Document:

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                                                                     EXHIBIT 4.1

                                                                  EXECUTION COPY

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                         AMERICAN GREETINGS CORPORATION

                    11.75% SENIOR SUBORDINATED NOTES DUE 2008

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

                                    INDENTURE

                            Dated as of June 29, 2001

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

                                       and

                          The Huntington National Bank

                                   as Trustee

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

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<PAGE>   2

<TABLE>
<CAPTION>
                                              CROSS-REFERENCE TABLE*

        Trust Indenture
        Act Section                                                                    Indenture Section
<S>                                                                                    <C>
        310(a)(1)...................................................................             7.10
             (a)(2).................................................................             7.10
             (a)(3).................................................................             N.A.
             (a)(4).................................................................             N.A.
             (a)(5).................................................................             7.10
             (b)....................................................................             7.10
             (c)....................................................................             N.A.
        311(a)......................................................................             7.11
             (b)....................................................................             7.11
             (c)....................................................................             N.A.
        312(a)......................................................................             2.05
             (b)....................................................................            12.03
             (c)....................................................................            12.03
        313(a)......................................................................             7.06
             (b)(1).................................................................            10.03
             (b)(2).................................................................             7.07
             (c)....................................................................          7.06;12.02
             (d)....................................................................             7.06
        314(a)......................................................................          4.03;12.02
             (b)....................................................................            10.02
             (c)(1).................................................................            12.04
             (c)(2).................................................................            12.04
             (c)(3).................................................................             N.A.
             (d)....................................................................     10.03, 10.04, 10.05
             (e)....................................................................            12.05
             (f)....................................................................             N.A.
        315(a)......................................................................             7.01
             (b)....................................................................          7.05,12.02
             (c)....................................................................             7.01
             (d)....................................................................             7.01
             (e)....................................................................             6.11
        316(a) (last sentence)......................................................             2.09
             (a)(1)(A)..............................................................             6.05
             (a)(1)(B)..............................................................             6.04
             (a)(2).................................................................             N.A.
             (b)....................................................................             6.07
             (c)....................................................................             2.12
        317(a)(1)...................................................................             6.08
             (a)(2).................................................................             6.09
             (b)....................................................................             2.04
        318(a)......................................................................            12.01
             (b)....................................................................             N.A.
             (c)....................................................................            12.01
</TABLE>

N.A. means not applicable.
* This Cross Reference Table is not part of the Indenture.

<PAGE>   3

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page

                                                   ARTICLE 1.
                                          DEFINITIONS AND INCORPORATION
                                                  BY REFERENCE

<S>                                                                                                              <C>
   Section 1.01.   Definitions....................................................................................1
   Section 1.02.   Other Definitions.............................................................................19
   Section 1.03.   Incorporation by Reference of Trust Indenture Act.............................................19
   Section 1.04.   Rules of Construction.........................................................................20

                                                   ARTICLE 2.
                                                    THE NOTES

   Section 2.01.   Form and Dating...............................................................................20
   Section 2.02.   Execution and Authentication..................................................................21
   Section 2.03.   Registrar and Paying Agent....................................................................21
   Section 2.04.   Paying Agent to Hold Money in Trust...........................................................22
   Section 2.05.   Holder Lists..................................................................................22
   Section 2.06.   Transfer and Exchange.........................................................................22
   Section 2.07.   Replacement Notes.............................................................................32
   Section 2.08.   Outstanding Notes.............................................................................33
   Section 2.09.   Treasury Notes................................................................................33
   Section 2.10.   Cancellation..................................................................................33
   Section 2.11.   Defaulted Interest............................................................................33

                                                   ARTICLE 3.
                                            REDEMPTION AND PREPAYMENT

   Section 3.01.   Notices to Trustee............................................................................34
   Section 3.02.   Selection of Notes to Be Redeemed.............................................................34
   Section 3.03.   Notice of Redemption..........................................................................34
   Section 3.04.   Effect of Notice of Redemption................................................................35
   Section 3.05.   Deposit of Redemption Price...................................................................35
   Section 3.06.   Notes Redeemed in Part........................................................................36
   Section 3.07.   Optional Redemption...........................................................................36
   Section 3.08.   Mandatory Redemption..........................................................................36
   Section 3.09.   Offer to Purchase by Application of Excess Proceeds...........................................36

