NOTICES.

     All notices, requests and other communications to any party hereunder
shall be given or made by telecopier or other writing and telecopied or
mailed or delivered to the intended recipient at its address or telecopier
number set forth on the signature pages hereof or such other address or
telecopy number as such party may hereafter specify for such purpose by
notice to the Administrative Agent in accordance with the provisions of
Section 9.01 of the Credit Agreement.  Except as otherwise provided in this
Guaranty, all such communications shall be deemed to have been duly given
when transmitted by telecopier, or personally delivered or, in the case of
a mailed notice, 3 Domestic Business Days after such communication is
deposited in the mails with first class postage prepaid, in each case given
or addressed as aforesaid.

SECTION 10.  NO WAIVERS.

     No failure or delay by the Administrative Agent or any Banks in
exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right,
power or privilege.  The rights and remedies provided in this Guaranty, the
Credit Agreement, the Notes, and the other Loan Documents shall be
cumulative and not exclusive of any rights or remedies provided by law.

SECTION 11.  SUCCESSORS AND ASSIGNS.

     This Guaranty is for the benefit of the Administrative Agent and the
Banks and their respective successors and assigns and in the event of an
assignment of any amounts payable under the Credit Agreement, the Notes, or
the other Loan Documents, the rights hereunder, to the extent applicable to
the indebtedness so assigned, may be transferred with such indebtedness.
This Guaranty may not be assigned by the Guarantors without the prior
written consent of the Administrative Agent and the Required Banks, and
shall be binding upon the Guarantors and their respective successors and
permitted assigns.

SECTION 12.  CHANGES IN WRITING.

     Neither this Guaranty nor any provision hereof may be changed,
waived, discharged or terminated orally, but only in writing signed by the
Guarantors and the Administrative Agent, with the consent of the Required
Banks.

SECTION 13.  GOVERNING LAW; SUBMISSION TO JURISDICTION;
     WAIVER OF JURY TRIAL.

     THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAW OF THE STATE OF GEORGIA.  EACH OF THE GUARANTORS AND THE
ADMINISTRATIVE AGENT HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA AND OF
ANY GEORGIA STATE COURT SITTING IN ATLANTA, GEORGIA AND FOR PURPOSES OF ALL
LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.  THE GUARANTORS IRREVOCABLY WAIVE, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH ANY OF THEM MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  EACH OF THE GUARANTORS AND THE
ADMINISTRATIVE AGENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

<PAGE>

SECTION 14.  TAXES, ETC.

     All payments required to be made by the Guarantors hereunder shall be
made without setoff or counterclaim and free and clear of and without
deduction or withholding for or on account of, any present or future taxes,
levies, imposts, duties or other charges of whatsoever nature imposed by
any government or any political or taxing authority pursuant and subject to
the provisions of Section 2.10(c) of the Credit Agreement, the terms of
which are incorporated herein by reference as to the Guarantors as fully as
if set forth herein, and for such purposes, the rights and obligations of
any Borrower under such Section shall devolve to the Guarantors as to
payments required to be made by the Guarantors hereunder.

SECTION 15.  ADDITIONAL GUARANTORS; RELEASE OF GUARANTORS.

     Section 5.28 of the Credit Agreement provides that all new
Subsidiaries and must become Guarantors, by, among other things, executing
and delivering to the Administrative Agent a counterpart of this Guaranty
or a joinder agreement with respect hereto.  Any Subsidiary which executes
and delivers to the Administrative Agent a counterpart of this Guaranty or
a joinder agreement with respect hereto shall be a Guarantor for all
purposes hereunder.  Under certain circumstances described in the last
sentence of Section 5.05 of the Credit Agreement, Guarantors may obtain
from the Administrative Agent a written release from this Guaranty pursuant
to the provisions of such sentence, and upon obtaining such written
release, any such Subsidiary shall no longer be a Guarantor hereunder.
Each other Guarantor consents and agrees to any such release and agrees
that no such release shall affect its obligations hereunder.

SECTION 16.  OTHER WAIVERS BY THE GUARANTORS.

     The Guarantors hereby expressly waive, renounce, and agree not to
assert, any right, claim or cause of action, including, without limitation,
a claim for reimbursement, subrogation, indemnification or otherwise,
against any Borrower arising out of or by reason of this Guaranty or the
obligations of the Guarantors hereunder, including, without limitation, the
payment or securing or purchasing of any of the Guaranteed Obligations by
the Guarantors.  The waiver, renunciation and agreement contained in the
immediately preceding sentence is for the benefit of the Administrative
Agent and the Banks and also for the benefit of any Borrower who may assert
the benefits thereof as a third-party beneficiary, and the Guarantors may
be released from such waiver, renunciation and agreement only by the
execution and delivery, by the Administrative Agent, the Required Banks and
the Borrowers, of an instrument expressly releasing the Guarantors
therefrom.

<PAGE>

     IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed, under seal, by its authorized officer as of the date first above
written.

                      AMLI RESIDENTIAL PROPERTIES, L.P.,
                      a Delaware limited partnership

                      By:   AMLI Residential Properties Trust,
                            a Maryland real estate investment trust,
                            its General Partner

<PAGE>

                               EXHIBIT L
                               ---------

CONTRIBUTION AGREEMENT

     THIS CONTRIBUTION AGREEMENT (this "Agreement") is entered into as of
______________, ____, jointly and severally, by and among AMLI Residential
Properties, L.P., a Delaware limited partnership (the "Principal"), and
_________________, a _____________ corporation (the "Guarantor"; the terms
"Guarantor" and "Guarantors" shall also include any Subsidiary of the
Principal which becomes a Guarantor pursuant to the last paragraph hereof
and Section 5.28 of the Credit Agreement referred to below).  The Principal
and each of the Subsidiary Guarantors are sometimes hereinafter referred to
individually as a "Contributing Party" and collectively as the
"Contributing Parties").

                         W I T N E S S E T H :

     WHEREAS, pursuant to that certain Amended And Restated Credit
Agreement dated as of November 15, 2000, among the Principal,  AMLI
Management Company, a Delaware corporation, AMLI Residential Construction
LLC, a Delaware limited liability company (collectively, the "Borrowers"),
the Banks (as defined in the Credit Agreement), Wachovia Bank, N.A., as
Administrative Agent, Bank One, NA, as Syndication Agent and PNC Bank,
National Association, as Documentation Agent (such agreement, as amended as
of the date hereof and as the same may from time to time be amended,
modified, restated or extended, being hereinafter referred to as the
"Credit Agreement"; capitalized terms used herein shall have the meanings
ascribed thereto in the Credit Agreement), the Banks have agreed to extend
financial accommodations to the Principal;

     WHEREAS, Section 5.28 of the Credit Agreement requires that the
Guarantor execute and deliver that certain Guaranty, dated as of even date
herewith (such agreement, as the same may from time to time be amended,
modified, restated or extended, being hereinafter referred to as the
"Guaranty"), pursuant to which, among other things, the Guarantor and,
together with other Guarantors which become such as contemplated in the
last paragraph hereof, have jointly and severally agreed to guarantee the
"Guaranteed Obligations" (as defined in the Guaranty); and

     WHEREAS, each Guarantor is a direct or indirect subsidiary of the
Principal and is engaged in businesses related to those of the Principal
and each other Guarantor, and each of the Guarantors will derive direct or
indirect economic benefit from the effectiveness and existence of the
Credit Agreement;

     NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, and to induce each Guarantor to enter into the
Guaranty, it is agreed as follows:

     To the extent that any Guarantor shall, under the Guaranty, make a
payment (a "Guarantor Payment") of a portion of the Guaranteed Obligations,
then, without limiting its rights of subrogation against the principal,
such Guarantor shall be entitled to contribution and indemnification from,
and be reimbursed by, each of the other Contributing Parties in an amount,
for each such Contributing Party, equal to a fraction of such Guarantor
Payment, the numerator of which fraction is such Contributing Party's
Allocable Amount and the denominator of which is the sum of the Allocable
Amounts of all of the Contributing Parties.

<PAGE>

     As of any date of determination, the "Allocable Amount" of each
Contributing Party shall be equal to the maximum amount of liability which
could be asserted against such Contributing Party hereunder with respect to
the applicable Guarantor Payment without (i) rendering such Contributing
Party "insolvent" within the meaning of Section 101(31) of the Federal
Bankruptcy Code (the "Bankruptcy Code") or Section 2 of either the Uniform
Fraudulent Transfer Act (the "UFTA") or the Uniform Fraudulent Conveyance
Act (the "UFCA"), (ii) leaving such Contributing Party with unreasonably
small capital, within the meaning of Section 548 of the Bankruptcy Code or
Section 4 of the UFTA or Section 5 of the UFCA, or (iii) leaving such
Contributing Party unable to pay its debts as they become due within the
meaning of Section 548 of the Bankruptcy Code or Section 4 of the UFTA or
Section 6 of the UFCA.

     This Agreement is intended only to define the relative rights of the
Contributing Parties, and nothing set forth in this Agreement is intended
to or shall impair the obligations of the Guarantors, jointly and
severally, to pay any amounts, as and when the same shall become due and
payable in accordance with the terms of the Guaranty.

     The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets in favor of each
Guarantor to which such contribution and indemnification is owing.

     This Agreement shall become effective upon its execution by each of
the Contributing Parties and shall continue in full force and effect and
may not be terminated or otherwise revoked by any Contributing Party until
all of the Guaranteed Obligations shall have been indefeasibly paid in full
(in lawful money of the United States of America) and discharged and the
Credit Agreement and financing arrangements evidenced and governed by the
Credit Agreement shall have been terminated.  Each Contributing Party
agrees that if, notwithstanding the foregoing, such Contributing Party
shall have any right under applicable law to terminate or revoke this
Agreement, and such Contributing Party shall attempt to exercise such
right, then such termination or revocation shall not be effective until a
written notice of such revocation or termination, specifically referring
hereto and signed by such Contributing Party, is actually received by each
of the other Contributing Parties and by the Administrative Agent at its
notice address set forth in the Credit Agreement.  Such notice shall not
affect the right or power of any Contributing Party to enforce rights
arising prior to receipt of such written notice by each of the other
Contributing Parties and the Administrative Agent.  If any Bank grants
additional loans to the Principal or takes other action giving rise to
additional Guaranteed Obligations after any Contributing Party has
exercised any right to terminate or revoke this Agreement but before the
Administrative Agent receives such written notice, the rights of each other
Contributing Party to contribution and indemnification hereunder in
connection with any Guarantor Payments made with respect to such loans or
Guaranteed Obligations shall be the same as if such termination or
revocation had not occurred.

     Section 5.28 of the Credit Agreement provides that new Subsidiaries,
must become Guarantors by, among other things, executing and delivering to
the Administrative Agent a counterpart of the Guaranty and of this
Contribution Agreement or a joinder agreement with respect thereto.  Any
Subsidiary which executes and delivers to the Administrative Agent a
counterpart of the Guaranty and of this Contribution Agreement  or a
joinder agreement with respect thereto shall be a Guarantor for all
purposes hereunder.   Under certain circumstances described in the last
sentence of Section 5.05 of the Credit Agreement, Guarantors may obtain
from the Administrative Agent a written release from the Guaranty pursuant
to the provisions of such sentence, and upon obtaining such written
release, any such Subsidiary shall no longer be a Guarantor or Contributing
Party hereunder, and such release shall automatically and without further
action constitute a release by each other Contributing Party of all
obligations of such Subsidiary hereunder.  Each other Guarantor consents
and agrees to any such release and agrees that no such release shall affect
its obligations hereunder, except as to the Subsidiary so released.

<PAGE>

     IN WITNESS WHEREOF, each Contributing Party has executed and
delivered this Agreement, under seal, as of the date first above written.

                      AMLI RESIDENTIAL PROPERTIES, L.P.
                      (SEAL)

                      By:   AMLI RESIDENTIAL PROPERTIES
                            TRUST, a Maryland real estate investment
                            trust, its General Partner

                            By:
                            Title:

                            By:
                            Title:

<PAGE>

                               EXHIBIT M
                               ---------

MONEY MARKET QUOTE REQUEST

Wachovia Bank, N.A.,
    as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia  30303-1757
Attention:  Syndications Group

Re:  MONEY MARKET QUOTE REQUEST

     This Money Market Quote Request is given in accordance with
Section 2.03 of the Amended And Restated Credit Agreement dated as of
November 15, 2000 (together with all amendments and modifications thereto,
the "Credit Agreement") among AMLI Residential Properties, L.P., a Delaware
limited partnership,  AMLI Management Company, a Delaware corporation, AMLI
Residential Construction LLC, a Delaware limited liability company
(collectively, the "Borrowers"), the Banks (as defined in the Credit
Agreement), Wachovia Bank, N.A., as Administrative Agent, Bank One, NA, as
Syndication Agent and PNC Bank, National Association, as Documentation
Agent.  Terms defined in the Credit Agreement are used herein as defined
therein.

     The Undersigned Borrower hereby requests that the Administrative
Agent obtain quotes for a Money Market Borrowing based upon the following:

     1.    The proposed date of the Money Market Borrowing shall be
______________, 19_____ (the "Money Market Borrowing Date").(1) *

     2.    The aggregate amount of the Money Market Borrowing shall be
$______. (2)

     3.    The Stated Maturity Date(s) applicable to the Money Market
Borrowing shall be ____ days. (3)

* All numbered footnotes appear on the last page of this EXHIBIT M.

<PAGE>

                      [AMLI RESIDENTIAL PROPERTIES, L.P.,
                      a Delaware limited partnership

                      By:   AMLI Residential Properties Trust,
                            a Maryland real estate investment trust,
                            its General Partner]

                      [AMLI MANAGEMENT COMPANY, a Delaware corporation
                      [AMLI RESIDENTIAL CONSTRUCTION LLC,
                      a Delaware limited liability company]

                      By:
                      Title:

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

     (1)   The date must be a Euro-Dollar Business Day.

     (2)   The amount of the Money Market Borrowing is subject to
Section 2.03(a) and (b).

     (3)   The Stated Maturity Dates are subject to Section 2.03(b)(iii).
The Undersigned Borrower may request that up to 2 different Stated Maturity
Dates be applicable to any Money Market Borrowing, PROVIDED that (i) each
such Stated Maturity Date shall be deemed to be a separate Money Market
Quote Request and (ii) the Undersigned Borrower shall specify the amounts
of such Money Market Borrowing to be subject to each such different Stated
Maturity Date.

<PAGE>

                               EXHIBIT N
                               ---------

MONEY MARKET QUOTE
------------------

Wachovia Bank, N.A.,
    as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Syndications Group

Re:  Money Market Quote to ______________

     This Money Market Quote is given in accordance with
Section 2.03(c)(ii) of the Amended And Restated Credit Agreement dated as
of November 15, 2000 (together with all amendments and modifications
thereto, the "Credit Agreement") among AMLI Residential Properties, L.P., a
Delaware limited partnership,  AMLI Management Company, a Delaware
corporation, AMLI Residential Construction LLC, a Delaware limited
liability company (collectively, the "Borrowers"), the Banks (as defined in
the Credit Agreement), Wachovia Bank, N.A., as Administrative Agent, Bank
One, NA, as Syndication Agent and PNC Bank, National Association, as
Documentation Agent.  Terms defined in the Credit Agreement are used herein
as defined therein.

     In response to the [Parent's] [AMLI Management's] [AMLI
Construction's] Money Market Quote Request dated __________, 19____, we
hereby make the following Money Market Quote on the following terms:

1.   Quoting Bank:

2.   Person to contact at Quoting Bank:

3.   Date of Money Market Borrowing:(1)*

4.   We hereby offer to make Money Market Loan(s) in the following maximum
principal amounts for the following Interest Periods and at the following
rates:

     Maximum                Stated
     Principal              Maturity         Rate Per
     Amount (2)             Date (3)         Annum (4)
     ----------             --------         ---------

   *  All numbered footnotes appear on the last page of this EXHIBIT N.

<PAGE>

     We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the Credit
Agreement, irrevocably obligate(s) us to make the Money Market Loan(s) for
which any offer(s) [is] [are] accepted, in whole or in part (subject to the
last sentence of Section 2.03(c)(i) of the Credit Agreement).

                            Very truly yours,

                            [Name of Bank]

                 Dated:     By:

                 ________________________________
                 Authorized Officer

                 Officer:

                 ________________________________

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

     1     As specified in the related Money Market Quote Request.

     2     The principal amount bid for each Stated Maturity Date may not
exceed the principal amount requested.  Money Market Quotes must be made
for at least $1,000,000 or a larger integral multiple of $500,000.

     3     The Stated Maturity Dates are subject to Section 2.03(b)(ii).

     4     Subject to Section 2.03(c)(ii)(C).

<PAGE>

                               EXHIBIT P
                               ---------

BANK JOINDER AGREEMENT

Dated ___________, ____

     Reference is made to the Amended And Restated Credit Agreement dated
as of November 15, 2000 (together with all amendments and modifications
thereto, the "Credit Agreement") among AMLI Residential Properties, L.P., a
Delaware limited partnership,  AMLI Management Company, a Delaware
corporation, AMLI Residential Construction LLC, a Delaware limited
liability company (collectively, the "Borrowers"), the Banks (as defined in
the Credit Agreement), Wachovia Bank, N.A., as Administrative Agent, Bank
One, NA, as Syndication Agent and PNC Bank, National Association, as
Documentation Agent.  Terms defined in the Credit Agreement are used herein
with the same meaning.

     The undersigned, _________________________ (the "Joining Bank")
desires to join as a Bank under the Credit Agreement pursuant to the
provisions of Section 2.14 thereof, and hereby agree as follows:

     1.    The Joining Bank hereby sets forth its Commitment as a Bank
under the Credit Agreement in the amount of $__________________ and
requests the execution and delivery by the relevant Borrower to it of a
Syndicated Loan Note in that amount and a Money Market Loan Note.

     2.    The Joining Bank (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements
referred to in Section 4.04(a) thereof (or any more recent financial
statements of the Parent delivered pursuant to Section 5.01(a) or
(b) thereof) and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Bank Joinder Agreement; (ii) agrees that it will, independently and without
reliance upon the Administrative Agent or any other Bank and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under the Credit Agreement; (iii) confirms that it is a bank or financial
institution; (iv) appoints and authorizes the Administrative Agent to take
such action as agent on its behalf and to exercise such powers under the
Credit Agreement as are delegated to the Administrative Agent by the terms
thereof, together with such powers as are reasonably incidental thereto;
(v) agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Bank; (vi) specifies as its Lending Office (and
address for notices) the office set forth beneath its name on the signature
pages hereof, (vii) represents and warrants that the execution, delivery
and performance of this Bank Joinder Agreement are within its powers and
have been duly authorized by all necessary action, (viii) makes the
representation and warranty contained in Section 9.18 of the Credit
Agreement, [and] (ix) agrees that on the Effective Date, it will purchase
participations in the existing Syndicated Loans of the other Banks pursuant
to Section 2.14 of the Credit Agreement [and (x) attaches the forms
prescribed by the Internal Revenue Service of the United States certifying
as to the Assignee's status for purposes of determining exemption from
United States withholding taxes with respect to all payments to be made to
the Assignee under the Credit Agreement and the Notes].

     3.    The Effective Date for this Bank Joinder Agreement shall be
___________, ____ (the "Effective Date"), provided that it has been
executed and accepted by the Co-Lead Arrangers and the relevant Borrower
and delivered to the Administrative Agent.

<PAGE>

     4.    Upon such execution and acceptance by the Co-Lead Arrangers and
the relevant Borrower and delivery to the Administrative Agent, and from
and after the Effective Date, (i) the Assignee shall be a party to the
Credit Agreement.

     5.    This Bank Joinder Agreement shall be governed by, and construed
in accordance with, the laws of the State of Georgia.

                      [NAME OF JOINING BANK]

                      By:
                      Title:

                      Lending Office:
                      [Address]

                      WACHOVIA SECURITIES, INC.,
                      As Co-Lead Arranger

                      By:
                      Title:

                      BANC ONE CAPITAL MARKETS, INC.,
                      As Co-Lead Arranger

                      By:
                      Title:

                      [AMLI RESIDENTIAL PROPERTIES, L.P.,
                      a Delaware limited partnership

                      By:   AMLI Residential Properties Trust,
                            a Maryland real estate investment trust,
                            its General Partner]

                      [AMLI MANAGEMENT COMPANY, a Delaware corporation

                      [AMLI RESIDENTIAL CONSTRUCTION LLC,
                      a Delaware limited liability company]

                      By:
                      Title:

<PAGE>

                               EXHIBIT Q
                               ---------

FORM OF DESIGNATION AGREEMENT
-----------------------------

Dated __________________, _______

     Reference is made to the Amended And Restated Credit Agreement dated
as of November 15, 2000 among AMLI Residential Properties, L.P., a Delaware
limited partnership,  AMLI Management Company, a Delaware corporation, AMLI
Residential Construction LLC, a Delaware limited liability company
(collectively, the "Borrowers"), the Banks (as defined in the Credit
Agreement), Wachovia Bank, N.A., as Administrative Agent, Bank One, NA, as
Syndication Agent and PNC Bank, National Association, as Documentation
Agent (as amended prior to the date hereof and as it may hereafter be
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement").  Terms defined in the Credit Agreement are used herein with
the same meaning.

     [NAME OF DESIGNATING BANK] (the "Designating Bank") and [NAME OF
DESIGNEE] (the "Designee") agree as follows:

     1.    Pursuant to Section 9.08(g) of the Credit Agreement, the
Designating Bank hereby designates the Designee, and the Designee hereby
accepts such designation, to have a right to make Money Market Loans
pursuant to Section 2.03(h) of the Credit Agreement.  Any assignment by
Designating Bank to Designee of its rights to make a Money Market Loan
pursuant to such Section 2.03(h) shall be effective at the time of the
funding of such Money Market Loan and not before such time.

     2.    Except as set forth in Section 7, below, the Designating Bank
makes no representation or warranty and assumes no responsibility pursuant
to this Designation Agreement with respect to (a) any statements,
warranties or representations made in or in connection with any Loan
Document or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Loan Document or any other instrument and
document furnished pursuant thereto and (b) the financial condition of the
Borrowers or the performance or observance by the Borrowers of any of its
obligations under any Loan Document or any other instrument or document
furnished pursuant thereto.

     3.    The Designee (a) confirms that it has received a copy of each
Loan Document, together with copies of the financial statements referred to
in Sections 4.04 and 5.01(a) and (b) (for periods for which such financial
statements are available) of the Credit Agreement and such other documents
and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Designation Agreement; (b) agrees
that it will independently and without reliance upon the Administrative
Agent, the Designating Bank or any other Bank and based on such documents
and information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under any Loan
Document; (c) confirms that it is a Designated Bank; (d) appoints and
authorizes the Administrative Agent to take such action as the
Administrative Agent on its behalf and to exercise such powers and
discretion under any Loan Document as are delegated to the Administrative
Agent by the terms thereof, together with such powers and discretion as are
reasonably incidental thereto; and (e) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of
any Loan Document are required to be performed by it as a Bank.

<PAGE>

     4.    The Designee hereby appoints  the Designating Bank as
Designee's agent and attorney in fact and grants to the Designating Bank an
irrevocable power of attorney, coupled with an interest, to receive
payments made for the benefit of Designee under the Credit Agreement, to
deliver and receive all communications and notices under the Credit
Agreement and other Loan Documents and to exercise on Designee's behalf all
rights to vote and to grant and make approvals, waivers, consent of
amendments to or under the Credit Agreement or other Loan Documents.  Any
document executed by such agent on the Designee's behalf in connection with
the Credit Agreement or other Loan Documents shall be binding on the
Designee.  The Borrowers,  the Administrative Agent and each of the Banks
may rely on and are beneficiaries of the preceding provisions.

     5.    Following the execution of this Designation Agreement by the
Designating Bank and its Designee, it will be delivered to the relevant
Borrower for acknowledgment and to the Administrative Agent for
acknowledgment and recording by the Administrative Agent.  The effective
date for this Designation Agreement (the "Effective Date") shall be the
date of acknowledgment hereof by the Administrative Agent, unless otherwise
specified on the signature page thereto.

     6.    The Designating Bank and, by execution of their respective
acknowledgments below, the relevant Borrower and the Administrative Agent,
each hereby (i) acknowledges that the Designee is relying on the non-
petition provisions of Section 9.19 of the Credit Agreement as agreed to by
all signatories thereto and (ii) reaffirms that it will not institute
against the Designee or join any other Person in instituting against the
Designee any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any federal or state bankruptcy or similar
law for one year and done day after the payment in full of the latest
maturing commercial paper note issued by the Designee.

     7.    The Designating Bank unconditionally agrees to pay or reimburse
the Designee and save the Designee harmless against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or mature whatsoever which may be
imposed or asserted by any of the parties to the Loan Documents against the
Designee, in its capacity as such, in any way relating to or arising out of
this Agreement or any other Loan Documents or any action taken or omitted
by the Designee hereunder or thereunder, provided that the Designating Bank
shall not be liable for any  portion of such Liabilities, obligations,
Losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements if the same results from the Designee's gross negligence or
willful misconduct.

     8.    Upon such acceptance and recording by the Administrative Agent,
as of the Effective Date, the Designee shall be a party to the Credit
Agreement with a right to make Money Market Loans as a Designated Bank
pursuant to Section 2.03(h) of the Credit Agreement and the rights and
obligations of a Designated Bank related thereto; provided, however, that
the Designee shall not be required to make payments with respect to such
obligations except to the extent of excess cash flow of the Designee which
is not otherwise required to repay obligations of the Designee Bank which
is not otherwise required to repay obligations of the Designee Bank which
are then due and payable.  Notwithstanding the foregoing, the Designating
Bank shall be and remain obligated to the relevant Borrower, the
Administrative Agent and the Banks for each and every of the obligations of
the Designee and the Designating Bank with respect to the Credit Agreement,
including, without limitation, any indemnification obligations under
Section 7.05 of the Credit Agreement and any sums otherwise payable to the
relevant Borrower by the Designee.

     9.    This Designation Agreement shall be governed by and construed
in accordance with the laws of the State of [Georgia][New York][other
jurisdiction chosen by Designating Bank and Designated Bank].

<PAGE>

     10.   This Designation Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.  Delivery
of an executed counterpart of a signature page to this Designation
Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart of this Designation Agreement.

     IN WITNESS WHEREOF, the Designating Bank and the Designee, intending
to be legally bound, have caused this Designation Agreement to be executed
by their officers thereunto duly authorized as of the date first above
written.

                      [NAME OF DESIGNATING BANK]
                      as Designating Bank

                      By;
                      Title:

                      [NAME OF DESIGNEE], as Designee

                      By:
                      Title:

                      Lending Office (and address for notices):

Acknowledged this ____ day        Acknowledged this ____ day
of ______________ ____, 19__      of ______________ __, 19__
(the Effective Date)

WACHOVIA BANK, NA
As the Administrative Agent       as the Borrower

By:                               By:
Title                             Title:

<PAGE>

                             SCHEDULE 4.08
                             -------------

SUBSIDIARIES AND CO-INVESTMENT PARTNERSHIPS

SUBSIDIARIES:
------------

NAME:JURISDICTION OF CREATION
-------------------------------

1.   Laurel Park Venture                           Georgia
2.   Park Creek-Gainsville, L.L.C.                 Georgia
3.   Lantana Apartments, Ltd.                      Texas
4.   Windsor Plano Partners, Ltd.                  Texas
5.   AMLI at Conner Farms, L.P.                    Delaware
6.   Clairmont, L.P.                               Delaware

CO-INVESTMENT PARTNERSHIPS:
--------------------------

NAME:  JURISDICTION OF CREATION
--------------------------------

1.   AMLI Foundation Co-Investors-II, L.P. -
     Greenwood Forest                              Delaware
2.   AMLI at Champions, L.P. - Park at Champions
     and Champions Centre (Houston, Texas)         Texas
3.   AMLI at Chevy Chase, L.P.Illinois
4.   AMLI at River Exchange Limited Liability
     Company                                       Delaware
5.   AMLI at Willeo Creek, L.P.                    Georgia
6.   AMLI at Windbrooke, L.P.                      Illinois
7.   Barrett Lakes Limited Liability Company       Delaware
8.   Gardner Drive L.L.C. - Northwinds Apartments
     (Alpharetta, GA)                              Delaware
9.   Pleasant Hill Joint Venture                   Georgia
10.  Acquiport/Aurora Crossing, L.P.               Delaware
11.  Acquiport/Fossil Creek, L.P.                  Delaware
12.  Acquiport/Clearwater, L.P.                    Delaware
13.  Acquiport/Wynnewood Farms, L.P.               Delaware
14.  Acquiport/Monterey Oaks, L.P.                 Delaware
15.  Acquiport/St. Charles, L.P.                   Delaware
16.  Acquiport/Park Bridge, L.P.                   Delaware
17.  AMLI at Danada, L.L.C                         Illinois
18.  AMLI at Regents Crest, L.P.                   Delaware
19.  AMLI Castle Creek, L.P.                       Delaware
20.  AMLI Creekside, L.P.                          Delaware
21.  AMLI at Verandah, L.P.                        Delaware
22.  AMLI at Willowbrook, L.P                      Illinois
23.  Wells Oakhurst, L.P                           Delaware
24.  AMLI Towne Creek Crossing Ltd. Partnership -
     Towne Creek Crossing (Gainesville, Georgia)   Georgia
25.  Timberglen, L.P.                              Delaware
26.  Park Creek - Old Mill, L.P.                   Georgia
27.  AMLIWS Deerfield, L.P.                        Texas
28.  AMLIWS Parkway, L. P.                         Texas
29.  Landmark at Spring Mill, L.L.C.               Delaware
30.  AMLI at Mill Creek, L.L.C.                    Delaware
31.  AMLIWS Summit Ridge, L.L.C.                   Missouri
32.  AMLI/BPMT Prestonwood Hills Partnership       Delaware
33.  Prestonwood Hills REIT II                     Maryland

<PAGE>

34.  AMLI/BPMT On The Green Partnership            Delaware
35.  On The Green REIT II                          Maryland
36.  AMLI Residential Construction, L.P.           Delaware
37.  AMLI at Cambridge Square, L.P.                Delaware
38.  AMLI at Oakbend, L.P.                         Delaware
39.  AMLI Residential Construction LLC             Delaware
40.  AMLI at Peachtree City, LLC                   Delaware
41.  AMLI at Peachtree City - Phase I, LLC         Georgia
42.  AMLI at Peachtree City - Phase II, LLC        Georgia
43.  AMLI at Cambridge Square, LLC                 Delaware
44.  AMLI at Seven Bridges, L.P.                   Delaware
45.  AMLI at Milton Park, LLC                      Delaware
46.  Midtown REIT                                  Maryland
47.  AMLI/BPMT Midtown Partnership                 Delaware
48.  Frankford REIT                                Maryland
49.  AMLI/BPMT Frankford Partnership               Delaware
50.  Southern REIT                                 Maryland
51.  AMLI/BPMT Scofield Partnership                Delaware
52.  Breckinridge REIT                             Maryland
53.  AMLI/BPMT Breckinridge Partnership            Delaware

<PAGE>

                             SCHEDULE 4.14
                             -------------

                     [TO BE UPDATED BY THE PARENT]

                         ENVIRONMENTAL MATTERS

                                 None

<PAGE>

                             SCHEDULE 5.17
                             -------------

                       EXISTING INVESTMENTS (1)

     Real Estate Tax Escrow Deposits   $  768,627
     Earnest Money Deposits            $5,070,000
     Notes Receivable-Co-Investments   $3,618,585
     Note Receivable-Pope & Land       $3,077,221
     Restricted Cash                   $1,313,129
     Security Deposits                 $1,491,000<PAGE>

                                                                     Exhibit 4.1
                                                                     -----------

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

                      RESOLUTION PERFORMANCE PRODUCTS LLC
                         and RPP CAPITAL CORPORATION,
                                  as Issuers,

                                      and

                   UNITED STATES TRUST COMPANY OF NEW YORK,

                                  as Trustee

                           ________________________
                                   INDENTURE
                           ________________________

                         Dated as of November 14, 2000

                  13 1/2% Senior Subordinated Notes due 2010

================================================================================
<PAGE>

                             CROSS-REFERENCE TABLE

<TABLE>
<CAPTION>
TIA Section                                                       Indenture Section
-----------                                                       -----------------
<S>                                                               <C>
310(a)(1).....................................................    7.10
   (a)(2).....................................................    7.10
   (a)(3).....................................................    N.A.
   (a)(4).....................................................    N.A.
   (a)(5).....................................................    7.8; 7.10
   (b)........................................................    7.8; 7.10; 13.2
   (c)........................................................    N.A.
311(a)........................................................    7.11
   (b)........................................................    7.11
   (c)........................................................    N.A.
312(a)........................................................    2.5
   (b)........................................................    11.3
   (c)........................................................    11.3
313(a)........................................................    7.6
   (b)(1).....................................................    7.6
   (b)(2).....................................................    7.6
   (c)........................................................    7.6; 13.2
   (d)........................................................    7.6
314(a)........................................................    4.8; 4.10; 13.2
   (b)........................................................    N.A.
   (c)(1).....................................................    7.2; 13.4; 13.5
   (c)(2).....................................................    7.2; 13.4; 13.5
   (c)(3).....................................................    N.A.
   (d)........................................................    N.A.
   (e)........................................................    11.5
   (f)........................................................    N.A.
315(a)........................................................    7.1(b)
   (b)........................................................    7.5
   (c)........................................................    7.1
   (d)........................................................    6.5; 7.1(c)
   (e)........................................................    6.11
316(a)(last sentence).........................................    2.9
   (a)(1)(A)..................................................    6.5
   (a)(1)(B)..................................................    6.4
   (a)(2).....................................................    9.5
   (b)........................................................    6.7
   (c)........................................................    9.5
317(a)(1).....................................................    6.8
   (a)(2).....................................................    6.9
   (b)........................................................    2.4
318(a)........................................................    13.1
   (c)........................................................    13.1
</TABLE>

__________________
N.A. means Not Applicable.
Note:   This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                              Page
                                                                                                              ----
<S>                                                                                                           <C>
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE..........................................................   1

  1.1    Definitions..........................................................................................   1
  1.2    Incorporation by Reference of TIA....................................................................  34
  1.3    Rules of Construction................................................................................  34

ARTICLE II THE SECURITIES.....................................................................................  35

  2.1    Form and Dating......................................................................................  35
  2.2    Execution and Authentication.........................................................................  36
  2.3    Registrar and Paying Agent...........................................................................  37
  2.4    Paying Agent to Hold Assets in Trust.................................................................  38
  2.5    Holder Lists.........................................................................................  38
  2.6    Transfer and Exchange................................................................................  38
  2.7    Replacement Securities...............................................................................  40
  2.8    Outstanding Securities...............................................................................  40
  2.9    Treasury Securities..................................................................................  40
  2.10   Temporary Securities.................................................................................  41
  2.11   Cancellation.........................................................................................  41
  2.12   Defaulted Interest...................................................................................  41
  2.13   CUSIP and ISIN Numbers...............................................................................  42
  2.14   Restrictive Legends..................................................................................  42
  2.15   Book-Entry Provisions for Global Security............................................................  44
  2.16   Special Transfer Provisions..........................................................................  45

ARTICLE III REDEMPTION........................................................................................  48

  3.1    Notices to Trustee...................................................................................  48
  3.2    Selection of Securities To Be Redeemed...............................................................  49
  3.3    Notice of Redemption.................................................................................  49
  3.4    Effect of Notice Of Redemption.......................................................................  50
  3.5    Deposit of Redemption Price..........................................................................  50
  3.6    Securities Redeemed in Part..........................................................................  51

ARTICLE IV COVENANTS..........................................................................................  51

  4.1    Payment of Securities................................................................................  51
  4.2    Maintenance of Office or Agency......................................................................  51
  4.3    Limitation on Restricted Payments....................................................................  52
  4.4    Limitation on Incurrence of Additional Indebtedness..................................................  56
  4.5    Corporate Existence..................................................................................  57
  4.6    Payment of Taxes and Other Claims....................................................................  57
  4.7    Maintenance of Properties and Insurance..............................................................  57
  4.8    Compliance Certificate; Notice of Default............................................................  58
  4.9    Compliance with Laws.................................................................................  59
  4.10   Reports to Holders...................................................................................  59
  4.11   Waiver of Stay, Extension or Usury Laws..............................................................  60
  4.12   Limitations on Transactions with Affiliates..........................................................  60
  4.13   Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries.........................  62
  4.14   Limitation on the Issuance and Sale of Capital Stock of Restricted Subsidiaries......................  63
  4.15   Limitation on Issuances of Guarantees by Restricted Subsidiaries.....................................  64
  4.16   Limitation on Liens..................................................................................  64
  4.17   Change of Control....................................................................................  65
  4.18   Limitation on Asset Sales............................................................................  67
  4.19   Prohibition on Incurrence of Senior Subordinated Debt................................................  71
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                                                <C>
  4.20   Excess Cash Flow Repurchase Offer.......................................................................  71
  4.21   Future Guarantors.......................................................................................  74

ARTICLE V SUCCESSOR CORPORATION..................................................................................  74

  5.1    Merger, Consolidation and Sale of Assets................................................................  74
  5.2    Successor Corporation Substituted.......................................................................  76

ARTICLE VI DEFAULT AND REMEDIES..................................................................................  77

  6.1    Events of Default.......................................................................................  77
  6.2    Acceleration............................................................................................  78
  6.3    Other Remedies..........................................................................................  79
  6.4    Waiver of Past Defaults.................................................................................  79
  6.5    Control by Majority.....................................................................................  79
  6.6    Limitation on Suits.....................................................................................  80
  6.7    Rights of Holders To Receive Payment....................................................................  80
  6.8    Collection Suit by Trustee..............................................................................  80
  6.9    Trustee May File Proofs of Claim........................................................................  81
  6.10   Priorities..............................................................................................  81
  6.11   Undertaking for Costs...................................................................................  82
  6.12   Restoration of Rights and Remedies......................................................................  82
  6.13   Rights and Remedies Cumulative..........................................................................  82

ARTICLE VII TRUSTEE..............................................................................................  83

  7.1    Duties of Trustee.......................................................................................  83
  7.2    Rights of Trustee.......................................................................................  84
  7.3    Individual Rights of Trustee............................................................................  85
  7.4    Trustee's Disclaimer....................................................................................  85
  7.5    Notice of Default.......................................................................................  85
  7.6    Reports by Trustee to Holders...........................................................................  86
  7.7    Compensation and Indemnity..............................................................................  86
  7.8    Replacement of Trustee..................................................................................  87
  7.9    Successor Trustee by Merger, Etc........................................................................  88
  7.10   Eligibility; Disqualification...........................................................................  88
  7.11   Preferential Collection of Claims Against the Issuers...................................................  89

ARTICLE VIII DISCHARGE OF INDENTURE; DEFEASANCE..................................................................  89

  8.1    Termination of the Issuers' Obligations.................................................................  89
  8.2    Legal Defeasance and Covenant Defeasance................................................................  90
  8.3    Conditions to Legal Defeasance or Covenant Defeasance...................................................  91
  8.4    Application of Trust Money..............................................................................  93
  8.5    Repayment to the Issuers................................................................................  93
  8.6    Reinstatement...........................................................................................  94

ARTICLE IX AMENDMENTS, SUPPLEMENTS AND WAIVERS...................................................................  94

  9.1    Without Consent of Holders..............................................................................  94
  9.2    With Consent of Holders.................................................................................  95
  9.3    Effect on Senior Debt...................................................................................  96
  9.4    Compliance with TIA.....................................................................................  96
  9.5    Revocation and Effect of Consents.......................................................................  96
  9.6    Notation on or Exchange of Securities...................................................................  97
  9.7    Trustee To Sign Amendments, Etc.........................................................................  97

ARTICLE X SUBORDINATION OF SECURITIES............................................................................  98

  10.1   Securities Subordinated to Senior Debt..................................................................  98
  10.2   Suspension of Payment When Senior Debt Is in Default....................................................  98
</TABLE>

                                      ii
<PAGE>

<TABLE>
<S>                                                                                                               <C>
  10.3   Securities Subordinated to Prior Payment of All Senior Debt on Dissolution, Liquidation Or
         Reorganization of the Issuers..........................................................................   99
  10.4   Payments May Be Paid Prior to Dissolution..............................................................  101
  10.5   Holders to Be Subrogated to Rights of Holders of Senior Debt...........................................  101
  10.6   Obligations of the Issuers Unconditional...............................................................  101
  10.7   Notice to Trustee......................................................................................  102
  10.8   Reliance on Judicial Order or Certificate of Liquidating Agent.........................................  102
  10.9   Trustee's Relation to Senior Debt......................................................................  103
  10.10  Subordination Rights Not Impaired by Acts or Omissions of the Issuers or Holders of Senior
         Debt...................................................................................................  103
  10.11  Securityholders Authorize Trustee to Effectuate Subordination of Securities............................  104
  10.12  This Article Ten Not to Prevent Events of Default......................................................  104
  10.13  Trustee's Compensation Not Prejudiced..................................................................  104

ARTICLE XI GUARANTEE OF SECURITIES..............................................................................  105

  11.1   Unconditional Subsidiary Guarantee.....................................................................  105
  11.2   Limitations on Subsidiary Guarantees...................................................................  106
  11.3   Execution and Delivery of Subsidiary Guarantee.........................................................  106
  11.4   Release of a Guarantor.................................................................................  107
  11.5   Waiver of Subrogation..................................................................................  108
  11.6   Immediate Payment......................................................................................  108
  11.7   No Set-Off.............................................................................................  109
  11.8   Obligations Absolute...................................................................................  109
  11.9   Obligations Continuing.................................................................................  109
  11.10  Obligations Not Reduced................................................................................  109
  11.11  Obligations Reinstated.................................................................................  110
  11.12  Obligations Not Affected...............................................................................  110
  11.13  Waiver.................................................................................................  111
  11.14  No Obligation To Take Action Against the Issuers.......................................................  111
  11.15  Dealing with the Issuers and Others....................................................................  112
  11.16  Default and Enforcement................................................................................  112
  11.17  Amendment, Etc.........................................................................................  112
  11.18  Acknowledgment.........................................................................................  112
  11.19  Costs and Expenses.....................................................................................  113
  11.20  No Merger or Waiver; Cumulative Remedies...............................................................  113
  11.21  Survival of Obligations................................................................................  113
  11.22  Subsidiary Guarantee in Addition to Other Obligations..................................................  113
  11.23  Severability...........................................................................................  114
  11.24  Successors and Assigns.................................................................................  114

ARTICLE XII SUBORDINATION OF SUBSIDIARY GUARANTEE...............................................................  114

  12.1   Subsidiary Guarantee Obligations Subordinated to Guarantor Senior Debt.................................  114
  12.2   Suspension of Subsidiary Guarantee Obligations When Guarantor Senior Debt is in Default................  114
  12.3   Subsidiary Guarantee Obligations Subordinated to Prior Payment of All Guarantor Senior Debt
         on Dissolution, Liquidation or Reorganization of Such Guarantor........................................  115
  12.4   Payments May Be Paid Prior to Dissolution..............................................................  116
  12.5   Holders of Subsidiary Guarantee Obligations To Be Subrogated to Rights of Holders of
         Guarantor Senior Debt..................................................................................  117
  12.6   Obligations of the Guarantors Unconditional............................................................  117
  12.7   Notice to Trustee......................................................................................  117
  12.8   Reliance on Judicial Order or Certificate of Liquidating Agent.........................................  118
  12.9   Trustee's Relation to Guarantor Senior Debt............................................................  119
  12.10  Subordination Rights Not Impaired by Acts or Omissions of the Guarantors or Holders of
         Guarantor Senior Debt..................................................................................  119
</TABLE>

                                      iii
<PAGE>

<TABLE>
<S>                                                                                                               <C>
  12.11  Holders Authorize Trustee To Effectuate Subordination of Subsidiary Guarantee Obligations..............  120
  12.12  This Article Twelve Not To Prevent Events of Default...................................................  120
  12.13  Trustee's Compensation Not Prejudiced..................................................................  120

ARTICLE XIII MISCELLANEOUS......................................................................................  121

  13.1   TIA Controls...........................................................................................  121
  13.2   Notices................................................................................................  121
  13.3   Communications by Holders with Other Holders...........................................................  122
  13.4   Certificate and Opinion as to Conditions Precedent.....................................................  122
  13.5   Statements Required in Certificate or Opinion..........................................................  123
  13.6   Rules by Trustee, Paying Agent, Registrar..............................................................  123
  13.7   Legal Holidays.........................................................................................  123
  13.8   Governing Law..........................................................................................  123
  13.9   No Adverse Interpretation of Other Agreements..........................................................  124
  13.10  No Recourse Against Others.............................................................................  124
  13.11  Successors.............................................................................................  124
  13.12  Duplicate Originals....................................................................................  124
  13.13  Severability...........................................................................................  124

  Signatures....................................................................................................  S-1
</TABLE>

Exhibit A   -  Form of Initial Note
Exhibit B   -  Form of Exchange Note
Exhibit C   -  Form of Certificate for Transfers to Non-QIB Accredited Investors
Exhibit D   -  Form of Certificate for Transfers Pursuant to Regulation S
Exhibit E   -  Guarantee

Note:  This Table of Contents shall not, for any purpose, be deemed to be part
of this Indenture

                                      iv
<PAGE>

INDENTURE dated as of November 14, 2000 among RESOLUTION PERFORMANCE PRODUCTS
LLC (formerly known as Shell Epoxy Resins LLC), a Delaware limited liability
company ("RPP LLC" or the "Company"), and RPP CAPITAL CORPORATION, a Delaware
          -------          -------
corporation ("RPP Capital" and together with RPP LLC, collectively the
              -----------
"Issuers"), and UNITED STATES TRUST COMPANY OF NEW YORK, as trustee (the
 -------
"Trustee").
 -------

          The Issuers have duly authorized the creation of an issue of 13 1/2%
Senior Subordinated Notes due 2010 and, when and if issued as provided in the
Registration Rights Agreement in an Exchange Offer, 13 1/2% Senior Subordinated
Notes due 2010, and, to provide therefor, the Issuers have duly authorized the
execution and delivery of this Indenture.  All things necessary to make the
Securities, when duly issued and executed by the Issuers and authenticated and
delivered hereunder, the valid and binding obligations of the Issuers and to
make this Indenture a valid and binding agreement of the Issuers have been done.