                                                   ARTICLE 4.
                                                    COVENANTS

   Section 4.01.   Payment of Notes..............................................................................38
   Section 4.02.   Maintenance of Office or Agency...............................................................38
   Section 4.03.   Reports.......................................................................................39
   Section 4.04.   Compliance Certificate........................................................................39
   Section 4.05.   Taxes.........................................................................................40
   Section 4.06.   Stay, Extension and Usury Laws................................................................40
   Section 4.07.   Restricted Payments...........................................................................40
   Section 4.08.   Dividend and Other Payment Restrictions Affecting Subsidiaries................................42
   Section 4.09.   Incurrence of Indebtedness and Issuance of Preferred Stock....................................43
</TABLE>

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<TABLE>
<CAPTION>
<S>                                                                                                              <C>
   Section 4.10.   Asset Sales...................................................................................45
   Section 4.11.   Transactions with Affiliates..................................................................46
   Section 4.12.   Liens.........................................................................................47
   Section 4.13.   Business Activities...........................................................................47
   Section 4.14.   Corporate Existence...........................................................................47
   Section 4.15.   Offer to Repurchase Upon Change of Control....................................................48
   Section 4.16.   Anti-Layering.................................................................................49
   Section 4.17.   Payments for Consent..........................................................................49
   Section 4.18.   Designation of Restricted and Unrestricted Subsidiaries.......................................49

                                                   ARTICLE 5.
                                                   SUCCESSORS

   Section 5.01.   Merger, Consolidation, or Sale of Assets......................................................49
   Section 5.02.   Successor Corporation Substituted.............................................................50

                                                   ARTICLE 6.
                                              DEFAULTS AND REMEDIES

   Section 6.01.   Events of Default.............................................................................50
   Section 6.02.   Acceleration..................................................................................51
   Section 6.03.   Other Remedies................................................................................52
   Section 6.04.   Waiver of Past Defaults.......................................................................52
   Section 6.05.   Control by Majority...........................................................................52
   Section 6.06.   Limitation on Suits...........................................................................53
   Section 6.07.   Rights of Holders of Notes to Receive Payment.................................................53
   Section 6.08.   Collection Suit by Trustee....................................................................53
   Section 6.09.   Trustee May File Proofs of Claim..............................................................53
   Section 6.10.   Priorities....................................................................................54
   Section 6.11.   Undertaking for Costs.........................................................................54

                                                   ARTICLE 7.
                                                     TRUSTEE

   Section 7.01.   Duties of Trustee.............................................................................54
   Section 7.02.   Rights of Trustee.............................................................................55
   Section 7.03.   Individual Rights of Trustee..................................................................56
   Section 7.04.   Trustee's Disclaimer..........................................................................56
   Section 7.05.   Notice of Defaults............................................................................56
   Section 7.06.   Reports by Trustee to Holders of the Notes....................................................56
   Section 7.07.   Compensation and Indemnity....................................................................57
   Section 7.08.   Replacement of Trustee........................................................................57
   Section 7.09.   Successor Trustee by Merger, etc..............................................................58
   Section 7.10.   Eligibility; Disqualification.................................................................58
   Section 7.11.   Preferential Collection of Claims Against Company.............................................59

                                                   ARTICLE 8.
                                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

   Section 8.01.   Option to Effect Legal Defeasance or Covenant Defeasance......................................59
   Section 8.02.   Legal Defeasance and Discharge................................................................59
   Section 8.03.   Covenant Defeasance...........................................................................59
   Section 8.04.   Conditions to Legal or Covenant Defeasance....................................................60
   Section 8.05.   Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions.61
   Section 8.06.   Repayment to Company..........................................................................61
</TABLE>

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<TABLE>
<CAPTION>
<S>                                                                                                              <C>
   Section 8.07.   Reinstatement.................................................................................62