          This Indenture is subject to, and shall be governed by, the mandatory
provisions of the Trust Indenture Act of 1939, as amended, that are required to
be a part of and to govern indentures qualified under the Trust Indenture Act of
1939, as amended.

          Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Securities:

                                   ARTICLE I

                  DEFINITIONS AND INCORPORATION BY REFERENCE

1.1  DEFINITIONS.
     -----------

          "Acceleration Notice" has the meaning set forth in Section 6.2.
           -------------------

          "Accredited Investor" has the meaning set forth in Section 2.16(a).
           -------------------

          "Acquired Indebtedness" means Indebtedness of a Person or any of its
           ---------------------
Subsidiaries (1) existing at the time such Person becomes a Restricted
Subsidiary of the Company or at the time it merges or consolidates with the
Company or any of its Restricted Subsidiaries or (2) assumed in connection with
the acquisition of assets from such Person, in each case, not incurred by such
Person in connection with, or in anticipation or contemplation of, such Person
becoming a Restricted Subsidiary of the Company or such acquisition, merger or
consolidation.

          "Affiliate" means, with respect to any specified Person, any other
           ---------
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such specified Person.
The term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative of the
foregoing.  For purposes of this Indenture, the Royal Dutch/Shell Group of
Companies and their Affiliates shall not be deemed to be an Affiliate of the
Company so long as they beneficially own securities representing less than
thirty-five percent of the voting power of the Company or RPP Inc.;
<PAGE>

provided that Apollo beneficially owns securities representing a greater
--------
percentage of the voting power of the Company or RPP Inc. than the Royal
Dutch/Shell Group of Companies and their Affiliates.

          "Affiliate Transaction" has the meaning set forth in Section 4.12(a).
           ---------------------

          "Agent" means any Registrar, Paying Agent or co-Registrar.
           -----

          "Agent Members" has the meaning set forth in Section 2.15(a).
           -------------

          "Apollo" means Apollo Management IV, L.P. and its Affiliates.
           ------

          "Applicable Premium" means, with respect to a Security, the greater of
           ------------------
(i) 1.0% of the then outstanding principal amount of such Security and (ii) (a)
the present value of all remaining required interest and principal payments due
on such Security and all premium payments relating thereto assuming a redemption
date of November 15, 2005, computed using a discount rate equal to the Treasury
Rate plus 50 basis points, minus (b) the then outstanding principal amount of
such Security minus (c) accrued interest paid on the date of redemption.

          "Asset Acquisition" means:
           -----------------

          (1)  an Investment by the Company or any Restricted Subsidiary of the
Company in any other Person pursuant to which such Person shall become a
Restricted Subsidiary of the Company or any Restricted Subsidiary of the
Company, or shall be merged with or into or consolidated with the Company or any
Restricted Subsidiary of the Company; or

          (2)  the acquisition by the Company or any Restricted Subsidiary of
the Company of the assets of any Person (other than a Restricted Subsidiary of
the Company) which constitute all or substantially all of the assets of such
Person or comprise any division or line of business of such Person or any other
properties or assets of such Person other than in the ordinary course of
business.

          "Asset Sale" means any direct or indirect sale, issuance, conveyance,
           ----------
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to
any Person other than the Company or a Wholly Owned Restricted Subsidiary of the
Company of (a) any Capital Stock of any Restricted Subsidiary of the Company
(other than directors' qualifying shares); or (b) any other property or assets
of the Company or any Restricted Subsidiary of the Company other than in the
ordinary course of business; provided, however, that Asset Sales shall not
                             --------  -------
include:

          (1)  a transaction or series of related transactions for which the
Company or its Restricted Subsidiaries receive aggregate consideration of less
than $3.0 million;

          (2)  the sale or exchange of equipment in connection with the purchase
or other acquisition of other equipment, in each case used in the business of
the Company and its Restricted Subsidiaries;

                                       2
<PAGE>

          (3)  the sale, lease, conveyance, disposition or other transfer of all
or substantially all of the assets of the Company as permitted under Section
5.1;

          (4)  disposals of equipment in connection with the reinvestment in or
the replacement of its equipment and disposals of worn-out or obsolete
equipment, in each case in the ordinary course of business of the Company or its
Restricted Subsidiaries;

          (5)  the sale of accounts receivable pursuant to a Qualified
Receivables Transaction;

          (6)  sales or grants of licenses to use the Company's or any
Restricted Subsidiary's patents, trade secrets, know-how and technology to the
extent that such license does not prohibit the licensor from using the patent,
trade secret, know-how or technology;

          (7)  the disposition of any Capital Stock or other ownership interest
in or assets or property of an Unrestricted Subsidiary;

          (8)  Capacity Arrangements;

          (9)  any Restricted Payment permitted under Section 4.3 or that
constitutes a Permitted Investment; and

          (10) one or more Sale and Leaseback Transactions for which the Company
or any Restricted Subsidiary of the Company receives aggregate consideration
from all such Sale and Leaseback Transactions of less than $15.0 million.

          "Bankruptcy Law" means Title 11, U.S. Code, or any similar federal,
           --------------
state or foreign law for the relief of debtors.

          "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
           ----------------
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as such term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire, whether such
right is currently exercisable or is exercisable only upon the occurrence of a
subsequent condition, regardless of when such right may be exercised.

          "Board of Directors" means, as to any Person, the board of directors
           ------------------
or equivalent governing board of such Person or any duly authorized committee
thereof.

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

          "Business Day" means any day other than a Saturday, Sunday or any
           ------------
other day on which banking institutions in The City of New York are required or
authorized by law or other governmental action to be closed.

                                       3
<PAGE>

          "Capacity Arrangements" means any agreement or arrangement involving,
           ---------------------
relating to or otherwise facilitating, (a) requirement contracts, (b) tolling
arrangements or (c) the reservation or presale of production capacity of the
Company or its Restricted Subsidiaries by one or more third parties.

          "Capitalized Lease Obligation" means, as to any Person, the
           ----------------------------
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP; and
the stated maturity thereof shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which such lease
may by prepaid by the lessee without payment of a penalty.

          "Capital Stock" means:
           -------------

          (1)  with respect to any Person that is a corporation, any and all
shares, interests, rights to purchase, warrants, options, participations or
other equivalents (however designated and whether or not voting) of corporate
stock, including each class of Common Stock and Preferred Stock of such Person
or options to purchase the same; and

          (2)  with respect to any Person that is not a corporation, any and all
partnership, membership, limited liability interests or other equity interests
of such Person.

          "Cash Equivalents" means:
           ----------------

          (1)  U.S. dollars, and in the case of any Foreign Restricted
Subsidiaries of the Company, Euros and such local currencies held by them from
time to time in the ordinary course of business;

          (2)  marketable direct obligations issued by, or unconditionally
guaranteed by, the United States, Germany, Spain, Great Britain and The
Netherlands or issued by any agency thereof and backed by the full faith and
credit of the respective country, in each case maturing within one year from the
date of acquisition thereof;

          (3)  marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Ratings Services ("S&P") or Moody's
                                                            ---
Investors Service, Inc. ("Moody's") or, if Moody's and S&P cease to exist, any
                          -------
other nationally recognized statistical rating organization designated by the
Board of Directors of the Company;

          (4)  commercial paper maturing no more than one year from the date of
creation thereof and, at the time of acquisition, having a rating of at least A-
1 from S&P or at least P-1 from Moody's or, if Moody's and S&P cease to exist,
the equivalent from any other nationally recognized statistical rating
organization designated by the Board of Directors of the Company;

                                       4
<PAGE>

          (5)  time deposits, certificates of deposit or bankers' acceptances
maturing within one year from the date of acquisition thereof issued by any bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia or any foreign jurisdiction having at the date of
acquisition thereof combined capital and surplus of not less than $250.0
million;

          (6)  repurchase obligations with a term of not more than thirty days
for underlying securities of the types described in clause (2) above entered
into with any bank meeting the qualifications specified in clause (5) above;

          (7)  investments in money market funds, which invest substantially all
their assets in securities of the types described in clauses (2) through (6)
above; and

          (8)  overnight deposits and demand deposit accounts (in the respective
local currencies) maintained in the ordinary course of business.

          "Change of Control" means the occurrence of one or more of the
           -----------------
following events:

          (1)  any sale, lease, exchange, conveyance, disposition or other
transfer (in one transaction or a series of related transactions) of all or
substantially all of the assets of RPP Inc. or RPP LLC to any Person or group of
related Persons for purposes of Section 13(d) of the Exchange Act (a "Group"),
                                                                      -----
together with any Affiliates thereof (whether or not otherwise in compliance
with the provisions of this Indenture), other than to the Permitted Holders;

          (2)  any approval, adoption or initiating of a plan or proposal for
the liquidation or dissolution of RPP Inc. or RPP LLC (whether or not otherwise
in compliance with the provisions of this Indenture);

          (3)  any Person or Group, together with any Affiliates thereof (other
than the Permitted Holders) shall become the Beneficial Owner or owner of record
(by way of merger, consolidation or other business combinations or by purchase
in one transaction or a series of related transactions) of shares representing
more than 50% of the aggregate ordinary voting power represented by the issued
and outstanding Capital Stock of RPP Inc. or RPP LLC;

          (4)  any Person or Group, together with any Affiliates or related
Persons thereof (other than the Permitted Holders) shall succeed in having a
sufficient number of its nominees elected in the Board of Directors of RPP Inc.
or RPP LLC such that such nominees, when added to any existing director
remaining on the Board of Directors of the Company after such election who was a
nominee of or is an Affiliate or related Person of such Person or Group, will
constitute a majority of the Board of Directors of the Company; or

          (5)  RPP Inc. shall cease to own, directly or indirectly, a majority
of the Capital Stock of the Company.

          "Change of Control Date" has the meaning set forth in Section 4.17(c).
           ----------------------

          "Change of Control Offer" has the meaning set forth in Section
           -----------------------
4.17(a).

                                       5
<PAGE>

          "Change of Control Payment Date" has the meaning set forth in Section
           ------------------------------
4.17(a).

          "Commission" means the Securities and Exchange Commission, as from
           ----------
time to time constituted, created under the Exchange Act or, with respect to the
Commission's duties under the TIA, if at any time after the execution of this
instrument such Commission is not existing and performing the duties now
assigned to it under the TIA, then the body performing such duties at such time.

          "Commodity Agreement" means any commodity futures contract, commodity
           -------------------
option or other similar agreement or arrangement entered into by the Company or
any Restricted Subsidiary of the Company designed to protect the Company or any
of its Restricted Subsidiaries against fluctuations in the price of the
commodities at the time used in the ordinary course of business of the Company
or any of its Restricted Subsidiaries.

          "Common Stock" of any Person means any and all shares, interests or
           ------------
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.

          "Company" means the party named as such in this Indenture until a
           -------
successor replaces it pursuant to this Indenture and thereafter shall mean such
successor Person.

          "Consolidated EBITDA" means, with respect to any Person, for any
           -------------------
period, the sum (without duplication) of:

          (1)  Consolidated Net Income; and

          (2)  to the extent Consolidated Net Income has been reduced thereby,

               (a)  all income taxes of such Person and its Restricted
          Subsidiaries paid or accrued in accordance with GAAP for such period
          (other than income taxes attributable to extraordinary, unusual or
          nonrecurring gains or losses),

               (b)  Consolidated Interest Expense, and

               (c)  Consolidated Non-cash Charges less any noncash items
          increasing Consolidated Net Income for such period,

all as determined on a consolidated basis for such Person and its Restricted
Subsidiaries in accordance with GAAP as applicable.

          "Consolidated Fixed Charge Coverage Ratio" means, with respect to any
           ----------------------------------------
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters for which financial statements are available (the "Four Quarter
                                                                   ------------
Period") ending on or prior to the date of the transaction giving rise to the
------
need to calculate the Consolidated Fixed Charge Coverage Ratio (the "Transaction
                                                                     -----------
Date") to Consolidated Fixed Charges of such Person for the Four Quarter Period.
----
In addition to and without limitation of the foregoing, for purposes of this
definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" shall be
calculated after giving

                                       6
<PAGE>

effect on a pro forma basis (consistent with the provisions below) for the
period of such calculation to:

          (1)  the incurrence or repayment of any Indebtedness of such Person or
     any of its Restricted Subsidiaries (and the application of the proceeds
     thereof) giving rise to the need to make such calculation and any
     incurrence or repayment of other Indebtedness (and the application of the
     proceeds thereof), other than the incurrence or repayment of Indebtedness
     in the ordinary course of business for working capital purposes pursuant to
     working capital facilities, occurring during the Four Quarter Period or at
     any time subsequent to the last day of the Four Quarter Period and on or
     prior to the Transaction Date, as if such incurrence or repayment, as the
     case may be (and the application of the proceeds thereof), occurred on the
     first day of the Four Quarter Period;

          (2)  any asset sales or other dispositions or Asset Acquisitions
     (including, without limitation, any Asset Acquisition giving rise to the
     need to make such calculation as a result of such Person or one of its
     Restricted Subsidiaries (including any Person who becomes a Restricted
     Subsidiary as a result of the Asset Acquisition) incurring, assuming or
     otherwise being liable for Acquired Indebtedness and also including any
     Consolidated EBITDA (including any pro forma expense and cost reductions,
     adjustments and other operating improvements or synergies both achieved by
     such Person during such period and to be achieved by such Person and with
     respect to the acquired assets, all as determined in good faith by a
     responsible financial or accounting officer of such Person attributable to
     the assets which are the subject of the Asset Acquisition or asset sale or
     other dispositions during the Four Quarter Period) occurring during the
     Four Quarter Period or at any time subsequent to the last day of the Four
     Quarter Period and on or prior to the Transaction Date, as if such asset
     sale or other dispositions or Asset Acquisition (including the incurrence,
     assumption or liability for any such Acquired Indebtedness) occurred on the
     first day of the Four Quarter Period.  If such Person or any of its
     Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a
     third Person, the preceding sentence shall give effect to the incurrence of
     such guaranteed Indebtedness as if such Person or any Restricted Subsidiary
     of such Person had directly incurred or otherwise assumed such guaranteed
     Indebtedness; and

          (3)  all adjustments used in connection with the calculation of pro
     forma EBITDA and Adjusted EBITDA as set forth in the Offering Memorandum to
     the extent such adjustments are not fully reflected in such Four Quarter
     Period and continue to be applicable.

          Furthermore, in calculating "Consolidated Fixed Charges" for purposes
of determining the denominator (but not the numerator) of this "Consolidated
Fixed Charge Coverage Ratio,"

          (1)  interest on outstanding Indebtedness determined on a fluctuating
     basis as of the Transaction Date and which will continue to be so
     determined thereafter shall be deemed to have accrued at a fixed rate per
     annum equal to the rate of interest on such Indebtedness in effect on the
     Transaction Date; and

                                       7
<PAGE>

          (2)  notwithstanding clause (1) above, interest on Indebtedness
     determined on a fluctuating basis, to the extent such interest is covered
     by agreements relating to Interest Swap Obligations or Currency Agreements,
     shall be deemed to accrue at the rate per annum resulting after giving
     effect to the operation of such agreements.

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

          (1)  Consolidated Interest Expense (excluding amortization or write-
     off of deferred financing costs), plus

          (2)  the product of (x) the amount of all dividend payments on any
     series of Preferred Stock of such Person or its Restricted Subsidiaries
     (other than dividends paid in Qualified Capital Stock) paid, accrued or
     scheduled to be paid or accrued during such period times (y) a fraction,
     the numerator of which is one and the denominator of which is one minus the
     then current effective consolidated federal, state and local income tax
     rate of such Person, expressed as a decimal.

          "Consolidated Indebtedness" means, at any time, the sum of (without
           -------------------------
duplication) all Indebtedness of the Company and its Restricted Subsidiaries
exclusive of the items referred to in clauses (6) and (8) of the definition of
Indebtedness.

          "Consolidated Interest Expense" means, with respect to any Person for
           -----------------------------
any period, the sum of, without duplication:

          (1)  the aggregate of the interest expense of such Person and its
     Restricted Subsidiaries for such period determined on a consolidated basis
     in accordance with GAAP, including, without limitation, (a) any
     amortization of debt discount and amortization or write-off of deferred
     financing costs (including the amortization of costs relating to interest
     rate caps or other similar agreements), (b) the net costs under Interest
     Swap Obligations, (c) all capitalized interest and (d) the interest portion
     of any deferred payment obligation; and

          (2)  the interest component of Capitalized Lease Obligations paid,
     accrued and/or scheduled to be paid or accrued by such Person and its
     Restricted Subsidiaries during such period as determined on a consolidated
     basis in accordance with GAAP, minus interest income for such period.

          "Consolidated Net Income" means, with respect to any Person, for any
           -----------------------
period, the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom:
           --------

          (1)  after-tax gains or losses from Asset Sales (without regard to the
     $3.0 million limitation set forth in the definition thereof) or
     abandonments or reserves relating thereto;

                                       8
<PAGE>

          (2)  after-tax items which are extraordinary gains or losses or
     nonrecurring gains, losses, expenses or income (including, without
     limitation, expenses related to the Transactions, severance and transition
     expenses incurred as a direct result of the transition of the Company to an
     independent operating company in connection with the Transactions provided
     that with respect to any non-recurring item or transition expense, the
     Company delivers to the Trustee an Officer's Certificate specifying and
     quantifying such item or expense and states that such item or expense is a
     general non-recurring item or specifically a severance or transition
     expense, as the case may be);

          (3)  the net income of any Person acquired in a "pooling of interests"
     transaction accrued prior to the date it becomes a Restricted Subsidiary of
     the referent Person or is merged or consolidated with the referent Person
     or any Restricted Subsidiary of the referent Person;

          (4)  the net income (but not loss) of any Restricted Subsidiary of the
     referent Person to the extent that the declaration of dividends or similar
     distributions by that Restricted Subsidiary of that income is prohibited by
     contract, operation of law or otherwise;

          (5)  the net income of any Person, other than a Restricted Subsidiary
     of the referent Person, except to the extent of cash dividends or
     distributions paid to the referent Person or to a Restricted Subsidiary of
     the referent Person by such Person;

          (6)  the establishment of accruals and reserves within twelve months
     after the Issue Date that are required to be so established in accordance
     with GAAP;

          (7)  income or loss attributable to discontinued operations
     (including, without limitation, operations disposed of during such period
     whether or not such operations were classified as discontinued); and

          (8)  in the case of a successor to the referent Person by
     consolidation or merger or as a transferee of the referent Person's assets,
     any earnings of the successor corporation prior to such consolidation,
     merger or transfer of assets.

          "Consolidated Non-cash Charges" means, with respect to any Person, for
           -----------------------------
any period, the aggregate depreciation, amortization and other non-cash expenses
(solely for the purpose of determining compliance with Section 4.3, excluding
any non-cash items for which a future cash payment will be required and for
which an accrual or reserve is required by GAAP to be made) of such Person and
its Restricted Subsidiaries reducing Consolidated Net Income of such Person and
its Restricted Subsidiaries for such period, determined on a consolidated basis
in accordance with GAAP.

          "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 of this Indenture,
located at 114 West 47th Street, 25th Floor, New York, New York 10036;  Attn:
Corporate Trust and Agency Services -- RPP.

          "Covenant Defeasance" has the meaning set forth in Section 8.2(c).
           -------------------

                                       9
<PAGE>

          "Credit Agreement" means the Credit Agreement dated as of the Issue
           ----------------
Date, among the Company, RPP Capital, one or more other Subsidiaries of the
Company, the lenders party thereto in their capacities as lenders thereunder and
Morgan Stanley Senior Funding, Inc., as administrative agent, together with the
related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder or adding Restricted
Subsidiaries of the Company as additional borrowers or guarantors thereunder)
all or any portion of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders.

          "Currency Agreement" means any foreign exchange contract, currency
           ------------------
swap agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary of the Company against fluctuations in
currency values.

          "Custodian" means any receiver, trustee, assignee, liquidator,
           ---------
sequestrator or similar official under any Bankruptcy Law.

          "Default" means an event or condition the occurrence of which is, or
           -------
with the lapse of time or the giving of notice or both would be, an Event of
Default.

          "Default Notice" has the meaning set forth in Section 10.2(b).
           --------------

          "Depository" shall mean The Depository Trust Company, New York, New
           ----------
York, or a successor thereto registered under the Exchange Act or other
applicable statute or regulation.

          "Designated Senior Debt" means:
           ----------------------

          (1)  Indebtedness under or in respect of the Credit Agreement; and

          (2)  any other Indebtedness constituting Senior Debt which, at the
     time of determination, has an aggregate principal amount of at least $25.0
     million and is specifically designated in the instrument evidencing such
     Senior Debt as "Designated Senior Debt" by the Company.

          "Disqualified Capital Stock" means that portion of any Capital Stock
           --------------------------
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable at the option of the holder
thereof), or upon the happening of any event (other than an event which would
constitute a Change of Control or an Asset Sale), matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the sole option of the holder thereof (except, in each case, upon the
occurrence of a Change of Control or an Asset Sale), on or prior to the final
maturity date of the Securities; provided that any class of Capital Stock of
                                 --------
such Person that by its terms authorizes such Person to satisfy its obligations
thereunder by delivery of Qualified Capital Stock shall not be deemed
Disqualified Capital Stock.

                                      10
<PAGE>

          "Domestic Restricted Subsidiary" means any Restricted Subsidiary of
           ------------------------------
the Company incorporated or otherwise organized or existing under the laws of
the United States, any State thereof or the District of Columbia.

          "Euros" means the single currency of the participating member states
           -----
as described in any legislative measures of the European Union for the
introduction of, change over to, or operation of, a single or unified European
currency.

          "Event of Default" has the meaning set forth in Section 6.1.
           ----------------

          "Excess Cash Flow" has the same meaning specified under "Adjusted
           ----------------
Excess Cash Flow" in the Credit Agreement as in effect on the Issue Date,
without giving effect to any amendment thereto.

          "Excess Cash Flow Offer" has the meaning set forth in Section 4.20(c).
           ----------------------

          "Excess Cash Flow Offer Amount" has the meaning set forth in Section
           -----------------------------
4.20(c).

          "Excess Cash Flow Payment Date" has the meaning set forth in Section
           -----------------------------
4.20(c).

          "Excess Cash Flow Offer Trigger Date" has the meaning set forth in
           -----------------------------------
Section 4.20(c).

          "Exchange Act" means the Securities Exchange Act of 1934, as amended,
           ------------
or any successor statute or statutes thereto.

          "Exchange Notes" means the 13 1/2% Senior Subordinated Notes due 2010
           --------------
(the terms of which are identical to the Initial Notes except that the Exchange
Notes shall be registered under the Securities Act, and shall not contain the
restrictive legend on the face of the form of the Initial Notes), to be issued
in exchange for the Initial Notes pursuant to the registered Exchange Offer.

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

          "Excluded Contribution" means Net Cash Proceeds received by the
           ---------------------
Company from (a) contributions to its common equity capital and (b) the sale of
Qualified Capital Stock of the Company, in each case designated as Excluded
Contributions pursuant to an Officers' Certificate executed on the date such
capital contributions are made or the date such Qualified Capital Stock is sold,
as the case may be, which are excluded from the calculation set forth in clause
(c) of Section 4.3.

          "fair market value" means with respect to any asset or property, the
           -----------------
price which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller

                                      11
<PAGE>

and a willing and able buyer, neither of whom is under undue pressure or
compulsion to complete the transaction. Fair market value shall be determined
conclusively by the Board of Directors of the Company acting reasonably and in
good faith and shall be evidenced by a Board Resolution of the Board of
Directors of the Company delivered to the Trustee.

          "Foreign Restricted Subsidiary" means any Restricted Subsidiary of the
           -----------------------------
Company incorporated in any jurisdiction outside of the United States.

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

          "Global Security" has the meaning set forth in Section 2.1.
           ---------------

          "Guarantee" means any obligation, contingent or otherwise, of any
           ---------
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and, without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of business) to take-or-pay, or to maintain
financial statement conditions or otherwise), or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided that the term "Guarantee" shall not include endorsements for
          --------
collection or deposit in the ordinary course of business.  The term "Guarantee"
used as a verb has a corresponding meaning.

          "Guaranteed Indebtedness" has the meaning set forth in Section 4.15.
           -----------------------

          "Guarantor" means:
           ---------

          (1) each New Domestic Restricted Subsidiary required to execute and
     deliver a Subsidiary Guarantee pursuant to Section 4.21; and

          (2) each of the Company's other Restricted Subsidiaries that in the
     future executes a supplemental indenture, in which such Restricted
     Subsidiary agrees to be bound by the terms of this Indenture as a
     Guarantor,

provided that any Person constituting a Guarantor as described above shall cease
--------
to constitute a Guarantor when its respective Subsidiary Guarantee is released
in accordance with the terms of this Indenture.

          "Guarantor Senior Debt" means, with respect to any Guarantor, the
           ---------------------
principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether

                                      12
<PAGE>

or not such interest is an allowed claim under applicable law) on any
Indebtedness of a Guarantor, whether outstanding on the Issue Date or thereafter
created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Subsidiary Guarantee of such Guarantor.
Without limiting the generality of the foregoing, "Guarantor Senior Debt" shall
also include the principal of, premium, if any, interest (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on, and all other amounts
owing by any Guarantor in respect of,

          (x) all monetary obligations of every nature of a Guarantor under, or
     with respect to, the Credit Agreement, including, without limitation,
     obligations to pay principal, premium and interest, reimbursement
     obligations under letters of credit, fees, expenses and indemnities
     (including guarantees thereof);

          (y) all Interest Swap Obligations (including guarantees thereof); and

          (z) all obligations under Currency Agreements (including guarantees
     thereof), in each case whether outstanding on the Issue Date or thereafter
     incurred.

          Notwithstanding the foregoing, "Guarantor Senior Debt" shall not
include:

          (1) any Indebtedness of such Guarantor to a Restricted Subsidiary of
     such Guarantor;

          (2) Indebtedness to, or guaranteed on behalf of, any director, officer
     or employee of such Guarantor or any director, officer or employee of any
     Restricted Subsidiary of such Guarantor (including, without limitation,
     amounts owed for compensation);

          (3) Indebtedness to trade creditors and other amounts incurred in
     connection with obtaining goods, materials or services (other than if
     incurred under the Credit Agreement);

          (4) Indebtedness represented by Disqualified Capital Stock;

          (5) any liability for federal, state, local or other taxes owed or
     owing by such Guarantor;

          (6) that portion of any Indebtedness incurred in violation of Section
     4.4 (but, as to any such obligation, no such violation shall be deemed to
     exist for purposes of this clause (6) if the holder(s) of such obligation
     or their representative shall have received an Officers' Certificate of the
     Company to the effect that the incurrence of such Indebtedness does not
     (or, in the case of revolving credit Indebtedness, that the incurrence of
     the entire committed amount thereof at the date on which the initial
     borrowing thereunder is made would not) violate such provisions of this
     Indenture);

                                      13
<PAGE>

          (7) any Indebtedness which, when incurred and without respect to any
     election under Section 1111(b) of Title 11, United States Code, is without
     recourse to such Guarantor; and

          (8) any Indebtedness, which is, by its express terms, subordinated in
     right of  payment to any other Indebtedness of such Guarantor.

          "Holder" or "Securityholder" means the registered holder of any
           ------      --------------
Security.

          "Indebtedness" means with respect to any Person, without duplication:
           ------------

          (1) all Obligations of such Person for borrowed money, including,
     without limitation, Senior Debt;

          (2) all Obligations of such Person evidenced by bonds, debentures,
     notes or other similar instruments;

          (3) all Capitalized Lease Obligations of such Person;

          (4) all Obligations of such Person issued or assumed as the deferred
     purchase price of property, all conditional sale obligations and all
     Obligations under any title retention agreement (but excluding trade
     accounts payable and other accrued liabilities arising in the ordinary
     course of business);

          (5) all Obligations for the reimbursement of any obligor on any letter
     of credit, banker's acceptance or similar credit transaction;

          (6) guarantees and other contingent Obligations in respect of
     Indebtedness referred to in clauses (1) through (5) above and clause (8)
     below;

          (7) all Obligations of any other Person of the type referred to in
     clauses (1) through (6) which are secured by any Lien on any property or
     asset of such Person, the amount of such Obligation being deemed to be the
     lesser of the fair market value of such property or asset or the amount of
     the Obligation so secured;

          (8) all Obligations under Currency Agreements, Commodity Agreements
     and Interest Swap Obligations of such Person; and

          (9) all Disqualified Capital Stock issued by such Person with the
     amount of Indebtedness represented by such Disqualified Capital Stock being
     equal to the greater of its voluntary or involuntary liquidation preference
     and its maximum fixed repurchase price, but excluding accrued dividends, if
     any.

For purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock,

                                      14
<PAGE>

such fair market value shall be determined reasonably and in good faith by the
Board of Directors of the issuer of such Disqualified Capital Stock. For
purposes of Section 4.4, in determining the principal amount of any Indebtedness
to be incurred by the Company or any Restricted Subsidiary or which is
outstanding at any date, the principal amount of any Indebtedness which provides
that an amount less than the principal amount thereof shall be due upon any
declaration of acceleration thereof shall be the accreted value thereof at the
date of determination.

          "Indenture" means this Indenture, as amended or supplemented from time
           ---------
to time in accordance with the terms hereof.

          "Independent Financial Advisor" means a firm:
           -----------------------------

          (1) which does not have a direct or indirect common equity interest in
     the Company; and

          (2) which, in the judgment of the Board of Directors of the Company,
     is otherwise independent and qualified to perform the task for which it is
     to be engaged.

          "Initial Notes" means the 13 1/2% Senior Subordinated Notes due 2010
           -------------
of the Issuers issued on the Issue Date and authenticated and delivered under
this Indenture pursuant to Section 2.2 and any other notes (other than Exchange
Notes) issued after the Issue Date in accordance with clause (iii) of the fourth
paragraph of Section 2.2.

          "Institutional Accredited Investor" has the meaning set forth in
           ---------------------------------
Section 2.16(a).

          "Interest Payment Date" means the stated maturity of an installment of
           ---------------------
interest on the Securities.

          "Interest Swap Obligations" means the obligations of any Person
           -------------------------
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.

          "Investment" means, with respect to any Person, any direct or indirect
           ----------
loan or other extension of credit (including, without limitation, a guarantee)
or capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any Person.  "Investment" shall exclude extensions of trade credit by,
prepayment of expenses by, and receivables owing to, the Company and its
Restricted Subsidiaries on commercially reasonable terms in accordance with
normal trade practices of the Company or such Restricted Subsidiary, as the case
may be.  For purposes of Section 4.3:

                                      15
<PAGE>

          (1) "Investment" shall include and be valued at the fair market value
     of the net assets of any Restricted  Subsidiary of the Company at the time
     that such Restricted Subsidiary is designated an Unrestricted Subsidiary of
     the Company and shall exclude the fair market value of the net assets of
     any Unrestricted  Subsidiary of the Company at the time that such
     Unrestricted Subsidiary is designated a Restricted Subsidiary of the
     Company; and

          (2) the amount of any Investment shall be the original cost of such
     Investment plus the cost of all additional Investments by the Company or
     any of its Restricted Subsidiaries, without any adjustments for increases
     or decreases in value, or write-ups, write-downs or write-offs with respect
     to such Investment, reduced by the payment of dividends or distributions in
     connection with such Investment or any other amounts received in respect of
     such Investment; provided that no such payment of dividends or
     distributions or receipt of any such other amounts shall reduce the amount
     of any Investment if such payment of dividends or distributions or receipt
     of any such amounts would be included in Consolidated Net Income.

If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Common Stock of any Person that prior to such sale or
disposition was a direct or indirect Restricted Subsidiary of the Company and
after giving effect to any such sale or disposition, ceases to be a Restricted
Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Common Stock of such Person not sold or disposed of.

          "Issue Date" means November 14,  2000, the date of original issuance
           ----------
of the Initial Notes.

          "Issuers" means the parties named as such in the first paragraph of
           -------
this Indenture.

          "Legal Defeasance" has the meaning set forth in Section 8.2(b).
           ----------------

          "Leverage Ratio" means, with respect to any Person as of any date, the
           --------------
ratio of (i) Consolidated Indebtedness on such date to (ii) Consolidated EBITDA
of such Person during the Four Quarter Period ending on or prior to the
Transaction Date.  In addition to and without limitation of the foregoing, for
purposes of this definition, "Consolidated EBITDA" and "Consolidated
Indebtedness" shall be calculated after giving effect on a pro forma basis for
the period of such calculation to clauses (2) and (3) of the first paragraph of
the definition of "Consolidated Fixed Charge Coverage Ratio."

          "Lien" means any lien, mortgage, deed of trust, pledge, security
           ----
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).

          "Management Agreement" means the Management Agreement dated as of the
           --------------------
Issue Date between the Company and Apollo.

          "Master Sale Agreement" means the Master Sale Agreement dated July 10,
           ---------------------
2000 among Shell Oil Company, as Seller, Resin Acquisition, LLC, as Buyer, and
RPP Inc.

                                      16
<PAGE>

          "Maturity Date" means November 15, 2010.
           -------------

          "Net Cash Proceeds" means (a) with respect to any Asset Sale, the
           -----------------
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest) received by the Company or any of its Restricted Subsidiaries from
such Asset Sale net of:

          (1) reasonable out-of-pocket expenses and fees relating to such Asset
     Sale (including, without limitation, legal, accounting and investment
     banking fees and sales commissions);

          (2) taxes paid or payable after taking into account any reduction in
     consolidated tax liability due to available tax credits or deductions and
     any tax sharing arrangements;

          (3) repayment of Indebtedness that is required to be repaid in
     connection with such Asset Sale;

          (4) appropriate amounts to be provided by the Company or any
     Restricted Subsidiary, as the case may be, as a reserve, in accordance with
     GAAP, against any liabilities associated with such Asset Sale and retained
     by the Company or any Restricted Subsidiary, as the case may be, after such
     Asset Sale, including, without limitation, pension and other post-
     employment benefit liabilities, liabilities related to environmental
     matters and liabilities under any indemnification obligations associated
     with such Asset Sale; and

          (5) all distributions and other payments required to be made to
     minority interest holders in Restricted Subsidiaries or joint ventures as a
     result of such Asset Sales;

and (b) with respect to any issuance or sale of Capital Stock, means the cash
proceeds of such issuance or sale, net of attorneys' fees, accountants' fees,
underwriters' or placement agents' or initial purchasers' fees, discounts or
commissions and brokerage, consultant and other fees and expenses actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.

          "Net Proceeds Offer" has the meaning set forth in Section 4.18.
           ------------------

          "Net Proceeds Offer Amount" has the meaning set forth in Section 4.18.
           -------------------------

          "Net Proceeds Offer Payment Date" has the meaning set forth in Section
           -------------------------------
     4.18.

          "Net Proceeds Offer Trigger Date" has the meaning set forth in Section
           -------------------------------
     4.18.

          "New Domestic Restricted Subsidiary" has the meaning set forth in
           ----------------------------------
     Section 4.21.

          "Non-payment Default" has the meaning set forth in Section 10.2(b).
           -------------------

                                      17
<PAGE>

          "Non-U.S. Person" means a person who is not a "U.S. Person" (as
           ---------------
defined in Regulation S).

          "Non-U.S. Sale Agreement" means the Sale Agreement dated as of
           -----------------------
September 11, 2000 between Shell Petroleum N.V. and RPP Inc.

          "Obligations" means all obligations for principal, premium, interest,
           -----------
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.

          "Offering Memorandum" means the Offering Memorandum dated November
           -------------------
8, 2000 relating to the offering of the Initial Notes issued on the Issue Date.

          "Officer" means, with respect to any Person, the Chairman of the
           -------
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Controller, the Treasurer or the Secretary of such
Person.

          "Officers' Certificate" means a certificate signed by two Officers of
           ---------------------
either Issuer or of any Guarantor, as applicable.

          "Offshore Global Securities" has the meaning provided in Section 2.1.
           --------------------------

          "Offshore Physical Securities" has the meaning provided in Section
           ----------------------------
2.1.

          "Opinion of Counsel" means a written opinion from legal counsel, which
           ------------------
opinion and counsel are reasonably acceptable to the Trustee.

          "Option Plan" means the Resolution Performance Products Inc. 2000
           -----------
Stock Option Plan.

          "Paying Agent" has the meaning set forth in Section 2.3.
           ------------

          "Payment Blockage Period" has the meaning set forth in Section
           -----------------------
10.2(b).

          "Payment Default" has the meaning set forth in Section 10.2(a).
           ---------------

          "Permanent Offshore Global Securities" has the meaning provided in
           ------------------------------------
Section 2.1.

          "Permitted Business" means the business of the Company and its
           ------------------
Restricted Subsidiaries as existing on the Issue Date and any other businesses
that are the same, similar or reasonably related, ancillary or complementary
thereto and reasonable extensions thereof.

          "Permitted Holders" means Apollo and other Related Parties.
           -----------------

          "Permitted Indebtedness" means, without duplication, each of the
           ----------------------
following:

          (1) Indebtedness under the Securities and any Subsidiary Guarantees in
     an aggregate amount not to exceed $200.0 million;

                                      18
<PAGE>

          (2) Indebtedness incurred pursuant to the Credit Agreement by the
     Company and its Restricted Subsidiaries, including RPP Nederland, in an
     aggregate principal amount at any time outstanding not to exceed $600.0
     million less (A) scheduled permanent repayments of Indebtedness under the
     Credit Agreement made upon or after the scheduled maturity date for such
     payment by the Company and its Restricted Subsidiaries, if the Leverage
     Ratio of the Company on the date such payment is made is more than 3.0 to
     1.0, and (B) the amount of all repayments of term debt and permanent
     commitment reductions under the Credit Agreement with (i) Net Cash Proceeds
     of Asset Sales applied thereto as required by Section 4.18(iii) and (ii)
     Excess Cash Flow applied thereto in the amounts required by Section 4.20 if
     the Leverage Ratio of the Company on the date such payment or commitment
     reduction is made is more than 3.0 to 1.0; provided that the aggregate
     principal amount of Indebtedness permitted to be incurred from time to time
     under this clause (2) shall be reduced dollar for dollar by the amount of
     any Indebtedness then outstanding under clause (12) below and provided
     further that any Indebtedness incurred pursuant to the Credit Agreement on
     the Issue Date shall be deemed to be incurred under this clause (2); and
     provided further that the amount of Indebtedness permitted to be incurred
     pursuant to the Credit Agreement in accordance with this clause (2) shall
     be in addition to any Indebtedness to be incurred pursuant to the Credit
     Agreement in reliance on and in accordance with clauses (10) and  (16)
     below;

          (3) other Indebtedness of the Company and its Restricted Subsidiaries
     outstanding on the Issue Date (including, without limitation, Indebtedness
     incurred in connection with the Transactions) reduced by the amount of any
     scheduled amortization payments or mandatory prepayments when actually paid
     or permanent reductions thereon;

          (4) Interest Swap Obligations of the Company covering Indebtedness of
     the Company or any of its Restricted Subsidiaries and Interest Swap
     Obligations of any Restricted Subsidiary of the Company covering
     Indebtedness of the Company or such Restricted Subsidiary; provided,
     however, that such Interest Swap Obligations are entered into to protect
     the Company and its Restricted Subsidiaries from fluctuations in interest
     rates on Indebtedness incurred in accordance with this Indenture to the
     extent the notional principal amount of such Interest Swap Obligation does
     not exceed the principal amount of the Indebtedness to which such Interest
     Swap Obligation relates;

          (5) Indebtedness under Currency Agreements; provided that in the case
     of Currency Agreements which relate to Indebtedness, such Currency
     Agreements do not increase the Indebtedness of the Company and its
     Restricted Subsidiaries outstanding other than as a result of fluctuations
     in foreign currency exchange rates or by reason of fees, indemnities and
     compensation payable thereunder;

          (6) Indebtedness of a Restricted Subsidiary of the Company to the
     Company or to a Restricted Subsidiary of the Company for so long as such
     Indebtedness is held by the Company, a Restricted Subsidiary of the Company
     or the lenders or collateral agent under the Credit Agreement, in each case
     subject to no Lien held by a Person other than the Company, a Restricted
     Subsidiary of the Company or the lenders or collateral agent under the
     Credit Agreement; provided that if as of any date any Person other than the

                                      19
<PAGE>

     Company, a Restricted Subsidiary of the Company or the lenders or
     collateral agent under the Credit Agreement owns or holds any such
     Indebtedness or holds a Lien in respect of such Indebtedness, such date
     shall be deemed the incurrence of Indebtedness not constituting Permitted
     Indebtedness under this clause (6) by the issuer of such Indebtedness;

          (7)  Indebtedness of the Company to a Restricted Subsidiary of the
     Company for so long as such Indebtedness is held by a Restricted Subsidiary
     of the Company or the lenders or the collateral agent under the Credit
     Agreement and is subject to no Lien other than a Lien in favor of the
     lenders or collateral agent under the Credit Agreement; provided that (a)
     any Indebtedness of the Company to any Restricted Subsidiary of the Company
     is unsecured and subordinated, pursuant to a written agreement, to the
     Company's obligations under this Indenture and the Securities and (b) if as
     of any date any Person other than a Restricted Subsidiary of the Company
     owns or holds any such Indebtedness or any Person holds a Lien other than a
     Lien in favor of the lenders or collateral agent under the Credit Agreement
     in respect of such Indebtedness, such date shall be deemed the incurrence
     of Indebtedness not constituting Permitted Indebtedness under this clause
     (7) by the Company;

          (8)  Indebtedness arising from the honoring by a bank or other
     financial institution of a check, draft or similar instrument inadvertently
     (except in the case of daylight overdrafts) drawn against insufficient
     funds in the ordinary course of business; provided, however, that such
     Indebtedness is extinguished within two Business Days of incurrence;

          (9)  Indebtedness of the Company or any of its Restricted Subsidiaries
     in respect of performance bonds, bankers' acceptances, workers'
     compensation claims, surety or appeal bonds, payment obligations in
     connection with self-insurance or similar obligations, and bank overdrafts
     (and letters of credit in respect thereof);

          (10) Indebtedness represented by Capitalized Lease Obligations,
     Purchase Money Indebtedness or Acquired Indebtedness of the Company and its
     Restricted Subsidiaries not to exceed $30.0 million in the aggregate at any
     one time outstanding; provided that all or a portion of the $30.0 million
     permitted to be incurred under this clause (10) may, at the option of the
     Company, be incurred under the Credit Agreement or pursuant to clause (16)
     below (in addition to the $50.0 million set forth therein) instead of
     pursuant to Capitalized Lease Obligations, Purchase Money Indebtedness or
     Acquired Indebtedness;

          (11) Indebtedness arising from agreements of the Company or a
     Restricted Subsidiary of the Company providing for indemnification,
     adjustment of purchase price or similar obligations, in each case, incurred
     or assumed in connection with the disposition of any business, assets or a
     Subsidiary, other than guarantees by the Company or a Restricted Subsidiary
     of the Company of Indebtedness incurred by any Person acquiring all or any
     portion of such business, assets or a Subsidiary for the purpose of
     financing such acquisition; provided, however, that:

                                      20
<PAGE>

               (a) such Indebtedness is not reflected on the balance sheet of
          the Company or any Restricted Subsidiary of the Company (contingent
          obligations referred to in a footnote to financial statements and not
          otherwise reflected on the balance sheet will not be deemed to be
          reflected on such balance sheet for purposes of this clause (a)); and

               (b) the maximum assumable liability in respect of all such
          Indebtedness shall at no time exceed the gross proceeds including the
          fair market value of noncash proceeds (the fair market value of such
          noncash proceeds being measured at the time they are received as
          determined in good faith by the Board of Directors of the Company or
          the Restricted Subsidiary, as applicable, and without giving effect to
          any subsequent changes in value) actually received by the Company and
          its Restricted Subsidiaries in connection with such disposition;

          (12) the incurrence by a Receivables Subsidiary of Indebtedness in a
     Qualified Receivables Transaction that is without recourse (other than
     pursuant to representations, warranties, covenants and indemnities entered
     into in the ordinary course of business in connection with a Qualified
     Receivables Transaction) to the Company or to any Restricted Subsidiary of
     the Company or their assets (other than such Receivables Subsidiary and its
     assets), and is not guaranteed by any such Person; provided that any
     outstanding Indebtedness incurred under this clause (12) shall reduce (for
     so long as, and to the extent that, the Indebtedness referred to in this
     clause (12) remains outstanding) the aggregate amount permitted to be
     incurred under clause (2) above to the extent set forth therein;

          (13) Indebtedness under Commodity Agreements;

          (14) Guarantees of Indebtedness of (x) any Restricted Subsidiary of
     the Company by the Company and its Restricted Subsidiaries, including
     agreements of the Company to keep well or maintain financial statement
     conditions of any Restricted Subsidiary of the Company and (y) the Company
     incurred pursuant to the Credit Agreement or pursuant to clauses (4) and
     (5) above by any Restricted Subsidiary of the Company;

          (15) Refinancing Indebtedness;

          (16) additional Indebtedness of the Company and its Restricted
     Subsidiaries in an aggregate principal amount not to exceed $50.0 million
     at any one time outstanding (which amount may, but need not, be incurred in
     whole or in part under the Credit Agreement) plus up to an additional $30.0
     million as contemplated by, and to the extent not incurred under, clause
     (10) above; and

          (17) Indebtedness of the Company or any of its Restricted Subsidiaries
     consisting of (x) the financing of insurance premiums in the ordinary
     course of business or (y) take-or-pay obligations contained in supply
     arrangements entered into in the ordinary course of business and on a basis
     consistent with past practice.