                                                   ARTICLE 9.
                                        AMENDMENT, SUPPLEMENT AND WAIVER

   Section 9.01.   Without Consent of Holders of Notes...........................................................62
   Section 9.02.   With Consent of Holders of Notes..............................................................63
   Section 9.03.   Compliance with Trust Indenture Act...........................................................64
   Section 9.04.   Revocation and Effect of Consents.............................................................64
   Section 9.05.   Notation on or Exchange of Notes..............................................................64
   Section 9.06.   Trustee to Sign Amendments, etc...............................................................64

                                                   ARTICLE 10.
                                                  SUBORDINATION

   Section 10.01.     Agreement to Subordinate...................................................................65
   Section 10.02.     Liquidation; Dissolution; Bankruptcy.......................................................65
   Section 10.03.     Default on Designated Senior Debt..........................................................65
   Section 10.04.     Acceleration of Securities.................................................................66
   Section 10.05.     When Distribution Must Be Paid Over........................................................66
   Section 10.06.     Notice by Company..........................................................................66
   Section 10.07.     Subrogation................................................................................67
   Section 10.08.     Relative Rights............................................................................67
   Section 10.09.     Subordination May Not Be Impaired by Company...............................................67
   Section 10.10.     Distribution or Notice to Representative...................................................67
   Section 10.11.     Rights of Trustee and Paying Agent.........................................................68
   Section 10.12.     Authorization to Effect Subordination......................................................68
   Section 10.13.     Amendments.................................................................................68

                                                   ARTICLE 11.
                                           SATISFACTION AND DISCHARGE

   Section 11.01.     Satisfaction and Discharge.................................................................68
   Section 11.02.     Application of Trust Money.................................................................69

                                                   ARTICLE 12.
                                                  MISCELLANEOUS

   Section 12.01.     Trust Indenture Act Controls...............................................................69
   Section 12.02.     Notices....................................................................................69
   Section 12.03.     Communication by Holders of Notes with Other Holders of Notes..............................70
   Section 12.04.     Certificate and Opinion as to Conditions Precedent.........................................71
   Section 12.05.     Statements Required in Certificate or Opinion..............................................71
   Section 12.06.     Rules by Trustee and Agents................................................................71
   Section 12.07.     No Personal Liability of Directors, Officers, Employees and Stockholders...................71
   Section 12.08.     Governing Law..............................................................................71
   Section 12.09.     No Adverse Interpretation of Other Agreements..............................................72
   Section 12.10.     Successors.................................................................................72
   Section 12.11.     Severability...............................................................................72
   Section 12.12.     Counterpart Originals......................................................................72
   Section 12.13.     Table of Contents, Headings, etc...........................................................72
</TABLE>

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<TABLE>
<CAPTION>
                                    EXHIBITS
<S>               <C>
Exhibit A         FORM OF NOTE
Exhibit B         FORM OF CERTIFICATE OF TRANSFER
Exhibit C         FORM OF CERTIFICATE OF EXCHANGE
Exhibit D         FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
</TABLE>

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<PAGE>   7

         INDENTURE dated as of June 29, 2001 between American Greetings
Corporation, an Ohio corporation (the "Company"), and the Huntington National
Bank, as trustee (the "Trustee").

         The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the Company's
11.75% Senior Subordinated Notes due 2008 (the "Notes"). Interest on the Notes
will accrue at the rate of 11.75% per annum; provided that if Adjusted
Consolidated Cash Flow, as shown on any financial statement furnished to the
Holders of Notes pursuant the Section 4.03 (or any amendment or restatement
thereof) for any four full consecutive fiscal quarters ending on or prior May
31, 2003, is less than $225 million, interest on the Notes will begin to accrue
(on and after such date) at a rate of 12.75% per annum (the "Increased Rate")
and will continue to accrue at the Increased Rate until the maturity of the
Notes.

                                   ARTICLE 1.
                          DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

Section 1.01.     Definitions.

         "144A Global Note" means a global note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.

         "Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, in
connection with, or in contemplation of, such other Person merging with or into,
or becoming a Subsidiary of, such specified Person; and (ii) Indebtedness
secured by a Lien encumbering any asset acquired by such specified Person.

         "Adjusted Consolidated Cash Flow" means, with respect to any specified
Person for any period, the Consolidated Net Income of such Person for such
period plus: (i) an amount equal to any extraordinary loss plus any net loss
realized by such Person or any of its Restricted Subsidiaries in connection with
an Asset Sale, to the extent such losses were deducted in computing such
Consolidates Net income; plus (ii) provision for taxes based on income or
profits of such Person and its Restricted Subsidiaries for such period, to the
extent such provision for taxes was deducted in computing such Consolidated Net
Income; plus (iii) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net of the effect of all payments made or received
pursuant to Hedging Obligations), to the extent that any such expense was
deducted in computing such Consolidated Net Income; plus (iv) non-recurring and
special charges deducted in computing Consolidated Net Income; plus (v)
depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Restricted Subsidiaries for such
period to the extent that such depreciation, amortization and other non-cash
expenses were deducted in computing such Consolidated Net Income; minus (vi)
non-cash items increasing such Consolidated Net

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Income for such period, other than the accrual of revenue in the ordinary course
of business, in each case, on a consolidated basis and determined in accordance
with GAAP.

         "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided, that beneficial ownership of 10% or more of
the Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" have correlative meanings. No person (other than the Company or any
Subsidiary of the Company) in whom a Receivables Subsidiary makes an Investment
in connection with a Qualified Receivables Transaction shall be deemed to be an
Affiliate of the Company or any of its Subsidiaries solely by reason of such
Investment.

         "Agent" means any Registrar, Paying Agent or co-registrar.

         "Applicable Procedures" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Note, the rules and procedures of
the Depositary, Euroclear and Clearstream that apply to such transfer or
exchange.

         "Asset Sale" means:

         (i)      the sale, lease, conveyance or other disposition of any assets
                  or rights, other than sales of inventory in the ordinary
                  course of business consistent with past practices; provided
                  that the sale, conveyance or other disposition of all or
                  substantially all of the assets of the Company and its
                  Subsidiaries taken as a whole shall be governed by the
                  provisions of this Indenture described in Section 4.15 hereof
                  and/or the provisions described in Section 5.01 hereof and not
                  by the provisions of Section 4.10 hereof; and

         (ii)     the issuance of Equity Interests in any of the Company's
                  Restricted Subsidiaries or the sale of Equity Interests in any
                  of its Subsidiaries.

         Notwithstanding the preceding, the following items shall not be deemed
to be Asset Sales:

         (i)      any single transaction or series of related transactions that
                  involves assets having a fair market value of less than $1.0
                  million;

         (ii)     a transfer of assets between or among the Company and its
                  Restricted Subsidiaries;

         (iii)    an issuance of Equity Interests by a Subsidiary to the Company
                  or to a Restricted Subsidiary;

         (iv)     the sale or lease of equipment, inventory, accounts receivable
                  or other assets in the ordinary course of business;

         (v)      the sale or other disposition of cash or Cash Equivalents;

         (vi)     the sale or other disposition of all or substantially all of
                  the assets comprising the party goods and candles businesses
                  of the Company (as such businesses are described in this
                  offering circular) or the stock of any subsidiary
                  substantially all of the assets of which are

                                       2
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                  the assets comprising the party goods and candles businesses
                  of the Company; provided that the requirements set forth under
                  Section 4.10 hereof shall have been satisfied and any cash
                  proceeds received upon any such sale or disposition shall be
                  applied in accordance with Section 4.10 hereof;

         (vii)    sales of accounts receivable and related assets of the type
                  specified in the definition of Qualified Receivables
                  Transaction to a Receivables Subsidiary for the fair market
                  value thereof, including cash in an amount at least equal to
                  75% of the book value thereof as determined in accordance with
                  GAAP, it being understood that, for the purposes of this
                  clause (vii), notes received in exchange for the transfer of
                  accounts receivable and related assets shall be deemed cash if
                  the Receivables Subsidiary or other payor is required to repay
                  said notes as soon as practicable from available cash
                  collections less amounts required to be established as
                  reserves pursuant to contractual agreements with entities that
                  are not Affiliates of the Company entered into as part of a
                  Qualified Receivables Transaction;

         (viii)   transfers of accounts receivable and related assets of the
                  type specified in the definition of Qualified Receivables
                  Transaction (or a fractional undivided interest therein) by a
                  Receivables Subsidiary in a Qualified Receivables Transaction;
                  and

         (ix)     a Restricted Payment or Permitted Investment that is permitted
                  by Section 4.07 hereof.