          For purposes of determining compliance with Section 4.4,

                                      21
<PAGE>

          (a) in the event that an item of Indebtedness meets the criteria of
     more than one of the categories of Permitted Indebtedness described in
     clauses (1) through (17) above or is entitled to be incurred pursuant to
     the Consolidated Fixed Charge Coverage Ratio provisions of such Section,
     the Company shall, in its sole discretion, classify (or later reclassify)
     such item of Indebtedness in any manner that complies with such Section,

          (b) accrual of interest, accretion or amortization of original issue
     discount, the payment of interest on any Indebtedness in the form of
     additional Indebtedness with the same terms or in the form of Capital
     Stock, the payment of dividends on Disqualified Capital Stock in the form
     of additional shares of the same class of Disqualified Capital Stock and
     increases in the amount of Indebtedness outstanding solely as a result of
     fluctuations in the exchange rate of currencies will not be deemed to be an
     incurrence of Indebtedness or an issuance of Disqualified Capital Stock for
     purposes of Section 4.4,

          (c) Guarantees of, or obligations in respect of letters of credit
     relating to, Indebtedness which is otherwise included in the determination
     of a particular amount of Indebtedness shall not be included,

          (d) if obligations in respect of letters of credit are incurred
     pursuant to the Credit Agreement and are being treated as incurred pursuant
     to clause (2) above and the letters of credit relate to other Indebtedness,
     then such other Indebtedness shall not be included,

          (e) if such Indebtedness is denominated in a currency other than U.S.
     dollars, the U.S. dollar equivalent principal amount thereof will be
     calculated based on the relevant currency exchange rates in effect on the
     date such indebtedness was incurred, and

          (f) Indebtedness need not be incurred solely by reference to one
     category of Permitted Indebtedness or the Consolidated Fixed Charge
     Coverage Ratio provisions of such covenant but may be permitted to be
     incurred in part under any combination of categories of Permitted
     Indebtedness and the Consolidated Fixed Charge Coverage Ratio provisions.

          "Permitted Investments" means:
           ---------------------

          (1) Investments by the Company or any Restricted Subsidiary of the
     Company in any Person that is or will become immediately after such
     Investment a Restricted Subsidiary of the Company or that will merge or
     consolidate into the Company or a Restricted Subsidiary of the Company;
     provided that such Restricted Subsidiary of the Company is not restricted
     from making dividends or similar distributions by contract, operation of
     law or otherwise other than as permitted by Section 4.13;

          (2) Investments in the Company by any Restricted Subsidiary of the
     Company; provided that any Indebtedness evidencing such Investment is
     unsecured and subordinated, pursuant to a written agreement, to the
     Company's obligations under the Securities and this Indenture;

                                      22
<PAGE>

          (3)  Investments in cash and Cash Equivalents;

          (4)  loans and advances to employees and officers of the Company and
     its Restricted Subsidiaries made (a) in the ordinary course of business for
     bona fide business purposes not to exceed $7.5 million in the aggregate at
     any one time outstanding or (b) to fund purchases of Capital Stock of the
     Company or RPP Inc. under the Option Plan or similar employment
     arrangements so long as no cash is actually advanced by the Company or any
     of its Restricted Subsidiaries to such employees and officers to fund such
     purchases;

          (5)  Currency Agreements, Commodity Agreements and Interest Swap
     Obligations entered into in the ordinary course of the Company's or its
     Restricted Subsidiaries' businesses and otherwise in compliance with this
     Indenture;

          (6)  Investments in securities of trade creditors or customers
     received (a) pursuant to any plan of reorganization or similar arrangement
     upon the bankruptcy or insolvency of such trade creditors or customers or
     (b) in settlement of delinquent obligations of, and other disputes with,
     customers, suppliers and others, in each case arising in the ordinary
     course of business or otherwise in satisfaction of a judgment;

          (7)  Investments (a) made by the Company or its Restricted
     Subsidiaries consisting of consideration received in connection with an
     Asset Sale made in compliance with Section 4.18, (b) consisting of
     consideration received by the Company or any of its Restricted Subsidiaries
     in connection with a transaction that would be an Asset Sale if it
     consisted of aggregate consideration received by the Company or any of its
     Restricted Subsidiaries of $3.0 million or more or (c) acquired in exchange
     for, or out of the proceeds of, a substantially concurrent offering of
     Capital Stock (other than Disqualified Capital Stock) of the Company (which
     proceeds of any such offering of Capital Stock of the Company shall not
     have been, and shall not be, included in clause (3)(b) of the first
     paragraph of Section 4.3);

          (8)  Investments of a Person or any of its Subsidiaries existing at
     the time such Person becomes a Restricted Subsidiary of the Company or at
     the time such Person merges or consolidates with the Company or any of its
     Restricted Subsidiaries, in either case in compliance with this Indenture;
     provided that such Investments were not made by such Person in connection
     with, or in anticipation or contemplation of, such Person becoming a
     Restricted Subsidiary of the Company or such merger or consolidation;

          (9)  Investments in the Securities;

          (10) Investments in existence on the Issue Date (including, without
     limitation, Investments made in connection with the Transactions);

          (11) Investments made after the Issue Date in the Yuka Shell Epoxy
     Kabushi Kaisha Company joint venture between the Company and Mitsubishi
     Chemical Corp. not to exceed $10.0 million at any one time outstanding;

                                      23
<PAGE>

          (12) Guarantees of Indebtedness to the extent permitted pursuant to
     Sections 4.4 and 4.15; and

          (13) additional Investments (including Investments in joint ventures
     and Unrestricted Subsidiaries) not to exceed $50.0 million at any one time
     outstanding.

          "Permitted Liens" means the following types of Liens:
           ---------------

          (1)  Liens for taxes, assessments or governmental charges or claims
     either (a) not delinquent or (b) contested in good faith by appropriate
     proceedings and as to which the Company or its Restricted Subsidiaries
     shall have set aside on its books such reserves, if any, as shall be
     required pursuant to (x) GAAP in the case of a Domestic Restricted
     Subsidiary, and (y) generally accepted accounting principles in effect from
     time to time in the applicable jurisdiction, in the case of a Foreign
     Restricted Subsidiary;

          (2)  statutory and common law Liens of landlords and Liens of
     carriers, warehousemen, mechanics, suppliers, materialmen, repairmen,
     customs and revenue authorities and other Liens imposed by law incurred in
     the ordinary course of business for sums not yet delinquent or being
     contested in good faith, if such reserve or other appropriate provision, if
     any, as shall be required by GAAP shall have been made in respect thereof;

          (3)  Liens incurred or deposits made in the ordinary course of
     business in connection with workers' compensation, unemployment insurance
     and other types of social security, including any Lien securing letters of
     credit issued in the ordinary course of business consistent with past
     practice in connection therewith, or to secure the performance of tenders,
     statutory obligations, surety and appeal bonds, bids, leases, government
     contracts, performance and return-of-money bonds and other similar
     obligations (exclusive of obligations for the payment of borrowed money);

          (4)  judgment Liens not giving rise to an Event of Default so long as
     such Lien is adequately bonded and any appropriate legal proceedings which
     may have been duly initiated for the review of such judgment shall not have
     been finally terminated or the period within which such proceedings may be
     initiated shall not have expired;

          (5)  licenses, sublicenses, leases, subleases, easements, rights-of-
     way, zoning restrictions and other similar charges or encumbrances in
     respect of property not interfering in any material respect with the
     ordinary conduct of the business of the Company and its Restricted
     Subsidiaries, taken as a whole;

          (6)  any interest or title of a lessor under any Capitalized Lease
     Obligation or operating lease; provided that such Liens do not extend to
     any property or asset which is not leased property subject to such
     Capitalized Lease Obligation or operating lease;

          (7)  Liens securing Indebtedness permitted pursuant to clause (10) of
     the definition of "Permitted Indebtedness"; provided, however, that in the
     case of Purchase Money Indebtedness (a) the Indebtedness shall not exceed
     the cost of such property or assets and shall not be secured by any
     property or assets of the Company or any

                                      24
<PAGE>

     Restricted Subsidiary of the Company other than the property and assets so
     acquired or constructed and any improvements thereon and (b) the Lien
     securing such Indebtedness shall be created within 180 days of such
     acquisition or construction or, in the case of a refinancing of any
     Purchase Money Indebtedness, within 180 days of such refinancing;

          (8)  Liens upon specific items of inventory or other goods and
     proceeds of any Person securing such Person's obligations in respect of
     bankers' acceptances or similar credit transactions issued or created for
     the account of such Person to facilitate the purchase, shipment or storage
     of such inventory or other goods;

          (9)  Liens securing reimbursement obligations with respect to
     commercial letters of credit which encumber documents and other property
     relating to such letters of credit and products and proceeds thereof;

          (10) Liens encumbering deposits made to secure obligations arising
     from statutory, regulatory, contractual, or warranty requirements of the
     Company or any of its Restricted Subsidiaries, including rights of offset
     and set-off;

          (11) Liens securing Interest Swap Obligations which Interest Swap
     Obligations relate to Indebtedness that is otherwise permitted under this
     Indenture;

          (12) Liens in the ordinary course of business not exceeding $10.0
     million at any one time outstanding that (a) are not incurred in connection
     with borrowing of money and (b) do not materially detract from the value of
     the property or materially impair its use;

          (13) Liens by reason of judgment or decree not otherwise resulting in
     an Event of Default;

          (14) Liens securing Indebtedness permitted to be incurred pursuant to
     clauses (12) and (16) of the definition of "Permitted Indebtedness";

          (15) Liens securing Indebtedness under Currency Agreements and
     Commodity Agreements permitted under this Indenture;

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

          (17) Liens arising out of conditional sale, title retention,
     consignment or similar arrangements for the sale of goods entered into by
     the Company or any of its Restricted Subsidiaries in the ordinary course of
     business;

          (18) Liens securing Acquired Indebtedness incurred in accordance with
     Section 4.4 (including, without limitation, clause (10) of the definition
     of Permitted Indebtedness); provided that:

               (a) such Liens secured such Acquired Indebtedness at the time of
          and prior to the incurrence of such Acquired Indebtedness by the
          Company or a

                                      25
<PAGE>

          Restricted Subsidiary of the Company and were not granted in
          connection with, or in anticipation of, the incurrence of such
          Acquired Indebtedness by the Company or a Restricted Subsidiary of the
          Company; and

               (b) such Liens do not extend to or cover any property or assets
          of the Company or of any of its Restricted Subsidiaries other than the
          property or assets that secured the Acquired Indebtedness prior to the
          time such Indebtedness became Acquired Indebtedness of the Company or
          a Restricted Subsidiary of the Company and are no more favorable to
          the lienholders than those securing the Acquired Indebtedness prior to
          the incurrence of such Acquired Indebtedness by the Company or a
          Restricted Subsidiary of the Company; and

          (19) Liens securing insurance premium financing arrangements, provided
                                                                        --------
     that such Lien is limited to the applicable insurance contracts.

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

          "Physical Securities" has the meaning provided in Section 2.1.
           -------------------
Physical Securities are sometimes referred to herein as certificated Securities.

          "Preferred Stock" of any Person means any Capital Stock of such Person
           ---------------
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.

          "Private Placement Legend" means the legend initially set forth on the
           ------------------------
Initial Notes in the form set forth in the first paragraph of Section 2.14.

          "Purchase Money Indebtedness" means Indebtedness of the Company and
           ---------------------------
its Restricted Subsidiaries incurred in the normal course of business for the
purpose of financing all or any part of the purchase price, or the cost of
installation, construction or improvement, of property or equipment or other
related assets and any Refinancing thereof.

          "QIB" means any "qualified institutional buyer" (as defined under the
           ---             -----------------------------
Securities Act).

          "Qualified Capital Stock" means any Capital Stock that is not
           -----------------------
Disqualified Capital Stock.

          "Qualified Receivables Transaction" means any transaction or series of
           ---------------------------------
transactions that may be entered into by the Company or any of its Restricted
Subsidiaries pursuant to which the Company or any of its Restricted Subsidiaries
may sell, convey or otherwise transfer to (1) a Receivables Subsidiary (in the
case of a transfer by the Company or any of its Restricted Subsidiaries) and (2)
any other Person (in the case of a transfer by a Receivables Subsidiary), or may
grant a security interest in, any accounts receivable (whether now existing or
arising in the future) of the Company or any of its Restricted Subsidiaries, and
any assets related thereto including, without limitation, all collateral
securing such accounts

                                      26
<PAGE>

receivable, all contracts and all guarantees or other obligations in respect of
such accounts receivable, proceeds of such accounts receivable and other assets
(including contract rights) which are customarily transferred or in respect of
which security interests are customarily granted in connection with asset
securitization transactions involving accounts receivable.

          "Recapitalization" means the recapitalization of the Company and RPP
           ----------------
Inc. on the Issue Date.

          "Receivables Subsidiary" means a Wholly Owned Restricted Subsidiary of
           ----------------------
the Company that engages in no activities other than in connection with the
financing of accounts receivable and that is designated by the Board of
Directors of the Company (as provided below) as a Receivables Subsidiary:

          (1) no portion of the Indebtedness or any other Obligations
     (contingent or otherwise) of which (a) is guaranteed by the Company or any
     Restricted Subsidiary of the Company (excluding guarantees of Obligations
     (other than the principal of, premium, if any, and interest on,
     Indebtedness) pursuant to representations, warranties, covenants and
     indemnities entered into in the ordinary course of business in connection
     with a Qualified Receivables Transaction), (b) is recourse to or obligates
     the Company or any Restricted Subsidiary of the Company in any way other
     than pursuant to representations, warranties, covenants and indemnities
     entered into in the ordinary course of business in connection with a
     Qualified Receivables Transaction or (c) subjects any property or asset of
     the Company or any Restricted Subsidiary of the Company, directly or
     indirectly, contingently or otherwise, to the satisfaction thereof, other
     than pursuant to representations, warranties, covenants and indemnities
     entered into in the ordinary course of business in connection with a
     Qualified Receivables Transaction;

          (2) with which neither the Company nor any Restricted Subsidiary of
     the Company has any material contract, agreement, arrangement or
     understanding other than on terms no less favorable to the Company or such
     Restricted Subsidiary than those that might be obtained at the time from
     Persons who are not Affiliates of the Company, other than fees payable in
     the ordinary course of business in connection with servicing accounts
     receivable; and

          (3) with which neither the Company nor any Restricted Subsidiary of
     the Company has any obligation to maintain or preserve such Restricted
     Subsidiary's financial condition or cause such Restricted Subsidiary to
     achieve certain levels of operating results.

          Any such designation by the Board of Directors of the Company shall be
evidenced to the Trustee by filing with the Trustee a Board Resolution giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions.

          "Record Date" means the applicable record date specified in the
           -----------
Securities.

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

                                      27
<PAGE>

          "Redemption Price," when used with respect to any Security to be
           ----------------
redeemed, means the price fixed for such redemption, payable in immediately
available funds, pursuant to this Indenture and the Securities.

          "Reference Date" has the meaning set forth in Section 4.3(c)(i).
           --------------

          "Refinance" means, in respect of any security or Indebtedness, to
           ---------
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part.  "Refinanced" and "Refinancing"
                                                ----------       -----------
shall have correlative meanings.

          "Refinancing Indebtedness" means any Refinancing by the Company or any
           ------------------------
Restricted Subsidiary of the Company of (A) for purposes of clause (15) of the
definition of Permitted Indebtedness, Indebtedness incurred or existing in
accordance with Section 4.4 (other than pursuant to clause (2), (4), (5), (6),
(7), (8), (9), (10), (11), (12) or (14) of the definition of Permitted
Indebtedness) or (B) for any other purpose, Indebtedness incurred in accordance
with Section 4.4, in each case that does not:

          (1) result in an increase in the aggregate principal amount of
     Indebtedness of such Person as of the date of such proposed Refinancing
     (plus the amount of any premium, accrued interest and defeasance costs,
     required to be paid under the terms of the instrument governing such
     Indebtedness and plus the amount of reasonable fees, expenses, discounts
     and commissions incurred by the Company in connection with such
     Refinancing); or

          (2) create Indebtedness with (a) if the Indebtedness being Refinanced
     was incurred pursuant to clause (3) of the definition of Permitted
     Indebtedness, a Weighted Average Life to Maturity that is less than the
     Weighted Average Life to Maturity of the Indebtedness being Refinanced or a
     final maturity earlier than the final maturity of the Indebtedness being
     Refinanced or (b) if the Indebtedness being Refinanced was otherwise
     incurred in accordance with the definition of Permitted Indebtedness or
     with Section 4.4, a Weighted Average Life to Maturity that is less than the
     Weighted Average Life to Maturity of the Securities or a final maturity
     earlier than the final maturity of the Securities; provided that (x) if
     such Indebtedness being Refinanced is Indebtedness solely of the Company,
     then such Refinancing Indebtedness shall be Indebtedness solely of the
     Company and (y) if such Indebtedness being Refinanced is subordinate or
     junior to the Securities, then such Refinancing Indebtedness shall be
     subordinate to the Securities at least to the same extent and in the same
     manner as the Indebtedness being Refinanced.

          "Registrar" has the meaning set forth in Section 2.3.
           ---------

          "Registration Rights Agreement" means the Registration Rights
           -----------------------------
Agreement, dated November 14, 2000 among the Issuers and Morgan Stanley & Co.
Incorporated, J.P. Morgan Securities Inc. and Salomon Smith Barney Inc. and
certain permitted assigns specified therein.

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

                                      28
<PAGE>

          "Related Parties" means with respect to a Person (a) that is a natural
           ---------------
person (1) any spouse, parent or lineal descendant (including by adoption) of
such Person or (2) the estate of such Person during any period in which such
estate holds Capital Stock of the Company or of RPP Inc. for the benefit of any
Person referred to in clause (a)(1) and (b) any trust, corporation, partnership,
limited liability company or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially owning an interest of more than 50% of
which consist of such Person and/or such other Persons referred to in the
immediately preceding clause (a).

          "Replacement Assets" has the meaning set forth in Section
           ------------------
4.18(iii)(B).

          "Representative" means the indenture trustee or other trustee, agent
           --------------
or representative in respect of any Designated Senior Debt; provided that if,
                                                            --------
and for so long as, any Designated Senior Debt lacks such a representative, then
the Representative for such Designated Senior Debt shall at all times constitute
the holders of a majority in outstanding principal amount of such Designated
Senior Debt in respect of any Designated Senior Debt.

          "Responsible Officer" means, when used with respect to the Trustee,
           -------------------
any officer in the corporate trust office of the Trustee with direct
responsibility for the administration of this Indenture or to whom any corporate
trust matter is referred because of such officer's knowledge of and familiarity
with the particular subject.

          "Restricted Payment" has the meaning set forth in Section 4.3.
           ------------------

          "Restricted Security" has the meaning assigned to such term in Rule
           -------------------
144(a)(3) under the Securities Act; provided that the Trustee shall be entitled
                                    --------
to request and conclusively rely on an Opinion of Counsel with respect to
whether any Security constitutes a Restricted Security.

          "Restricted Subsidiary" of any Person means any Subsidiary of such
           ---------------------
Person which at the time of determination is not an Unrestricted Subsidiary.

          "RPP Holdings" means RPP Holdings LLC, a Delaware limited liability
           ------------
company, and any successor Person.

          "RPP Inc." means Resolution Performance Products Inc., a Delaware
           --------
corporation, and any successor Person.

          "RPP LLC" means Resolution Performance Products LLC, a Delaware
           -------
limited liability company, until a successor replaces it pursuant to this
Indenture and thereafter shall mean such successor Person.

          "RPP Nederland" means Resolution Nederland B.V. and any successor
           -------------
Person.

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

          "Sale and Leaseback Transaction" means any direct or indirect
           ------------------------------
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Restricted Subsidiary of any property,
whether owned by the Company or any Restricted

                                      29
<PAGE>

Subsidiary at the Issue Date or later acquired, which has been or is to be sold
or transferred by the Company or such Restricted Subsidiary to such Person or to
any other Person from whom funds have been or are to be advanced by such Person
on the security of such property other than (a) arrangements between the Company
and a Wholly Owned Restricted Subsidiary of the Company or between Wholly Owned
Restricted Subsidiaries of the Company or (b) any arrangement whereby the
transfer involves fixed or capital assets and is consummated within 120 days
after the date the Company or a Restricted Subsidiary acquires or finishes
construction of such fixed or capital assets.

          "Securities" means the Initial Notes, the Exchange Notes and any other
           ----------
notes issued after the Issue Date in accordance with clause (iii) of the fourth
paragraph of Section 2.2 treated as a single class of securities, as amended or
supplemented from time to time in accordance with the terms hereof, that are
issued pursuant to this Indenture.

          "Securities Act" means the Securities Act of 1933, as amended, or any
           --------------
successor statute or statutes thereto.

          "Senior Debt" means the principal of, premium, if any, and accrued and
           -----------
unpaid interest (including any interest accruing subsequent to the filing of a
petition of bankruptcy or other like proceeding at the rate provided for in the
documentation with respect thereto, whether or not such interest is an allowed
claim under applicable law) on any Indebtedness of either Issuer, whether
outstanding on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
Securities.  Without limiting the generality of the foregoing, "Senior Debt"
shall also include the principal of, premium, if any, interest (including any
interest accruing subsequent to the filing of petition of bankruptcy or other
like proceeding at the rate provided for in the documentation with respect
thereto, whether or not such interest is an allowed claim under applicable law)
on, and all other amounts owing by either Issuer in respect of,

          (x) all monetary obligations of every nature (including guarantees
     thereof) of either Issuer under, or with respect to, the Credit Agreement,
     including, without limitation, obligations to pay principal, premium, if
     any, and interest, reimbursement obligations under letters of credit, fees,
     expenses and indemnities;

          (y) all Interest Swap Obligations (including guarantees thereof); and

          (z) all obligations under Currency Agreements and Commodity Agreements
     (including guarantees thereof), in each case whether outstanding on the
     Issue Date or thereafter incurred.

          Notwithstanding the foregoing, "Senior Debt" shall not include:

          (1) any Indebtedness of the Company to a Subsidiary of the Company;

          (2) Indebtedness to, or guaranteed on behalf of, any director, officer
     or employee of the Company or any director, officer or employee of any
     Subsidiary of the Company (including, without limitation, amounts owed for
     compensation);

                                      30
<PAGE>

          (3) Indebtedness to trade creditors and other amounts incurred in
     connection with obtaining goods, materials or services (other than if
     incurred under the Credit Agreement);

          (4) Indebtedness represented by Disqualified Capital Stock;

          (5) any liability for federal, state, local or other taxes owed or
     owing by either Issuer;

          (6) that portion of any Indebtedness incurred in violation of Section
     4.4 (but, as to any such obligation, no such violation shall be deemed to
     exist for purposes of this clause (6) if the holder(s) of such obligation
     or their representative shall have received an Officers' Certificate of the
     Company to the effect that the incurrence of such Indebtedness does not
     (or, in the case of revolving credit Indebtedness, that the incurrence of
     the entire committed amount thereof at the date on which the initial
     borrowing thereunder is made would not) violate such provisions of this
     Indenture);

          (7) Indebtedness which, when incurred and without respect to any
     election under Section 1111(b) of Title 11, United States Code, is without
     recourse to either Issuer; and

          (8) any Indebtedness, which is, by its express terms, subordinated in
     right of payment to any other Indebtedness of either Issuer.

          "Senior Subordinated Debt" means, with respect to a Person, the
           ------------------------
Securities and any other Indebtedness of such Person that specifically provides
that such Indebtedness is to rank pari passu with the Securities in right of
payment and is not subordinated by its terms in right of payment to any
Indebtedness or other obligations of such Person which is not Senior Debt of
such Person.

          "Shell" means the Royal Dutch/Shell Group of Companies and its
           -----
Affiliates; provided that such Affiliates are not Affiliates of Apollo.
            --------

          "Significant Subsidiary," with respect to any Person, means any
           ----------------------
Restricted Subsidiary of such Person that satisfies the criteria for a
"significant subsidiary" set forth in Rule 1.02(w) of Regulation S-X under the
Securities Act.

          "Subsidiary," with respect to any Person, means:
           ----------

          (1) any corporation of which the outstanding Capital Stock having at
     least a majority of the votes entitled to be cast in the election of
     directors under ordinary circumstances shall at the time be owned, directly
     or indirectly, by such Person or a Subsidiary of such Person; or

          (2) any other Person of which at least a majority of the voting
     interest under ordinary circumstances is at the time, directly or
     indirectly, owned by such Person or a Subsidiary of such Person.

                                      31
<PAGE>

          "Subsidiary Guarantee" has the meaning set forth in Section 11.1.
           --------------------

          "Surviving Entity" has the meaning set forth in Section 5.1(a)(i).
           ----------------

          "Temporary Offshore Global Securities" has the meaning set forth in
           ------------------------------------
Section 2.1.

          "TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939
           ---      -------------------
(15 U.S.C. (S)(S) 77aaa-77bbbb), as amended, as in effect on the date of the
execution of this Indenture until such time as this Indenture is qualified under
the TIA, and thereafter as in effect on the date on which this Indenture is
qualified under the TIA, except as otherwise provided in Section 9.4.

          "Transaction Date" has the meaning specified in the definition of
           ----------------
"Consolidated Fixed Charge Coverage Ratio."

          "Transactions" means the offering of the Initial Notes, the
           ------------
Recapitalization and the related borrowings under the Credit Agreement on the
Issue Date.

          "Treasury Rate" means the rate per annum equal to the yield to
           -------------
maturity at the time of computation of United States Treasury securities with a
constant maturity most nearly equal to the period from such date of redemption
to November 15, 2005; provided, however, that if the period from such date of
                      --------  -------
redemption to November 15, 2005 is not equal to the constant maturity of the
United States Treasury security for which a weekly average yield is given, the
Treasury Rate shall be obtained by linear interpolation (calculated to the
nearest one-twelfth of a year) from the weekly average yields of United States
Treasury securities for which such yields are given, except that if the period
from such date of redemption to November 15, 2005 is less than one year, the
weekly average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year shall be used.

          "Trustee" means the party named as such in this Indenture until a
           -------
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.

          "Unrestricted Subsidiary" of any Person means (1) any Subsidiary of
           -----------------------
such Person that at the time of determination shall be or continue to be
designated an Unrestricted Subsidiary by the Board of Directors of such Person
in the manner provided below and (2) any Subsidiary of an Unrestricted
Subsidiary.  The Board of Directors may designate any Subsidiary (including any
newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on
any property of, the Company or any other Subsidiary of the Company that is not
a Subsidiary of the Subsidiary to be so designated; provided that (x) either (i)
                                                    --------
the Company certifies to the Trustee in an Officers' Certificate that such
designation complies with Section 4.3 or (ii) the Subsidiary to be so designated
at the time of designation has total consolidated assets of $1,000 or less and
(y) each Subsidiary to be so designated and each of its Subsidiaries has not at
the time of designation, and does not thereafter, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable with respect to any
Indebtedness pursuant to which the lender has recourse to any of the assets of
the Company or any of its Restricted Subsidiaries (other than the assets of such
Unrestricted Subsidiary).  The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary only if (x) immediately after giving
effect to such

                                      32
<PAGE>

designation, the Company is able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.4
and (y) immediately before and immediately after giving effect to such
designation, no Default or Event of Default shall have occurred and be
continuing. Any such designation by the Board of Directors shall be evidenced to
the Trustee by promptly filing with the Trustee a copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing provisions.

          "U.S. Global Securities" has the meaning provided in Section 2.1.
           ----------------------

          "U.S. Government Obligations" means direct obligations of, and
           ---------------------------
obligations guaranteed by, the United States of America for the payment of which
the full faith and credit of the United States of America is pledged and which
are not callable or redeemable at the issuer's option.

          "U.S. Legal Tender" means such coin or currency of the United States
           -----------------
of America as at the time of payment shall be legal tender for the payment of
public and private debts.

          "U.S. Physical Securities" means the Securities issued in the form of
           ------------------------
permanent certificated Securities in registered form in substantially the form
set forth in Exhibit A to Institutional Accredited Investors which are not QIBs
(excluding Non-U.S. Persons) who purchased Securities pursuant to Regulation D
of the Securities Act.

          "Weighted Average Life to Maturity" means, when applied to any
           ---------------------------------
Indebtedness at any date, the number of years obtained by dividing (1) the then
outstanding aggregate principal amount of such Indebtedness into (2) the sum of
the total of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (b)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.

          "Wholly Owned Restricted Subsidiary" of any Person means any
           ----------------------------------
Restricted Subsidiary of such Person of which all the outstanding voting
securities (other than in the case of a Foreign Restricted Subsidiary,
directors' qualifying shares or an immaterial amount of shares required to be
owned by other Persons pursuant to applicable law) are owned by such Person or
any Wholly Owned Restricted Subsidiary of such Person.

1.2  INCORPORATION BY REFERENCE OF TIA.
     ---------------------------------

     Whenever this Indenture refers to a provision of the TIA, such provision is
incorporated by reference in, and made a part of, this Indenture.  The following
TIA terms used in this Indenture have the following meanings:

          "indenture securities" means the Securities.
           --------------------

          "indenture security holder" means a Holder or a Securityholder.
           -------------------------

          "indenture to be qualified" means this Indenture.
           -------------------------

                                      33
<PAGE>

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

          "obligor" on the indenture securities means the Company, any Guarantor
           -------
or any other obligor on the Securities.

          All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
and not otherwise defined herein have the meanings assigned to them therein.

1.3  RULES OF CONSTRUCTION.
     ---------------------

     Unless the context otherwise requires:

          (1) a term has the meaning assigned to it;

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

          (3) "or" is not exclusive;
               --

          (4) "including" means including without limitation;
               ---------

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

          (6) provisions apply to successive events and transactions; and

          (7) "herein," "hereof" and other words of similar import refer to this
               ------    ------
     Indenture as a whole and not to any particular Article, Section or other
     subdivision.

          (8) all ratios and computations based on GAAP contained in this
     Indenture shall be computed in accordance with the definition of GAAP set
     forth in Section 1.1.

          (9) all references to Sections or Articles refer to Sections or
     Articles in this Indenture unless otherwise indicated.

                                  ARTICLE II

                                THE SECURITIES

2.1  FORM AND DATING.
     ---------------

     The Initial Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A and the Exchange Notes and the Trustee's
                             ---------
certificate of authentication shall be substantially in the form of Exhibit B.
                                                                    ---------
The Securities may have notations, legends or endorsements required by law,
stock exchange rule or usage.  The Issuers and the Trustee shall approve the
form of the Securities and any notation, legend or endorsement on them.  Each
Security shall be dated the date of its authentication.

                                      34
<PAGE>

     The terms and provisions contained in the Securities, annexed hereto as
Exhibits A and B, and the Subsidiary Guarantees (when executed pursuant to
----------     -
Section 4.15 or 4.21), if any, annexed hereto as Exhibit E, shall constitute,
                                                 ---------
and are hereby expressly made, a part of this Indenture and, to the extent
applicable, the Issuers, the Guarantors, if any, and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.

     Securities offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent global Securities in registered
form, substantially in the form set forth in Exhibit A (the "U.S. Global
                                             ---------       -----------
Securities"), deposited with the Trustee, as custodian for the Depository, duly
----------
executed by the Issuers and authenticated by the Trustee as hereinafter
provided, and shall bear the legends set forth in Section 2.14.  The aggregate
principal amount of the U.S. Global Securities may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depository, as hereinafter provided.

     Securities issued in exchange for interests in the U.S. Global Securities
pursuant to Section 2.15 may be issued in the form of permanent certificated
Securities in registered form  and shall bear the first legend set forth in
Section 2.14.

     Securities offered and sold in offshore transactions in reliance on
Regulation S shall be issued initially in the form of one or more temporary
global Securities in registered form substantially in the form set forth in
Exhibit A (the "Temporary Offshore Global Securities"), registered in the name
                ------------------------------------
of the nominee of the Depositary, deposited with the Trustee, as custodian for
the Depositary, duly executed by the Issuers and authenticated by the Trustee as
hereinafter provided and shall bear the legends set forth in Section 2.14.  At
any time on or after the 41st day after the Issue Date, upon receipt by the
Trustee, Registrar and the Issuers of a certificate substantially in the form of
Exhibit D hereto, one or more permanent global Securities in registered form
substantially in the form set forth in Exhibit A (the "Permanent Offshore Global
                                                       -------------------------
Securities"; and together with the Temporary Offshore Global Securities, the
----------
"Offshore Global Securities"), duly executed by the Issuers and authenticated by
---------------------------
the Trustee as hereinafter provided shall be deposited with the Trustee, as
custodian for the Depositary or its nominee, and the Registrar shall reflect on
its books and records the date and a decrease in the principal amount of the
Temporary Offshore Global Securities in an amount equal to the principal amount
of the beneficial interest in the Temporary Offshore Global Securities
transferred.  The aggregate principal amount of the Offshore Global Securities
may from time to time be increased or decreased by adjustments made on the
records of the Trustee, as custodian for the Depository, as hereinafter
provided.

     Securities issued in exchange for interests in the Offshore Global
Securities pursuant to Section 2.15 may be issued in the form of permanent
certificated Securities in registered form (the "Offshore Physical Securities")
                                                 ----------------------------
and shall bear the first legend set forth in Section 2.14.  All Securities
offered and sold in reliance on Regulation S shall remain in the form of an
Offshore Global Security until the consummation of the Exchange Offer pursuant
to the Registration Rights Agreement.

                                      35
<PAGE>

     The Offshore Physical Securities and the U.S. Physical Securities are
sometimes collectively herein referred to as the "Physical Securities."  The
                                                  -------------------
U.S. Global Securities and the Offshore Global Securities are sometimes referred
to herein as the "Global Securities."
                  -----------------

2.2  Execution and Authentication.
     ----------------------------

     Two Officers, or an Officer and an Assistant Secretary, of each of the
Issuers shall sign, or one Officer shall sign and one Officer or an Assistant
Secretary of each of the Issuers (each of whom shall, in each case, have been
duly authorized by all requisite corporate actions) shall attest to, the
Securities for each of the Issuers by manual or facsimile signature.

     If an Officer whose signature is on a Security was an Officer at the time
of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall nevertheless be valid.

     A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security.  The signature
shall be conclusive evidence that the Security has been authenticated under this
Indenture.

     The Trustee shall authenticate (i) Initial Notes for original issue on the
Issue Date in the aggregate principal amount not to exceed $200,000,000, (ii)
pursuant to the Exchange Offer, Exchange Notes from time to time for issue only
in exchange for a like principal amount of Initial Notes and (iii) subject to
compliance with Section 4.4, one or more series of Securities for original issue
after the Issue Date (such Securities to be substantially in the form of Exhibit
                                                                         -------
A or B, as the case may be) in an unlimited amount (and if in the form of
-    -
Exhibit A the same principal amount of Exchange Notes in exchange therefor upon
---------
consummation of a registered exchange offer), in each case upon written orders
of the Issuers in the form of an Officers' Certificate, which Officers'
Certificate shall, in the case of any issuance pursuant to clause (iii) above,
certify that such issuance is in compliance with Section 4.4.  In addition, each
such Officers' Certificate shall specify the amount of Securities to be
authenticated, the date on which the Securities are to be authenticated, whether
the Securities are to be Initial Notes, Exchange Notes or Securities issued
under clause (iii) of the preceding sentence and the aggregate principal amount
of Securities outstanding on the date of authentication, and shall further
specify the amount of such Securities to be issued as a Global Security or
Physical Securities.  Such Securities shall initially be in the form of one or
more Global Securities, which (i) shall represent, and shall be denominated in
an amount equal to the aggregate principal amount of, the Securities to be
issued, (ii) shall be registered in the name of the Depository for such Global
Security or Securities or its nominee and (iii) shall be delivered by the
Trustee to the Depository or pursuant to the Depository's instruction.  All
Securities issued under this Indenture shall vote and consent together on all
matters as one class and no series of Securities will have the right to vote or
consent as a separate class on any matter.

     The Trustee may appoint an authenticating agent reasonably acceptable to
the Issuers to authenticate the Securities.  Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so.  Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent.  An

                                      36
<PAGE>

authenticating agent has the same rights as an Agent to deal with the Issuers
and Affiliates of the Issuers.

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

2.3  REGISTRAR AND PAYING AGENT.
     --------------------------

     The Issuers shall maintain an office or agency in the Borough of Manhattan,
The City of New York, where (a) Securities may be presented or surrendered for
registration of transfer or for exchange ("Registrar"), (b) Securities may be
                                           ---------
presented or surrendered for payment ("Paying Agent") and (c) notices and
                                       ------------
demands to or upon the Issuers in respect of the Securities and this Indenture
may be served.  The Issuers may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
              --------  -------
any manner relieve the Issuers of their obligation to maintain an office or
agency in the Borough of Manhattan, The City of New York, for such purposes.
The Issuers may act as their own Registrar or Paying Agent except that for the
purposes of Articles Three and Eight and Sections 4.17 and 4.18, neither the
Issuers nor any Affiliate of the Issuers shall act as Paying Agent.  The
Registrar shall keep a register of the Securities and of their transfer and
exchange.  The Issuers, upon notice to the Trustee, may have one or more co-
Registrars and one or more additional paying agents reasonably acceptable to the
Trustee.  The term "Paying Agent" includes any additional paying agent.  The
                    ------------
Issuers hereby initially appoint the Trustee as Registrar and Paying Agent until
such time as the Trustee has resigned or a successor has been appointed.

     The Issuers shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture, which agreement shall implement the provisions of
this Indenture that relate to such Agent.  The Issuers shall notify the Trustee,
in advance, of the name and address of any such Agent.  If the Issuers fail to
maintain a Registrar or Paying Agent, the Trustee shall act as such.

2.4  PAYING AGENT TO HOLD ASSETS IN TRUST.
     ------------------------------------

     The Issuers shall require each Paying Agent other than the Trustee to agree
in writing that, subject to Article Ten, each Paying Agent shall hold in trust
for the benefit of Holders or the Trustee all assets held by the Paying Agent
for the payment of principal of, premium, if any, or interest on, the Securities
(whether such assets have been distributed to it by the Issuers or any other
obligor on the Securities), and shall notify the Trustee of any Default or Event
of Default by the Issuers (or any other obligor on the Securities) in making any
such payment.  If either of the Issuers or a Subsidiary acts as Paying Agent, it
shall segregate such assets and hold them as a separate trust fund.  The Issuers
at any time may require a Paying Agent to distribute all assets held by it to
the Trustee and account for any assets disbursed and the Trustee may at any time
during the continuance of any payment Default or payment Event of Default, upon
written request to a Paying Agent, require such Paying Agent to distribute all
assets held by it to the Trustee and to account for any assets distributed.
Upon distribution to the Trustee of all assets

                                      37
<PAGE>

that shall have been delivered by the Issuers to the Paying Agent, the Paying
Agent shall have no further liability for such assets.

2.5  HOLDER LISTS.
     ------------

     The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders.  If the Trustee is not the Registrar, the Issuers shall furnish to the
Trustee on or before each Interest Payment Date and at such other times as the
Trustee may request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Holders, which list
may be conclusively relied upon by the Trustee.

2.6  TRANSFER AND EXCHANGE.
     ---------------------

     (a)  Subject to the provisions of Sections 2.14 and 2.15, when Securities
are presented to the Registrar or a co-Registrar with a request to register the
transfer of such Securities or to exchange such Securities for an equal
principal amount of Securities of other authorized denominations, the Registrar
or co-Registrar shall register the transfer or make the exchange as requested if
its requirements for such transaction are met; provided, however, that the
                                               --------  -------
Securities surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to the Issuers and the Registrar or co-Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing. To permit registrations of
transfers and exchanges, the Issuers shall execute and the Trustee shall
authenticate Securities at the Registrar's or co-Registrar's request. No service
charge shall be made for any registration of transfer or exchange, but the
Issuers may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchanges or
transfers pursuant to Section 2.2, 2.10, 3.6, 4.17, 4.18 or 9.6). The Registrar
or co-Registrar shall not be required to register the transfer of or exchange of
any Security (i) during a period beginning at the opening of business 15 days
before the mailing of a notice of redemption of Securities and ending at the
close of business on the day of such mailing, (ii) selected for redemption in
whole or in part pursuant to Article Three, except the unredeemed portion of any
Security being redeemed in part, and (iii) during a Change of Control Offer or a
Net Proceeds Offer if such Security is tendered pursuant to such Change of
Control Offer or Net Proceeds Offer and not withdrawn. A Global Security may be
transferred, in whole but not in part, in the manner provided in this Section
2.6(a), only to a nominee of the Depository for such Global Security, or to the
Depository, or a successor Depository for such Global Security selected or
approved by the Issuers, or to a nominee of such successor Depository.

     (b)  If at any time the Depository for the Global Security or Securities
notifies the Issuers that it is unwilling or unable to continue as Depository
for such Global Security or Securities or the Issuers become aware that the
Depository has ceased to be a clearing agency registered under the Exchange Act,
the Issuers shall appoint a successor Depository with respect to such Global
Security or Securities. If a successor Depository for such Global Security or
Securities has not been appointed within 90 days after the Issuers receive such
notice or become aware of such ineligibility, the Issuers shall execute, and the
Trustee, upon receipt of an Officers' Certificate for the authentication and
delivery of Securities, shall authenticate and deliver,

                                      38
<PAGE>

Securities in definitive form, in an aggregate principal amount at maturity
equal to the principal amount at maturity of the Global Security representing
such Securities, in exchange for such Global Security. The Issuers shall
reimburse the Registrar, the Depository and the Trustee for expenses they incur
in documenting such exchanges and issuances of Securities in definitive form.

     The Issuers may at any time and in their sole discretion determine that the
Securities shall no longer be represented by such Global Security or Securities.
In such event the Issuers will execute, and the Trustee, upon receipt of a
written order for the authentication and delivery of individual Securities in
exchange in whole or in part for such Global Security or Securities, will
authenticate and deliver individual Securities in definitive form in an
aggregate principal amount equal to the principal amount of such Global Security
or Securities in exchange for such Global Security or Securities.

     In any exchange provided for in any of the preceding two paragraphs, the
Issuers will execute and the Trustee will authenticate and deliver individual
Securities in definitive registered form in authorized denominations.  Upon the
exchange of a Global Security for individual Securities, such Global Security
shall be cancelled by the Trustee.  Securities issued in exchange for a Global
Security pursuant to this Section 2.6(b) shall be registered in such names and
in such authorized denominations as the Depository for such Global Security,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee.  The Trustee shall deliver such Securities to the
Persons in whose names such Securities are so registered.

     None of the Issuers, the Trustee, any Paying Agent or the Registrar will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in a Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.

2.7  REPLACEMENT SECURITIES.
     ----------------------

     If a mutilated Security is surrendered to the Trustee or if the Holder of a
Security claims that the Security has been lost, destroyed or wrongfully taken,
the Issuers shall issue and the Trustee shall authenticate a replacement
Security if the Trustee's requirements are met.  If required by the Trustee or
the Issuers, such Holder must provide an indemnity bond or other indemnity,
sufficient in the judgment of both the Issuers and the Trustee, to protect the
Issuers, the Trustee or any Agent from any loss which any of them may suffer if
a Security is replaced.  The Issuers may charge such Holder for their reasonable
out-of-pocket expenses in replacing a Security pursuant to this Section 2.7,
including reasonable fees and expenses of counsel.

     Every replacement Security is an additional obligation of the Issuers.

2.8  OUTSTANDING SECURITIES.
     ----------------------

     Securities outstanding at any time are all the Securities that have been
authenticated by the Trustee except those cancelled by it, those delivered to it
for cancellation and those described in this Section as not outstanding.  A
Security does not cease to be outstanding because either of the Issuers, any
Guarantor or any of their respective Subsidiaries or Affiliates holds the
Security.

                                      39
<PAGE>

     If a Security is replaced pursuant to Section 2.7 (other than a mutilated
Security surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Security is held by
a bona fide purchaser or a protected purchaser.  A mutilated Security ceases to
  ---- ----
be outstanding upon surrender of such Security and replacement thereof pursuant
to Section 2.7.  If the principal amount of any Security is considered paid
under Section 4.1, it ceases to be outstanding and interest ceases to accrue.

     If on a Redemption Date or the Maturity Date the Paying Agent (other than
either of the Issuers or a Subsidiary) holds U.S. Legal Tender sufficient to pay
all of the principal, premium, if any, and interest due on the Securities
payable on that date, then on and after that date such Securities cease to be
outstanding and interest on them ceases to accrue.

2.9  TREASURY SECURITIES.
     -------------------

     In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Issuers, any of their Subsidiaries or any of their respective Affiliates
shall be disregarded, except that, for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Securities that a Responsible Officer of the Trustee knows or has reason to
know are so owned shall be disregarded.

2.10 TEMPORARY SECURITIES.
     --------------------

     Until definitive Securities are ready for delivery, the Issuers may prepare
and the Trustee shall authenticate temporary Securities.  Temporary Securities
shall be substantially in the form of definitive Securities but may have
variations that the Issuers consider appropriate for temporary Securities, as
evidenced by execution of such temporary Securities by the Issuers.  Without
unreasonable delay, the Issuers shall prepare and the Trustee shall authenticate
definitive Securities in exchange for temporary Securities.  Until such
exchange, temporary Securities shall be entitled to the same rights, benefits
and privileges as definitive Securities.  Notwithstanding the foregoing, so long
as the Securities are represented by a Global Security, such Global Security may
be in typewritten form.

2.11 CANCELLATION.
     ------------

     The Issuers at any time may deliver Securities to the Trustee for
cancellation.  The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange or
payment.  The Trustee, or at the direction of the Trustee, the Registrar or the
Paying Agent (other than either of the Issuers or a Subsidiary), and no one
else, shall cancel and shall dispose of all Securities surrendered for
registration of transfer, exchange, payment or cancellation.  Subject to Section
2.7, the Issuers may not issue new Securities to replace Securities that they
have paid or delivered to the Trustee for cancellation.  If the Issuers or any
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 surrendered to the Trustee for
cancellation pursuant to this Section 2.11.

                                      40
<PAGE>

2.12 DEFAULTED INTEREST.
     ------------------

     If the Issuers default in a payment of interest on the Securities, they
shall, unless the Trustee fixes another record date pursuant to Section 6.10,
pay the defaulted interest, plus (to the extent lawful) any interest payable on
the defaulted interest, in any lawful manner.  The Issuers may pay the defaulted
interest to the Persons who are Holders on a subsequent special record date,
which date shall be the fifteenth day next preceding the date fixed by the
Issuers for the payment of defaulted interest or the next succeeding Business
Day if such date is not a Business Day.  At least 15 days before any such
subsequent special record date, the Issuers shall mail to each Holder, with a
copy to the Trustee, a notice that states the subsequent special record date,
the payment date and the amount of defaulted interest, and interest payable on
such defaulted interest, if any, to be paid.

2.13 CUSIP AND ISIN NUMBERS.
     ----------------------

     The Issuers in issuing the Securities may use "CUSIP" and "ISIN" numbers,
                                                    -----       ----
and if so, the Trustee shall use the CUSIP numbers in notices of redemption or
exchange as a convenience to Holders; provided, however, that any such notice
                                      --------  -------
may state that no representation is made as to the correctness or accuracy of
the CUSIP and ISIN numbers printed in the notice or on the Securities, and that
reliance may be placed only on the other identification numbers printed on the
Securities and that any such redemption or exchange shall not be affected by any
defect or omission of such CUSIP and ISIN numbers.  The Issuers will promptly
notify the Trustee of any change in CUSIP or ISIN number.

2.14 RESTRICTIVE LEGENDS.
     -------------------

     Unless and until a Security is exchanged for an Exchange Note or sold in
connection with an effective registration statement under the Securities Act
pursuant to the Registration Rights Agreement, (i) the U.S. Global Securities
and U.S. Physical Securities shall bear the legend set forth below (the "Private
                                                                         -------
Placement Legend") on the face thereof and (ii) the Offshore Physical
----------------
Securities, until at least the 41/st/ day after the Issue Date and receipt by
the Issuers and the Trustee of a certificate substantially in the form of
Exhibit D hereto, and the Temporary Offshore Global Securities shall bear the
legend set forth below on the face thereof.

          THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
          1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
                                 --------------
          OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
          BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
          SENTENCE.  BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
          (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
                       -----------------------------
          UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
          INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION
          D UNDER THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR
                                          ---------------------------------
          (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
          OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE

                                      41
<PAGE>

          SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD
          REFERRED TO IN RULE 144(k) UNDER THE SECURITIES ACT AS IN EFFECT ON
          THE DATE OF THE TRANSFER OF THIS SECURITY, RESELL OR OTHERWISE
          TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUERS OR ANY SUBSIDIARY
          THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
          RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
          INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
          FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
          REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
          TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED
          FROM THE TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
          PRINCIPAL AMOUNT OF SECURITIES OF LESS THAN $100,000, AN OPINION OF
          COUNSEL ACCEPTABLE TO THE ISSUERS THAT SUCH TRANSFER IS IN COMPLIANCE
          WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
          TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E)
          PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
          THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
          REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT
          WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
          SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.  IN CONNECTION WITH ANY
          TRANSFER OF THIS SECURITY WITHIN THE TIME PERIOD REFERRED TO IN RULE
          144(k) UNDER THE SECURITIES ACT AFTER THE ORIGINAL ISSUANCE OF THE
          SECURITIES, 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 THE TRUSTEE.  IF THE PROPOSED TRANSFEREE IS AN
          INSTITUTIONAL ACCREDITED INVESTOR OR NON-U.S. PERSON, THE HOLDER MUST,
          PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUERS SUCH
          CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM
          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.  AS USED HEREIN, THE
          TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
                 --------------------    -------------       -----------
          THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
          THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
          REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING
          RESTRICTION.

                                      42
<PAGE>

     Each Global Security shall also bear the following legend on the face
thereof:

          UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
          DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
          WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY SUCH
          NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH
          SUCCESSOR DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR
          A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.  UNLESS THIS CERTIFICATE IS
          PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
          COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUERS OR THEIR AGENT
                                            ---
          FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
          ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
          IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
          HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
          BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
          USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
          INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
          HEREIN.

          TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
          WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
          THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
          GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
          THE RESTRICTIONS SET FORTH IN SECTION 2.16 OF THE INDENTURE GOVERNING
          THIS SECURITY.

2.15 BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITY.
     -----------------------------------------

     (a)  Each Global Security initially shall (i) be registered in the name of
the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Section 2.14.

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

                                      43
<PAGE>

     (b)  Transfers of Global Securities shall be limited to transfers in whole,
but not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in any Global Security may be transferred or,
subject to Section 2.1, exchanged for Physical Securities in accordance with the
rules and procedures of the Depository and the provisions of Section 2.16. In
addition, U.S. Physical Securities and Offshore Physical Securities shall be
transferred to all beneficial owners in exchange for their beneficial interests
in U.S. Global Securities or Offshore Global Securities, as the case may be, if
(i) the Depository notifies the Issuers that it is unwilling or unable to
continue as Depository for the U.S. Global Securities or the Offshore Global
Securities and a successor depositary is not appointed by the Issuers within 90
days of such notice or (ii) an Event of Default has occurred and is continuing
and the Registrar has received a written request from the Depository or the
Trustee to issue Physical Securities.

     (c)  In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Security to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Securities are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of such Global Security in an amount equal to the principal
amount of the beneficial interest in such Global Security to be transferred, and
the Issuers shall execute, and the Trustee shall authenticate and deliver, one
or more U.S. Physical Securities or Offshore Physical Securities, as the case
may be, of like tenor and amount.

     (d)  In connection with the transfer of U.S. Global Securities or Offshore
Global Securities, in whole, to beneficial owners pursuant to paragraph (b), the
U.S. Global Securities or the Offshore Global Securities, as the case may be,
shall be deemed to be surrendered to the Trustee for cancellation, and the
Issuers shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in such U.S. Global Securities or Offshore Global Securities, as the
case may be, an equal aggregate principal amount of U.S. Physical Securities or
Offshore Physical Securities, as the case may be, of authorized denominations.

     (e)  Any Physical Security constituting a Restricted Security delivered in
exchange for an interest in a Global Security pursuant to paragraph (b) or (c)
shall, except as otherwise provided by paragraphs (a)(i)(x), (d), (e)(ii) and
(f) of Section 2.16, bear the legend regarding transfer restrictions applicable
to the Physical Securities set forth in Section 2.14.

     (f)  The Holder of a Global Security 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 Securities.

2.16 SPECIAL TRANSFER PROVISIONS.
     ---------------------------

     (a)  Transfers to Non-QIB Institutional Accredited Investors. The following
          -------------------------------------------------------
provisions shall apply with respect to the registration of any proposed transfer
of a Security constituting a Restricted Security to any institutional accredited
investor (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) (an "Accredited Investor" or an " Institutional Accredited Investor") which
          -------------------          ---------------------------------
is not a QIB (excluding Non-U.S. Persons):

                                      44
<PAGE>

          (i)  the Registrar shall register the transfer of any Security
     constituting a Restricted Security, whether or not such Security bears the
     Private Placement Legend, if (x) the transferee certifies that it is not an
     Affiliate of either of the Issuers and the requested transfer is after the
     second anniversary of the later of the (a) Issue Date and (b) the last date
     on which the Issuers or an Affiliate of either of the Issuers was the owner
     of such Security (or any predecessor Security) or such shorter period of
     time as permitted by Rule 144(k) under the Securities Act or any successor
     provision thereunder or (y) the proposed transferee has delivered to the
     Registrar a certificate substantially in the form of Exhibit C hereto and
                                                          ---------
     if such transfer is in respect of an aggregate principal amount of
     Securities of less than $100,000, the proposed transferee has delivered to
     the Registrar and the Issuers an opinion of counsel acceptable to the
     Issuers that such transfer is in compliance with the Securities Act and
     such other certifications, legal opinions or other information that the
     Trustee may reasonably request in order to confirm that such transaction is
     being made pursuant to an exemption from or in a transaction not subject to
     the registration requirements of the Securities Act; and

          (ii) if the proposed transferor is an Agent Member holding a
     beneficial interest in the U.S. Global Security, the Registrar shall
     register the transfer of any Security constituting a Restricted Security,
     whether or not such Security bears a Private Placement Legend upon receipt
     by the Registrar of (x) the certificate, if any, required by paragraph (i)
     above and (y) instructions given in accordance with the Depository's and
     the Registrar's procedures, whereupon (a) the Registrar shall reflect on
     its books and records the date and (if the transfer does not involve a
     transfer of outstanding U.S. Physical Securities) a decrease in the
     principal amount of the applicable U.S. Global Security in an amount equal
     to the principal amount of the beneficial interest in such U.S. Global
     Security to be transferred, and (b) the Issuers shall execute and the
     Trustee shall authenticate and deliver one or more U.S. Physical Securities
     of like tenor and amount.

     (b)  Transfers to QIBs.  The following provisions shall apply with
          -----------------
respect to the registration of any proposed transfer of a Security to a QIB
(excluding transfers to Non-U.S. Persons):

          (i)  if the Security to be transferred consists of (x) either Offshore
     Physical Securities prior to the removal of the Private Placement Legend or
     U.S. Physical Securities, the Registrar shall register the transfer if such
     transfer is being made by a proposed transferor who has checked the box
     provided for on the form of Security stating, or has otherwise advised the
     Issuers and the Registrar in writing, that the sale has been made in
     compliance with the provisions of Rule 144A to a transferee who has signed
     the certification provided for on the form of Security stating, or has
     otherwise advised the Issuers and the Registrar in writing, that it is
     purchasing the Security for its own account or an account with respect to
     which it exercises sole investment discretion and that it and any such
     account is a QIB within the meaning of Rule 144A, and is aware that the
     sale to it is being made in reliance on Rule 144A and acknowledges that it
     has received such information regarding the Issuers as it has requested
     pursuant to Rule 144A or has determined not to request such information and
     that it is aware that the transferor is relying upon its foregoing
     representations in order to claim the exemption from registration provided
     by Rule 144A or (y) an interest in the U.S. Global Securities, the

                                      45
<PAGE>

     transfer of such interest may be effected only through the book entry
     system maintained by the Depositary; and

          (ii) if the proposed transferee is an Agent Member, and the Securities
     to be transferred consist of U.S. Physical Securities which after transfer
     are to be evidenced by an interest in a U.S. Global Security, upon receipt
     by the Registrar of instructions given in accordance with the Depository's
     and the Registrar's procedures, the Registrar shall reflect on its books
     and records the date and an increase in the principal amount of the
     applicable U.S. Global Security in an amount equal to the principal amount
     of the U.S. Physical Securities to be transferred, and the Trustee shall
     cancel the U.S. Physical Securities so transferred.

     (c)  Transfers of Interests in the Temporary Offshore Global Securities.
          ------------------------------------------------------------------
The following provisions shall apply with respect to registration of any
proposed transfer of an interest in a Temporary Offshore Global Securities:

          (i)  The Registrar shall register the transfer of any Security (x) if
     the proposed transferee is a Non-U.S. Person and the proposed transferor
     has delivered to the Registrar a certificate substantially in the form of
     Exhibit D hereto or (y) if the proposed transferee is a QIB and the
     proposed transferor has checked the box provided for on the form of
     Security stating, or has otherwise advised the Issuers and the Registrar in
     writing, that the sale has been made in compliance with the provisions of
     Rule 144A to a transferee who has signed the certification provided for on
     the form of Security stating, or has otherwise advised the Issuers and the
     Registrar in writing, that it is purchasing the Security for its own
     account or an account with respect to which it exercises sole investment
     discretion and that it and any such account is a QIB within the meaning of
     Rule 144A, and is aware that the sale to it is being made in reliance on
     Rule 144A and acknowledges that it has received such information regarding
     the Issuers as it has requested pursuant to Rule 144A or has determined not
     to request such information and that it is aware that the transferor is
     relying upon its foregoing representations in order to claim the exemption
     from registration provided by Rule 144A.

          (ii) If the proposed transferee is an Agent Member, upon receipt by
     the Registrar of the documents referred to in clause (i)(y) above and
     instructions given in accordance with the Depositary's and the Registrar's
     procedures, the Registrar shall reflect on its books and records the date
     and an increase in the principal amount of the U.S. Global Securities in an
     amount equal to the principal amount of the Temporary Offshore Global
     Securities to be transferred, and the Trustee shall decrease the amount of
     the Temporary Offshore Global Securities.

     (d)  Transfers of Interests in the Permanent Offshore Global Securities or
          ---------------------------------------------------------------------
Unlegended Offshore Physical Securities.  The following provisions shall apply
---------------------------------------
with respect to any transfer of interests in Permanent Offshore Global
Securities or unlegended Offshore Physical Securities. The Registrar shall
register the transfer of any such Security without requiring any additional
certification.

                                      46
<PAGE>

     (e)  Transfers to Non-U.S. Persons at Any Time.  The following provisions
          -----------------------------------------
shall apply with respect to any transfer of a Security to a Non-U.S. Person:

          (i)   Prior to the 41st day after the Issue Date, the Registrar shall
     register any proposed transfer of a Security to a Non-U.S. Person upon
     receipt of a certificate substantially in the form of Exhibit D hereto from
     the proposed transferor.

          (ii)  On and after the 41st day after the Issue Date, the Registrar
     shall register any proposed transfer to any Non-U.S. Person if the Security
     to be transferred is a U.S. Physical Security or an interest in U.S. Global
     Securities, upon receipt of a certificate substantially in the form of
     Exhibit D hereto from the proposed transferor.

          (iii) (a) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Securities, upon receipt by the Registrar
of (x) the documents, if any, required by paragraph (ii) and (y) instructions in
accordance with the Depositary's and the Registrar's procedures, the Registrar
shall reflect on its books and records the date and a decrease in the principal
amount of the U.S. Global Securities in an amount equal to the principal amount
of the beneficial interest in the U.S. Global Securities to be transferred, and
(b) if the proposed transferee is an Agent Member, upon receipt by the Registrar
of instructions given in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date and an
increase in the principal amount of the Offshore Global Securities in an amount
equal to the principal amount of the U.S. Physical Securities or the U.S. Global
Securities, as the case may be, to be transferred, and the Trustee shall cancel
the U.S. Physical Security, if any, so transferred or decrease the amount of the
U.S. Global Security.

     (f)  Private Placement Legend.  Upon the registration of transfer,
          ------------------------
exchange or replacement of Securities not bearing the Private Placement Legend,
the Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the registration of transfer, exchange or replacement of Securities
bearing the Private Placement Legend, the Registrar shall deliver only
Securities that bear the Private Placement Legend unless (i) the circumstance
contemplated by paragraph (a)(i)(x), (d) or (e)(ii) of this Section 2.16 exists
or (ii) there is delivered to the Registrar an Opinion of Counsel reasonably
satisfactory to the Issuers and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act.

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

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

                                      47
<PAGE>

                                  ARTICLE III

                                   REDEMPTION

3.1  NOTICES TO TRUSTEE.
     ------------------

     If the Issuers elect to redeem Securities pursuant to Paragraph 6 or
Paragraph 7 of the Securities, they shall notify the Trustee in writing of the
Redemption Date, the Redemption Price and the principal amount of the applicable
Securities to be redeemed.  The Issuers shall give notice of redemption to the
Paying Agent and Trustee at least 45 days but not more than 60 days before the
Redemption Date (unless a shorter notice shall be agreed to by the Trustee in
writing), together with an Officers' Certificate stating that such redemption
will comply with the conditions contained herein.

3.2  SELECTION OF SECURITIES TO BE REDEEMED.
     --------------------------------------

     In the event that less than all of the Securities are to be redeemed at any
time, selection of such Securities for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which such Securities are listed or, if such Securities are not then
listed on a national securities exchange, on a pro rata basis, by lot or by such
                                               --- ----
method as the Trustee shall deem fair and appropriate; provided, however, that
                                                       --------  -------
no Securities of a principal amount of $1,000 or less shall be redeemed in part;
and provided, further, that if a partial redemption is made with the Net Cash
    --------  -------
Proceeds of an Asset Sale or with Excess Cash Flow, selection of the Securities
or portions thereof for redemption shall be made by the Trustee only on a pro
                                                                          ---
rata basis or on as nearly a pro rata basis as is practicable (subject to the
----                         --- ----
procedures of the Depository), unless such method is otherwise prohibited.

3.3  NOTICE OF REDEMPTION.
     --------------------

     At least 30 days but not more than 60 days before a Redemption Date, the
Issuers shall mail a notice of redemption by first class mail, postage prepaid,
to each Holder whose Securities are to be redeemed at its registered address.
At the Issuers' request at least 45 days before a Redemption Date (unless a
shorter period shall be acceptable to the Trustee), the Trustee shall give the
notice of redemption in the Issuers' name and at the Issuers' expense.  Each
notice of redemption shall identify the Securities to be redeemed and shall
state:

     (a)  the Redemption Date;

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

     (c)  the name and address of the Paying Agent;

     (d)  that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price plus accrued interest, if any;

     (e)  that, unless the Issuers default in making the redemption payment,
interest on Securities called for redemption ceases to accrue on and after the
Redemption Date, and the only

                                      48
<PAGE>

remaining right of the Holders of such Securities is to receive payment of the
Redemption Price and accrued interest, if any, upon surrender to the Paying
Agent of the Securities redeemed;

     (f)  if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the Redemption
Date, and upon surrender of such Security, a new Security or Securities in
aggregate principal amount equal to the unredeemed portion thereof will be
issued;

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

     (h)  the Paragraph of the Securities pursuant to which the Securities are
to be redeemed; and

     (i)  the CUSIP or ISIN number, if any, printed on the Securities being
redeemed and a statement that no representation is made as to the correctness or
accuracy of the CUSIP or ISIN number, if any, listed in such notice or printed
on the Securities.

     The notice, if mailed in a manner herein provided, shall be conclusively
presumed to have been given, whether or not the Holder receives such notice.  In
any case, failure to give such notice by mail or any defect in the notice to the
Holder of any Security designated for redemption in whole or in part shall not
affect the validity of the proceedings for the redemption of any other Security.

3.4  EFFECT OF NOTICE OF REDEMPTION.
     ------------------------------

     Once notice of redemption is mailed in accordance with Section 3.3,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price plus accrued interest, if any.  Upon surrender to
the Trustee or Paying Agent, such Securities called for redemption shall be paid
at the Redemption Price (which shall include accrued interest thereon to the
Redemption Date), but installments of interest, the maturity of which is on or
prior to the Redemption Date, shall be payable to Holders of record at the close
of business on the relevant Record Dates.

3.5  DEPOSIT OF REDEMPTION PRICE.
     ---------------------------

     On or before 11:00 a.m. New York time on the Redemption Date, the Issuers
shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay the
Redemption Price plus accrued interest, if any, of all Securities to be redeemed
on that date.

     If the Issuers comply with the preceding paragraph, then, unless the
Issuers default in the payment of such Redemption Price plus accrued interest,
if any, interest on the Securities to be redeemed will cease to accrue on and
after the applicable Redemption Date, whether or not such Securities are
presented for payment.

                                      49
<PAGE>

3.6  SECURITIES REDEEMED IN PART.
     ---------------------------

     Upon surrender of a Security that is to be redeemed in part only, the
Trustee shall upon written instruction from the Issuers authenticate for the
Holder a new Security or Securities in a principal amount equal to the
unredeemed portion of the Security surrendered.

                                  ARTICLE IV

                                   COVENANTS

4.1  PAYMENT OF SECURITIES.
     ---------------------

     The Issuers shall pay the principal of, premium, if any, and interest on
the Securities in the manner provided in the Securities.  An installment of
principal of, premium, if any, or interest on the Securities shall be considered
paid on the date it is due if the Trustee or Paying Agent holds on that date
U.S. Legal Tender designated for and sufficient to pay the installment.  If
either of the Issuers or any Subsidiary of either Issuer acts as Paying Agent,
an installment of principal, premium, if any, or interest shall be considered
paid on the date it is due if the entity acting as Paying Agent complies with
the second sentence of Section 2.4.  Interest on the Securities will be computed
on the basis of a 360-day year comprised of twelve 30-day months.  As provided
in Section 6.9, upon any bankruptcy or reorganization procedure relative to
either Issuer, the Trustee shall serve as Paying Agent, if any, for the
Securities.

4.2  MAINTENANCE OF OFFICE OR AGENCY.
     -------------------------------

     The Issuers shall maintain in the Borough of Manhattan, The City of New
York, the office or agency required under Section 2.3.  The Issuers shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency.  If at any time the Issuers shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 13.2.

     The Issuers may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations.  The Issuers
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 Issuers hereby initially designate the Trustee at its address c/o
United States Trust Company of New York, 114 West 47th Street, 25th Floor, New
York, New York 10036, Attention:  Corporate Trust and Agency Services -- RPP, as
such office of the Issuers in accordance with Section 2.3.

4.3  LIMITATION ON RESTRICTED PAYMENTS.
     ---------------------------------

     The Company shall not, and shall not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, (1) declare or pay any dividend or make
any distribution (other than dividends or distributions payable in Qualified
Capital Stock of the Company) on or in respect of

                                      50
<PAGE>

shares of the Company's Capital Stock to holders of such Capital Stock; (2)
purchase, redeem or otherwise acquire or retire for value any Capital Stock of
the Company or any warrants, rights or options to purchase or acquire shares of
any class of such Capital Stock of the Company; (3) make any principal payment
on, purchase, defease, redeem, prepay, decrease or otherwise acquire or retire
for value, prior to any scheduled final maturity, scheduled repayment or
scheduled sinking fund payment, any Indebtedness of the Company that is
subordinate or junior in right of payment to the Securities (other than
Indebtedness described in clause (7) of the definition of "Permitted
                                                           ---------
Indebtedness"); or (4) make any Investment (other than Permitted Investments)
------------
(each of the foregoing actions set forth in clauses (1), (2), (3) and (4) being
referred to as a "Restricted Payment"), if
                  ------------------
at the time of such Restricted Payment or immediately after giving effect
thereto:

     (a)  a Default or an Event of Default shall have occurred and be
continuing; or

     (b)  the Company is not able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.4;
or

     (c)  the aggregate amount of Restricted Payments (including such proposed
Restricted Payment) made subsequent to the Issue Date (the amount expended for
such purposes, if other than in cash, being the fair market value of such
property as determined reasonably and in good faith by the Board of Directors of
the Company whose determination will be conclusive) shall exceed the sum of:

          (i)    50% of the cumulative Consolidated Net Income (or if cumulative
     Consolidated Net Income shall be a loss, minus 100% of such loss) of the
     Company earned subsequent to the Issue Date and on or prior to the date the
     Restricted Payment occurs (the "Reference Date") (treating such period as a
                                     --------------
     single accounting period); plus

          (ii)   100% of the aggregate Net Cash Proceeds and the fair market
     value, as determined in good faith by the Board of Directors of the
     Company, of property other than cash received by the Company from any
     Person (other than a Subsidiary of the Company) from the issuance and sale
     subsequent to the Issue Date and on or prior to the Reference Date of
     Qualified Capital Stock of the Company (other than Excluded Contributions);
     plus

          (iii)  without duplication of any amounts included in clause (c)(ii)
     above, 100% of the aggregate Net Cash Proceeds of any equity contribution
     received by the Company from a holder of the Company's Capital Stock (other
     than Excluded Contributions); plus

          (iv)   the amount by which Indebtedness of the Company or any of its
     Restricted Subsidiaries is reduced on the Company's balance sheet upon the
     conversion or exchange subsequent to the Issue Date of any Indebtedness of
     the Company or any of its Restricted Subsidiaries incurred after the Issue
     Date into or for Qualified Capital Stock; plus

          (v)    without duplication, the sum of:

                 (A)  the aggregate amount returned in cash on or with respect
          to Investments (other than Permitted Investments) made subsequent to
          the Issue

                                      51
<PAGE>

          Date whether through interest payments, principal payments, dividends
          or other distributions or payments;

                 (B)  the net cash proceeds received by the Company or any
          Restricted Subsidiary of the Company from the disposition of all or
          any portion of such Investments (other than to a Subsidiary of the
          Company); and

                 (C)  upon redesignation of an Unrestricted Subsidiary as a
          Restricted Subsidiary, the fair market value of such Subsidiary
          (valued in each case as provided in the definition of "Investment");
                                                                 ----------

provided, however, that the sum of clauses (A), (B) and (C) above shall not
-------- --------
exceed the aggregate amount of all such Investments made by the Company or any
Restricted Subsidiary in the relevant Person or Unrestricted Subsidiary
subsequent to the Issue Date.

     Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph do not prohibit:

          (1)    the payment of any dividend or other distribution within 60
     days after the date of declaration of such dividend or other distribution
     if the dividend or other distribution would have been permitted on the date
     of declaration;

          (2)    if no Default or Event of Default shall have occurred and be
     continuing, the acquisition of any shares of Capital Stock of the Company,
     either (a) solely in exchange for shares of Qualified Capital Stock of the
     Company or Qualified Capital Stock of RPP Inc. or (b) through the
     application of net proceeds of a substantially concurrent sale for cash
     (other than to a Subsidiary of the Company) of shares of Qualified Capital
     Stock of the Company or, to the extent the proceeds therefrom are
     contributed by RPP Inc. to the Company, from the shares of Capital Stock of
     RPP Inc.;

          (3)    if no Default or Event of Default shall have occurred and be
     continuing, the acquisition of any Indebtedness of the Company that is
     subordinate or junior in right of payment to the Securities either (a)
     solely in exchange for shares of Qualified Capital Stock of the Company or
     RPP Inc., or (b) through the application of net proceeds of a substantially
     concurrent sale for cash (other than to a Subsidiary of the Company) of (I)
     shares of Qualified Capital Stock of the Company or RPP Inc., or (II)
     Refinancing Indebtedness;

          (4)    if no Default or Event of Default shall have occurred and be
     continuing, repurchases by the Company or any Restricted Subsidiary of the
     Company of, or dividends, distributions or advances to RPP Inc. to allow
     RPP Inc. to repurchase (and/or to make payments on notes theretofore issued
     by RPP Inc. representing the consideration for the previous repurchase of),
     securities of RPP Inc., RPP Holdings or the Company from employees,
     directors or consultants of RPP Inc., the Company or any Subsidiaries of
     the Company or their authorized representatives (a) upon the death,
     disability or termination of employment of such employees, directors or
     consultants or to the extent required pursuant to employee benefit plans,
     employment agreements or consulting agreements or (b) pursuant to any other
     agreements with such employees or directors of

                                      52
<PAGE>

     or consultants to RPP Inc., the Company or any Subsidiaries of the Company,
     in an aggregate amount not to exceed $7.5 million in any calendar year
     (with unused amounts in any calendar year being carried over to succeeding
     years subject to a maximum of $15.0 million in any calendar year), provided
                                                                        --------
     that the cancellation of Indebtedness owing to the Company or any
     Restricted Subsidiary of the Company from such employees, directors or
     consultants of the Company or any of its Restricted Subsidiaries in
     connection with a repurchase of Capital Stock of the Company will not be
     deemed to constitute a Restricted Payment under this Indenture;

          (5)  the declaration and payment of dividends to holders of any class
     or series of Preferred Stock of the Company, provided that for the most
     recently ended four full fiscal quarters for which internal financial
     statements are available immediately preceding the date of issuance of such
     Preferred Stock, after giving effect to such issuance on a pro forma basis,
                                                                --- -----
     the Company would have been able to incur at least $1.00 of Indebtedness
     (other than Permitted Indebtedness) pursuant to Section 4.4;

          (6)  the payment of dividends on the Company's Common Stock (or
     dividends, distributions or advances to RPP Inc. to allow RPP Inc. to pay
     dividends on RPP Inc.'s Common Stock), following the first public offering
     of the Company's Common Stock (or of RPP Inc.'s Common Stock) after the
     Issue Date, of (i) in the case of the first public offering of the
     Company's Common Stock, up to 6% per annum of the net proceeds received by
     the Company in such public offering, or (ii) in the case of the first
     public offering of RPP Inc.'s Common Stock, up to 6% per annum of the
     amount contributed by RPP Inc. from the proceeds received by RPP Inc. from
     such offering, other than, in each case, public offerings with respect to
     the Company's Common Stock (or RPP Inc.'s Common Stock) registered on Form
     S-8 (or any successor form);

          (7)  the payment of dividends, distributions or advances to RPP Inc.
     to allow RPP Inc. to repurchase, retire or otherwise acquire or retire for
     value equity interests of RPP Inc., in existence on the Issue Date and from
     the Persons holding such equity interests on the Issue Date and which are
     not held by Apollo or any of its Affiliates or members of management of the
     Company and its Subsidiaries on the Issue Date (including any equity
     interests issued in respect of such equity interests as a result of a stock
     split, recapitalization, merger, combination, consolidation or similar
     transaction), provided, however, that the Company shall be permitted to
                   --------  -------
     make Restricted Payments under this clause only if after giving effect
     thereto, the Company would be permitted to incur at least $1.00 of
     additional Indebtedness (other than Permitted Indebtedness) pursuant to
     Section 4.4;

          (8)  other Restricted Payments in an aggregate amount not to exceed
     $20.0 million;

          (9)  if no Default or Event of Default shall have occurred and be
     continuing, payments or distributions to, or dividends, distributions or
     advances to RPP Inc. to allow RPP Inc. to make payments or distributions
     to, dissenting stockholders pursuant to applicable law, pursuant to or in
     connection with a consolidation, merger or transfer of assets that complies
     with the provisions of this Indenture applicable to mergers,

                                      53
<PAGE>

     consolidations and transfers of all or substantially all of the property
     and assets of the Company;

          (10) Investments that are made with Excluded Contributions;

          (11) any payments made to consummate the Transactions pursuant to or
     contemplated by the Master Sale Agreement, the Non-US Sale Agreement, the
     Transaction Documents, the Non-US Transaction Documents (as such terms are
     defined in the Master Sale Agreement), and any other agreements related to
     the Recapitalization in effect on the closing date of the Recapitalization,
     including payments made by the Company to RPP Inc. to allow RPP Inc. to
     satisfy its obligations under such agreements or documents, in each case,
     as such agreements or documents are in effect on the Issue Date as amended
     from time to time so long as such amendment is in the good faith judgment
     of the Board of Directors of the Company not more disadvantageous to the
     Holders of the Securities in any material respect than such agreement or
     document as in effect on the Issue Date;

          (12) repurchases of Capital Stock deemed to occur upon the exercise of
     stock options, warrants or other convertible securities, to the extent such
     Capital Stock represents a portion of the consideration for such exercise;

          (13) payment of dividends, other distributions or other amounts by the
     Company to RPP Inc. in amounts required for RPP Inc. to pay franchise taxes
     and other fees required to maintain its existence and provide for all other
     operating costs of RPP Inc., including, without limitation, in respect of
     director fees and expenses, administrative, legal and accounting services
     provided by third parties and other costs and expenses, including all costs
     and expenses with respect to filings with the Commission, of up to $2.5
     million per fiscal year;

          (14) the acquisition of any shares of Disqualified Capital Stock of
     the Company either (a) solely in exchange for shares of Disqualified
     Capital Stock of the Company or Capital Stock of RPP Inc. or (b) through
     the application of the net proceeds of a substantially concurrent sale for
     cash (other than to a Subsidiary of the Company) of shares of Disqualified
     Capital Stock of the Company or, to the extent the proceeds therefrom are
     contributed by RPP Inc. to the Company, from shares of Capital Stock of RPP
     Inc.;

          (15) any purchase or redemption of Indebtedness that ranks junior to
     the Securities utilizing any Net Cash Proceeds remaining after the Company
     has complied with the requirements of the covenants described under
     Sections 4.17 and 4.18;

          (16) the payment of dividends, other distributions or amounts by the
     Company to RPP Inc. in amounts required to pay the tax obligations of the
     Company and its Subsidiaries and the tax obligations of RPP Inc. or any of
     its direct or indirect parent attributable to the Company and its
     Subsidiaries; provided that (x) the amount of dividends paid pursuant to
                   --------
     this clause (16) to enable RPP Inc. or any of its direct or indirect
     parents to pay Federal and state income taxes at any time shall not exceed
     the

                                      54
<PAGE>

     amount of such Federal and state income taxes actually owing by RPP Inc. or
     any of its direct or indirect parents at such time for the respective
     period and (y) any refunds received by RPP Inc. or any of its direct or
     indirect parents attributable to the Company and its Subsidiaries shall
     promptly be returned by RPP Inc. or any of its direct or indirect parents
     to the Company; and

          (17)  if no Default or Event of Default shall have occurred and be
     continuing, payments of cash, or dividends, distributions or advances to
     RPP Inc. to allow RPP Inc. to make payments of cash, in lieu of the
     issuance of fractional shares upon the exercise of warrants or upon the
     conversion or exchange of, or issuance of Capital Stock in lieu of cash
     dividends on, any Capital Stock of RPP Inc., the Company or any Restricted
     Subsidiary, which in the aggregate do not exceed $3.0 million.

In determining the aggregate amount of Restricted Payments made subsequent to
the Issue Date in accordance with clause (c) of the immediately preceding
paragraph, amounts expended pursuant to clauses (1), (2), (4), (5), (6), (7),
(8), (9), (15) and (17) shall be included in such calculation.

     Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment complies with this Indenture and setting forth in reasonable detail the
basis upon which the required calculations were computed, which calculations may
be based upon the Company's latest available internal quarterly financial
statements.

4.4  LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS.
     ---------------------------------------------------

     The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume, guarantee,
acquire, become liable, contingently or otherwise, with respect to, or otherwise
become responsible for payment of (collectively, "incur") any Indebtedness
                                                  -----
(other than Permitted Indebtedness); provided, however, that if no Default or
                                     --------  -------
Event of Default shall have occurred and be continuing at the time of or as a
consequence of the incurrence of any such Indebtedness, the Company and its
Restricted Subsidiaries may incur Indebtedness (including, without limitation,
Acquired Indebtedness) if on the date of the incurrence of such Indebtedness,
after giving effect to the incurrence thereof, the Consolidated Fixed Charge
Coverage Ratio of the Company is greater than 2.0 to 1.0 if such incurrence is
on or prior to June 30, 2002 and 2.25 to 1.0 if such incurrence is thereafter;
provided that the amount of Indebtedness (other than Acquired Indebtedness) that
--------
may be incurred pursuant to the foregoing by Restricted Subsidiaries of the
Company that have not Guaranteed the Securities in compliance with Section 4.15
or 4.21 shall not exceed $50.0 million, in the case of the Domestic Restricted
Subsidiaries, and $50.0 million, in the case of the Foreign Restricted
Subsidiaries, in each case, at any one time outstanding.

4.5  CORPORATE EXISTENCE.
     -------------------

     Except as otherwise permitted by Article Five, the Company shall do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and the corporate, partnership or other existence
of each of its Restricted Subsidiaries in accordance with

                                      55
<PAGE>

the respective organizational documents of each such Restricted Subsidiary and
the rights (charter and statutory) and material franchises of the Company and
each of its Restricted Subsidiaries; provided, however, that neither the Company
                                     --------  -------
nor any Restricted Subsidiary shall be required to preserve any such right or
franchise or in the case of any Restricted Subsidiary, its existence, if (in
each case) the Board of Directors of the Company shall determine that the loss
thereof is not, and will not be, adverse in any material respect to the Holders.

4.6  PAYMENT OF TAXES AND OTHER CLAIMS.
     ---------------------------------

     The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed upon it or any of its Subsidiaries or
upon the income, profits or property of it or any of its Restricted Subsidiaries
and (b) all lawful claims for labor, materials and supplies which, in each case,
if unpaid, might by law become a material liability or Lien upon the property of
it or any of its Restricted Subsidiaries; provided, however, that the Company
                                          --------  -------
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, (i) the applicability or
validity is being contested in good faith by appropriate proceedings and for
which appropriate provision has been made or (ii) where the failure to effect
such payment or discharge is not adverse in any material respect to the Holders.

4.7  MAINTENANCE OF PROPERTIES AND INSURANCE.
     ---------------------------------------

     (a)  The Company shall cause all MATERIAL properties owned by or leased by
it or any of its Restricted Subsidiaries used or useful to the conduct of its
business or the business of any of its Restricted Subsidiaries, taken as a
whole, to be maintained and kept in normal condition, repair and working order
and supplied with all necessary equipment and shall cause to be made all
repairs, renewals, replacements, and betterments thereof, all as in its judgment
may be necessary, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
                                                    --------  -------
nothing in this Section 4.7 shall prevent the Company or any of its Restricted
Subsidiaries from discontinuing the use, operation or maintenance of any of such
properties, or disposing of any of them, if such discontinuance or disposal is,
in the judgment of the Board of Directors of the Company or any such Restricted
Subsidiary desirable in the conduct of the business of the Company or any such
Restricted Subsidiary, and if such discontinuance or disposal is not adverse in
any material respect to the Holders; provided further that nothing in this
                                     -------- -------
Section 4.7 shall prevent the Company or any of its Restricted Subsidiaries from
discontinuing or disposing of any properties to the extent otherwise permitted
by this Indenture.

     (b)  The Company shall maintain, and shall cause its Restricted
Subsidiaries to maintain, insurance with responsible carriers against such risks
and in such amounts, and with such deductibles, retentions, self-insured amounts
and co-insurance provisions, as are, in the Company's reasonable judgment,
customarily carried by similar businesses of similar size, including property
and casualty loss, workers' compensation and interruption of business insurance.

                                      56
<PAGE>

4.8   COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.
      -----------------------------------------

      (a)  The Issuers and each Guarantor, if any, shall deliver to the Trustee,
within 120 days after the close of each fiscal year of the Issuers, an Officers'
Certificate stating that a review of the activities of each of the Issuers has
been made under the supervision of the signing Officers with a view to
determining whether it has kept, observed, performed and fulfilled its
obligations under this Indenture and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge, the Issuers
or the applicable Guarantor during such preceding fiscal year have kept,
observed, performed and fulfilled each and every such covenant and no Default or
Event of Default occurred during such year and at the date of such certificate
there is no Default or Event of Default that has occurred and is continuing or,
if such signers do know of such Default or Event of Default, the certificate
shall describe its status with particularity. The applicable Officers'
Certificate shall also notify the Trustee should either of the Issuers or any
Guarantor elect to change the manner in which it fixes its fiscal year end.

      (b)  The annual financial statements delivered pursuant to Section 4.10
shall be accompanied by a written report of the Company's independent
accountants (who shall be a firm of established national reputation) that in
conducting their audit of such financial statements nothing has come to their
attention that would lead them to believe that the Issuers have violated any
provisions of Article Four, Five or Six of this Indenture insofar as they relate
to accounting matters or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.

      (c)  The Issuers shall deliver to the Trustee, in the event that any
Officer becomes aware of any Default or Event of Default in the performance of
any covenant, agreement or condition contained in this Indenture, an Officers'
Certificate specifying the Default or Event of Default and describing its status
with particularity.

4.9   COMPLIANCE WITH LAWS.
      --------------------

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

4.10  REPORTS TO HOLDERS.
      ------------------

      Whether or not required by the rules and regulations of the Commission, so
long as any Securities are outstanding, the Company shall file a copy of the
following information and reports with the Trustee and the Commission for public
availability (unless the Commission will not accept such a filing) and shall
furnish to the Holders of Securities and to securities analysts and prospective
investors, upon their written request:

                                      57
<PAGE>

          (i)   all quarterly and annual financial information that would be
     required to be contained in a filing with the Commission on Forms 10-Q and
     10-K if the Company were required to file such Forms, including a
     "Management's Discussion and Analysis of Financial Condition and Results of
      --------------------------------------------------------------------------
     Operations" that describes the financial condition and results of
     ----------
     operations of the Company and its consolidated Subsidiaries (it being
     understood that the first of such Forms required to be filed by the Company
     following the Issue Date shall be a Form 10-Q for the quarter ending
     September 30, 2000 and shall be filed on or prior to the 45th day following
     the Issue Date) and, with respect to the annual information only, a report
     thereon by the Company's certified independent accountants; and

          (ii)  all current reports that would be required to be filed with the
     Commission on Form 8-K if the Company were required to file such reports,
     in each case within the time periods specified in the Commission's rules
     and regulations.

          In addition, following the consummation of the Exchange Offer, whether
or not required by the rules and regulations of the Commission, the Company
shall file a copy of all such information and reports with the Commission for
public availability within the time periods specified in the Commission's rules
and regulations (unless the Commission will not accept such a filing) and make
such information available to securities analysts and prospective investors upon
written request to the Company.

          In addition, for so long as any Securities remain outstanding, the
Company shall furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.

4.11  WAIVER OF STAY, EXTENSION OR USURY LAWS.
      ---------------------------------------

      Each of the Issuers and each Guarantor, if any, covenants (to the extent
that it may lawfully do so) that it will not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive such
Issuer or such Guarantor from paying all or any portion of the principal of,
premium, if any, and/or interest on the Securities or the Subsidiary Guarantee
of any such Guarantor 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 (to the extent that it may lawfully do so) each hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.

4.12  LIMITATIONS ON TRANSACTIONS WITH AFFILIATES.
      -------------------------------------------

      (a)  The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction or series of related transactions (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with, or for the benefit of, any of its Affiliates (each an "Affiliate
                                                                      ---------
Transaction"), other than (x) Affiliate Transactions permitted under paragraph
-----------
(b) below and (y)

                                      58
<PAGE>

Affiliate Transactions on terms that are no less favorable than those that could
reasonably have been obtained in a comparable transaction at such time on an
arm's-length basis from a Person that is not an Affiliate of the Company or such
Restricted Subsidiary. All Affiliate Transactions (and each series of related
Affiliate Transactions which are similar or part of a common plan) involving
aggregate payments or other property with a fair market value in excess of $2.0
million shall be approved by the Board of Directors of the Company or such
Restricted Subsidiary, as the case may be, such approval to be evidenced by a
Board Resolution stating that such Board of Directors has determined that such
transaction complies with the foregoing provisions. If the Company or any
Restricted Subsidiary of the Company enters into an Affiliate Transaction (or a
series of related Affiliate Transactions related to a common plan) that involves
an aggregate fair market value of more than $10.0 million, the Company or such
Restricted Subsidiary, as the case may be, shall, prior to the consummation
thereof, obtain a favorable opinion as to the fairness of such transaction or
series of related transactions to the Company or the relevant Restricted
Subsidiary, as the case may be, from a financial point of view, from an
Independent Financial Advisor and file the same with the Trustee.

     (b)  The restrictions set forth in clause (a) shall not apply to:

          (i)    reasonable fees and compensation paid to and indemnity provided
     on behalf of, officers, directors, employees or consultants of the Company
     or any Restricted Subsidiary of the Company as determined in good faith by
     the Company's Board of Directors;

          (ii)   transactions exclusively between or among the Company and any
     of its Restricted Subsidiaries or exclusively between or among such
     Restricted Subsidiaries, provided such transactions are not otherwise
                              --------
     prohibited by this Indenture;

          (iii)  any agreement as in effect or entered into as of the Issue Date
     or any amendment thereto or any transaction contemplated thereby (including
     pursuant to any amendment thereto) in any replacement agreement thereto so
     long as any such amendment or replacement agreement is not more
     disadvantageous to the Holders in any material respect than the original
     agreement as in effect on the Issue Date;

          (iv)   Restricted Payments and Permitted Investments permitted by this
     Indenture;

          (v)    transactions in which the Company or any of its Restricted
     Subsidiaries, as the case may be, delivers to the Trustee a letter from an
     Independent Financial Advisor stating that such transaction is fair to the
     Company or such Restricted Subsidiary from a financial point of view or
     meets the requirements of the first sentence of paragraph (a) above;

          (vi)   the issuance of securities or other payments, awards or grants
     in cash, securities or otherwise pursuant to or the funding of, employment
     arrangements, stock options and stock ownership plans or similar employee
     benefit plans approved by Board of Directors of the Company in good faith
     and loans to employees of the Company and

                                      59
<PAGE>

      its Subsidiaries which are approved by the Board of Directors of the
      Company in good faith;

          (vii)   the payment of all fees and expenses related to the
      Transactions;

          (viii)  transactions with customers, clients, suppliers, or purchasers
      or sellers of goods or services, in each case on ordinary business terms
      and otherwise in compliance with the terms of this Indenture, which are
      fair to the Company or its Restricted Subsidiaries, in the reasonable
      determination of the Board of Directors of the Company or the senior
      management thereof, or are on terms at least as favorable as could
      reasonably have been obtained at such time from an unaffiliated party;

          (ix)    fees payable to Apollo pursuant to the Management Agreement;

          (x)     any contribution to the capital of the Company by RPP Inc., or
      any sales of Capital Stock of the Company to RPP Inc.; and

          (xi)    any tax sharing agreement or arrangement and payments pursuant
      thereto among the Company and its Subsidiaries and any other Person with
      which the Company or its Subsidiaries is required or permitted to file a
      consolidated tax return or with which the Company or any of its Restricted
      Subsidiaries is or could be part of a consolidated group for tax purposes
      in amounts not otherwise prohibited by this Indenture.

4.13  LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
      ---------------------------------------------------------------
SUBSIDIARIES
------------

      The Company shall not, and shall not cause or permit any of its Restricted
Subsidiaries (other than a Restricted Subsidiary that has executed a Subsidiary
Guarantee) to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary of the Company to (a) pay dividends or make any other
distributions on or in respect of its Capital Stock (it being understood that
the priority of any preferred stock in receiving dividends or liquidating
distributions prior to dividends or liquidating distributions being paid on
common stock shall not be deemed a restriction on the ability to make
distributions on Capital Stock); (b) make loans or advances or to pay any
Indebtedness or other obligation owed to the Company or any other Restricted
Subsidiary of the Company; or (c) transfer any of its property or assets to the
Company or any other Restricted Subsidiary of the Company, except for such
encumbrances or restrictions existing under or by reason of:

          (i)     applicable law, rule, regulation, order, grant or governmental
      permit;

          (ii)    this Indenture;

          (iii)   the Credit Agreement;

          (iv)    customary non-assignment provisions of any contract, license
      or any lease of any Restricted Subsidiary of the Company;

                                      60
<PAGE>

          (v)     any instrument governing Acquired Indebtedness, which
     encumbrance or restriction is not applicable to any Person, or the
     properties or assets of any Person, other than the Person or the properties
     or assets of the Person so acquired;

          (vi)    agreements existing or entered into on the Issue Date to the
     extent and in the manner such agreements are in effect on the Issue Date;

          (vii)   purchase money obligations for property acquired in the
     ordinary course of business or Capitalized Lease Obligations that impose
     restrictions of the nature discussed in clause (c) above on the property so
     acquired;

          (viii)  contracts for the sale of assets, including, without
     limitation, customary restrictions with respect to a Restricted Subsidiary
     of the Company pursuant to an agreement that has been entered into for the
     sale or disposition of all or substantially all of the Capital Stock or
     assets of such Restricted Subsidiary;

          (ix)    secured Indebtedness otherwise permitted to be incurred
     pursuant to Sections 4.4 and 4.16 that limit the right of the debtor to
     dispose of the assets securing such Indebtedness;

          (x)     customary provisions in joint venture agreements and other
     similar agreements entered into in the ordinary course of business;

          (xi)    customary net worth and restrictions on transfer, assignment
     or subletting provisions contained in leases and other agreements entered
     into by the Company or any Restricted Subsidiary;

          (xii)   any restriction in any agreement or instrument of a
     Receivables Subsidiary governing a Qualified Receivables Transaction;

          (xiii)  an agreement governing Indebtedness incurred to Refinance the
     Indebtedness issued, assumed or incurred pursuant to an agreement referred
     to in clauses (i) through (xii) above; provided, however, that the
                                            --------  -------
     provisions relating to such encumbrance or restriction contained in any
     such Indebtedness, taken as a whole, are no less favorable to the Company
     in any material respect as determined by the Board of Directors of the
     Company in their reasonable and good faith judgment than the provisions
     relating to such encumbrance or restriction contained in agreements
     referred to in such clauses; or

          (xiv)   an agreement governing Indebtedness permitted to be incurred
     pursuant to Section 4.4; provided that the provisions relating to such
                              --------
     encumbrance or restriction contained in such Indebtedness, taken as a
     whole, are no less favorable to the Company in any material respect as
     determined by the Board of Directors of the Company in their reasonable and
     good faith judgment than the provisions contained in the Credit Agreement
     or in this Indenture as in effect on the Issue Date.

                                      61
<PAGE>

4.14  LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF RESTRICTED
      ------------------------------------------------------------------
SUBSIDIARIES.
------------

           The Company shall not sell, and shall not permit any Restricted
Subsidiary of the Company, directly or indirectly, to issue or sell, any shares
of Capital Stock of a Restricted Subsidiary (including options, warrants or
other rights to purchase shares of such Capital Stock) except:

      (a)  to the Company or a Wholly Owned Restricted Subsidiary of the
Company;

      (b)  issuance of director's qualifying shares or sales to foreign
nationals of shares of Capital Stock of Foreign Restricted Subsidiaries of the
Company, to the extent required by applicable law;

      (c)  if, immediately after giving effect to such issuance or sale, such
Restricted Subsidiary would no longer constitute a Restricted Subsidiary of the
Company and any Investment in such Person remaining after giving effect to such
issuance or sale would have been permitted to be made under Section 4.3 if made
on the date of such issuance or sale; or

      (d)  the sale or issuance of Common Stock that is Qualified Capital Stock
of Restricted Subsidiaries of the Company, if the proceeds from such issuance
and sale are applied in accordance with Section 4.18.

4.15  LIMITATION ON ISSUANCES OF GUARANTEES BY RESTRICTED SUBSIDIARIES.
      ----------------------------------------------------------------

           The Company shall not permit any Restricted Subsidiary of the
Company, directly or indirectly, to Guarantee any Indebtedness of the Company
which is pari passu with or subordinate in right of payment to the Securities
         ---- -----
("Guaranteed Indebtedness"), unless (i) such Restricted Subsidiary
  -----------------------
simultaneously executes and delivers a supplemental indenture to this Indenture
providing for a Subsidiary Guarantee of payment of the Securities by such
Restricted Subsidiary and (ii) such Restricted Subsidiary waives and will not in
any manner whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against the Company
or any other Restricted Subsidiary as a result of any payment by such Restricted
Subsidiary under its Subsidiary Guarantee so long as any Securities remain
outstanding; provided that this paragraph shall not be applicable to any
             --------
Guarantee of any Restricted Subsidiary (x) that existed at the time such Person
became a Restricted Subsidiary and was not incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary or (y) of
Indebtedness incurred under the Credit Agreement or (z) that is provided by a
Foreign Restricted Subsidiary of Indebtedness incurred by another Foreign
Restricted Subsidiary. If the Guaranteed Indebtedness is (A) pari passu with the
                                                             ---- -----
Securities, then the Guarantee of such Guaranteed Indebtedness shall be pari
                                                                        ----
passu with, or subordinated to, the Subsidiary Guarantee or (B) subordinated to
-----
the Securities, then the Guarantee of such Guaranteed Indebtedness shall be
subordinated to the Subsidiary Guarantee at least to the extent that the
Guaranteed Indebtedness is subordinated to the Securities.

           Notwithstanding the foregoing, any Subsidiary Guarantee by a
Restricted Subsidiary may provide by its terms that it shall be automatically
and unconditionally released and discharged upon (i) any sale, exchange or
transfer, to any Person not an Affiliate of the Company, of all of the Company's
and each Restricted Subsidiary's Capital Stock in, or all or

                                      62
<PAGE>

substantially all the assets of, such Restricted Subsidiary (which sale,
exchange or transfer is not prohibited by this Indenture), (ii) the release or
discharge of the Guarantee which resulted in the creation of such Subsidiary
Guarantee, except a discharge or release by or as a result of payment under such
Guarantee or (iii) the designation of such Restricted Subsidiary as an
Unrestricted Subsidiary in accordance with the provisions of this Indenture.

4.16  LIMITATION ON LIENS.
      -------------------

      The Company shall not, and shall not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or permit or
suffer to exist any Liens of any kind against or upon any property or assets of
the Company or any of its Restricted Subsidiaries whether owned on the Issue
Date or acquired after the Issue Date, or any proceeds therefrom, or assign or
otherwise convey any right to receive income or profits therefrom unless:

      (a)  in the case of Liens securing Indebtedness that is expressly
subordinate or junior in right of payment of the Securities, the Securities are
secured by a Lien on such property, assets or proceeds that is senior in
priority to such Liens; and

      (b)  in all other cases, the Securities are equally and ratably secured,
except for the following Liens which are expressly permitted:

           (i)    Liens existing as of the Issue Date;

           (ii)   Liens securing Senior Debt, Guarantor Senior Debt and
      Indebtedness (including any Guarantee) incurred by a Restricted Subsidiary
      under the Credit Agreement;

           (iii)  Liens securing the Securities or any Subsidiary Guarantee;

           (iv)   Liens in favor of the Company or a Wholly Owned Restricted
      Subsidiary of the Company on assets of any Restricted Subsidiary of the
      Company;

           (v)    Liens securing Refinancing Indebtedness which is incurred to
      Refinance any Indebtedness (including, without limitation, Acquired
      Indebtedness) which has been secured by a Lien permitted under this
      Indenture and which has been incurred in accordance with the provisions of
      this Indenture; provided, however, that such Liens:
                      --------  -------

                  (A)  are no less favorable to the Holders and are not more
           favorable to the lienholders with respect to such Liens than the
           Liens in respect of the Indebtedness being Refinanced; and

                  (B)  do not extend to or cover any property or assets of the
           Company or any of its Restricted Subsidiaries not securing the
           Indebtedness so Refinanced;

           (vi)   Liens securing Indebtedness of Restricted Subsidiaries of the
      Company so long as such Indebtedness is otherwise permitted under this
      Indenture; and

                                      63
<PAGE>

           (vii)  Permitted Liens.

4.17  CHANGE OF CONTROL.
      -----------------

      (a)  Upon the occurrence of a Change of Control, the Company shall be
obligated to make an offer to purchase (the "Change of Control Offer"), and
                                             -----------------------
shall purchase, on a Business Day (the "Change of Control Payment Date") as
                                        ------------------------------
described below, all or a portion of the then outstanding Securities at a
purchase price equal to 101.0% of the principal amount thereof, plus accrued and
unpaid interest, if any, thereon to the Change of Control Payment Date (subject
to the right of Holders of record on the relevant record date to receive
interest due on the relevant interest payment date). The Change of Control Offer
shall remain open for at least 20 Business Days and until the close of business
on the Change of Control Payment Date. Notwithstanding the occurrence of a
Change of Control, the Company shall not be obligated to repurchase the
Securities pursuant to this Section 4.17 in the event that the Company has
exercised its right to redeem all the Securities under the terms of Article III
of this Indenture and paragraph 6 of the Securities.

      (b)  Prior to the mailing of the notice referred to below, but in any
event within 30 days following any Change of Control, the Company covenants to:

           (i)   repay in full and terminate all commitments under Indebtedness
      under the Credit Agreement and all other Senior Debt the terms of which
      require repayment upon a Change of Control or offer to repay in full and
      terminate all commitments under all Indebtedness under the Credit
      Agreement and all other such Senior Debt and to repay the Indebtedness
      owed to (and terminate all commitments of) each lender which has accepted
      such offer; or

           (ii)  obtain the requisite consents under the Credit Agreement and
      all such other Senior Debt to permit the repurchase of the Securities as
      provided below.

The Company shall first comply with the covenant in the immediately preceding
sentence before it shall be required to repurchase Securities pursuant to the
provisions described below.  The Company's failure to comply with the covenant
described in the second preceding sentence (and any failure to send the notice
referred to in clause (c) below because same is prohibited by the second
preceding sentence) may (with notice and lapse of time) constitute an Event of
Default described in clause (iii) of Section 6.1 but shall not constitute an
Event of Default described in clause (ii) of Section 6.1.

      (c)  Within 30 days following the date upon which a Change of Control
occurs (the "Change of Control Date"), the Company shall send, by first class
             ----------------------
mail, a notice to each Holder, with a copy to the Trustee, which notice shall
govern the terms of the Change of Control Offer. The notice to the Holders shall
contain all instructions and materials necessary to enable such Holders to
tender Securities pursuant to the Change of Control Offer. Such notice shall
state:

           (i)   that the Change of Control Offer is being made pursuant to this
      Section 4.17 and that all Securities tendered and not withdrawn will be
      accepted for payment;

                                      64
<PAGE>

          (ii)   the purchase price (including the amount of accrued interest)
     and the Change of Control Payment Date, which shall be a Business Day, that
     is not earlier than 30 days or later than 60 days from the date such notice
     is mailed, other than as may be required by law;

          (iii)  that any Security not tendered will continue to accrue
interest;

          (iv)   that, unless the Company defaults in making payment therefor,
     any Security accepted for payment pursuant to the Change of Control Offer
     shall cease to accrue interest after the Change of Control Payment Date;

          (v)    that Holders electing to have a Security purchased pursuant to
     a Change of Control Offer will be required to surrender the Security, with
     the form entitled "Option of Holder to Elect Purchase" on the reverse of
                        ----------------------------------
     the Security completed, to the Paying Agent at the address specified in the
     notice prior to the close of business on the third Business Day prior to
     the Change of Control Payment Date;

          (vi)   that Holders will be entitled to withdraw their election if the
     Paying Agent receives, not later than the second Business Day prior to the
     Change of Control Payment Date, a telegram, telex, facsimile transmission
     or letter setting forth the name of the Holder, the principal amount of the
     Securities the Holder delivered for purchase and a statement that such
     Holder is withdrawing his election to have such Security purchased;

          (vii)  that Holders whose Securities are purchased only in part will
     be issued new Securities in a principal amount equal to the unpurchased
     portion of the Securities surrendered; and

          (viii) the circumstances and relevant facts regarding such Change of
     Control.

     The Company shall not be required to make a Change of Control Offer upon a
Change of Control if any other Person makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Section 4.17 applicable to a Change of Control Offer made by the Company
and purchases all Securities validly tendered and not withdrawn under such
Change of Control Offer. This covenant and other provisions contained in this
Indenture relating to the Company's obligation to make a Change of Control Offer
may be waived or modified with the written consent of the Holders of a majority
in principal amount of Securities.

     On or before the Change of Control Payment Date, the Company shall (i)
accept for payment Securities or portions thereof tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price plus accrued interest, if any, of all
Securities so tendered and (iii) deliver to the Trustee Securities so accepted
together with an Officers' Certificate stating the Securities or portions
thereof being purchased by the Company. The Paying Agent shall promptly mail to
the Holders of Securities so accepted payment in an amount equal to the purchase
price plus accrued interest, if any, and upon written order of the Company the
Trustee shall promptly authenticate and mail to such Holders new Securities
equal in principal amount to any unpurchased portion of the Securities

                                      65
<PAGE>

surrendered. Any Securities not so accepted shall be promptly mailed by the
Company to the Holder thereof. For purposes of this Section 4.17, the Trustee
shall act as the Paying Agent.

     Any amounts remaining with the Paying Agent after the purchase of
Securities pursuant to a Change of Control Offer shall be returned by the
Trustee to the Company.

     The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Securities pursuant to a Change of Control Offer.  To the extent
the provisions of any securities laws or regulations conflict with the
provisions of this Section 4.17, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.17 by virtue thereof.

4.18 LIMITATION ON ASSET SALES.
     -------------------------

     The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:

          (i)   the Company or the applicable Restricted Subsidiary, as the case
     may be, receives consideration at the time of such Asset Sale at least
     equal to the fair market value of the assets sold or otherwise disposed of
     (as determined in good faith by the Company's senior management or, in the
     case of an Asset Sale in excess of $5.0 million, the Board of Directors of
     the Company);

          (ii)  at least 75% of the consideration received by the Company or the
     Restricted Subsidiary, as the case may be, from such Asset Sale shall be in
     the form of (x) cash or Cash Equivalents, (y) properties and assets to be
     owned by the Company or any of its Restricted Subsidiaries and used in a
     Permitted Business or (z) Capital Stock in one or more Persons engaged in a
     Permitted Business that are or thereby become Restricted Subsidiaries of
     the Company, and, in each case, such consideration is received at the time
     of such disposition; provided that the amount of (a) any liabilities (as
                          --------
     shown on the Company's or such Restricted Subsidiary's most recent balance
     sheet) of the Company or any Restricted Subsidiary (other than liabilities
     that are by their terms subordinated to the Securities) that are assumed by
     the transferee of any such assets, and (b) any notes or other securities
     received by the Company or any such Restricted Subsidiary from such
     transferee that are converted by the Company or such Restricted Subsidiary
     into cash within 180 days after such Asset Sale (to the extent of the cash
     received) shall be deemed to be cash for the purposes of this provision
     only; and

          (iii) upon the consummation of an Asset Sale, the Company shall apply,
     or cause such Restricted Subsidiary to apply, the Net Cash Proceeds
     relating to such Asset Sale within 360 days of receipt thereof either:

               (A)  to prepay any Senior Debt or any Indebtedness of a
          Restricted Subsidiary and, in the case of any Senior Debt or
          Indebtedness of a Restricted Subsidiary under any revolving credit
          facility, effect a permanent reduction in the availability under such
          revolving credit facility (or effect a permanent reduction in

                                      66
<PAGE>

          availability under such revolving credit facility regardless of the
          fact that no prepayment is required);

               (B)  to make an Investment (x) in properties and assets that
          replace the properties and assets that were the subject of such Asset
          Sale, (y) in properties and assets that will be used in a Permitted
          Business or (z) permitted by clause (1) of the definition of Permitted
          Investments (collectively, "Replacement Assets"); or
                                      ------------------

               (C)  a combination of prepayment and investment permitted by the
          foregoing clauses (iii)(A) and (iii)(B).

     Pending the final application of the Net Cash Proceeds, the Company and its
Restricted Subsidiaries may temporarily reduce Indebtedness or otherwise invest
such Net Cash Proceeds in any manner not prohibited by this Indenture.

     On the 361st day after an Asset Sale or such earlier date, if any, as the
senior management or the Board of Directors of the Company or of such Restricted
Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset
Sale as set forth in clauses (iii)(A), (iii)(B) and (iii)(C) of the next
preceding paragraph (each, a "Net Proceeds Offer Trigger Date"), such aggregate
                              -------------------------------
amount of Net Cash Proceeds which have not been applied on or before such Net
Proceeds Offer Trigger Date as permitted in clauses (iii)(A), (iii)(B) and
(iii)(C) of the next preceding paragraph (each a "Net Proceeds Offer Amount")
                                                  -------------------------
shall be applied by the Company or such Restricted Subsidiary to make an offer
to purchase (the "Net Proceeds Offer") on a date (the "Net Proceeds Offer
                  ------------------                   ------------------
Payment Date") not less than 30 nor more than 60 days following the applicable
------------
Net Proceeds Offer Trigger Date, from all Holders on a pro rata basis, that
                                                       --- ----
amount of Securities equal to the Net Proceeds Offer Amount at a price equal to
100% of the principal amount of the Securities to be purchased, plus accrued and
unpaid interest thereon, if any, to the date of purchase; provided, however,
                                                          --------  -------
that if the Company so elects (or is required by the terms of any Senior
Subordinated Debt), such Net Proceeds Offer may be made ratably to purchase the
Securities and other Senior Subordinated Debt of the Company.

     If at any time any non-cash consideration received by the Company or any
Restricted Subsidiary of the Company, as the case may be, in connection with any
Asset Sale is converted into or sold or otherwise disposed of for cash (other
than interest received with respect to any such non-cash consideration), then
such conversion or disposition shall be deemed to constitute an Asset Sale
hereunder as of the date of such conversion or disposition and the Net Cash
Proceeds thereof shall be applied in accordance with this covenant.

     The Company may defer the Net Proceeds Offer until there is an aggregate
unutilized Net Proceeds Offer Amount equal to or in excess of $10.0 million
resulting from one or more Asset Sales (at which time, the entire unutilized Net
Proceeds Offer Amount, and not just the amount in excess of $10.0 million, shall
be applied as required pursuant to the preceding paragraph).

     In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under Section 5.1, which
transaction does not constitute a Change of Control, the successor

                                      67
<PAGE>

corporation shall be deemed to have sold the properties and assets of the
Company and its Restricted Subsidiaries not so transferred for purposes of this
Section, and shall comply with the provisions of clause (iii) of this Section
with respect to such deemed sale as if it were an Asset Sale. In addition, the
fair market value of such properties and assets of the Company or its Restricted
Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for
purposes of this Section 4.18.

     Notice of each Net Proceeds Offer pursuant to this Section 4.18 shall be
mailed or caused to be mailed, by first class mail, by the Company within 25
days following the applicable Net Proceeds Offer Trigger Date to all Holders at
their last registered addresses, with a copy to the Trustee.  A Net Proceeds
Offer shall remain open for a period of 20 Business Days or such longer period
as may be required by law.  The notice shall contain all instructions and
materials necessary to enable such Holders to tender Securities pursuant to the
Net Proceeds Offer and shall state the following terms:

          (i)    that Holders may elect to have their Securities purchased by
     the Company either in whole or in part (subject to prorationing as
     hereinafter described in the event the Net Proceeds Offer is
     oversubscribed) in integral multiples of $1,000 of principal amount, at the
     applicable purchase price;

          (ii)   that the Net Proceeds Offer is being made pursuant to this
     Section 4.18 and that all Securities tendered will be accepted for payment;
     provided, however, that if the principal amount of Securities tendered in
     --------  ------
     the Net Proceeds Offer exceeds the aggregate amount of the Net Proceeds
     Offer Amount, the Company shall select the Securities to be purchased on a
     pro rata basis (based on amounts tendered);
     --- ----

          (iii)  the purchase price (including the amount of accrued interest,
     if any) and the purchase date (which shall be no earlier than 30 days nor
     later than 60 days from the Net Proceeds Offer Trigger Date, other than as
     may be required by applicable law);

          (iv)   that any Security not tendered will continue to accrue
     interest;

          (v)    that, unless the Company defaults in making payment therefor,
     any Security accepted for payment pursuant to the Net Proceeds Offer shall
     cease to accrue interest after the Net Proceeds Offer Payment Date;

          (vi)   that Holders electing to have a Security purchased pursuant to
     the Net Proceeds Offer will be required to surrender the Security, with the
     form entitled "Option of Holder to Elect Purchase" on the reverse of the
                    ----------------------------------
     Security completed, to the Paying Agent at the address specified in the
     notice prior to the close of business on the Net Proceeds Offer Payment
     Date;

          (vii)  that Holders will be entitled to withdraw their election if the
     Paying Agent receives, not later than the second Business Day prior to the
     Net Proceeds Offer Payment Date, a facsimile transmission or letter setting
     forth the name of the Holder, the principal amount of the Security the
     Holder delivered for purchase and a statement that such Holder is
     withdrawing his election to have such Security purchased; and

                                      68
<PAGE>

          (viii) that Holders whose Securities are purchased only in part will
     be issued new Securities in a principal amount at maturity equal to the
     unpurchased portion of the Securities surrendered.

     On or before the Net Proceeds Offer Payment Date, the Company shall (i)
accept for payment Securities or portions thereof tendered pursuant to the Net
Proceeds Offer, (ii) deposit with the Paying Agent U.S. Legal Tender sufficient
to pay the purchase price, plus accrued interest, if any, of all Securities to
be purchased and (iii) deliver to the Trustee Securities so accepted together
with an Officers' Certificate stating the Securities or portions thereof being
purchased by the Company. The Paying Agent shall promptly mail to the Holders of
Securities so accepted payment in an amount equal to the purchase price, plus
accrued interest, if any, thereon set forth in the notice of such Net Proceeds
Offer. Any Security not so accepted shall be promptly mailed by the Company to
the Holder thereof. For purposes of this Section 4.18, the Trustee shall act as
the Paying Agent.

     Any amounts remaining after the purchase of Securities pursuant to a Net
Proceeds Offer shall be returned by the Trustee to the Company. To the extent
that the aggregate amount of the Securities tendered pursuant to a Net Proceeds
Offer is less than the Net Proceeds Offer Amount, the Company may use such
excess Net Proceeds Offer Amount for general corporate purposes or for any other
purposes not prohibited by this Indenture. Upon completion of any such Net
Proceeds Offer, the Net Proceeds Offer Amount shall be reset at zero.

     The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Securities pursuant to a Net Proceeds Offer. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of this Section 4.18, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.18 by virtue thereof. This covenant and other
provisions contained in this Indenture relating to the Company's obligation to
make a Net Proceeds Offer may be waived or modified with the written consent of
the Holders of a majority in principal amount of the Securities.

4.19 PROHIBITION ON INCURRENCE OF SENIOR SUBORDINATED DEBT.
     -----------------------------------------------------

     The Issuers and the Guarantors, if any, shall not incur or suffer to exist
Indebtedness that is senior in right of payment to the Securities and the
Subsidiary Guarantees, if any, and subordinate in right of payment by its terms
to any other Indebtedness of the Issuers or such Guarantor, as the case may be.

4.20 EXCESS CASH FLOW REPURCHASE OFFER.
     ---------------------------------

     (a)  If (x) the Company has Excess Cash Flow for any fiscal year
(commencing with fiscal 2001) and (y) the Leverage Ratio of the Company is more
than 3.0 to 1.0 on the last day of such fiscal year, no later than the 120th day
following the end of such fiscal year, the Company shall apply an amount equal
to 50% of the Excess Cash Flow for such fiscal year: (1) first, to the extent
                                                         -----
the Company elects (or is required by the terms of any Senior Debt) to prepay,
repay, redeem or purchase (and permanently reduce the commitments thereunder)
Senior Debt with

                                      69
<PAGE>

such percentage of Excess Cash Flow; (2) second, to the extent of the balance of
                                         ------
such percentage of Excess Cash Flow after application in accordance with clause
(1), to make an offer to the holders of the Securities (and to holders of other
Senior Subordinated Debt designated by the Company) to purchase Securities (and
such other Senior Subordinated Debt) pursuant to and subject to the conditions
contained in this Indenture (an "Excess Cash Flow Offer"); and (3) third, to the
                                 ----------------------
extent of the balance of such percentage of Excess Cash Flow after application
in accordance with clause (1) or (2) above, to any other application or use not
prohibited by this Indenture; provided, however, that in connection with any
                              --------  -------
prepayment, repayment or purchase of Indebtedness pursuant to clause (1) above,
the Company shall permanently retire such Indebtedness and shall cause the
related loan commitment (if any) to be permanently reduced in an amount equal to
the principal amount so prepaid, repaid or purchased.

     Notwithstanding the foregoing, the amount of Excess Cash Flow included in
any Excess Cash Flow Offer shall be reduced by the aggregate amount of any
optional prepayments of Senior Debt during the fiscal year for which Excess Cash
Flow was calculated, but only to the extent that such prepayments by their terms
cannot be reborrowed or redrawn and do not occur in connection with a
refinancing of all or any portion of such Senior Debt.

     (b)  In the event of an Excess Cash Flow Offer, the Company will be
required to purchase Securities tendered pursuant to an offer by the Company for
the Securities (and other Senior Subordinated Debt) at a purchase price of 100%
of their respective principal amount (or, in the event such other Senior
Subordinated Indebtedness was issued with significant original issue discount,
100% of the accreted value thereof), without premium, plus accrued but unpaid
interest (or, in respect of such other Senior Subordinated Debt such lesser
price, if any, as may be provided for by the terms of such Senior Subordinated
Debt) in accordance with the procedures (including prorating in the event of
oversubscription) set forth in Section 4.20(c). If the aggregate purchase price
of the Securities (and any other Senior Subordinated Debt) tendered pursuant to
such offer is less than the Excess Cash Flow allotted to the purchase thereof,
the Company will be required to apply the remaining Excess Cash Flow in
accordance with clause (a)(3) above. The Company shall not be required to make
an Excess Cash Flow Offer to purchase Securities (and other Senior Subordinated
Debt) pursuant to Section 4.20(a) if the Excess Cash Flow available therefor is
less than $5.0 million (which lesser amount shall be carried forward for
purposes of determining whether such an offer is required with respect to the
Excess Cash Flow in any subsequent fiscal year).

     (c)  Notice of each Excess Cash Flow Offer pursuant to this Section 4.20
shall be mailed or caused to be mailed, by first class mail, by the Company
within 25 days after the Company becomes obligated to make an Excess Cash Flow
Offer (the "Excess Cash Flow Offer Trigger Date") to all Holders at their last
            -----------------------------------
registered addresses, with a copy to the Trustee. An Excess Cash Flow Offer
shall remain open for a period of 20 Business Days or such longer period as may
be required by law. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Securities pursuant to the Excess
Cash Flow Offer and shall state the following terms:

          (i)  that Holders may elect to have their Securities purchased by the
Company either in whole or in part (subject to prorationing as hereinafter
described in the event the

                                      70
<PAGE>

     Excess Cash Flow Offer is oversubscribed) in integral multiples of $1,000
     of principal amount, at the applicable purchase price;

          (ii)   that the Excess Cash Flow Offer is being made pursuant to this
     Section 4.20 and that all Securities tendered will be accepted for payment;
     provided, however, that if the principal amount of Securities tendered in
     --------  -------
     the Excess Cash Flow Offer exceeds the aggregate amount of the Excess Cash
     Flow Offer (the "Excess Cash Flow Offer Amount"), the Company shall select
                      -----------------------------
     the Securities to be purchased on a pro rata basis (based on amounts
                                         --- ----
     tendered);

          (iii)  the purchase price (including the amount of accrued interest,
     if any) and the purchase date (the "Excess Cash Flow Payment Date") (which
                                         -----------------------------
     shall be no earlier than 30 days nor later than 60 days from the Excess
     Cash Flow Offer Trigger Date, other than as may be required by applicable
     law);

          (iv)   that any Security not tendered will continue to accrue
     interest;

          (v)    that, unless the Company defaults in making payment therefor,
     any Security accepted for payment pursuant to the Excess Cash Flow Offer
     shall cease to accrue interest after the Excess Cash Flow Offer Payment
     Date;

          (vi)   that Holders electing to have a Security purchased pursuant to
     the Excess Cash Flow Offer will be required to surrender the Security, with
     the form entitled "Option of Holder to Elect Purchase" on the reverse of
                        ----------------------------------
     the Security completed, to the Paying Agent at the address specified in the
     notice prior to the close of business on the Excess Cash Flow Offer Payment
     Date;

          (vii)  that Holders will be entitled to withdraw their election if the
     Paying Agent receives, not later than the second Business Day prior to the
     Excess Cash Flow Offer Payment Date, a facsimile transmission or letter
     setting forth the name of the Holder, the principal amount of the Security
     the Holder delivered for purchase and a statement that such Holder is
     withdrawing his election to have such Security purchased; and

          (viii) that Holders whose Securities are purchased only in part will
     be issued new Securities in a principal amount at maturity equal to the
     unpurchased portion of the Securities surrendered.

     On or before the Excess Cash Flow Offer Payment Date, the Company shall (i)
accept for payment Securities or portions thereof tendered pursuant to the
Excess Cash Flow Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price, plus accrued interest, if any, of all
Securities to be purchased and (iii) deliver to the Trustee Securities so
accepted together with an Officers' Certificate stating the Securities or
portions thereof being purchased by the Company. The Paying Agent shall promptly
mail to the Holders of Securities so accepted payment in an amount equal to the
purchase price, plus accrued interest, if any, thereon set forth in the notice
of such Excess Cash Flow Offer. Any Security not so accepted shall be promptly
mailed by the Company to the Holder thereof. For purposes of this Section 4.20,
the Trustee shall act as the Paying Agent.

                                      71
<PAGE>

     Any amounts remaining after the purchase of Securities pursuant to an
Excess Cash Flow Offer shall be returned by the Trustee to the Company. To the
extent that the aggregate amount of the Securities tendered pursuant to an
Excess Cash Flow Offer is less than the Excess Cash Flow Offer Amount, the
Company may use such excess Excess Cash Flow Offer Amount for general corporate
purposes or for any other purposes not prohibited by this Indenture. Upon
completion of any such Excess Cash Flow Offer, the Excess Cash Flow Offer Amount
shall be reset at zero.

     The Company shall comply, to the extent applicable, with the requirements
of Rule 14e-1 under the Exchange Act and any other securities laws or
regulations thereunder to the extent such laws and regulations are applicable in
connection with the repurchase of Securities pursuant to an Excess Cash Flow
Offer. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section 4.20, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section 4.20 by virtue thereof. This
covenant and other provisions contained in this Indenture relating to the
Company's obligation to make an Excess Cash Flow Offer may be waived or modified
with the written consent of the Holders of a majority in principal amount of the
Securities.

4.21 FUTURE GUARANTORS.
     -----------------

     (a)  If the Company organizes or acquires any Domestic Restricted
Subsidiary after the Issue Date (each a "New Domestic Restricted Subsidiary")
                                         ----------------------------------
that, after giving pro forma effect to the acquisition or organization of such
New Domestic Restricted Subsidiary or Subsidiaries (if applicable), together
with each other New Domestic Restricted Subsidiary of the Company, has
consolidated assets or Consolidated EBITDA which exceeds 5 percent of the total
consolidated assets, as of the end of the most recently completed fiscal quarter
for which financial statements are available, or total Consolidated EBITDA, for
the most recent preceding 4 fiscal quarters for which financial statements are
available, of the Company and its Restricted Subsidiaries, the Company shall:
(i) execute and deliver to the Trustee a supplemental indenture in form
reasonably satisfactory to the Trustee pursuant to which each such New Domestic
Restricted Subsidiary shall unconditionally guarantee all of the Company's
obligations under the Securities and this Indenture; (ii) deliver to the Trustee
an Opinion of Counsel that such supplemental indenture has been duly authorized,
executed and delivered by such New Domestic Restricted Subsidiary and
constitutes a legal, valid, binding and enforceable obligation of such New
Domestic Restricted Subsidiary; and (iii) cause each New Domestic Restricted
Subsidiary to promptly execute and deliver to the Trustee a Subsidiary
Guarantee.

     (b)  Following the execution and delivery of a Subsidiary Guarantee by any
New Domestic Restricted Subsidiary of the Company pursuant to clause (a) of this
Section 4.21, the Company and each New Domestic Restricted Subsidiary
subsequently acquired or organized by the Company shall comply with clauses (i)-
(iii) of Section 4.21(a) above.

     (c)  After the execution of a supplemental indenture pursuant to clause (a)
or (b) of this Section 4.21, each such New Domestic Restricted Subsidiary party
thereto shall be a Guarantor for all purposes of this Indenture.

                                      72
<PAGE>

                                   ARTICLE V

                             SUCCESSOR CORPORATION

5.1  MERGER, CONSOLIDATION AND SALE OF ASSETS.
     ----------------------------------------

     (a)  The Company shall not, in a single transaction or series of related
transactions, consolidate or merge with or into any Person, or sell, assign,
transfer, lease, convey or otherwise dispose of (or cause or permit any
Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or
otherwise dispose of) all or substantially all of the Company's assets
(determined on a consolidated basis for the Company and the Company's Restricted
Subsidiaries) whether as an entirety or substantially as an entirety to any
Person unless:

          (i)   either (a) the Company shall be the surviving or continuing
     corporation, partnership, trust or limited liability company or (b) the
     Person (if other than the Company) formed by such consolidation or into
     which the Company is merged or the Person which acquires by sale,
     assignment, transfer, lease, conveyance or other disposition the properties
     and assets of the Company and of the Company's Restricted Subsidiaries
     substantially as an entirety (the "Surviving Entity"):
                                        ----------------

                (x)  shall be a corporation, partnership, trust or limited
          liability company organized and validly existing under the laws of the
          United States or any State thereof or the District of Columbia; and

                (y)  shall expressly assume, by supplemental indenture (in form
          and substance reasonably satisfactory to the Trustee), executed and
          delivered to the Trustee, the due and punctual payment of the
          principal of, and premium, if any, and interest on all of the
          Securities and the performance of every covenant of the Securities and
          this Indenture on the part of the Company to be performed or observed;

          (ii)  immediately after giving effect to such transaction on a pro
                                                                         ---
     forma basis and the assumption contemplated by clause (a)(i)(y) above
     -----
     (including giving effect to any Indebtedness and Acquired Indebtedness
     incurred or anticipated to be incurred in connection with or in respect of
     such transaction), the Company or such Surviving Entity, as the case may
     be, shall be able to incur at least $1.00 of additional Indebtedness (other
     than Permitted Indebtedness) pursuant to Section 4.4;

          (iii)  immediately before and immediately after giving effect to such
     transaction on a pro forma basis and the assumption contemplated by clause
                      --- -----
     (a)(i)(y) above (including, without limitation, giving effect to any
     Indebtedness and Acquired Indebtedness incurred or anticipated to be
     incurred or repaid and any Lien granted or to be released in connection
     with or in respect of the transaction), no Default or Event of Default
     shall have occurred or be continuing; and

          (iv)   the Company or the Surviving Entity, as the case may be, shall
     have delivered to the Trustee an Officers' Certificate and an Opinion of
     Counsel, each stating that such consolidation, merger, sale, assignment,
     transfer, lease, conveyance or other

                                      73
<PAGE>

     disposition and, if a supplemental indenture is required in connection with
     such transaction, such supplemental indenture comply with the applicable
     provisions of this Indenture and that all conditions precedent in this
     Indenture relating to such transaction have been satisfied.

          Notwithstanding the foregoing, (i) the merger of the Company with an
Affiliate incorporated solely for the purpose of reincorporating the Company in
another jurisdiction shall be permitted and (ii) the merger of any Restricted
Subsidiary of the Company into the Company or the transfer, lease, conveyance or
other disposition of all or substantially all of the assets of a Restricted
Subsidiary of the Company to the Company shall be permitted so long as the
Company delivers to the Trustee an Officers' Certificate stating that the
purpose of such merger, transfer, lease, conveyance or other disposition is not
to consummate a transaction that would otherwise be prohibited by clause (iii)
of this Section 5.1(a).

     (b)  For purposes of the foregoing paragraph (a), the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties or assets of one or
more Restricted Subsidiaries of the Company the Capital Stock of which
constitutes all or substantially all of the properties and assets of the
Company, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Company.

     (c)  Each Guarantor (other than any Guarantor whose Subsidiary Guarantee is
to be released in accordance with the terms of such Subsidiary Guarantee and
this Indenture in connection with any transaction complying with the provisions
of Section 4.18) shall not, and the Company shall not cause or permit any
Guarantor to, consolidate with or merge with or into any Person other than the
Company or any other Guarantor unless:

          (i)    the Person formed by or surviving any such consolidation or
     merger (if other than the Guarantor) or to which such sale, lease,
     conveyance or other disposition shall have been made is a corporation,
     partnership or limited liability company organized and validly existing
     under the laws of the United States, any State thereof, the District of
     Columbia thereof or the jurisdiction in which such Guarantor is organized;

          (ii)   such Person expressly assumes by supplemental indenture all of
     the obligations of the Guarantor on its Subsidiary Guarantee;

          (iii)  immediately after giving effect to such transaction on a pro
                                                                          ---
     forma basis, no Default or Event of Default shall have occurred and be
     -----
     continuing; and (iv) immediately after giving effect to such transaction
     and the use of any net proceeds therefrom on a pro forma basis, the Company
                                                    --- -----
     could satisfy the provisions of clause (ii) of Section 5.1(a).

     Any merger or consolidation of a Guarantor with and into the Company (with
the Company being the surviving entity) or another Guarantor that is a Wholly
Owned Restricted Subsidiary of the Company need only comply with clause (iv) of
Section 5.1(a).

                                      74
<PAGE>

5.2  SUCCESSOR CORPORATION SUBSTITUTED.
     ---------------------------------

     Upon any consolidation, combination or merger or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.1 in
which the Company or any Guarantor, as applicable, is not the continuing
corporation, the successor Person formed by such consolidation or into which the
Company or such Guarantor is merged or to which such conveyance, lease or
transfer is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company or such Guarantor under this Indenture and
the Securities or any Subsidiary Guarantee, as applicable, with the same effect
as if such Surviving Entity had been named as such.

                                  ARTICLE VI

                              DEFAULT AND REMEDIES

6.1  EVENTS OF DEFAULT.
     -----------------

     Each of the following shall be an "Event of Default":
                                        ----------------

          (i)   the failure to pay interest on any Securities when the same
     becomes due and payable and the default continues for a period of 30 days
     (whether or not such payment shall be prohibited by Article Ten);

          (ii)  the failure to pay the principal on any Securities, when such
     principal becomes due and payable, at maturity, upon redemption or
     otherwise (including the failure to make a payment to purchase Securities
     tendered pursuant to a Change of Control Offer or a Net Proceeds Offer)
     (whether or not such payment shall be prohibited by Article Ten);

          (iii) a default by the Company or any Restricted Subsidiary of the
     Company in the observance or performance of any other covenant or agreement
     contained in this Indenture, which default continues for a period of 30
     days after the Company receives written notice specifying the default (and
     demanding that such default be remedied) from the Trustee or from the
     Holders of at least 25% of the outstanding principal amount of the
     Securities;

          (iv)  the failure to pay at final stated maturity (giving effect to
     any applicable grace periods and any extensions thereof) the principal
     amount of any Indebtedness of the Company or any Significant Subsidiary of
     the Company, or the acceleration of the final stated maturity of any such
     Indebtedness by the holders thereof if the aggregate principal amount of
     such Indebtedness, together with the principal amount of any other such
     Indebtedness in default for failure to pay principal at final stated
     maturity or which has been accelerated, exceeds $10.0 million or more at
     any time;

          (v)   one or more judgments in an aggregate amount in excess of $10.0
     million (exclusive of amounts covered by insurance other than self-
     insurance) shall have been rendered against the Company or any of its
     Significant Subsidiaries and such judgments

                                      75
<PAGE>

     remain undischarged, unpaid or unstayed for a period of 60 days after such
     judgment or judgments become final and non-appealable;

          (vi)   the Company or any of its Significant Subsidiaries (i)
     commences a voluntary case or proceeding under any Bankruptcy Law with
     respect to itself, (ii) consents to the entry of a judgment, decree or
     order for relief against it in an involuntary case or proceeding under any
     Bankruptcy Law, (iii) consents to the appointment of a custodian of it or
     for substantially all of its property, (iv) consents to or acquiesces in
     the institution of a bankruptcy or an insolvency proceeding against it, (v)
     makes a general assignment for the benefit of its creditors or (vi) takes
     any corporate action to authorize or effect any of the foregoing;

          (vii)  a court of competent jurisdiction enters a judgment, decree or
     order for relief in respect of the Company or any of its Significant
     Subsidiaries in an involuntary case or proceeding under any Bankruptcy Law,
     which shall (i) approve as properly filed a petition seeking
     reorganization, arrangement, adjustment or composition in respect of the
     Company or any of its Significant Subsidiaries, (ii) appoint a Custodian of
     the Company or any of its Significant Subsidiaries or for substantially all
     of any of its property or (iii) order the winding-up or liquidation of its
     affairs; and such judgment, decree or order shall remain unstayed and in
     effect for a period of 60 consecutive days; or

          (viii) any Subsidiary Guarantee of a Significant Subsidiary ceases to
     be in full force and effect or any Subsidiary Guarantee made by a
     Significant Subsidiary is declared to be null and void and unenforceable or
     any Subsidiary Guarantee made by a Significant Subsidiary is found to be
     invalid or any such Guarantor denies its liability under its Subsidiary
     Guarantee (other than by reason of release of a Guarantor in accordance
     with the terms of this Indenture).

If, pursuant to clause (iii) above, the Holders of at least 25% of the then
outstanding principal amount of Securities notify the Company as specified in
such clause, such Holders shall similarly notify the Trustee. Any notice given
pursuant to clause (iii) above or the immediately preceding sentence shall be
given by registered or certified mail, return receipt requested.

6.2  ACCELERATION.
     ------------

     If an Event of Default (other than an Event of Default specified in clause
(vi) or (vii) of Section 6.1 above with respect to the Company) shall occur and
be continuing, the Trustee or the Holders of at least 25% in principal amount of
outstanding Securities may declare the principal of, premium, if any, and
accrued interest on all the Securities to be due and payable by notice in
writing to the Issuers (and the Trustee if given by the Holders) specifying the
respective Event of Default and that it is a "notice of acceleration" (the
                                              ----------------------
"Acceleration Notice"), and the same (i) shall become immediately due and
--------------------
payable or (ii) if there are any amounts outstanding under the Credit Agreement,
shall become immediately due and payable upon the first to occur of an
acceleration under the Credit Agreement or five (5) Business Days after receipt
by the Company and the Representative under the Credit Agreement of such
Acceleration Notice but only if such Event of Default is then continuing.  If an
Event of Default specified in clause (vi) or (vii) of Section 6.1 above with
respect to the Company occurs and is continuing, then all unpaid

                                      76
<PAGE>

principal of, and premium, if any, and accrued and unpaid interest on all of the
outstanding Securities shall ipso facto become and be immediately due and
                             ---- -----
payable without any declaration or other act on the part of the Trustee or any
Holder.

     At any time after a declaration of acceleration with respect to the
Securities as described in the preceding paragraph, the Holders of a majority in
principal amount of the Securities may rescind and cancel such declaration and
its consequences (i) if the rescission would not conflict with any judgment or
decree, (ii) if all existing Events of Default have been cured or waived except
nonpayment of principal, premium, if any, or interest that has become due solely
because of the acceleration, (iii) to the extent the payment of such interest is
lawful, interest on overdue installments of interest and overdue principal and
premium if any, which has become due otherwise than by such declaration of
acceleration, has been paid, (iv) if the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances, and any other amounts due to the Trustee under
Section 7.7 and (v) in the event of the cure or waiver of an Event of Default of
the type described in clause (vi) or (vii) of Section 6.1, the Trustee shall
have received an Officers' Certificate and an Opinion of Counsel that such Event
of Default has been cured or waived. No such rescission shall affect any
subsequent Default or Event of Default or impair any right consequent thereto.

6.3  OTHER REMEDIES.
     --------------

     If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy by proceeding at law or in equity to collect the payment of
principal of, premium, if any, or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.

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

6.4  WAIVER OF PAST DEFAULTS.
     -----------------------

     Subject to Sections 2.9, 6.2, 6.7 and 9.2, the Holders of not less than a
majority in principal amount of the outstanding Securities by notice to the
Trustee may waive an existing Default or Event of Default and its consequences,
except a Default or Event of Default in the payment of principal of, premium, if
any, or interest on any Security as specified in clauses (i) and (ii) of Section
6.1.  The Company shall deliver to the Trustee an Officers' Certificate stating
that the requisite percentage of Holders have consented to such waiver and
attaching copies of such consents.  When a Default or Event of Default is
waived, it is cured and ceases.

6.5  CONTROL BY MAJORITY.
     -------------------

     The Holders of not less than a majority in principal amount of the
outstanding Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it.  Subject to Section 7.1, however, the

                                      77
<PAGE>

Trustee may refuse to follow any direction that conflicts with any law or this
Indenture, that the Trustee determines may be unduly prejudicial to the rights
of another Securityholder, or that may involve the Trustee in personal
liability.

6.6  LIMITATION ON SUITS.
     -------------------

     A Securityholder may not pursue any remedy with respect to this Indenture
or the Securities unless:

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

          (ii)  the Holder or Holders of at least 25% in principal amount of the
     outstanding Securities make a written request to the Trustee to pursue the
     remedy;

          (iii) such Holder or Holders offer and, if requested, provide to the
     Trustee indemnity satisfactory to the Trustee against any loss, liability
     or expense;

          (iv)  the Trustee does not comply with the request within 45 days
     after receipt of the request and the offer and, if requested, the provision
     of indemnity; and

          (v)   during such 45-day period the Holder or Holders of a majority in
     principal amount of the outstanding Securities do not give the Trustee a
     direction which, in the opinion of the Trustee, is inconsistent with the
     request.

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

6.7  RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
     ------------------------------------

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

6.8  COLLECTION SUIT BY TRUSTEE.
     --------------------------

     If an Event of Default in payment of principal, premium, if any, or
interest specified in clause (i) or (ii) of Section 6.1 occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Issuers or any other obligor on the Securities for
the whole amount of principal, premium, if any, and accrued interest and fees
remaining unpaid, together with interest on overdue principal and premium, if
any, and, to the extent that payment of such interest is lawful, interest on
overdue installments of interest, in each case at the rate per annum borne by
                                                           --- -----
the Securities and such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due to the Trustee under Section 7.7.

                                      78
<PAGE>

6.9  TRUSTEE MAY FILE PROOFS OF CLAIM.
     --------------------------------

     The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
to the Trustee under Section 7.7) and the Securityholders allowed in any
judicial proceedings relating to the Issuers, their creditors or their property
and shall be entitled and empowered to participate as a member, voting or
otherwise, of any official committee appointed for such matter, to collect and
receive any monies or other securities or property payable or deliverable upon
the conversion or exchange of the Securities or upon any such claims and to
distribute the same, and any Custodian in any such judicial proceedings is
hereby authorized by each Securityholder 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 Securityholders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agent and counsel, and any other amounts due the Trustee under
Section 7.7.  Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Securityholder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Securityholder in any such proceeding.

6.10 PRIORITIES.
     ----------

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

          First:  to the Trustee for amounts due under Section 7.7;

          Second:  subject to Article Ten, to Holders for interest accrued on
     the Securities, ratably, without preference or priority of any kind,
     according to the amounts due and payable on the Securities for interest;

          Third:  subject to Article Ten, to Holders for principal amounts and
     premium, if any, due and unpaid on the Securities, ratably, without
     preference or priority of any kind, according to the amounts due and
     payable on the Securities for principal; and

          Fourth:  to the Issuers or, if applicable, the Guarantors as their
     respective interests may appear.

     The Trustee, upon prior notice to the Issuers, may fix a record date and
payment date for any payment to Securityholders pursuant to this Section 6.10.

6.11 UNDERTAKING FOR COSTS.
     ---------------------

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

                                      79
<PAGE>

against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.7, or a suit by a Holder or Holders of more than 10% in principal amount of
the outstanding Securities.

6.12  RESTORATION OF RIGHTS AND REMEDIES.
      ----------------------------------

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

6.13  RIGHTS AND REMEDIES CUMULATIVE.
      ------------------------------

      Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or wrongfully taken Securities in Section 2.7, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

                                  ARTICLE VII

                                    TRUSTEE

7.1   DUTIES OF TRUSTEE.
      -----------------

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

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

           (i)  The Trustee need perform only those duties as are specifically
      set forth herein or in the TIA and no duties, covenants, responsibilities
      or obligations shall be implied in this Indenture against the Trustee.

           (ii) In the absence of bad faith on its part, the Trustee may
      conclusively rely, as to the truth of the statements and the correctness
      of the opinions expressed therein, upon certificates (including Officers'
      Certificates) or opinions (including Opinions of Counsel) furnished to the
      Trustee and conforming to the requirements of this Indenture. However, the
      Trustee shall examine the certificates and opinions to determine whether
      or

                                      80
<PAGE>

     not they conform to the requirements of this Indenture, but need not verify
     the contents thereof.

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

          (i)   This paragraph does not limit the effect of paragraph (b) of
     this Section 7.1.

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

          (iii) The Trustee shall not be liable with respect to any action it
     takes or omits to take in good faith in accordance with a direction
     received by it pursuant to Section 6.5.

     (d)  No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder or to take or omit to take any action under this
Indenture or take any action at the request or direction of Holders if it shall
have reasonable grounds for believing that repayment of such funds is not
assured to it.

     (e)  Every provision of this Indenture that in any way relates to the
Trustee is subject to this Section 7.1.

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

     (g)  In the absence of bad faith, negligence or willful misconduct on the
part of the Trustee, the Trustee shall not be responsible for the application of
any money by any Paying Agent other than the Trustee.

7.2  RIGHTS OF TRUSTEE.
     -----------------

     Subject to Section 7.1:

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

     (b)  Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate and an Opinion of Counsel, which shall conform to the
provisions of Section 13.5. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such certificate or opinion.

                                      81
<PAGE>

     (c)  The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent (other than an agent
who is an employee of the Trustee) appointed with due care.

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

     (e)  The Trustee may consult with counsel and the advice or opinion of such
counsel as to matters of law shall be full and complete authorization and
protection from liability in respect of any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.

     (f)  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 Holders pursuant to the provisions of this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby.

     (g)  The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate (including any Officers'
Certificate), statement, instrument, opinion (including any Opinion of Counsel),
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, upon reasonable notice to the Issuers, to examine the books, records,
and premises of the Issuers, personally or by agent or attorney.

     (h)  The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.

     (i)  The permissive rights of the Trustee to do things enumerated in this
Indenture shall not be construed as duties.

     (j)  The Trustee shall not be charged with knowledge of any Default or
Event of Default, of the identity of any Restricted Subsidiary or the existence
of any Change of Control or Asset Sale unless either (i) a Responsible Officer
shall have actual knowledge thereof or (ii) the Trustee shall have received
written notice thereof from either of the Issuers or any Holder.

     (k)  Delivery of reports, information and documents to the Trustee under
Section 4.10 is for informational purposes only and the Trustee's receipt of the
foregoing shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Issuers' compliance with any of the covenants hereunder.

7.3  INDIVIDUAL RIGHTS OF TRUSTEE.
     ----------------------------

     The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Issuers, their
Subsidiaries (including any Guarantors) or their respective Affiliates with the
same rights it would have if it were not Trustee.  Any

                                      82
<PAGE>

Agent may do the same with like rights. However, the Trustee must comply with
Sections 7.10 and 7.11.

7.4  TRUSTEE'S DISCLAIMER.
     --------------------

     The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture, any Subsidiary Guarantee or the
Securities, it shall not be accountable for the Issuers' use of the proceeds
from the Securities, and it shall not be responsible for any statement of the
Issuers in this Indenture or any document issued in connection with the sale of
Securities or any statement in the Securities other than the Trustee's
certificate of authentication.  The Trustee makes no representations with
respect to the effectiveness or adequacy of this Indenture.

7.5  NOTICE OF DEFAULT.
     -----------------

     If a Default or an Event of Default occurs and is continuing and the
Trustee receives actual notice of such Default or Event of Default, the Trustee
shall mail to each Securityholder notice of the uncured Default or Event of
Default within 60 days after such Default or Event of Default occurs.  Except in
the case of a Default or an Event of Default in payment of principal of,
premium, if any, or interest on, any Security, including an accelerated payment
and the failure to make payment on the Change of Control Payment Date pursuant
to a Change of Control Offer or the Net Proceeds Offer Payment Date pursuant to
a Net Proceeds Offer, the Trustee may withhold the notice if and so long as the
Board of Directors, the executive committee, or a trust committee of directors
and/or Responsible Officers, of the Trustee in good faith determines that
withholding the notice is in the interest of the Securityholders.

7.6  REPORTS BY TRUSTEE TO HOLDERS.
     -----------------------------

     Within 60 days after each May 15, beginning with the first May 15 following
the date of this Indenture, the Trustee shall, to the extent that any of the
events described in TIA (S) 313(a) occurred within the previous twelve months,
but not otherwise, mail to each Securityholder a brief report dated as of such
date that complies with TIA (S) 313(a).  The Trustee also shall comply with TIA
(S)(S) 313(b), 313(c) and 313(d).

     A copy of each report at the time of its mailing to Securityholders shall
be mailed to the Issuers and filed with the Commission and each securities
exchange, if any, on which the Securities are listed.

     The Issuers shall notify the Trustee if the Securities become listed on any
securities exchange or of any delisting thereof and the Trustee shall comply
with TIA (S) 313(d).

7.7  COMPENSATION AND INDEMNITY.
     --------------------------

     The Issuers shall pay to the Trustee, from time to time, reasonable
compensation for its services hereunder.  The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust.  The
Issuers shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances (including reasonable fees and expenses of
counsel) incurred or made by it in addition to the compensation for its
services,

                                      83
<PAGE>

except any such disbursements, expenses and advances as may be attributable to
the Trustee's negligence, bad faith or willful misconduct. Such expenses shall
include the reasonable fees and expenses of the Trustee's agents and counsel.

     The Issuers shall indemnify the Trustee and its agents, employees,
officers, stockholders and directors for, and hold them harmless against, any
loss, liability or expense (including reasonable attorneys' fees and expenses)
incurred by them except for such actions to the extent caused by any negligence,
bad faith or willful misconduct on their part, arising out of or in connection
with the acceptance or administration of this trust including the cost and
expense of enforcing this Indenture and the Securities against the Issuers or
the Holders (including this Section 7.7) including the reasonable costs and
expenses of defending themselves against or investigating any claim or liability
in connection with the exercise or performance of any of the Trustee's rights,
powers or duties hereunder.  The Trustee shall notify the Issuers promptly of
any claim asserted against the Trustee or any of its agents, employees,
officers, stockholders and directors for which it may seek indemnity, provided
that any failure to so notify the Issuers shall not relieve the Issuers of their
indemnity obligations hereunder.  The Issuers may, subject to the approval of
the Trustee, defend the claim and the Trustee shall cooperate in the defense.
The Trustee and its agents, employees, officers, stockholders and directors
subject to the claim may have separate counsel and the Issuers shall pay the
reasonable fees and expenses of such counsel; provided, however, that the
                                              --------  -------
Issuers will not be required to pay such fees and expenses if, subject to the
approval of the Trustee, it assumes the Trustee's defense and there is no
conflict of interest between the Issuers and the Trustee and its agents,
employees, officers, stockholders and directors subject to the claim in
connection with such defense as reasonably determined by the Trustee.  The
Issuers need not pay for any settlement made without its written consent, which
consent will not be unreasonably withheld, delayed or conditioned.  The Issuers
need not reimburse any expense or indemnify against any loss or liability to the
extent incurred by the Trustee through its negligence, bad faith or willful
misconduct.

     To secure the Issuers' payment obligations in this Section 7.7, the Trustee
shall have a senior claim prior to the Securities against all money or property
held or collected by the Trustee, in its capacity as Trustee.  The obligations
of the Issuers and any Guarantor under this Section shall not be subordinated to
the payment of Senior Debt pursuant to Article Ten or Guarantor Senior Debt
pursuant to Article Twelve except assets or money held in trust to pay principal
of, premium, if any, or interest on particular Securities.

     When the Trustee incurs expenses or renders services after an Event of
Default specified in clause (vi) or (vii) of Section 6.1 occurs, such expenses
and the compensation for such services shall be paid to the extent allowed under
any Bankruptcy Law.

     Notwithstanding any other provision in this Indenture, the foregoing
provisions of this Section 7.7 shall survive the satisfaction and discharge of
this Indenture or the appointment of a successor Trustee.

7.8  REPLACEMENT OF TRUSTEE.
     ----------------------

     The Trustee may resign at any time by so notifying the Issuers in writing.
The Holders of a majority in principal amount of the outstanding Securities may
remove the Trustee by so

                                      84
<PAGE>

notifying the Issuers and the Trustee and may appoint a successor Trustee. The
Issuers may remove the Trustee if:

          (i)    the Trustee fails to comply with Section 7.10;

          (ii)   the Trustee is adjudged bankrupt or insolvent;

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

          (iv)   the Trustee becomes incapable of acting.

     If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Issuers shall notify each Holder of such event
and shall promptly appoint a successor Trustee.  Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of
the Securities may appoint a successor Trustee to replace the successor Trustee
appointed by the Issuers.

     A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Issuers.  Immediately after that, the
retiring Trustee shall transfer, after payment of all sums then owing to the
Trustee pursuant to Section 7.7, all property held by it as Trustee to the
successor Trustee, subject to the Lien provided in Section 7.7, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture.  A successor Trustee shall mail notice of its succession to each
Securityholder.

     If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers or the
Holders of at least 10% in principal amount of the outstanding Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

     If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

     Notwithstanding replacement of the Trustee pursuant to this Section 7.8,
the Issuers' obligations under Section 7.7 shall continue for the benefit of the
retiring Trustee.

7.9  SUCCESSOR TRUSTEE BY MERGER, ETC.
     --------------------------------

     If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the resulting, surviving or transferee corporation without any further act
shall, if such resulting, surviving or transferee corporation is otherwise
eligible hereunder, be the successor Trustee; provided that such corporation
                                              --------
shall be otherwise qualified and eligible under this Article Seven.

                                      85
<PAGE>

7.10  ELIGIBILITY; DISQUALIFICATION.
      -----------------------------

      This Indenture shall always have a Trustee who satisfies the requirement
of TIA (S)(S) 310(a)(1), 310(a)(2) and 310(a)(5). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. In addition, if the Trustee is a
corporation included in a bank holding company system, the Trustee,
independently of the bank holding company, shall meet the capital requirements
of TIA (S) 310(a)(2). The Trustee shall comply with TIA (S) 310(b); provided,
                                                                    --------
however, that there shall be excluded from the operation of TIA (S) 310(b)(1)
-------
any indenture or indentures under which other securities, or certificates of
interest or participation in other securities, of the Issuers are outstanding,
if the requirements for such exclusion set forth in TIA (S) 310(b)(1) are met.
The provisions of TIA (S) 310 shall apply to the Issuers and any other obligor
of the Securities.

7.11  PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE ISSUERS.
      -----------------------------------------------------

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

                                 ARTICLE VIII

                      DISCHARGE OF INDENTURE; DEFEASANCE

8.1   TERMINATION OF THE ISSUERS' OBLIGATIONS.
      ---------------------------------------

      The Issuers may terminate their obligations under the Securities and this
Indenture, except those obligations referred to in the penultimate paragraph of
this Section 8.1, if all Securities previously authenticated and delivered
(other than destroyed, lost or stolen Securities which have been replaced or
paid or Securities for whose payment U.S. Legal Tender has theretofore been
deposited with the Trustee or the Paying Agent in trust or segregated and held
in trust by the Issuers and thereafter repaid to the Issuers, as provided in
Section 8.5) have been delivered to the Trustee for cancellation and the Issuers
have paid all sums payable by them hereunder, or if:

          (i)  either (i) pursuant to Article Three, the Issuers shall have
     given notice to the Trustee and mailed a notice of redemption to each
     Holder of the redemption of all of the Securities in accordance with the
     provisions hereof or (ii) all Securities have otherwise become due and
     payable hereunder;

          (ii) the Issuers shall have irrevocably deposited or caused to be
     deposited with the Trustee or a trustee satisfactory to the Trustee, under
     the terms of an irrevocable trust agreement in form and substance
     satisfactory to the Trustee, as trust funds in trust solely for the benefit
     of the Holders of that purpose, U.S. Legal Tender in such amount as is
     sufficient without consideration of reinvestment of such interest, to pay
     principal of, premium, if any, and interest on the outstanding Securities
     to maturity or redemption; provided that the Trustee shall have been
                                --------
     irrevocably instructed to apply such U.S. Legal Tender to the payment of
     said principal, premium, if any, and interest with respect to the
     Securities and provided, further, that from and after the time of deposit,
                    --------  -------
     the money

                                      86
<PAGE>

     deposited shall not be subject to the rights of holders of Senior Debt or
     Guarantor Senior Debt pursuant to the provisions of Article Ten or Twelve,
     as the case may be;

          (iii)  no Default or Event of Default with respect to this Indenture
     or the Securities shall have occurred and be continuing on the date of such
     deposit or shall occur as a result of such deposit (other than a Default or
     Event of Default resulting from the incurrence of Indebtedness all or a
     portion of the proceeds of which will be used to defease the Securities
     pursuant to this Article Eight concurrently with such incurrence) and such
     deposit will not result in a breach or violation of, or constitute a
     default under, any other instrument or agreement (including, without
     limitation, the Credit Agreement) to which either of the Issuers is a party
     or by which either is bound;

          (iv)   the Issuers shall have paid all other sums payable by it
     hereunder; and

          (v)    the Issuers shall have delivered to the Trustee an Officers'
     Certificate and an Opinion of Counsel, each stating that all conditions
     precedent providing for or relating to the termination of the Issuers'
     obligations under the Securities and this Indenture have been complied
     with. Such Opinion of Counsel shall also state that such satisfaction and
     discharge does not result in a default under the Credit Agreement or any
     other material agreement or instrument then known to such counsel that
     binds or affects either of the Issuers.

     Subject to the next sentence and notwithstanding the foregoing paragraph,
the Issuers'  obligations in Sections 2.5, 2.6, 2.7, 2.8, 4.1, 4.2, 7.7, 8.5 and
8.6 shall survive until the Securities are no longer outstanding pursuant to the
last paragraph of Section 2.8.  After the Securities are no longer outstanding,
the Issuers' obligations in Sections 7.7, 8.5 and 8.6 shall survive.

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

8.2  LEGAL DEFEASANCE AND COVENANT DEFEASANCE.
     ----------------------------------------

     (a)  The Issuers may, at their option by Board Resolutions of the Boards of
Directors of the Issuers, at any time, elect to have either paragraph (b) or (c)
below applied to all outstanding Securities upon compliance with the conditions
set forth in Section 8.3.

     (b)  Upon the Issuers' exercise under paragraph (a) hereof of the option
applicable to this paragraph (b), the Issuers and any Guarantor shall, subject
to the satisfaction of the conditions set forth in Section 8.3, be deemed to
have been discharged from their respective obligations with respect to all
outstanding Securities and the corresponding Subsidiary Guarantees, if any, on
the date the conditions set forth below are satisfied (hereinafter, "Legal
                                                                     -----
Defeasance"). For this purpose, Legal Defeasance means that the Issuers shall be
----------
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Securities, which shall thereafter be deemed to be "outstanding"
                                                                -----------
only for the purposes of Section 8.4 and the other Sections of this Indenture
referred to in (i) and (ii) below, and to have satisfied all its other
obligations under such Securities and this Indenture (and the Trustee, on demand
of and at the

                                      87
<PAGE>

expense of the Issuers, shall execute proper instruments acknowledging the
same), and Holders of the Securities and any amounts deposited under Section 8.3
shall cease to be subject to any obligations to, or the rights of, any holder of
Senior Debt under Article Ten or otherwise, except for the following provisions,
which shall survive until otherwise terminated or discharged hereunder: (i) the
rights of Holders of outstanding Securities to receive solely from the trust
fund described in Section 8.4, and as more fully set forth in such Section,
payments in respect of the principal of, premium, if any, and interest on such
Securities when such payments are due, (ii) the Company's obligations with
respect to such Securities under Article Two and Section 4.2, (iii) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (iv) this Article Eight. Subject to
compliance with this Article Eight, the Issuers may exercise their option under
this paragraph (b) notwithstanding the prior exercise of its option under
paragraph (c) hereof.

     (c)  Upon the Issuers' exercise under paragraph (a) hereof of the option
applicable to this paragraph (c), the Issuers and each Guarantor, if any, shall,
subject to the satisfaction of the conditions set forth in Section 8.3, be
released from their obligations, if any, under the covenants contained in
Sections 4.3 and 4.4 and Sections 4.12 through 4.19 and Article Five with
respect to the outstanding Securities and the corresponding Subsidiary
Guarantee, if any, on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Securities shall
                         -------------------
thereafter be deemed not "outstanding" for the purposes of any direction,
                          -----------
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Securities shall not be deemed outstanding for accounting purposes) and Holders
                               -----------
of the Securities and any amounts deposited under Section 8.3 shall cease to be
subject to any obligations to, or the rights of, any holder of Senior Debt under
Article Ten or otherwise. For this purpose, such Covenant Defeasance means that,
with respect to the outstanding Securities, the Company may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.1(iii), but, except as specified above, the remainder of this
Indenture and such Securities shall be unaffected thereby. In addition, upon the
Issuers' exercise under paragraph (a) hereof of the option applicable to this
paragraph (c), subject to the satisfaction of the conditions set forth in
Section 8.3 hereof, Sections 6.1(iii), 6.1(iv) and 6.1(v) shall not constitute
Events of Default.

8.3  CONDITIONS TO LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
     -----------------------------------------------------

     The following shall be the conditions to the application of either Section
8.2(b) or 8.2(c) to the outstanding Securities:

     In order to exercise either Legal Defeasance or Covenant Defeasance:

          (i)  the Issuers must irrevocably deposit with the Trustee, in trust,
     for the benefit of the Holders, U.S. Legal Tender or non-callable U.S.
     Government Obligations which through the scheduled payment of principal,
     premium, if any, and interest in respect thereof in accordance with their
     terms, will provide, not later than one day before

                                      88
<PAGE>

the due date of any payment on the Securities, U.S. Legal Tender, or a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the Securities on the stated date
for payment thereof or on the applicable redemption date, as the case may be;

          (ii)   in the case of an election under Section 8.2(b), the Issuers
     shall have delivered to the Trustee an Opinion of Counsel in the United
     States reasonably acceptable to the Trustee confirming that (A) the Issuers
     have received from, or there has been published by, the Internal Revenue
     Service a ruling or (B) since the date of the execution 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 of Counsel shall
     confirm that, the Holders will not recognize income, gain or loss for
     federal income tax purposes as a result of such Legal 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 Legal Defeasance
     had not occurred;

          (iii)  in the case of an election under Section 8.2(c), the Issuers
     shall have delivered to the Trustee an Opinion of Counsel in the United
     States reasonably acceptable to the Trustee confirming that the Holders of
     the Securities 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;

          (iv)   no Default or Event of Default shall have occurred and be
     continuing on the date of such deposit (other than a Default or Event of
     Default resulting from the incurrence of Indebtedness all or a portion of
     the proceeds of which will be used to defease the Securities pursuant to
     this Article Eight concurrently with such incurrence) or insofar as
     Sections 6.1(vi) and 6.1(vii) hereof are concerned, at any time in the
     period ending on the 91st day after the date of such deposit;

          (v)    such Legal Defeasance or Covenant Defeasance shall not result
     in a breach or violation of, or constitute a default under this Indenture
     (other than a Default or Event of Default resulting from the incurrence of
     Indebtedness all or a portion of the proceeds of which will be used to
     defease the Securities pursuant to this Article Eight concurrently with
     such incurrence), the Credit Agreement or any other material agreement or
     instrument to which the Company or any of its Subsidiaries is a party or by
     which the Company or any of its Subsidiaries is bound;

          (vi)   the Issuers shall have delivered to the Trustee an Officers'
     Certificate stating that the deposit was not made by the Issuers with the
     intent of preferring the Holders over any other creditors of the Issuers or
     with the intent of defeating, hindering, delaying or defrauding any other
     creditors of the Issuers or others;

          (vii)  the Company shall have delivered to the Trustee an Officers'
     Certificate and an Opinion of Counsel, each stating that all conditions
     precedent hereunder provided

                                      89
<PAGE>

     for or relating to the Legal Defeasance or the Covenant Defeasance have
     been complied with; and

          (viii) the Company shall have delivered to the Trustee an Opinion of
     Counsel to the effect that, assuming no intervening bankruptcy or
     insolvency of the Company between the date of deposit and the 91st day
     following the deposit and that no Holder is an insider of the Company,
     after the 91st day following the deposit, the trust funds will not be
     subject to the effect of Section 547 of the United States Bankruptcy Code
     or Section 15 of the New York Debtor and Creditor Law.

          Notwithstanding the foregoing, the Opinion of Counsel required by
     clause (ii) above of this Section 8.3 need not be delivered if all
     Securities not theretofore delivered to the Trustee for cancellation (i)
     have become due and payable, (ii) will become due and payable on the
     Maturity Date within one year or (iii) are to be called for redemption
     within one year under arrangements satisfactory to the Trustee for the
     giving of notice of redemption by the Trustee in the name, and at the
     expense, of the Company.

8.4  APPLICATION OF TRUST MONEY.
     --------------------------

     The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or U.S.
Government Obligations deposited with it pursuant to this Article Eight, and
shall apply the deposited U.S. Legal Tender and the money from U.S. Government
Obligations in accordance with this Indenture to the payment of principal of,
premium, if any, and interest on the Securities.

     The Issuers shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.3 hereof or the
principal, premium, if any, 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.

     Anything in this Article Eight to the contrary notwithstanding, the Trustee
shall deliver or pay to the Issuers from time to time upon the Issuers' request
any U.S. Legal Tender or U.S. Government Obligations held by it as provided in
Section 8.3 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 that would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

8.5  REPAYMENT TO THE ISSUERS.
     ------------------------

     The Trustee and the Paying Agent shall pay to the Issuers upon request any
money held by them for the payment of principal, premium, if any, or interest
that remains unclaimed for two years; provided that the Trustee or such Paying
                                      --------
Agent, before being required to make any payment, may at the expense of the
Issuers cause to be published once in a newspaper of general circulation in The
City of New York or mail to each Holder entitled to such money notice that such
money remains unclaimed and that after a date specified therein which shall be
at least 30 days from the date of such publication or mailing any unclaimed
balance of such money then remaining will be repaid to the Issuers.  After
payment to the Issuers, Holders entitled to such

                                      90
<PAGE>

money must look to the Issuers for payment as general creditors unless an
applicable law designates another Person.

8.6  REINSTATEMENT.
     -------------

     If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender or
U.S. Government Obligations in accordance with this Article Eight by reason of
any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Issuers' obligations under this Indenture and the Securities
shall be revived and reinstated as though no deposit had occurred pursuant to
this Article Eight until such time as the Trustee or Paying Agent is permitted
to apply all such U.S. Legal Tender or U.S. Government Obligations in accordance
with this Article Eight; provided that if the Issuers have made any payment of
                         --------
interest on, premium, if any, or principal of any Securities because of the
reinstatement of its obligations, the Issuers shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the U.S. Legal
Tender or U.S. Government Obligations held by the Trustee or Paying Agent.

                                  ARTICLE IX

                      AMENDMENTS, SUPPLEMENTS AND WAIVERS

9.1  WITHOUT CONSENT OF HOLDERS.
     --------------------------

     Subject to Section 9.3, the Issuers, any Guarantors and the Trustee,
together, may amend or supplement this Indenture, the Securities or any
Subsidiary Guarantee without notice to or consent of any Securityholder:

          (i)    to cure any ambiguity, defect or inconsistency, so long as such
     change does not, in the good faith determination of the Board of Directors
     of the Company, adversely affect the rights of any of the Holders in any
     material respect. In formulating its determination on such matters, the
     Board of Directors of the Company will be entitled to rely on such evidence
     as it deems appropriate;

          (ii)   to evidence the succession in accordance with Article Five of
     another Person to the Company and the assumption by any such successor of
     the covenants of the Company herein and in the Securities;

          (iii)  to provide for uncertificated Securities in addition to or in
     place of certificated Securities;

          (iv)   to make any other change that does not adversely affect the
     rights of any Securityholders hereunder in any material respect;

          (v)    to comply with any requirements of the Commission in connection
     with the qualification of this Indenture under the TIA;

          (vi)   to add or release any Guarantor pursuant to the terms of this
     Indenture; or

                                      91
<PAGE>

          (vii)  to provide for issuance of the Exchange Notes, which will have
     terms substantially identical in all material respects to the Initial Notes
     (except that the transfer restrictions contained in the Initial Notes will
     be modified or eliminated, as appropriate), and which will be treated
     together with any outstanding Initial Notes, as a single issue of
     securities, provided that for purposes of this clause (vi), the terms
     Initial Notes and Exchange Notes, shall include any other Securities issued
     in accordance with clause (iii) of the fourth paragraph of Section 2.2 or
     Securities issued in exchange therefor which are identical in all material
     respects to such Securities (except that the transfer restrictions on the
     Securities issued in exchange for Securities issued in accordance with
     clause (iii) of the fourth paragraph of Section 2.2 shall be modified or
     eliminated, as appropriate);

provided that the Company has delivered to the Trustee an Opinion of Counsel and
--------
an Officers' Certificate, each stating that such amendment or supplement
complies with the provisions of this Section 9.1.

9.2  WITH CONSENT OF HOLDERS.
     -----------------------

     Subject to Sections 6.7 and 9.3, the Issuers, the Guarantors, if any, and
the Trustee, together, with the written consent of the Holder or Holders of at
least a majority in aggregate principal amount of the outstanding Securities or
any Subsidiary Guarantee, may amend or supplement this Indenture, the Securities
or the Subsidiary Guarantees without notice to any other Securityholders.
Subject to Sections 6.7 and 9.3, the Holder or Holders of a majority in
aggregate principal amount of the outstanding Securities may waive compliance by
the Issuers with any provision of this Indenture, the Securities or any
Subsidiary Guarantee without notice to any other Securityholder.  Without the
consent of each Securityholder affected, however, no amendment, supplement or
waiver, including a waiver pursuant to (and to the extent provided in) Section
6.4, may:

          (i)    reduce the amount of Securities whose Holders must consent to
     an amendment, supplement or waiver;

          (ii)   reduce the rate of or change or have the effect of changing the
     time for payment of interest, including default interest, on any Security;

          (iii)  reduce the principal of or change or have the effect of
     changing the fixed maturity of any Security, or change the date on which
     any Securities may be subject to redemption or reduce the redemption price
     therefor;

          (iv)   make any Securities payable in money other than that stated in
     the Securities;

          (v)    make any change in provisions of this Indenture protecting the
     right of each Holder to receive payment of principal of, premium, if any,
     and interest on such Security on or after the due date thereof or to bring
     suit to enforce such payment, or permitting Holders of a majority in
     principal amount of the Securities to waive Defaults or Events of Default;

                                      92
<PAGE>

          (vi)   modify or change any provision of this Indenture or the related
     definitions affecting the subordination or ranking of the Securities or any
     Subsidiary Guarantee, in a manner which adversely affects the Holders;

          (vii)  make any changes in Section 6.4, 6.7 or this Section 9.2; or

          (viii) release any Guarantor that is a Significant Subsidiary from any
     of its obligations under its Subsidiary Guarantee or this Indenture other
     than in accordance with the terms of this Indenture.

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

     After an amendment, supplement or waiver under this Section 9.2 becomes
effective, the Issuers shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver.  Any failure of the
Issuers to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.

9.3  EFFECT ON SENIOR DEBT.
     ---------------------

     No amendment of, or supplement or waiver to, this Indenture shall adversely
affect the rights of any holder of Senior Debt or Guarantor Senior Debt under
Article Ten or Twelve, as the case may be, without the consent of such holder.

9.4  COMPLIANCE WITH TIA.
     -------------------

     From the date on which this Indenture is qualified under the TIA, every
amendment, waiver or supplement of this Indenture or the Securities or any
Subsidiary Guarantee shall comply with the TIA as then in effect.

9.5  REVOCATION AND EFFECT OF CONSENTS.
     ---------------------------------

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

     The Issuers may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver.  If a record date is fixed, then notwithstanding the last
sentence of the immediately preceding paragraph, those Persons who were Holders
at such record date (or their duly designated proxies), and only those Persons,
shall be entitled to revoke any consent previously given,

                                      93
<PAGE>

whether or not such Persons continue to be Holders after such record date. No
such consent shall be valid or effective for more than 90 days after such record
date.

     After an amendment, supplement or waiver becomes effective, it shall bind
every Securityholder, unless it makes a change described in any of clauses (i)
through (vii) of Section 9.2, in which case, the amendment, supplement or waiver
shall bind only each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security; provided that any such waiver shall
                                          --------
not impair or affect the right of any Holder to receive payment of principal of,
premium, if any, and interest on a Security, on or after the respective due
dates expressed in such Security, or to bring suit for the enforcement of any
such payment on or after such respective dates without the consent of such
Holder.

9.6  NOTATION ON OR EXCHANGE OF SECURITIES.
     -------------------------------------

     If an amendment, supplement or waiver changes the terms of a Security, the
Issuers may require the Holder of the Security to deliver it to the Trustee.
The Issuers shall provide the Trustee with an appropriate notation on the
Security about the changed terms and cause the Trustee to return it to the
Holder at the Issuers' expense.  Alternatively, if the Issuers or the Trustee so
determines, the Issuers in exchange for the Security shall issue and the Trustee
shall authenticate a new Security that reflects the changed terms.  Failure to
make the appropriate notation or issue a new Security shall not affect the
validity and effect of such amendment, supplement or waiver.

9.7  TRUSTEE TO SIGN AMENDMENTS, ETC.
     -------------------------------

     The Trustee shall execute any amendment, supplement or waiver authorized
pursuant to this Article Nine; provided that the Trustee may, but shall not be
                               --------
obligated to, execute any such amendment, supplement or waiver which affects the
Trustee's own rights, duties or immunities under this Indenture.  The Trustee
shall be entitled to receive, and shall be fully protected in relying upon, an
Opinion of Counsel and an Officers' Certificate each complying with Sections
11.4 and 11.5 and stating that the execution of any amendment, supplement or
waiver authorized pursuant to this Article Nine is authorized or permitted by
this Indenture and constitutes the legal, valid and binding obligations of the
Issuers enforceable in accordance with its terms.  Such Opinion of Counsel shall
be at the expense of the Issuers.

                                   ARTICLE X

                          SUBORDINATION OF SECURITIES

10.1 SECURITIES SUBORDINATED TO SENIOR DEBT.
     --------------------------------------

     Anything herein to the contrary notwithstanding, the Issuers, for
themselves and their successors, and each Holder, by his, her or its acceptance
of Securities, agrees that the payment of all Obligations owing to the Holders
in respect of the Securities is subordinated, to the extent and in the manner
provided in this Article Ten, to the prior payment in full in cash or Cash
Equivalents of all Obligations on Senior Debt (including the Obligations with
respect to the Credit Agreement).

                                      94
<PAGE>

     This Article Ten shall constitute a continuing offer to all Persons who
become holders of, or continue to hold, Senior Debt, and such provisions are
made for the benefit of the holders of Senior Debt and such holders are made
obligees hereunder and any one or more of them may enforce such provisions.

10.2 SUSPENSION OF PAYMENT WHEN SENIOR DEBT IS IN DEFAULT.
     ----------------------------------------------------

     (a)  Unless Section 10.3 shall be applicable, if any default occurs and is
continuing in the payment when due, whether at maturity, upon any redemption, by
declaration or otherwise, of any principal of, premium, if any, interest on,
unpaid drawings for letters of credit issued in respect of, or regularly
accruing fees with respect to, any Senior Debt (a "Payment Default"), then no
                                                   ---------------
payment or distribution of any kind or character shall be made by or on behalf
of the Issuers or any other Person on their behalf with respect to any
Obligations on the Securities or to acquire any of the Securities for cash or
property or otherwise until such Payment Default shall have been cured or waived
or shall have ceased to exist or such Senior Debt as to which such Payment
Default relates shall have been paid in full in cash or Cash Equivalents, after
which the Issuers shall (subject to other provisions of this Article Ten) resume
making any and all required payments in respect of the Securities, including any
missed payments.

     (b)  Unless Section 10.3 shall be applicable, if any other event of default
(other than a Payment Default) occurs and is continuing with respect to any
Designated Senior Debt (as such event of default is defined in the instrument
creating or evidencing such Designated Senior Debt) permitting the holders of
such Designated Senior Debt then outstanding to accelerate the maturity thereof
(a "Non-payment Default") and if the Representative for the respective issue of
    -------------------
Designated Senior Debt gives written notice of the event of default to the
Trustee (a "Default Notice"), then, unless and until all events of default have
            --------------
been cured or waived or have ceased to exist or the Trustee receives notice
thereof from the Representative for the respective issue of Designated Senior
Debt terminating the Payment Blockage Period (as defined below), during the 180
days after the delivery of such Default Notice (the "Payment Blockage Period"),
                                                     -----------------------
neither the Issuers nor any other Person on their behalf shall (x) make any
payment of any kind or character with respect to any Obligations on or with the
respect to the Securities or (y) acquire any of the Securities for cash or
property or otherwise. Notwithstanding anything herein to the contrary, (x) in
no event will a Payment Blockage Period extend beyond 180 days from the date the
applicable Default Notice is received by the Trustee and (y) only one such
Payment Blockage Period may be commenced within any 360 consecutive days. For
all purposes of this Section 10.2(b), no event of default which existed or was
continuing on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior Debt shall be, or be made, the basis for the
commencement of a second Payment Blockage Period by the Representative of such
Designated Senior Debt whether or not within a period of 360 consecutive days,
unless such event of default shall have been cured or waived for a period of not
less than 90 consecutive days (it being acknowledged that any subsequent action,
or any breach of any financial covenants for a period commencing after the date
of commencement of such Payment Blockage Period that, in either case, would give
rise to an event of default pursuant to any provisions under which an event of
default previously existed or was continuing shall constitute a new event of
default for this purpose).

                                      95
<PAGE>

     (c)  In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any Holder when such payment is prohibited by the
foregoing provisions of this Section 10.2, such payment shall be held for the
benefit of, and shall be paid over or delivered to, the holders of Senior Debt
(pro rata to such holders on the basis of the respective amount of Senior Debt
 --- ----
held by such holders) or their respective Representatives, as their respective
interests may appear. The Trustee shall be entitled to rely on information
regarding amounts then due and owing on the Senior Debt, if any, received from
the holders of Senior Debt (or their Representatives) or, if such information is
not received from such holders or their Representatives, from the Issuers and
only amounts included in the information provided to the Trustee shall be paid
to the holders of Senior Debt.

          Nothing contained in this Article Ten shall limit the right of the
Trustee or the Holders of Securities to take any action to accelerate the
maturity of the Securities pursuant to Section 6.2 or to pursue any rights or
remedies hereunder; provided that all Senior Debt thereafter due or declared to
                    --------
be due shall first be paid in full in cash or Cash Equivalents before the
Holders are entitled to receive any payment of any kind or character with
respect to Obligations on the Securities.

10.3      SECURITIES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR DEBT ON
          --------------------------------------------------------------
          DISSOLUTION, LIQUIDATION OR REORGANIZATION OF THE ISSUERS.
          ---------------------------------------------------------

          (a)  Upon any payment or distribution of assets of either Issuer of
any kind or character, whether in cash, property or securities, to creditors
upon any liquidation, dissolution, winding-up, reorganization, assignment for
the benefit of creditors or marshaling of assets of either Issuer or in a
bankruptcy, reorganization, insolvency, receivership or other similar proceeding
relating to either Issuer or their respective properties, whether voluntary or
involuntary, all Obligations due or to become due upon all Senior Debt shall
first be paid in full in cash or Cash Equivalents before any payment or
distribution of any kind or character is made on account of any Obligations on
the Securities, or for the acquisition of any of the Securities for cash or
property or otherwise. Upon any such dissolution, winding-up, liquidation,
reorganization, receivership or similar proceeding, any payment or distribution
of assets of either Issuer of any kind or character, whether in cash, property
or securities, to which the Holders of the Securities or the Trustee under this
Indenture would be entitled, except for the provisions hereof, shall be paid by
the Issuers or by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, or by the Holders or
by the Trustee under this Indenture if received by them, directly to the holders
of Senior Debt (pro rata to such holders on the basis of the respective amounts
                --- ----
of Senior Debt held by such holders) or their respective Representatives, or to
the trustee or trustees under any indenture pursuant to which any of such Senior
Debt may have been issued, as their respective interests may appear, for
application to the payment of Senior Debt remaining unpaid until all such Senior
Debt has been paid in full in cash or Cash Equivalents after giving effect to
any concurrent payment, distribution or provision therefor to or for the holders
of Senior Debt.

          (b)  To the extent any payment of Senior Debt (whether by or on behalf
of either Issuer, as proceeds of security or enforcement of any right of setoff
or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person under any bankruptcy, insolvency,

                                      96
<PAGE>

receivership, fraudulent conveyance or similar law, then, if such payment is
recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person, the Senior Debt or part thereof
originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payment had not occurred.

       (c)  In the event that, notwithstanding the foregoing, any payment or
distribution of assets of either Issuer of any kind or character, whether in
cash, property or securities, shall be received by the Trustee or any Holder
when such payment or distribution is prohibited by this Section 10.3, such
payment or distribution shall be held for the benefit of, and shall be paid over
or delivered to, the holders of Senior Debt (pro rata to such holders on the
                                             --- ----
basis of the respective amount of Senior Debt held by such holders) or their
respective Representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of Senior Debt
remaining unpaid until all such Senior Debt has been paid in full in cash or
Cash Equivalents, after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Senior Debt.

       (d)  The consolidation of either Issuer with, or the merger of either
Issuer with or into, another corporation or the liquidation or dissolution of
either Issuer following the conveyance or transfer of all or substantially all
of its assets, to another corporation upon the terms and conditions provided in
Article Five and as long as permitted under the terms of the Senior Debt shall
not be deemed a dissolution, winding-up, liquidation or reorganization for the
purposes of this Section if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, assume such Issuers' obligations
hereunder in accordance with Article Five.

10.4   PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION.
       -----------------------------------------

       Nothing contained in this Article Ten or elsewhere in this Indenture
shall prevent (i) the Issuers, except under the conditions described in Sections
10.2 and 10.3, from making payments at any time for the purpose of making
payments of principal of, premium, if any, and interest on the Securities, or
from depositing with the Trustee any moneys for such payments, or (ii) in the
absence of actual knowledge by the Trustee that a given payment would be
prohibited by Section 10.2 or 10.3, the application by the Trustee of any moneys
deposited with it for the purpose of making such payments of principal of,
premium, if any, and interest on, the Securities to the Holders entitled thereto
unless at least one Business Day prior to the date upon which such payment would
otherwise become due and payable a Responsible Officer shall have actually
received the written notice provided for in the first sentence of Section
10.2(b) or in Section 10.7 (provided that, notwithstanding the foregoing, the
                            --------
Holders receiving any payments made in contravention of Section 10.2 and/or 10.3
(and the respective such payments) shall otherwise be subject to the provisions
of Section 10.2 and Section 10.3). The Issuers shall give prompt written notice
to the Trustee of any dissolution, winding-up, liquidation or reorganization of
either Issuer, although any delay or failure to give any such notice shall have
no effect on the subordination provisions contained herein.

                                      97
<PAGE>

10.5  HOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS OF SENIOR DEBT.
      ------------------------------------------------------------

      Subject to the payment in full in cash or Cash Equivalents of all Senior
Debt, the Holders of the Securities shall be subrogated to the rights of the
holders of Senior Debt to receive payments or distributions of cash, property or
securities of the Issuers applicable to the Senior Debt until the Securities
shall be paid in full; and, for the purposes of such subrogation, no such
payments or distributions to the holders of the Senior Debt by or on behalf of
the Issuers, or by or on behalf of the Holders by virtue of this Article Ten,
which otherwise would have been made to the Holders shall, as between the
Issuers and the Holders, be deemed to be a payment by the Issuers to or on
account of the Senior Debt, it being understood that the provisions of this
Article Ten are and are intended solely for the purpose of defining the relative
rights of the Holders, on the one hand, and the holders of Senior Debt, on the
other hand.

10.6  OBLIGATIONS OF THE ISSUERS UNCONDITIONAL.
      ----------------------------------------

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

10.7  NOTICE TO TRUSTEE.
      -----------------

      The Issuers shall give prompt written notice to a Responsible Officer of
the Trustee at its address set forth in Section 13.2 of any fact known to the
Issuers which would prohibit the making of any payment to or by the Trustee in
respect of the Securities pursuant to the provisions of this Article Ten,
although any delay or failure to give any such notice shall have no effect on
the subordination provisions contained herein. Regardless of anything to the
contrary contained in this Article Ten or elsewhere in this Indenture, the
Trustee shall not be charged with knowledge of the existence of any default or
event of default with respect to any Senior Debt or of any other facts which
would prohibit the making of any payment to or by the Trustee unless and until
the Trustee shall have received notice in writing from the Issuers, or from a
holder of Senior Debt or a Representative therefor, and, prior to the receipt of
any such written notice, the Trustee shall be entitled to assume (in the absence
of actual knowledge to the contrary) that no such facts exist (provided that,
                                                               --------
notwithstanding the foregoing, the Holders receiving any payments made in
contravention of Section 10.2 and/or 10.3 (and the respective such payments)
shall otherwise be subject to the provisions of Section 10.2 and Section 10.3).
The Trustee shall be entitled to rely on the delivery to it of any notice
pursuant to this Section 10.7 to establish that such notice has been given by a
holder of Senior Debt (or a Representative therefor). If the Trustee shall not
have received, at least one Business Day prior to the date upon which by the
terms hereof any such monies may become payable for any purpose, the notice
provided for in this Section, then anything herein contained to the contrary
notwithstanding, the Trustee shall

                                      98
<PAGE>

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 with one Business Day prior to such
date (provided that, notwithstanding the foregoing, the Holders receiving any
      --------
payments made in contravention of Section 10.2 and/or 10.3 (and the respective
such payments) shall otherwise be subject to the provisions of Section 10.2 and
Section 10.3).

      In the event that the Trustee determines in good faith that any evidence
is required with respect to the right of any Person as a holder of Senior Debt
to participate in any payment or distribution pursuant to this Article Ten, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amounts of Senior Debt 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 Ten, 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.

10.8  RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.
      --------------------------------------------------------------

      Upon any payment or distribution of assets of the Issuers referred to in
this Article Ten, the Trustee, subject to the provisions of Article Seven
hereof, and the Holders of the Securities shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which any
insolvency, bankruptcy, receivership, dissolution, winding-up, liquidation,
reorganization or similar case or proceeding is pending, or upon a certificate
of the receiver, trustee in bankruptcy, liquidating trustee, assignee for the
benefit of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or the Holders of the Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Debt and other Indebtedness of the
Issuers or its Restricted Subsidiaries, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Ten.

10.9  TRUSTEE'S RELATION TO SENIOR DEBT.
      ---------------------------------

      The Trustee and any agent of the Issuers or the Trustee shall be entitled
to all the rights set forth in this Article Ten with respect to any Senior Debt
which may at any time be held by it in its individual or any other capacity to
the same extent as any other holder of Senior Debt and nothing in this Indenture
shall deprive the Trustee or any such agent of any of its rights as such holder.

      With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article Ten, and no implied covenants or
obligations with respect to the holders of Senior Debt 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 Debt.

      Whenever a distribution is to be made or a notice given to holders or
owners of Senior Debt, the distribution may be made and the notice may be given
to their Representative, if any.

                                      99
<PAGE>

10.10  SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF THE ISSUERS OR
       ------------------------------------------------------------------------
       HOLDERS OF SENIOR DEBT.
       ----------------------

       No right of any present or future holders of any Senior Debt to enforce
subordination as provided herein shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Issuers or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Issuers with the terms of this Indenture, regardless of any knowledge
thereof which any such holder may have or otherwise be charged with.

       Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee or any Holder of a Security, without
incurring responsibility to the Trustee or the Holders of the Securities and
without impairing or releasing the subordination provided in this Article Ten or
the obligations hereunder of the Holders of the Securities to the holders of the
Senior Debt, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Debt, or otherwise amend or supplement in any manner Senior Debt, or any
instrument evidencing the same or any agreement under which Senior Debt is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Debt; (iii) release any Person
liable in any manner for the payment or collection of Senior Debt; and (iv)
exercise or refrain from exercising any rights against the Issuers and any other
Person.

10.11  SECURITYHOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF
       ----------------------------------------------------------------
       SECURITIES.
       ----------

       Each Holder of Securities by its acceptance of them authorizes and
expressly directs the Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of Senior Debt
and the Holders of Securities, the subordination provided in this Article Ten,
and appoints the Trustee its attorney-in-fact for such purposes, including, in
the event of any dissolution, winding-up, liquidation or reorganization of
either Issuer (whether in bankruptcy, insolvency, receivership, reorganization
or similar proceedings or upon an assignment for the benefit of creditors or
otherwise) tending towards liquidation of the business and/or assets of either
Issuer, the filing of a claim for the unpaid balance of its Securities and
accrued interest in the form required in those proceedings.

       If the Trustee does not file a proper claim or proof of debt in the form
required in such proceeding prior to 30 days before the expiration of the time
to file such claim or claims, then the holders of the Senior Debt or their
Representative are or is hereby authorized to have the right to file and are or
is hereby authorized to file an appropriate claim for and on behalf of the
Holders of said Securities. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Senior Debt or their Representative to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee or the holders
of Senior Debt or their Representative to vote in respect of the claim of any
Holder in any such proceeding.

                                      100
<PAGE>

10.12  THIS ARTICLE TEN NOT TO PREVENT EVENTS OF DEFAULT.
       -------------------------------------------------

       The failure to make a payment on account of principal of, premium, if
any, or interest on the Securities by reason of any provision of this Article
Ten will not be construed as preventing the occurrence of an Event of Default.

10.13  TRUSTEE'S COMPENSATION NOT PREJUDICED.
       -------------------------------------

       Nothing in this Article Ten will apply to amounts due to the Trustee in
its capacity as such pursuant to other sections of this Indenture.

                                  ARTICLE XI

                            GUARANTEE OF SECURITIES

11.1   UNCONDITIONAL SUBSIDIARY GUARANTEE.
       ----------------------------------

       Subject to the provisions of this Article Eleven, each of the Guarantors,
upon the execution and delivery of a Subsidiary Guarantee pursuant to Section
4.15 or 4.21, shall hereby, jointly and severally, unconditionally and
irrevocably guarantee, on a senior subordinated basis (such guarantees to be
referred to herein as the "Subsidiary Guarantees") to each Holder of a Security
                           ---------------------
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of this Indenture,
the Securities or the obligations of the Issuers or any other Guarantors to the
Holders or the Trustee hereunder or thereunder, that: (a) the principal of,
premium, if any, and interest on the Securities shall be duly and punctually
paid in full when due, whether at maturity, upon redemption at the option of
Holders pursuant to the provisions of the Securities relating thereto, by
acceleration or otherwise, and interest on the overdue principal and (to the
extent permitted by law) interest, if any, on the Securities and all other
obligations of the Issuers or the Guarantors to the Holders or the Trustee
hereunder or thereunder (including amounts due the Trustee under Section 7.7
hereof) and all other obligations shall be promptly paid in full or performed,
all in accordance with the terms hereof and thereof; and (b) in case of any
extension of time of payment or renewal of any Securities or any of such other
obligations, the same shall be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at maturity, by
acceleration or otherwise. Failing payment when due of any amount so guaranteed,
or failing performance of any other obligation of the Issuers to the Holders
under this Indenture or under the Securities, for whatever reason, each
Guarantor shall be obligated to pay, or to perform or cause the performance of,
the same immediately. An Event of Default under this Indenture or the Securities
shall constitute an event of default under the Subsidiary Guarantees, and shall
entitle the Holders of Securities to accelerate the obligations of the
Guarantors hereunder in the same manner and to the same extent as the
obligations of the Issuers.

       Each of the Guarantors, upon the execution and delivery of a Subsidiary
Guarantee pursuant to Section 4.15 or 4.21, shall hereby agree that its
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Securities or this Indenture, the absence of
any action to enforce the same, any waiver or consent by any Holder of the
Securities with respect to any provisions hereof or thereof, any release of any
other

                                      101
<PAGE>

Guarantor, the recovery of any judgment against the Issuers, any action to
enforce the same, whether or not a Subsidiary Guarantee is affixed to any
particular Security, or any other circumstance which might otherwise constitute
a legal or equitable discharge or defense of a Guarantor. Each of the
Guarantors, upon the execution and delivery of a Subsidiary Guarantee pursuant
to Section 4.15 or 4.21, shall hereby waive the benefit of diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of either Issuer, any right to require a proceeding
first against either Issuer, protest, notice and all demands whatsoever and
covenants that its Subsidiary Guarantee shall not be discharged except by
complete performance of the obligations contained in the Securities, this
Indenture and the Subsidiary Guarantees. Each Subsidiary Guarantee is a
guarantee of payment and not of collection. If any Holder or the Trustee is
required by any court or otherwise to return to either Issuer or to any
Guarantor, or any custodian, trustee, liquidator or other similar official
acting in relation to such Issuer or such Guarantor, any amount paid by such
Issuer or such Guarantor to the Trustee or such Holder, each Subsidiary
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Guarantor, upon the execution and delivery of a
Subsidiary Guarantee pursuant to Section 4.15 or 4.21, shall hereby further
agree that, as between it, on the one hand, and the Holders of Securities and
the Trustee, on the other hand, (a) subject to this Article Eleven, the maturity
of the obligations guaranteed hereby may be accelerated as provided in Article
Six hereof for the purposes of the Subsidiary Guarantees, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the obligations guaranteed hereby, and (b) in the event of any acceleration of
such obligations as provided in Article Six hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of the Subsidiary Guarantees.

        No Affiliate, stockholder, officer, director, limited liability company
member or employee, past, present or future, of any Guarantor, as such, shall
have any personal liability under such Guarantor's Subsidiary Guarantee by
reason of his, her or its status as such Affiliate, stockholder, officer,
director, limited liability company member or employee.

11.2    LIMITATIONS ON SUBSIDIARY GUARANTEES.
        ------------------------------------

        The obligations of any Guarantor under its Subsidiary Guarantee shall be
limited to the maximum amount which, after giving effect to all other contingent
and fixed liabilities of such Guarantor (including all Guarantor Senior Debt of
such Guarantor) and after giving effect to any collections from or payments made
by or on behalf of any other Guarantor in respect of the obligations of such
other Guarantor under its Subsidiary Guarantee or pursuant to its contribution
obligations under this Indenture, will result in the obligations of such
Guarantor under the Subsidiary Guarantee not constituting a fraudulent
conveyance or fraudulent transfer under federal or state law. Each Guarantor
that makes a payment or distribution under a Subsidiary Guarantee shall be
entitled to a contribution from each other Guarantor in an amount pro rata,
                                                                  --- ----
based on the net assets of each Guarantor, determined in accordance with GAAP.

11.3    EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
        ----------------------------------------------

        To further evidence the Subsidiary Guarantees set forth in Section 11.1,
each Guarantor, upon the execution and delivery of a Subsidiary Guarantee
pursuant to Section 4.15 or 4.21,

                                      102
<PAGE>

hereby agrees that a notation of its Subsidiary Guarantee, substantially in the
form of Exhibit E hereto, shall be endorsed on each Security authenticated and
        ---------
delivered by the Trustee. The Subsidiary Guarantee of any Guarantor shall be
executed on behalf of such Guarantor by either manual or facsimile signature of
two Officers of such Guarantor, each of whom, in each case, shall have been duly
authorized to so execute by all requisite corporate action. The validity and
enforceability of any Subsidiary Guarantee shall not be affected by the fact
that it is not affixed to any particular Security.

        Each of the Guarantors, upon the execution and delivery of a Subsidiary
Guarantee pursuant to Section 4.15 or 4.21, hereby agrees that its Subsidiary
Guarantee set forth in Section 11.1 shall remain in full force and effect
notwithstanding any failure to endorse on each Security a notation of such
Subsidiary Guarantee.

        If an Officer of a Guarantor whose signature is on this Indenture or a
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Security on which such Subsidiary Guarantee is endorsed or at
any time thereafter, such Guarantor's Subsidiary Guarantee of such Security
shall nevertheless be valid.

        The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Subsidiary Guarantee set
forth in this Indenture on behalf of each Guarantor.

11.4    RELEASE OF A GUARANTOR.
        ----------------------

        (a)  If no Default or Event of Default exists or would exist under this
Indenture, upon the sale or disposition of all of the Capital Stock of a
Guarantor by the Company or any Restricted Subsidiary of the Company, in a
transaction or series of related transactions that either (i) does not
constitute an Asset Sale or (ii) constitutes an Asset Sale the Net Cash Proceeds
of which are applied in accordance with Section 4.18, or upon the consolidation
or merger of a Guarantor with or into any Person in compliance with Article Five
(in each case, other than to the Company or an Affiliate of the Company), or if
any Guarantor is dissolved or liquidated in accordance with this Indenture, such
Guarantor's Subsidiary Guarantee will be automatically discharged and such
Guarantor shall be released from all obligations under this Article Eleven
without any further action required on the part of the Trustee or any Holder.
Any Guarantor not so released or the entity surviving such Guarantor, as
applicable, shall remain or be liable under its Subsidiary Guarantee as provided
in this Article Eleven.

        (b)  With respect to any Subsidiary Guarantee executed and delivered
solely pursuant to Section 4.15, such Subsidiary Guaranty will be automatically
discharged and the Guarantor party thereto shall be released from all
obligations under this Article Eleven without any further action on the part of
the Trustee or any Holder upon (i) the release or discharge of the Guarantee
which resulted in the creation of such Subsidiary Guarantee under such Section
4.15, except a discharge or release by or as a result of payment under such
Guarantee or (ii) the designation of such Guarantor as an Unrestricted
Subsidiary in accordance with the provisions of this Indenture. Any Guarantor
not so released or the entity surviving such Guarantor, as applicable, shall
remain or be liable under its Subsidiary Guarantee as provided in this Article
Eleven.

                                      103
<PAGE>

          (c)  The Trustee shall deliver an appropriate instrument evidencing
the release of a Guarantor upon receipt of a request by the Issuers or such
Guarantor accompanied by an Officers' Certificate and an Opinion of Counsel
certifying as to the compliance with this Section 11.4; provided, however, that
                                                        --------  -------
the legal counsel delivering such Opinion of Counsel may rely as to matters of
fact on one or more Officers' Certificates of the Company.

          The Trustee shall execute any documents reasonably requested by the
Issuers or a Guarantor in order to evidence the release of such Guarantor from
its obligations under its Subsidiary Guarantee endorsed on the Securities and
under this Article Eleven.

          Except as set forth in Articles Four and Five and this Section 11.4,
nothing contained in this Indenture or in any of the Securities shall prevent
any consolidation or merger of a Guarantor with or into either Issuer or another
Guarantor or shall prevent any sale or conveyance of the property of a Guarantor
as an entirety or substantially as an entirety to either Issuer or another
Guarantor.

11.5      WAIVER OF SUBROGATION
          ---------------------

          Until this Indenture is discharged and all of the Securities are
discharged and paid in full, each Guarantor, upon the execution and delivery of
a Subsidiary Guarantee pursuant to Section 4.15 or 4.21, shall hereby
irrevocably waive and agrees not to exercise any claim or other rights which it
may now or hereafter acquire against the Issuers that arise from the existence,
payment, performance or enforcement of the Issuers' obligations under the
Securities or this Indenture and such Guarantor's obligations under its
Subsidiary Guarantee and this Indenture, in any such instance, including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution, indemnification, and any right to participate in any claim or
remedy of the Holders against the Issuers, whether or not such claim, remedy or
right arises in equity, or under contract, statute or common law, including,
without limitation, the right to take or receive from the Issuers, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights. If any amount
shall be paid to any Guarantor in violation of the preceding sentence and any
amounts owing to the Trustee or the Holders of Securities under the Securities,
this Indenture, or any other document or instrument delivered under or in
connection with such agreements or instruments, shall not have been paid in
full, such amount shall have been deemed to have been paid to such Guarantor for
the benefit of, and held in trust for the benefit of, the Trustee or the Holders
and shall forthwith be paid to the Trustee for the benefit of itself or such
Holders to be credited and applied to the obligations in favor of the Trustee or
the Holders, as the case may be, whether matured or unmatured, in accordance
with the terms of this Indenture. Each Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated by this Indenture and that the waiver set forth in this Section
11.5 is knowingly made in contemplation of such benefits.

11.6      IMMEDIATE PAYMENT.
          -----------------

          Each Guarantor, upon the execution and delivery of a Subsidiary
Guarantee pursuant to Section 4.15 or 4.21, shall hereby agree to make immediate
payment to the Trustee, on behalf of the Holders or itself, of all Obligations
due and owing or payable to the respective Holders or the

                                      104
<PAGE>

Trustee upon receipt of a demand for payment therefor by the Trustee to such
Guarantor in writing.

11.7   NO SET-OFF.
       ----------

       Each payment to be made by a Guarantor hereunder in respect of the
Obligations shall be payable in the currency or currencies in which such
Obligations are denominated, and shall be made without set-off, counterclaim,
reduction or diminution of any kind or nature.

11.8   OBLIGATIONS ABSOLUTE.
       --------------------

       The obligations of each Guarantor hereunder are and shall be absolute and
unconditional and any monies or amounts expressed to be owing or payable by each
Guarantor hereunder which may not be recoverable from such Guarantor on the
basis of a Subsidiary Guarantee shall be recoverable from such Guarantor as a
primary obligor and principal debtor in respect thereof.

11.9   OBLIGATIONS CONTINUING.
       ----------------------

       The obligations of each Guarantor hereunder shall be continuing and shall
remain in full force and effect until all the obligations have been paid and
satisfied in full. Upon the execution and delivery of a Subsidiary Guarantee
pursuant to Section 4.15 or 4.21, each Guarantor shall hereby agree with the
Trustee that it will from time to time deliver to the Trustee suitable
acknowledgments of its continued liability hereunder and under any other
instrument or instruments in such form as counsel to the Trustee may advise and
as will prevent any action brought against it in respect of any default
hereunder being barred by any statute of limitations now or hereafter in force
and, in the event of the failure of a Guarantor so to do, it hereby irrevocably
appoints the Trustee the attorney and agent of such Guarantor to make, execute
and deliver such written acknowledgment or acknowledgments or other instruments
as may from time to time become necessary or advisable, in the judgment of the
Trustee on the advice of counsel, to fully maintain and keep in force the
liability of such Guarantor hereunder and under its Subsidiary Guarantee.

11.10  OBLIGATIONS NOT REDUCED.
       -----------------------

       The obligations of each Guarantor hereunder shall not be satisfied,
reduced or discharged solely by the payment of such principal, premium, if any,
interest, fees and other monies or amounts as may at any time prior to discharge
of this Indenture pursuant to Article Eight be or become owing or payable under
or by virtue of or otherwise in connection with the Securities or this
Indenture.

11.11  OBLIGATIONS REINSTATED.
       ----------------------

       The obligations of each Guarantor hereunder shall continue to be
effective or shall be reinstated, as the case may be, if at any time any payment
which would otherwise have reduced the obligations of any Guarantor hereunder
(whether such payment shall have been made by or on behalf of the Issuers or by
or on behalf of a Guarantor) is rescinded or reclaimed from any of the Holders
upon the insolvency, bankruptcy, liquidation or reorganization of either Issuer
or any Guarantor or otherwise, all as though such payment had not been made. If
demand for, or

                                      105
<PAGE>

acceleration of the time for, payment by either Issuer is stayed upon the
insolvency, bankruptcy, liquidation or reorganization of such Issuer, all such
Indebtedness otherwise subject to demand for payment or acceleration shall
nonetheless be payable by each Guarantor as provided herein.

11.12  OBLIGATIONS NOT AFFECTED.
       ------------------------

       The obligations of each Guarantor hereunder shall not be affected,
impaired or diminished in any way by any act, omission, matter or thing
whatsoever, occurring before, upon or after any demand for payment hereunder
(and whether or not known or consented to by any Guarantor or any of the
Holders) which, but for this provision, might constitute a whole or partial
defense to a claim against any Guarantor hereunder or might operate to release
or otherwise exonerate any Guarantor from any of its obligations hereunder or
otherwise affect such obligations, whether occasioned by default of any of the
Holders or otherwise, including, without limitation:

          (i)    any limitation of status or power, disability, incapacity or
     other circumstance relating to either Issuer or any other Person, including
     any insolvency, bankruptcy, liquidation, reorganization, readjustment,
     composition, dissolution, winding-up or other proceeding involving or
     affecting such Issuer or any other Person;

          (ii)   any irregularity, defect, unenforceability or invalidity in
     respect of any indebtedness or other obligation of either Issuer or any
     other Person under this Indenture, the Securities or any other document or
     instrument;

          (iii)  any failure of either Issuers, whether or not without fault on
     its part, to perform or comply with any of the provisions of this Indenture
     or the Securities, or to give notice thereof to a Guarantor;

          (iv)   the taking or enforcing or exercising or the refusal or neglect
     to take or enforce or exercise any right or remedy from or against either
     Issuer or any other Person or their respective assets or the release or
     discharge of any such right or remedy;

          (v)    the granting of time, renewals, extensions, compromises,
     concessions, waivers, releases, discharges and other indulgences to either
     Issuer or any other Person;

          (vi)   any change in the time, manner or place of payment of, or in
     any other term of, any of the Securities, or any other amendment,
     variation, supplement, replacement or waiver of, or any consent to
     departure from, any of the Securities or this Indenture, including, without
     limitation, any increase or decrease in the principal amount of or premium,
     if any, or interest on any of the Securities;

          (vii)  any change in the ownership, control, name, objects,
     businesses, assets, capital structure or constitution of either Issuer or a
     Guarantor;

          (viii) any merger or amalgamation of either Issuer or a Guarantor with
     any Person or Persons;

                                      106
<PAGE>

          (ix)  the occurrence of any change in the laws, rules, regulations or
     ordinances of any jurisdiction by any present or future action of any
     governmental authority or court amending, varying, reducing or otherwise
     affecting, or purporting to amend, vary, reduce or otherwise affect, any of
     the Obligations or the obligations of a Guarantor under its Subsidiary
     Guarantee; and

          (x)   any other circumstance, including release of a Guarantor
     pursuant to Section 11.4 (other than by complete, irrevocable payment) that
     might otherwise constitute a legal or equitable discharge or defense of
     either Issuer under this Indenture or the Securities or of another
     Guarantor in respect of its Subsidiary Guarantee hereunder;

provided, that the provisions of this Section 11.12 are not intended to affect
--------
in any way any release of a Guarantor in accordance with the provisions of
Section 11.4.

11.13  WAIVER.
       ------

       Without in any way limiting the provisions of Section 11.1 hereof, each
Guarantor, upon the execution and delivery of a Subsidiary Guarantee pursuant to
Section 4.15 or 4.21, shall hereby waive notice of acceptance hereof, notice of
any liability of any Guarantor hereunder, notice or proof of reliance by the
Holders upon the obligations of any Guarantor hereunder, and diligence,
presentment, demand for payment on either Issuer, protest, notice of dishonor or
non-payment of any of the Obligations, or other notice or formalities to either
Issuer or any Guarantor of any kind whatsoever.

11.14  NO OBLIGATION TO TAKE ACTION AGAINST THE ISSUERS.
       ------------------------------------------------

       Neither the Trustee nor any other Person shall have any obligation to
enforce or exhaust any rights or remedies or to take any other steps under any
security for the Obligations or against either Issuer or any other Person or any
property of such Issuer or any other Person before the Trustee is entitled to
demand payment and performance by any or all Guarantors of their liabilities and
obligations under their Subsidiary Guarantees or under this Indenture.

11.15  DEALING WITH THE ISSUERS AND OTHERS.
       -----------------------------------

       The Holders, without releasing, discharging, limiting or otherwise
affecting in whole or in part the obligations and liabilities of any Guarantor
and without the consent of or notice to any Guarantor, may

          (i)    grant time, renewals, extensions, compromises, concessions,
     waivers, releases, discharges and other indulgences to either Issuer or any
     other Person;

          (ii)   take or abstain from taking security or collateral from either
     Issuer or from perfecting security or collateral of either Issuer;

          (iii)  release, discharge, compromise, realize, enforce or otherwise
     deal with or do any act or thing in respect of (with or without
     consideration) any and all collateral, mortgages or other security given by
     either Issuer or any third party with respect to the obligations or matters
     contemplated by this Indenture or the Securities;

                                      107
<PAGE>

               (iv) accept compromises or arrangements from either Issuer;

               (v)  apply all monies at any time received from either Issuer or
       from any security upon such part of the Obligations as the Holders may
       see fit or change any such application in whole or in part from time to
       time as the Holders may see fit; and

               (vi) otherwise deal with, or waive or modify their right to deal
       with, either Issuer and all other Persons and any security as the Holders
       or the Trustee may see fit.

11.16  DEFAULT AND ENFORCEMENT.
       -----------------------

       If any Guarantor fails to pay in accordance with Section 11.6 hereof, the
Trustee may proceed in its name as trustee hereunder in the enforcement of the
Subsidiary Guarantee of any such Guarantor and such Guarantor's obligations
thereunder and hereunder by any remedy provided by law, whether by legal
proceedings or otherwise, and to recover from such Guarantor the obligations.

11.17  AMENDMENT, ETC.
       --------------

       No amendment, modification or waiver of any provision of this Indenture
relating to any Guarantor or consent to any departure by any Guarantor or any
other Person from any such provision will in any event be effective unless it is
signed by such Guarantor and the Trustee.

11.18  ACKNOWLEDGMENT.
       --------------

       Each Guarantor, upon the execution and delivery of a Subsidiary Guarantee
pursuant to Section 4.15 or 4.21, shall hereby acknowledge communication of the
terms of this Indenture and the Securities and shall hereby consent to and
approves of the same.

11.19  COSTS AND EXPENSES.
       ------------------

       Each Guarantor shall pay on demand by the Trustee any and all costs, fees
and expenses (including, without limitation, legal fees on a solicitor and
client basis) incurred by the Trustee, its agents, advisors and counsel or any
of the Holders in enforcing any of their rights under any Subsidiary Guarantee.

11.20  NO MERGER OR WAIVER; CUMULATIVE REMEDIES.
       ----------------------------------------

       No Subsidiary Guarantee shall operate by way of merger of any of the
obligations of a Guarantor under any other agreement, including, without
limitation, this Indenture. No failure to exercise and no delay in exercising,
on the part of the Trustee or the Holders, any right, remedy, power or privilege
hereunder or under this Indenture or the Securities, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder or under this Indenture or the Securities preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges in the Subsidiary
Guarantee and under this Indenture, the Securities and any other document or
instrument between a Guarantor and/or either Issuer and the Trustee are
cumulative and not exclusive of any rights, remedies, powers and privilege
provided by law.

                                      108
<PAGE>

11.21  SURVIVAL OF OBLIGATIONS.
       -----------------------

       Without prejudice to the survival of any of the other obligations of any
Guarantor hereunder, the obligations of each Guarantor under Section 11.1 shall
survive the payment in full of the Obligations under the Securities, but only if
and to the extent such payment is avoided, and in such case shall be enforceable
against such Guarantor to the same extent as prior to any such payment and
without regard to and without giving effect to any defense, right of offset or
counterclaim available to or which may be asserted by either Issuer or any
Guarantor.

11.22  SUBSIDIARY GUARANTEE IN ADDITION TO OTHER OBLIGATIONS.
       -----------------------------------------------------

       The Obligations of each Guarantor under its Subsidiary Guarantee and this
Indenture are in addition to and not in substitution for any other Obligations
to the Trustee or to any of the Holders in relation to this Indenture or the
Securities and any guarantees or security at any time held by or for the benefit
of any of them.

11.23  SEVERABILITY.
       ------------

       Any provision of this Article Eleven which is prohibited or unenforceable
in any jurisdiction shall not invalidate the remaining provisions and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction unless its removal
would substantially defeat the basic intent, spirit and purpose of this
Indenture and this Article Eleven.

11.24  SUCCESSORS AND ASSIGNS.
       ----------------------

       Each Subsidiary Guarantee shall be binding upon and inure to the benefit
of each Guarantor and the Trustee and the other Holders and their respective
successors and permitted assigns, except that no Guarantor may assign any of its
obligations hereunder or thereunder, except as otherwise permitted in this
Indenture.

                                  ARTICLE XII

                     SUBORDINATION OF SUBSIDIARY GUARANTEE

12.1   SUBSIDIARY GUARANTEE OBLIGATIONS SUBORDINATED TO GUARANTOR SENIOR DEBT.
       ----------------------------------------------------------------------

       Anything herein to the contrary notwithstanding, each of the Guarantors,
for itself and its successors, and each Holder, by his, her or its acceptance of
Subsidiary Guarantees, agrees that the payment of all Obligations owing to the
Holders in respect of its Subsidiary Guarantee (collectively, as to any
Guarantor, its "Subsidiary Guarantee Obligations") is subordinated, to the
                --------------------------------
extent and in the manner provided in this Article Twelve, to the prior payment
in full in cash or Cash Equivalents of all Obligations on Guarantor Senior Debt
of such Guarantor (including the Obligations with respect to the Credit
Agreement).

       This Article Twelve shall constitute a continuing offer to all Persons
who become holders of, or continue to hold, Guarantor Senior Debt, and such
provisions are made for the benefit of

                                      109
<PAGE>

the holders of Guarantor Senior Debt and such holders are made obligees
hereunder and any one or more of them may enforce such provisions.

12.2   SUSPENSION OF SUBSIDIARY GUARANTEE OBLIGATIONS WHEN GUARANTOR SENIOR DEBT
       -------------------------------------------------------------------------
       IS IN DEFAULT.
       -------------

       (a)  Unless Section 12.3 shall be applicable, if any payment default
occurs and is continuing with respect to any Guarantor Senior Debt, then no
payment of any kind or character shall be made by or on behalf of such Guarantor
or any other Person on its behalf with respect to any Subsidiary Guarantee
Obligations or to acquire any of the Securities for cash or property or
otherwise and until such payment default shall have been cured or waived or
shall have ceased to exist or such Guarantor Senior Debt shall have been
discharged or paid in full in cash or Cash Equivalents, after which such
Guarantor shall (subject to the other provisions of this Article Twelve) resume
making any and all required payments in respect of its obligations under its
Subsidiary Guarantee, including any missed payments.

       (b)  At any time while any Payment Blockage Period is in existence,
neither any Guarantor nor any other Person on any Guarantor's behalf shall (x)
make any payment of any kind or character with respect to any Obligations on its
Subsidiary Guarantee or (y) acquire any of the Securities for cash or otherwise.

       (c)  In the event that, notwithstanding the foregoing, any payment shall
be received by the Trustee or any Holder when such payment is prohibited by the
foregoing provisions of this Section 12.2, such payment shall be held for the
benefit of, and shall be paid over or delivered to, the holders of Guarantor
Senior Debt (pro rata to such holders on the basis of the respective amount of
             --- ----
Guarantor Senior Debt held by such holders) or their respective Representatives,
as their respective interests may appear. The Trustee shall be entitled to rely
on information regarding amounts then due and owing on the Guarantor Senior
Debt, if any, received from the holders of Guarantor Senior Debt (or their
Representatives) or, if such information is not received from such holders or
their Representatives, from a Guarantor and only amounts included in the
information provided to the Trustee shall be paid to the holders of Guarantor
Senior Debt.

12.3   SUBSIDIARY GUARANTEE OBLIGATIONS SUBORDINATED TO PRIOR PAYMENT OF ALL
       ---------------------------------------------------------------------
       GUARANTOR SENIOR DEBT ON DISSOLUTION, LIQUIDATION OR REORGANIZATION OF
       ----------------------------------------------------------------------
       SUCH GUARANTOR.
       --------------

       (a)  Upon any payment or distribution of assets of any Guarantor of any
kind or character, whether in cash, property or securities, to creditors upon
any liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors or marshaling of assets of such Guarantor or in a
bankruptcy, reorganization, insolvency, receivership or other similar proceeding
relating to such Guarantor or its property, whether voluntary or involuntary,
all Obligations due or to become due upon all Guarantor Senior Debt shall first
be paid in full in cash or Cash Equivalents before any payment or distribution
of any kind or character is made on account of any Subsidiary Guarantee
Obligations or for the acquisition of any of the Securities for cash or property
or otherwise. Upon any such dissolution, winding-up, liquidation,
reorganization, receivership or similar proceeding, any payment or distribution
of assets of such Guarantor of any kind or character, whether in cash, property
or securities, to which the Holders

                                      110
<PAGE>

or the Trustee under this Indenture would be entitled, except for the provisions
hereof, shall be paid by such Guarantor or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders or by the Trustee under this Indenture if
received by them, directly to the holders of Guarantor Senior Debt (pro rata to
                                                                    --- ----
such holders on the basis of the respective amounts of Guarantor Senior Debt
held by such holders) or their respective Representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Guarantor Senior Debt
may have been issued, as their respective interests may appear, for application
to the payment of Guarantor Senior Debt remaining unpaid until all such
Guarantor Senior Debt has been paid in full in cash or Cash Equivalents after
giving effect to any concurrent payment, distribution or provision therefor to
or for the holders of Guarantor Senior Debt.

     (b)  To the extent any payment of Guarantor Senior Debt (whether by or on
behalf of a Guarantor, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then, if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar Person, the Guarantor Senior Debt or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if
such payment had not occurred.

     (c)  In the event that, notwithstanding the foregoing, any payment or
distribution of assets of any Guarantor of any kind or character, whether in
cash, property or securities, shall be received by the Trustee or any Holder
when such payment or distribution is prohibited by this Section 12.3, such
payment or distribution shall be held for the benefit of, and shall be paid over
or delivered to, the holders of Guarantor Senior Debt (pro rata to such holders
                                                       --- ----
on the basis of the respective amount of Guarantor Senior Debt held by such
holders) or their respective Representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Guarantor Senior Debt may have
been issued, as their respective interests may appear, for application to the
payment of Guarantor Senior Debt remaining unpaid until all such Guarantor
Senior Debt has been paid in full in cash or Cash Equivalents, after giving
effect to any concurrent payment, distribution or provision therefor to or for
the holders of such Guarantor Senior Debt.

     (d)  The consolidation of any Guarantor with, or the merger of any
Guarantor with or into, another corporation or the liquidation or dissolution of
a Guarantor following the conveyance or transfer of all or substantially all of
its assets, to another corporation upon the terms and conditions provided in
Article Five and as long as permitted under the terms of the Guarantor Senior
Debt shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section if such other corporation shall,
as a part of such consolidation, merger, conveyance or transfer, assumes the
Subsidiary Guarantee of such Guarantor hereunder in accordance with Article
Five.

12.4  PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION.
      -----------------------------------------

      Nothing contained in this Article Twelve or elsewhere in this Indenture
shall prevent (i) any Guarantor, except under the conditions described in
Sections 12.2 and 12.3, from making

                                      111
<PAGE>

payments at any time for the purpose of making payments on Subsidiary Guarantee
Obligations, or from depositing with the Trustee any moneys for such payments,
or (ii) in the absence of actual knowledge by the Trustee that a given payment
would be prohibited by Section 12.2 or 12.3, the application by the Trustee of
any moneys deposited with it for the purpose of making such payments on
Subsidiary Guarantee Obligations to the Holders entitled thereto unless at least
one Business Day prior to the date upon which such payment would otherwise
become due and payable a Responsible Officer shall have actually received the
written notice provided for in the first sentence of Section 10.2(b) or in
Section 12.7 (provided that, notwithstanding the foregoing, the Holders
              --------
receiving any payments made in contravention of Sections 12.2 and/or 12.3 (and
the respective such payments) shall otherwise be subject to the provisions of
Section 12.2 and Section 12.3). Each Guarantor shall give prompt written notice
to the Trustee of any dissolution, winding-up, liquidation or reorganization of
such Guarantor, although any delay or failure to give any such notice shall have
no effect on the subordination provisions contained herein.

12.5   HOLDERS OF SUBSIDIARY GUARANTEE OBLIGATIONS TO BE SUBROGATED TO RIGHTS OF
       -------------------------------------------------------------------------
       HOLDERS OF GUARANTOR SENIOR DEBT.
       --------------------------------

       Subject to the payment in full in cash or Cash Equivalents of all
Guarantor Senior Debt, the Holders of Subsidiary Guarantee Obligations of any
Guarantor shall be subrogated to the rights of the holders of Guarantor Senior
Debt of such Guarantor to receive payments or distributions of cash, property or
securities of such Guarantor applicable to such Guarantor Senior Debt until all
amounts owing on or in respect of the Subsidiary Guarantee Obligations shall be
paid in full; and, for the purposes of such subrogation, no such payments or
distributions to the holders of such Guarantor Senior Debt by or on behalf of
such Guarantor, or by or on behalf of the Holders by virtue of this Article
Twelve, which otherwise would have been made to the Holders shall, as between
such Guarantor and the Holders, be deemed to be a payment by such Guarantor to
or on account of such Guarantor Senior Debt, it being understood that the
provisions of this Article Twelve are and are intended solely for the purpose of
defining the relative rights of the Holders, on the one hand, and the holders of
Guarantor Senior Debt, on the other hand.

12.6   OBLIGATIONS OF THE GUARANTORS UNCONDITIONAL.
       -------------------------------------------

       Nothing contained in this Article Twelve or elsewhere in this Indenture
or in the Subsidiary Guarantees is intended to or shall impair, as among the
Guarantors, their creditors other than the holders of Guarantor Senior Debt, and
the Holders, the obligation of the Guarantors, which is absolute and
unconditional, to pay to the Holders all amounts due and payable under the
Subsidiary Guarantees as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders and creditors of the Guarantors other than the holders of
the Guarantor Senior Debt, nor shall anything herein or therein prevent any
Holder or the Trustee on its behalf from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, in respect of cash, property or securities of the Guarantors
received upon the exercise of any such remedy.

                                      112
<PAGE>

12.7   NOTICE TO TRUSTEE.
       -----------------

       Each Guarantor shall give prompt written notice to a Responsible Officer
of the Trustee at its address set forth in Section 13.2 of any fact known to
such Guarantor which would prohibit the making of any payment to or by the
Trustee in respect of the Subsidiary Guarantees pursuant to the provisions of
this Article Twelve, although any delay or failure to give any such notice shall
have no effect on the subordination provisions contained herein. Regardless of
anything to the contrary contained in this Article Twelve or elsewhere in this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any default or event of default with respect to any Guarantor Senior Debt or of
any other facts which would prohibit the making of any payment to or by the
Trustee unless and until the Trustee shall have received notice in writing from
a Guarantor, or from a holder of Guarantor Senior Debt or a Representative
therefor, and, prior to the receipt of any such written notice, the Trustee
shall be entitled to assume (in the absence of actual knowledge to the contrary)
that no such facts exist (provided that, notwithstanding the foregoing, the
                          --------
Holders receiving any payments made in contravention of Section 12.2 and/or 12.3
(and the respective such payments) shall otherwise be subject to the provisions
of Section 12.2 and Section 12.3). The Trustee shall be entitled to rely on the
delivery to it of any notice pursuant to this Section 12.7 to establish that
such notice has been given by a holder of Guarantor Senior Debt (or a
Representative therefor). If the Trustee shall not have received, at least one
Business Day prior to the date upon which by the terms hereof any such monies
may become payable for any purpose, the notice provided for in this Section,
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 effected by any
notice to the contrary which may be received by it with one Business Day prior
to such date (provided that, notwithstanding the foregoing, the Holders
              --------
receiving any payments made in contravention of Section 12.2 and/or 12.3 (and
the respective such payments) shall otherwise be subject to the provisions of
Section 12.2 and Section 12.3).

       In the event that the Trustee determines in good faith that any evidence
is required with respect to the right of any Person as a holder of Guarantor
Senior Debt to participate in any payment or distribution pursuant to this
Article Twelve, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amounts of Guarantor Senior
Debt 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 Twelve, 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.

12.8   RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.
       --------------------------------------------------------------

       Upon any payment or distribution of assets of a Guarantor referred to in
this Article Twelve, the Trustee, subject to the provisions of Article Seven
hereof, and the Holders shall be entitled to rely upon any order or decree made
by any court of competent jurisdiction in which any insolvency, bankruptcy,
receivership, dissolution, winding-up, liquidation, reorganization or similar
case or proceeding is pending, or upon a certificate of the trustee in
bankruptcy, liquidating trustee, receiver, assignee for the benefit of
creditors, agent or other Person making such payment or distribution, delivered
to the Trustee or the Holders, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of the

                                      113
<PAGE>

Guarantor Senior Debt and other Indebtedness of such Guarantor, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article Twelve.

12.9   TRUSTEE'S RELATION TO GUARANTOR SENIOR DEBT.
       -------------------------------------------

       The Trustee and any agent of a Guarantor or the Trustee shall be entitled
to all the rights set forth in this Article Twelve with respect to any Guarantor
Senior Debt which may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of Guarantor Senior Debt and
nothing in this Indenture shall deprive the Trustee or any such agent of any of
its rights as such holder.

       With respect to the holders of Guarantor Senior Debt, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Twelve, and no implied covenants
or obligations with respect to the holders of Guarantor Senior Debt shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Guarantor Senior Debt.

       Whenever a distribution is to be made or a notice given to holders or
owners of Guarantor Senior Debt, the distribution may be made and the notice may
be given to their Representative, if any.

12.10  SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF THE GUARANTORS
       ------------------------------------------------------------------------
       OR HOLDERS OF GUARANTOR SENIOR DEBT.
       -----------------------------------

       No right of any present or future holders of any Guarantor Senior Debt to
enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of any Guarantor
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by any Guarantor with the terms of this Indenture, regardless of
any knowledge thereof which any such holder may have or otherwise be charged
with.

       Without in any way limiting the generality of the foregoing paragraph,
the holders of Guarantor Senior Debt may, at any time and from time to time,
without the consent of or notice to the Trustee or any Holder of a Security,
without incurring responsibility to the Trustee or the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
Twelve or the obligations hereunder of the Holders of the Securities to the
holders of Guarantor Senior Debt, do any one or more of the following: (i)
change the manner, place or terms of payment or extend the time of payment of,
or renew or alter, Guarantor Senior Debt, or otherwise amend or supplement in
any manner Guarantor Senior Debt, or any instrument evidencing the same or any
agreement under which Guarantor Senior Debt is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Guarantor Senior Debt; (iii) release any Person liable in any manner
for the payment or collection of Guarantor Senior Debt; and (iv) exercise or
refrain from exercising any rights against the Guarantors and any other Person.

                                      114
<PAGE>

12.11  HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF SUBSIDIARY
       -------------------------------------------------------------------
       GUARANTEE OBLIGATIONS.
       ---------------------

       Each Holder of Subsidiary Guarantee Obligations by its acceptance of them
authorizes and expressly directs the Trustee on its behalf to take such action
as may be necessary or appropriate to effectuate, as between the holders of
Guarantor Senior Debt and the Holders, the subordination provided in this
Article Twelve, and appoints the Trustee its attorney-in-fact for such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of any Guarantor (whether in bankruptcy, insolvency,
receivership, reorganization or similar proceedings or upon an assignment for
the benefit of credits or otherwise) tending towards liquidation of the business
and assets of any Guarantor, the filing of a claim for the unpaid balance under
its Subsidiary Guarantee Obligations and accrued interest in the form required
in those proceedings.

       If the Trustee does not file a proper claim or proof of debt in the form
required in such proceeding prior to 30 days before the expiration of the time
to file such claim or claims, then the holders of the Guarantor Senior Debt or
their Representative are or is hereby authorized to have the right to file and
are or is hereby authorized to file an appropriate claim for and on behalf of
the Holders of said Subsidiary Guarantee Obligations. Nothing herein contained
shall be deemed to authorize the Trustee or the holders of Guarantor Senior Debt
or their Representative to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Subsidiary Guarantee Obligations or the rights of any Holder
thereof, or to authorize the Trustee or the holders of Guarantor Senior Debt or
their Representative to vote in respect of the claim of any Holder in any such
proceeding.

12.12  THIS ARTICLE TWELVE NOT TO PREVENT EVENTS OF DEFAULT.
       ----------------------------------------------------

       The failure to make a payment on account of principal of or interest on
the Subsidiary Guarantees by reason of any provision of this Article Twelve will
not be construed as preventing the occurrence of an Event of Default.

12.13  TRUSTEE'S COMPENSATION NOT PREJUDICED.
       -------------------------------------

       Nothing in this Article Twelve will apply to amounts due to the Trustee
in its capacity as such pursuant to other sections of this Indenture.

                                 ARTICLE XIII

                                 MISCELLANEOUS

13.1   TIA CONTROLS.
       ------------

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

                                      115
<PAGE>

13.2  NOTICES.
      -------

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

      if to the Issuers or a Guarantor, if any:

          Resolution Performance Products LLC
          1600 Smith Street
          Houston, TX  77002
          Attention:   President
          Telecopy:    (713) 241-5333

      with a copy to:

          O'Sullivan Graev & Karabell, LLP
          30 Rockefeller Plaza
          New York, New York  10112
          Attention:   John J. Suydam
                       Rosa A. Testani

          Telephone:   (212) 408-2400
          Telecopy:    (212) 218-6220

      if to the Trustee:

          United States Trust Company of New York
          114 West 47th Street
          25th Floor
          New York, New York  10036
          Attention:  Corporate Trust and Agency Services -- RPP

      if to the Trustee for presentation of Securities for payment or for
      registration of transfer or exchange:

          United States Trust Company of New York
          30 Broad Street
          14th Floor
          New York, New York  10004-2304
          Attention:  Corporate Trust and Agency Services -- RPP

          Telephone:  (212) 825-1000
          Telecopy:   (212) 825-1626

      Each of the Issuers and the Trustee by written notice to each other such
Person may designate additional or different addresses for notices to such
Person. Any notice or

                                      116
<PAGE>

communication to the Issuers and the Trustee, shall be deemed to have been given
or made as of the date so delivered if personally delivered; when answered back,
if telecopied; and five (5) calendar days after mailing if sent by registered or
certified mail, postage prepaid (except that a notice of change of address shall
not be deemed to have been given until actually received by the addressee),
except that, with respect to any mailing, notices to the Trustee shall be deemed
effective only upon receipt.

     Any notice or communication mailed to a Securityholder shall be mailed to
him by first class mail or other equivalent means at his address as it appears
on the registration books of the Registrar and shall be sufficiently given to
him if so mailed within the time prescribed.

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

13.3 COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
     --------------------------------------------

     Securityholders may communicate pursuant to TIA (S) 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Issuers, the Trustee, the Registrar and any other Person shall
have the protection of TIA (S) 312(c).

13.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
     --------------------------------------------------

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

          (i)  an Officers' Certificate, in form and substance satisfactory to
     the Trustee, stating that, in the opinion of the signers, all conditions
     precedent to be performed or effected by each of the Issuers, if any,
     provided for in this Indenture relating to the proposed action have been
     complied with; and

          (ii) an Opinion of Counsel stating that, in the opinion of such
     counsel, any and all such conditions precedent have been complied with.

13.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
     ---------------------------------------------

     Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture, other than the Officers' Certificate
required by Section 4.8, shall include:

          (i)  a statement that the Person making such certificate or opinion
     has read such covenant or condition;

          (ii) 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;

                                      117
<PAGE>

          (iii)  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

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

13.6  RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
      -----------------------------------------

      The Trustee, Paying Agent or Registrar may make reasonable rules for its
functions.

13.7  LEGAL HOLIDAYS.
      --------------

      If a payment date is not a Business Day, payment may be made on the next
succeeding day that is a Business Day.

13.8  GOVERNING LAW.
      -------------

      THIS INDENTURE, THE SECURITIES AND ANY SUBSIDIARY GUARANTEES WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. Each of the parties hereto agrees to
submit to the jurisdiction of the courts of the State of New York in any action
or proceeding arising out of or relating to this Indenture, the Securities or
any Subsidiary Guarantees.

13.9  NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
      ---------------------------------------------

      This Indenture may not be used to interpret another indenture, loan or
debt agreement of any of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.

13.10 NO RECOURSE AGAINST OTHERS.
      --------------------------

      No Affiliate, director, officer, employee, limited liability company
members or stockholder of the Company or any Subsidiary, as such, shall have any
liability for any obligations of the Issuers under the Securities or any
Subsidiary Guarantee or this Indenture or for any claim based on, in respect of,
or by reason of, such obligations or their creation. Each Securityholder by
accepting a Security waives and releases all such liability. Such waiver and
release are part of the consideration for the issuance of the Securities.

13.11 SUCCESSORS.
      ----------

      All agreements of the Issuers and the Guarantors, if any, in this
Indenture and the Securities and the Subsidiary Guarantees shall bind their
respective successors. All agreements of the Trustee in this Indenture shall
bind its successor.

                                      118
<PAGE>

13.12  DUPLICATE ORIGINALS.
       -------------------

       All parties may sign any number of copies of this Indenture.  Each signed
copy or counterpart shall be an original, but all of them together shall
represent the same agreement.

13.13  SEVERABILITY.
       ------------

       In case any one or more of the provisions in this Indenture, the
Securities or the Subsidiary Guarantees shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions shall not in any way be affected or impaired thereby, it being
intended that all of the provisions hereof shall be enforceable to the full
extent permitted by law.

                                      119
<PAGE>

                                  SIGNATURES

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

                                  ISSUERS

                                  RESOLUTION PERFORMANCE PRODUCTS LLC

                                  By: /s/ David T. Preston
                                      -------------------------------------
                                      Name: David T. Preston
                                      Title: President

                                  RPP CAPITAL CORPORATION

                                  By: /s/ David T. Preston
                                      -------------------------------------
                                      Name: David T. Preston
                                      Title: President

                                      S-1
<PAGE>

                                   UNITED STATES TRUST COMPANY OF NEW YORK,
                                   as Trustee

                                   By:  /s/ Glenn E. Mitchell
                                        ---------------------
                                        Name:  Glenn E. Mitchell
                                        Title: Vice President

                                      S-2
<PAGE>

                                                                       Exhibit A
                                                                       ---------

                            [FORM OF INITIAL NOTE]*

                              [FACE OF SECURITY]

                      RESOLUTION PERFORMANCE PRODUCTS LLC
                            RPP CAPITAL CORPORATION

                   13 1/2% Senior Subordinated Note due 2010

No.                                   Principal Amount   $
ISIN No.
CUSIP No.

     RESOLUTION PERFORMANCE PRODUCTS LLC, a Delaware limited liability company
(the "Company"), and RPP CAPITAL CORPORATION, a Delaware corporation (together
      -------
with the Company, the "Issuers," which term includes any of their successors
                       -------
under the Indenture hereinafter referred to), for value received promise to pay
to CEDE & CO. or registered assigns, the principal sum of     Dollars ($    )
on November 15, 2010.

     Interest Payment Dates:  May 15 and November 15; commencing May 15, 2001.

     Record Dates:  May 1 and November 1.

     Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.

_________________________
* Add Private Placement Legend and, if appropriate, Global Security Legend.

                                      A-1
<PAGE>

IN WITNESS WHEREOF, the Issuers have caused this Security to be signed manually
or by facsimile by their duly authorized officers.

Dated:

                                   RESOLUTION PERFORMANCE PRODUCTS LLC

                                   By:____________________________________
                                      Name:
                                      Title:

                                   By:____________________________________
                                      Name:
                                      Title:

                                   RPP CAPITAL CORPORATION

                                   By:____________________________________
                                      Name:
                                      Title:

                                   By:____________________________________
                                      Name
                                      Title:

                                      A-2
<PAGE>

               [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]

     This is one of the 13 1/2% Senior Subordinated Notes due 2010 described in
the within-mentioned Indenture.

                                      UNITED STATES TRUST COMPANY OF NEW YORK,
                                      as Trustee

                                      By:  ______________________________
                                           Authorized Signatory

                                      A-3
<PAGE>

                             [REVERSE OF SECURITY]

                      RESOLUTION PERFORMANCE PRODUCTS LLC
                            RPP CAPITAL CORPORATION

                   13 1/2% Senior Subordinated Note due 2010

1.   Interest.
     --------

     RESOLUTION PERFORMANCE PRODUCTS LLC, a Delaware limited liability company
(the "Company"), and RPP CAPITAL CORPORATION, a Delaware corporation (together
      -------
with the Company, the "Issuers," which term includes any of their respective
                       -------
successors under the Indenture hereinafter referred to), promise to pay interest
on the principal amount of this Security at the rate per annum shown above. The
Issuers will pay interest semi-annually on May 15 and November 15 of each year
(the "Interest Payment Date"), commencing May 15, 2001. Interest on this
      ---------------------
Security will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from and including November 14, 2000. Interest
on this Security will be computed on the basis of a 360-day year of twelve 30-
day months.

     The Issuers shall pay interest on overdue principal from time to time on
demand at the rate borne by this Security plus 2% and on overdue installments of
interest (without regard to any applicable grace periods) to the extent lawful.

2.   Method of Payment.
     -----------------

     The Issuers shall pay interest on the Securities (except defaulted
interest) to the Persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date even if the
Securities are canceled on registration of transfer or registration of exchange
(including pursuant to an Exchange Offer (as defined in the Indenture)) after
such Record Date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Issuers shall pay principal, premium, if any and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
                                                 -----------------
the Issuers may pay principal, premium, if any, and interest by wire transfer of
federal funds, or interest by check payable in such U.S. Legal Tender. The
Issuers may deliver any such interest payment to the Paying Agent or to a Holder
at the Holder's registered address.

3.   Paying Agent and Registrar.
     --------------------------

     Initially, United States Trust Company of New York (the "Trustee") will act
                                                              -------
as Paying Agent and Registrar. The Issuers may change any Paying Agent,
Registrar or co-Registrar without notice to the Holders. The Company or any of
its Subsidiaries may, subject to certain exceptions, act as Registrar or co-
Registrar.

4.   Indenture.
     ---------

     The Issuers issued the Securities under an Indenture, dated as of November
14, 2000 (the "Indenture"), among the Issuers and the Trustee. This Security is
               ---------
one of a duly authorized issue

                                      A-4
<PAGE>

of Securities of the Issuers designated as their 13 1/2% Senior Subordinated
Notes due 2010 (the "Initial Notes"). Capitalized terms herein are used as
                     -------------
defined in the Indenture unless otherwise defined herein. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. (S)(S)
77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture until such
                    ---
time as the Indenture is qualified under the TIA, and thereafter as in effect on
the date on which the Indenture is qualified under the TIA. Notwithstanding
anything to the contrary herein, the Securities are subject to all such terms,
and Holders of Securities are referred to the Indenture and the TIA for a
statement of them. The Securities are general obligations of the Issuers
unlimited in amount, of which an aggregate principal amount of $200,000,000 are
being issued on the Issue Date.

5.   Subordination.
     -------------

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

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

     The Issuers may redeem the Securities, in whole at any time or in part from
time to time, on and after November 15, 2005, upon not less than 30 nor more
than 60 days' notice, at the following redemption prices (expressed as
percentages of the principal amount thereof) if redeemed during the twelve-month
period commencing on November 15 of the years set forth below, plus, in each
case, accrued and unpaid interest thereon, if any, to the date of redemption
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date):

          Year                            Percentage
          ----                            ----------

          2005                            106.750%
          2006                            104.500%
          2007                            102.250%
          2008 and thereafter             100.000%

     In addition, at any time prior to November 15, 2005, upon the occurrence of
a Change of Control, the Issuers may redeem the Securities, in whole but not in
part, at a redemption price equal to the principal amount thereof plus the
Applicable Premium plus accrued and unpaid interest, if any, to the date of
redemption (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date).  Notice of
redemption of the Securities pursuant to this paragraph shall be mailed to
Holders of the Securities not more than 30 days following the occurrence of a
Change of Control.

                                      A-5
<PAGE>

7.   Notice of Redemption.
     --------------------

     Notice of redemption shall be mailed by first-class mail at least 30 days
but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at such Holder's registered address.  Securities in
denominations of $1,000 may be redeemed only in whole.  The Trustee may select
for redemption portions (equal to $1,000 or any integral multiple thereof) of
the principal of Securities that have denominations larger than $1,000.

     If any Security is to be redeemed in part only, the notice of redemption
that relates to such Security shall state the portion of the principal amount
thereof to be redeemed.  A new Security in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Security.  On and after the Redemption Date,
interest will cease to accrue on Securities or portions thereof called for
redemption, subject to the provisions of the Indenture.

8.   Change of Control Offer.
     -----------------------

     Upon the occurrence of a Change of Control, the Issuers will be required,
as and to the extent set forth in the Indenture, to offer to purchase all of the
outstanding Securities at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, thereon to the date of
repurchase (subject to the right of Securityholders of record on the relevant
record date to receive interest due on the relevant interest payment date);
provided however, that notwithstanding the occurrence of a Change of Control,
the Issuers shall not be obligated to repurchase the Securities pursuant to this
paragraph 8 in the event that the Issuers have exercised their right to redeem
all of the Securities under the terms of paragraph 6 hereof).

9.   Limitation on Asset Sales.
     -------------------------

     The Issuers are, subject to certain conditions, obligated to make an offer
to purchase Securities at 100% of their principal amount, plus accrued and
unpaid interest, if any, thereon to the date of repurchase with certain Net Cash
Proceeds of certain sales or other dispositions of assets in accordance with the
Indenture.

10.  Excess Cash Flow.
     ----------------

     If the Company has Excess Cash Flow for any fiscal year and the Leverage
Ratio of the Company is more than 3.0 to 1.0 on the last day of such fiscal
year, the Company will be required, subject to certain exceptions and
limitations, to make an offer to purchase, on a pro rata basis, Securities with
50% of such Excess Cash Flow (reduced by the amount of any similar payments the
Company elects or is required to make to its senior lenders or other holders of
Senior Debt) at 100% of their principal amount plus accrued interest to the date
of purchase.

11.  Registration Rights.
     -------------------

     Pursuant to the Registration Rights Agreement, the Issuers will be
obligated to consummate an exchange offer pursuant to which the Holder of this
Security shall have the right to exchange this Security for the Issuers' 13 1/2%
Senior Subordinated Notes due 2010 (the

                                      A-6
<PAGE>

"Exchange Notes"), which shall have been registered under the Securities Act, in
 --------------
like principal amount and having terms identical in all material respects to the
Initial Notes. The Holders of the Initial Notes shall be entitled to receive
certain additional interest payments in the event such exchange offer is not
consummated and upon certain other conditions, all pursuant to and in accordance
with the terms of the Registration Rights Agreement.

12.  Denominations; Transfer; Exchange.
     ---------------------------------

     The Securities are in registered form, without coupons, in denominations of
$1,000 and integral multiples of $1,000.  A Holder shall register the transfer
of or exchange Securities in accordance with the Indenture.  The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay certain transfer taxes or similar governmental
charges payable in connection therewith as permitted by the Indenture.  The
Registrar need not register the transfer of or exchange any Securities or
portions thereof selected for redemption, except the unredeemed portion of any
security being redeemed in part.

13.  Persons Deemed Owners.
     ---------------------

     The registered Holder of a Security shall be treated as the owner of it for
all purposes.

14.  Unclaimed Funds.
     ---------------

     If funds for the payment of principal, premium, if any, or interest remain
unclaimed for two years, the Trustee and the Paying Agent will repay the funds
to the Issuers at their request.  After that, all liability of the Trustee and
such Paying Agent with respect to such funds shall cease.

15.  Discharge Prior to Redemption or Maturity.
     -----------------------------------------

     The Issuers and any Guarantor may be discharged from their obligations
under the Indenture or the Securities and any Subsidiary Guarantee except for
certain provisions thereof, and may be discharged from obligations to comply
with certain covenants contained in the Indenture and the Securities and any
Subsidiary Guarantee, in each case upon satisfaction of certain conditions
specified in the Indenture.

16.  Amendment; Supplement; Waiver.
     -----------------------------

     Subject to certain exceptions, the Indenture and the Securities and any
Subsidiary Guarantee may be amended or supplemented with the written consent of
the Holders of at least a majority in aggregate principal amount of the
Securities then outstanding, and any existing Default or Event of Default or
compliance with any provision may be waived with the consent of the Holders of a
majority in aggregate principal amount of the Securities then outstanding.
Without notice to or consent of any Holder, the parties thereto may amend or
supplement the Indenture, the Securities and the Subsidiary Guarantees, if any,
to, among other things, cure any ambiguity, defect or inconsistency, provide for
uncertificated Securities and any Subsidiary Guarantee in addition to or in
place of certificated Securities or comply with any requirements of the
Commission in connection with the qualification of the Indenture under the TIA,
or make any other change that does not materially adversely affect the rights of
any Holder of a Security.

                                      A-7
<PAGE>

17.  Restrictive Covenants.
     ---------------------

     The Indenture contains certain covenants that, among other things, limit
the ability of the Company and its Restricted Subsidiaries to make restricted
payments, to incur indebtedness, to create liens, to sell assets, to permit
restrictions on dividends and other payments by Restricted Subsidiaries of the
Company to the Company, to consolidate, merge or sell all or substantially all
of its assets or to engage in transactions with affiliates.  The limitations are
subject to a number of important qualifications and exceptions.  The Company
must annually report to the Trustee on compliance with such limitations.

18.  Defaults and Remedies.
     ---------------------

     If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in aggregate principal amount of Securities then outstanding may
declare all the Securities to be due and payable immediately in the manner and
with the effect provided in the Indenture.  Holders of Securities may not
enforce the Indenture, the Securities or any Subsidiary Guarantee except as
provided in the Indenture.  The Trustee is not obligated to enforce the
Indenture, the Securities or the Subsidiary Guarantees, if any, unless it has
received indemnity satisfactory to it.  The Indenture permits, subject to
certain limitations therein provided, Holders of a majority in aggregate
principal amount of the Securities or any Subsidiary Guarantee then outstanding
to direct the Trustee in its exercise of any trust or power.  The Trustee may
withhold from Holders of Securities notice of certain continuing Defaults or
Events of Default if it determines that withholding notice is in their interest.

19.  Trustee Dealings with Issuers.
     -----------------------------

     The Trustee under the Indenture, in its individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal with the
Issuers, their Subsidiaries or their respective Affiliates as if it were not the
Trustee.

20.  No Recourse Against Others.
     --------------------------

     No Affiliate, stockholder, director, officer, employee or limited liability
company member of the Issuers or any of their Subsidiaries shall have any
liability for any obligation of the Issuers under the Securities or the
Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation.  Each Holder of a Security by accepting a
Security waives and releases all such liability.  The waiver and release are
part of the consideration for the issuance of the Securities.

21.  Authentication.
     --------------

     This Security shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on this Security.

22.  Abbreviations and Defined Terms.
     -------------------------------

     Customary abbreviations may be used in the name of a Holder of a Security
or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT

                                      A-8
<PAGE>

TEN (= joint tenants with right of survivorship and not as tenants in common),
CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

23.  Governing Law.
     -------------

     This Security shall be governed by, and construed in accordance with, the
laws of the State of New York without giving effect to applicable principles of
conflicts of laws to the extent that the application of the laws of another
jurisdiction would be required thereby.

24.  CUSIP and ISIN Numbers.
     ----------------------

     Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuers have caused CUSIP and ISIN
numbers to be printed on the Securities as a convenience to the Holders of the
Securities.  No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.

25.  Indenture.
     ---------

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

     The Issuers will furnish to any Holder of a Security upon written request
and without charge a copy of the Indenture which has the text of this Security
in larger type.  Requests may be made to:  Resolution Performance Products LLC,
1600 Smith Street, Houston, TX 77002, Attn:  President.

                                      A-9
<PAGE>

                                ASSIGNMENT FORM

I or we assign and transfer this Security to

______________________________________________________________________________

______________________________________________________________________________
(Print or type name, address and zip code of assignee or
transferee)

______________________________________________________________________________
(Insert Social Security or other identifying number of assignee or transferee)

and irrevocably appoint _______________________________________ agent to
transfer this Security on the books of the Issuers.  The agent may substitute
another to act for him.

Dated: _________________                      Signed:  _________________________
                                                          (Sign exactly as name
                                                          appears on the other
                                                          side of this Security)
Signature Guarantee:                      ______________________________________
                                          Participant in a recognized Signature
                                          Guarantee Medallion Program (or other
                                          signature guarantor program reasonably
                                          acceptable to the Trustee)

     In connection with any transfer of this Security occurring prior to the
date which is the earlier of (i) the date of the declaration by the Commission
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), covering resales of this Security
                       --------------
(which effectiveness shall not have been suspended or terminated at the date of
the transfer) and (ii) November 14, 2002 the undersigned confirms that it has
not utilized any general solicitation or general advertising in connection with
the transfer and that this Security is being transferred:

                                     A-10
<PAGE>

                                  [Check One]
                                   ---------

(1)  __   to either of the Issuers or a subsidiary thereof; or

(2)  __   pursuant to and in compliance with Rule 144A under the Securities Act;
          or

(3)  __   to an institutional "accredited investor" (as defined in Rule
          501(a)(1), (2), (3) or (7) under the Securities Act) that has
          furnished to the Trustee a signed letter containing certain
          representations and agreements (the form of which letter can be
          obtained from the Trustee); or

(4)  __   outside the United States to a "foreign person" in compliance with
          Rule 904 of Regulation S under the Securities Act; or

(5)  __   pursuant to the exemption from registration provided by Rule 144 under
          the Securities Act; or

(6)  __   pursuant to an effective registration statement under the Securities
          Act; or

(7)  __   pursuant to another available exemption from the registration
          requirements of the Securities Act;

and unless the box below is checked, the undersigned confirms that such Security
is not being transferred to an "affiliate" of the Issuers as defined in Rule 144
                                ---------
under the Securities Act of 1933, as amended (an "Affiliate"):
                                                  ---------

     [_]   The transferee is an Affiliate of either of the Issuers.

     Unless one of the items is checked, the Trustee will refuse to register any
of the Securities evidenced by this certificate in the name of any person other
than the registered Holder thereof; provided that if box (3), (4), (5) or (7) is
                                    --------
checked, the Issuers or the Trustee may require, prior to registering any such
transfer of the Securities, in its sole discretion, such legal opinions,
certifications (including an investment letter in the case of box (3) or (4))
and other information as the Trustee or the Issuers have reasonably requested 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.

                                     A-11
<PAGE>

If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Security in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.16 of the Indenture shall have
been satisfied.
Dated: _________________                      Signed:  _________________________
                                                         (Sign exactly as name
                                                         appears on the other
                                                         side of this Security)

Signature Guarantee:                   _________________________________________

              TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED

     The undersigned represents and warrants that it is purchasing this Security
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
                                                             ---------
institutional buyer" within the meaning of Rule 144A under the Securities Act
-------------------
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuers as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.

Dated:  __________________________________________________
NOTICE:  To be executed by an executive officer

                                     A-12
<PAGE>

                      OPTION OF HOLDER TO ELECT PURCHASE

     If you want to elect to have this Security purchased by the Company
pursuant to Section 4.17, Section 4.18 or Section 4.20 of the Indenture, check
the appropriate box:

     Section 4.17 [    ] Section 4.18 [    ] Section 4.20 [    ]

     If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.17, Section 4.18 or 4.20 of the Indenture, state
the amount:  $___________

Dated: _________________                      Signed:  _________________________
                                                          (Sign exactly as name
                                                          appears on the other
                                                          side of this Security)

Signature Guarantee:                      ______________________________________
                                          Participant in a recognized Signature
                                          Guarantee Medallion Program (or other
                                          signature guarantor program reasonably
                                          acceptable to the Trustee)

                                     A-13
<PAGE>

                                                                       Exhibit B
                                                                       ---------

                            [FORM OF EXCHANGE NOTE]*

                              [FACE OF SECURITY]

                      RESOLUTION PERFORMANCE PRODUCTS LLC
                            RPP CAPITAL CORPORATION

                       13 1/2% Senior Subordinated Note
                                   due 2010

CUSIP No.

ISIN No.

No.                                                         $

     RESOLUTION PERFORMANCE PRODUCTS LLC, a Delaware limited liability company
(the "Company"), and RPP CAPITAL CORPORATION, a Delaware corporation (together
      -------
with the Company, the "Issuers," which term includes any of their successors
                       -------
under the Indenture hereinafter referred to), for value received promise to pay
to [                 ] or registered assigns, the principal sum of
Dollars (  $), on November 15, 2010.

     Interest Payment Dates:  May 15 and November 15, commencing May 15, 2001.

     Record Dates:  May 1 and November 1.

     Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.

     IN WITNESS WHEREOF, the Issuers have caused this Security to be signed
manually or by facsimile by their duly authorized officers.

Dated:

                            RESOLUTION PERFORMANCE PRODUCTS LLC

                            By:__________________________________________
                               Name:
                               Title:

                            By:__________________________________________
                               Name:
                               Title:

________________________

* Add Global Security Legend, if appropriate.

                                      B-1
<PAGE>

                                      RPP CAPITAL CORPORATION

                                      By:______________________________
                                         Name:
                                         Title:

                                      By:______________________________
                                         Name:
                                         Title:

                                      B-2
<PAGE>

               [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]

     This is one of the 13 1/2% Senior Subordinated Notes due 2010 described in
the within-mentioned Indenture.

                              UNITED STATES TRUST COMPANY OF NEW YORK,
                              as Trustee

                              By: __________________________________
                                  Authorized Signatory

                                      B-3
<PAGE>

                             [REVERSE OF SECURITY]

                      RESOLUTION PERFORMANCE PRODUCTS LLC
                            RPP CAPITAL CORPORATION

                   13 1/2% Senior Subordinated Note due 2010

1.   Interest.
     --------

     RESOLUTION PERFORMANCE PRODUCTS LLC, a Delaware limited liability company
(the "Company"), and RPP CAPITAL CORPORATION, a Delaware corporation (together
      -------
with the Company, the "Issuers," which term includes any of their respective
                       -------
successors under the Indenture hereinafter referred to), promise to pay interest
on the principal amount of this Security at the rate per annum shown above.  The
Issuers will pay interest semi-annually on May 15 and November 15 of each year
(the "Interest Payment Date"), commencing May 15, 2001.  Interest on this
      ---------------------
Security will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from and including November 14, 2000.
Interest on this Security will be computed on the basis of a 360-day year of
twelve 30-day months.

     The Issuers shall pay interest on overdue principal from time to time on
demand at the rate borne by this Security plus 2% and on overdue installments of
interest (without regard to any applicable grace periods) to the extent lawful.

2.   Method of Payment.
     -----------------

     The Issuers shall pay interest on the Securities (except defaulted
interest) to the Persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date even if the
Securities are canceled on registration of transfer or registration of exchange
(including pursuant to an Exchange Offer (as defined in the Indenture)) after
such Record Date.  Holders must surrender Securities to a Paying Agent to
collect principal payments.  The Issuers shall pay principal, premium, if any
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender").  However,
                                                 -----------------
the Issuers may pay principal, premium, if any, and interest by wire transfer of
federal funds, or interest by check payable in such U.S. Legal Tender.  The
Issuers may deliver any such interest payment to the Paying Agent or to a Holder
at the Holder's registered address.

3.   Paying Agent and Registrar.
     --------------------------

     Initially, United States Trust Company of New York (the "Trustee") will act
                                                              -------
as Paying Agent and Registrar.  The Issuers may change any Paying Agent,
Registrar or co-Registrar without notice to the Holders.  The Company or any of
its Subsidiaries may, subject to certain exceptions, act as Registrar or co-
Registrar.

                                      B-4
<PAGE>

4.   Indenture.
     ---------

     The Issuers issued the Securities under an Indenture, dated as of November
14, 2000 (the "Indenture"), among the Issuers and the Trustee.  This Security is
               ---------
one of a duly authorized issue of Securities of the Issuers designated as their
13 1/2% Senior Subordinated Notes due 2010 (the "Initial Notes").  Capitalized
                                                 -------------
terms herein are used as defined in the Indenture unless otherwise defined
herein.  The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. (S)(S) 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
                                      ---
Indenture until such time as the Indenture is qualified under the TIA, and
thereafter as in effect on the date on which the Indenture is qualified under
the TIA.  Notwithstanding anything to the contrary herein, the Securities are
subject to all such terms, and Holders of Securities are referred to the
Indenture and the TIA for a statement of them.  The Securities are general
obligations of the Issuers unlimited in amount, of which an aggregate principal
amount of $200,000,000 are being issued on the Issue Date.

5.   Subordination.
     -------------

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

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

     The Issuers may redeem the Securities, in whole at any time or in part from
time to time, on and after November 15, 2005, upon not less than 30 nor more
than 60 days' notice, at the following redemption prices (expressed as
percentages of the principal amount thereof) if redeemed during the twelve-month
period commencing on November 15 of the years set forth below, plus, in each
case, accrued and unpaid interest thereon, if any, to the date of redemption
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date):

        Year                                       Percentage
        ----                                       ----------

        2005                                       106.750%
        2006                                       104.500%
        2007                                       102.250%
        2008 and thereafter                        100.000%

     In addition, at any time prior to November 15, 2005, upon the occurrence of
a Change of Control, the Issuers may redeem the Securities, in whole but not in
part, at a redemption price equal to the principal amount thereof plus the
Applicable Premium plus accrued and unpaid interest, if any, to the date of
redemption (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date). Notice of
redemption

                                      B-5
<PAGE>

of the Securities pursuant to this paragraph shall be mailed to Holders of the
Securities not more than 30 days following the occurrence of a Change of
Control.

7.   Notice of Redemption.
     --------------------

     Notice of redemption shall be mailed by first-class mail at least 30 days
but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at such Holder's registered address.  Securities in
denominations of $1,000 may be redeemed only in whole.  The Trustee may select
for redemption portions (equal to $1,000 or any integral multiple thereof) of
the principal of Securities that have denominations larger than $1,000.

     If any Security is to be redeemed in part only, the notice of redemption
that relates to such Security shall state the portion of the principal amount
thereof to be redeemed.  A new Security in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Security.  On and after the Redemption Date,
interest will cease to accrue on Securities or portions thereof called for
redemption, subject to the provisions of the Indenture.

8.   Change of Control Offer.
     -----------------------

     Upon the occurrence of a Change of Control, the Issuers will be required,
as and to the extent set forth in the Indenture, to offer to purchase all of the
outstanding Securities at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, thereon to the date of
repurchase (subject to the right of Securityholders of record on the relevant
record date to receive interest due on the relevant interest payment date);
provided however, that notwithstanding the occurrence of a Change of Control,
the Issuers shall not be obligated to repurchase the Securities pursuant to this
paragraph 8 in the event that the Issuers have exercised their right to redeem
all of the Securities under the terms of paragraph 6 hereof).

9.   Limitation on Asset Sales.
     -------------------------

     The Issuers are, subject to certain conditions, obligated to make an offer
to purchase Securities at 100% of their principal amount, plus accrued and
unpaid interest, if any, thereon to the date of repurchase with certain Net Cash
Proceeds of certain sales or other dispositions of assets in accordance with the
Indenture.

10.  Excess Cash Flow.
     ----------------

     If the Company has Excess Cash Flow for any fiscal year and the Leverage
Ratio of the Company is more than 3.0 to 1.0 on the last day of such fiscal
year, the Company will be required, subject to certain exceptions and
limitations, to make an offer to purchase, on a pro rata basis, Securities with
50% of such Excess Cash Flow (reduced by the amount of any similar payments the
Company elects or is required to make to its senior lenders or other holders of
Senior Debt) at 100% of their principal amount plus accrued interest to the date
of purchase.

                                      B-6
<PAGE>

11.  Denominations; Transfer; Exchange.
     ---------------------------------

     The Securities are in registered form, without coupons, in denominations of
$1,000 and integral multiples of $1,000.  A Holder shall register the transfer
of or exchange Securities in accordance with the Indenture.  The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay certain transfer taxes or similar governmental
charges payable in connection therewith as permitted by the Indenture.  The
Registrar need not register the transfer of or exchange any Securities or
portions thereof selected for redemption, except the unredeemed portion of any
security being redeemed in part.

12.  Persons Deemed Owners.
     ---------------------

     The registered Holder of a Security shall be treated as the owner of it for
all purposes.

13.  Unclaimed Funds.
     ---------------

     If funds for the payment of principal, premium, if any, or interest remain
unclaimed for two years, the Trustee and the Paying Agent will repay the funds
to the Issuers at their request.  After that, all liability of the Trustee and
such Paying Agent with respect to such funds shall cease.

14.  Discharge Prior to Redemption or Maturity.
     -----------------------------------------

     The Issuers and the Subsidiary Guarantors, if any, may be discharged from
their obligations under the Indenture or the Securities and any Subsidiary
Guarantee except for certain provisions thereof, and may be discharged from
obligations to comply with certain covenants contained in the Indenture and the
Securities and any Subsidiary Guarantee, in each case upon satisfaction of
certain conditions specified in the Indenture.

15.  Amendment; Supplement; Waiver.
     -----------------------------

     Subject to certain exceptions, the Indenture and the Securities and any
Subsidiary Guarantees may be amended or supplemented with the written consent of
the Holders of at least a majority in aggregate principal amount of the
Securities then outstanding, and any existing Default or Event of Default or
compliance with any provision may be waived with the consent of the Holders of a
majority in aggregate principal amount of the Securities then outstanding.
Without notice to or consent of any Holder, the parties thereto may amend or
supplement the Indenture, the Securities and any Subsidiary Guarantee to, among
other things, cure any ambiguity, defect or inconsistency, provide for
uncertificated Securities in addition to or in place of certificated Securities
or comply with any requirements of the Commission in connection with the
qualification of the Indenture under the TIA, or make any other change that does
not materially adversely affect the rights of any Holder of a Security.

16.  Restrictive Covenants.
     ---------------------

     The Indenture contains certain covenants that, among other things, limit
the ability of the Company and its Restricted Subsidiaries to make restricted
payments, to incur indebtedness, to create liens, to sell assets, to permit
restrictions on dividends and other payments by Restricted

                                      B-7
<PAGE>

Subsidiaries of the Company to the Company, to consolidate, merge or sell all or
substantially all of its assets or to engage in transactions with affiliates.
The limitations are subject to a number of important qualifications and
exceptions. The Company must annually report to the Trustee on compliance with
such limitations.

17.  Defaults and Remedies.
     ---------------------

     If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in aggregate principal amount of Securities then outstanding may
declare all the Securities to be due and payable immediately in the manner and
with the effect provided in the Indenture.  Holders of Securities may not
enforce the Indenture, the Securities or any Subsidiary Guarantee except as
provided in the Indenture.  The Trustee is not obligated to enforce the
Indenture, the Securities or the Subsidiary Guarantees, if any, unless it has
received indemnity satisfactory to it.  The Indenture permits, subject to
certain limitations therein provided, Holders of a majority in aggregate
principal amount of the Securities then outstanding to direct the Trustee in its
exercise of any trust or power.  The Trustee may withhold from Holders of
Securities notice of certain continuing Defaults or Events of Default if it
determines that withholding notice is in their interest.

18.  Trustee Dealings with Issuers.
     -----------------------------

     The Trustee under the Indenture, in its individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal with the
Issuers, their Subsidiaries or their respective Affiliates as if it were not the
Trustee.

19.  No Recourse Against Others.
     --------------------------

     No Affiliate, stockholder, director, officer, employee or limited liability
company member of the Issuers or any of their Subsidiaries shall have any
liability for any obligation of the Issuers under the Securities or the
Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation.  Each Holder of a Security by accepting a
Security waives and releases all such liability.  The waiver and release are
part of the consideration for the issuance of the Securities.

20.  Authentication.
     --------------

     This Security shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on this Security.

21.  Abbreviations and Defined Terms.
     -------------------------------

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

                                      B-8
<PAGE>

22.  Governing Law.
     -------------

     This Security shall be governed by, and construed in accordance with, the
laws of the State of New York without giving effect to applicable principles of
conflicts of laws to the extent that the application of the laws of another
jurisdiction would be required thereby.

23.  CUSIP and ISIN Numbers.
     ----------------------

     Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuers have caused CUSIP and ISIN
numbers to be printed on the Securities as a convenience to the Holders of the
Securities.  No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.

24.  Indenture.
     ---------

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

     The Issuers will furnish to any Holder of a Security upon written request
and without charge a copy of the Indenture which has the text of this Security
in larger type.  Requests may be made to:  Resolution Performance Products LLC,
1600 Smith Street, Houston, TX  77002 Attn:  President.

                                      B-9
<PAGE>

                                ASSIGNMENT FORM

I or we assign and transfer this Security to

________________________________________________________________

________________________________________________________________
(Print or type name, address and zip code of assignee or transferee)

_______________________________________________________________
(Insert Social Security or other identifying number of assignee or transferee)

and irrevocably appoint _______________________________________ agent to
transfer this Security on the books of the Issuers.  The agent may substitute
another to act for him.

Dated: _________________               Signed:  _________________________
                                                  (Sign exactly as name
                                                  appears on the other
                                                  side of this Security)

Signature Guarantee:            ______________________________________
                                Participant in a recognized Signature Guarantee
                                Medallion Program (or other signature guarantor
                                program reasonably acceptable to the Trustee)

                                     B-10
<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE

     If you want to elect to have this Security purchased by the Company
pursuant to Section 4.17, Section 4.18 or Section 4.20 of the Indenture, check
the appropriate box:

     Section 4.17 [    ]    Section 4.18 [    ]    Section 4.20 [    ]

     If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.17, Section 4.18 or Section 4.20 of the Indenture,
state the amount: $___________

Dated: _________________               Signed:  _________________________
                                                   (Sign exactly as name
                                                   appears on the other
                                                   side of this Security)

Signature Guarantee:            ______________________________________
                                Participant in a recognized Signature Guarantee
                                Medallion Program (or other signature guarantor
                                program reasonably acceptable to the Trustee)

                                     B-11
<PAGE>

                                                                       Exhibit C
                                                                       ---------

                           Form of Certificate to Be
                         Delivered in Connection with
                   Transfers to Non-QIB Accredited Investors
                   -----------------------------------------

                                                                          [Date]

Attention:

          Re:  Resolution Performance Products LLC
               RPP Capital Corporation
               13 1/2% Senior Subordinated Notes due 2010
               (the " Securities")
               ------------------------------------------

Ladies and Gentlemen:

     In connection with our proposed purchase of the Securities of Resolution
Performance Products LLC and RPP Capital Corporation (the "Issuers"), we confirm
                                                           -------
that:

     1.  We have received a copy of the Offering Memorandum (the "Offering
                                                                  --------
Memorandum"), dated November 8, 2000 relating to the Securities and such other
----------
information as we deem necessary in order to make our investment decision.  We
acknowledge that we have read and agreed to the matters stated on pages 1-5 of
the Offering Memorandum and in the section entitled "Transfer Restrictions" of
                                                     ---------------------
the Offering Memorandum, including the restrictions on duplication and
circulation of the Offering Memorandum.

     2.  We understand that any subsequent transfer of the Securities is subject
to certain restrictions and conditions set forth in the Indenture relating to
the Securities (as described in the Offering Memorandum) and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the
Securities except in compliance with, such restrictions and conditions and the
Securities Act of 1933, as amended (the "Securities Act").
                                         --------------

     3.  We understand that the offer and sale of the Securities have not been
registered under the Securities Act, and that the Securities may not be offered
or sold except as permitted in the following sentence.  We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell or otherwise transfer any Securities prior to the
date which is two years after the original issuance of the Securities, and if
such

                                      C-1
<PAGE>

transfer is in respect of any aggregate principal amount of Securities of
less than $100,000, also furnishes an opinion of counsel acceptable to the
Issuers that such transfer complies with the Securities Act, we will do so only
(i) to the Issuers or any of their subsidiaries, (ii) inside the United States
in accordance with Rule 144A under the Securities Act to a "qualified
                                                            ---------
institutional buyer" (as defined in Rule 144A under the Securities Act), (iii)
-------------------
inside the United States to an institutional "accredited investor" (as defined
                                              -------------------
below) that, prior to such transfer, furnishes (or has furnished on its behalf
by a U.S. broker-dealer) to the Trustee (as defined in the Indenture relating to
the Securities), a signed letter containing certain representations and
agreements relating to the restrictions on transfer of the Securities, (iv)
outside the United States in accordance with Rule 904 of Regulation S under the
Securities Act, (v) pursuant to the exemption from registration provided by Rule
144 under the Securities Act (if available), or (vi) pursuant to an effective
registration statement under the Securities Act, and we further agree to provide
to any person purchasing any of the Securities from us a notice advising such
purchaser that resales of the Securities are restricted as stated herein.

     4.  We understand that, on any proposed resale of any Securities, we will
be required to furnish to the Trustee and the Issuers such certification, legal
opinions and other information as the Trustee and the Issuers may reasonably
require to confirm that the proposed sale complies with the foregoing
restrictions.  We further understand that the Securities purchased by us will
bear a legend to the foregoing effect.

     5.  We are an institutional "accredited investor" (as defined in Rule
                                  -------------------
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Securities, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or their investment, as the case may be.

     6.  We are acquiring the Securities purchased by us for our account or for
one or more accounts (each of which is an institutional "accredited investor")
                                                         -------------------
as to each of which we exercise sole investment discretion, and we are acquiring
the Securities not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act.

     You and the Issuers are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.

                                    Very truly yours,

                                    By:___________________________
                                       Name:
                                       Title:

                                      C-2
<PAGE>

                                                                       Exhibit D
                                                                       ---------

                           Form of Certificate to Be
                         Delivered in Connection with
                      Transfers Pursuant to Regulation S
                      ----------------------------------

                                                                          [Date]

Attention:

          Re:  Resolution Performance Products LLC
               RPP Capital Corporation
               13 1/2% Senior Subordinated Notes due 2010
               (the "Securities")
               ------------------------------------------

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

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

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

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

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

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

     You and the Issuers are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.  Terms used in this certificate have the
meanings set forth in Regulation S.

                                      D-1
<PAGE>

                            Very truly yours,

                            [Name of Transferor]

                            By:_______________________________
                               Authorized Signature

                                      D-2
<PAGE>

                                                                       Exhibit E
                                                                       ---------

                                   GUARANTEE
                                   ---------

     For value received, the undersigned hereby unconditionally guarantees, as
principal obligor and not only as a surety, to the Holder of this Security the
cash payments in United States dollars of principal of, premium, if any, and
interest on this Security in the amounts and at the times when due and interest
on the overdue principal, premium, if any, and interest, if any, of this
Security, if lawful, and the payment or performance of all other obligations of
the Issuers under the Indenture (as defined below) or the Securities, to the
Holder of this Security and the Trustee, all in accordance with and subject to
the terms and limitations of this Security, Article Eleven of the Indenture and
this Subsidiary Guarantee.  This Subsidiary Guarantee will become effective in
accordance with Article Eleven of the Indenture and its terms shall be evidenced
therein.  The validity and enforceability of any Subsidiary Guarantee shall not
be affected by the fact that it is not affixed to any particular Security.

     Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Indenture dated as of November 14, 2000, among
Resolution Performance Products LLC (formerly known as Shell Epoxy Resins LLC),
a Delaware limited liability company ("RPP LLC" or the "Company"), and RPP
                                       -------          -------
Capital Corporation, a Delaware corporation ("RPP Capital" and together with RPP
                                              -----------
LLC, collectively the "Issuers"), and United States Trust Company of New York,
                       -------
as trustee (the "Trustee").
                 -------

     The obligations of the undersigned to the Holders of Securities and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly
set forth in Article Eleven of the Indenture and reference is hereby made to the
Indenture for the precise terms of the Subsidiary Guarantee and all of the other
provisions of the Indenture to which this Subsidiary Guarantee relates.

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

     THIS SUBSIDIARY GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW.  The undersigned Guarantor hereby agrees to submit to the
jurisdiction of the courts of the State of New York in any action or proceeding
arising out of or relating to this Subsidiary Guarantee.

     This Subsidiary Guarantee is subject to release upon the terms set forth in
the Indenture.

                                      E-1
<PAGE>

     IN WITNESS WHEREOF, each Guarantor has caused its Subsidiary Guarantee to
be duly executed.

                                          GUARANTORS

                                          By:________________________
                                             Name:
                                             Title:

                                          By:________________________
                                             Name:
                                             Title:

                                      E-2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00021-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00021-of-00352.parquet"}]]