         "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state 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 that 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 by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"beneficially owns" and "beneficially owned" have a corresponding meaning.

         "Board of Directors" means (i) with respect to a corporation, the board
of directors of the corporation, (ii) with respect to a partnership, the board
of directors of the general partner of the partnership, and (iii) with respect
to any other Person, the board or committee of such Person serving a similar
function.

         "Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.

         "Business Day" means any day other than a Legal Holiday.

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

         "Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or

                                       3
<PAGE>   10

participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.

         "Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality of the United States government
(provided that the full faith and credit of the United States is pledged in
support of those securities) having maturities of not more than six months from
the date of acquisition, (iii) certificates of deposit and eurodollar time
deposits with maturities of six months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months and overnight bank
deposits, in each case, with any domestic commercial bank having capital and
surplus in excess of $500,000,000 and a Thompson Bank Watch Rating of "B" or
better, (iv) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (ii) and (iii) above
entered into with any financial institution meeting the qualifications specified
in clause (iii) above, (v) commercial paper having the highest rating obtainable
from either Moody's Investors Service, Inc. or Standard & Poor's Corporation
and, in each case, maturing within six months after the date of acquisition and
(vi) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (i) through (v) of this
definition.

         "Clearstream" means Clearstream Banking Corporation.

         "Change of Control" means the occurrence of any of the following:

         (i)      the direct or indirect sale, transfer, conveyance or other
                  disposition (other than by way of merger or consolidation), in
                  one or a series of related transactions, of all or
                  substantially all of the properties or assets of the Company
                  and its Restricted Subsidiaries taken as a whole to any
                  "person" (as that term is used in Section 13(d)(3) of the
                  Exchange Act) other than a Principal or a Related Party of a
                  Principal;

         (ii)     the adoption of a plan relating to the liquidation or
                  dissolution of the Company;

         (iii)    the consummation of any transaction (including, without
                  limitation, any merger or consolidation) the result of which
                  is that any "person" (as defined above), other than the
                  Principals and their Related Parties, becomes the Beneficial
                  Owner, directly or indirectly, of more than 50% of the Voting
                  Stock of the Company, measured by voting power rather than
                  number of shares; or

         (iv)     the first day on which a majority of the members of the Board
                  of Directors of the Company are not Continuing Directors.

         "Company" means American Greetings Corporation, and any and all
successors thereto.

         "Consolidated Cash Flow" means, with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period plus:

         (i)      an amount equal to any extraordinary loss plus any net loss
                  realized by such Person or any of its Restricted Subsidiaries
                  in connection with an Asset Sale, to the extent such losses
                  were deducted in computing such Consolidated Net Income; plus

         (ii)     provision for taxes based on income or profits of such Person
                  and its Restricted Subsidiaries for such period, to the extent
                  that such provision for taxes was deducted in computing such
                  Consolidated Net Income; plus

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         (iii)    consolidated interest expense of such Person and its
                  Restricted Subsidiaries for such period, whether paid or
                  accrued and whether or not capitalized (including, without
                  limitation, amortization of debt issuance costs and original
                  issue discount, non-cash interest payments, the interest
                  component of any deferred payment obligations, the interest
                  component of all payments associated with Capital Lease
                  Obligations, commissions, discounts and other fees and charges
                  incurred in respect of letter of credit or bankers' acceptance
                  financing, and net of the effect of all payments made or
                  received pursuant to Hedging Obligations), to the extent that
                  any such expense was deducted in computing such Consolidated
                  Net Income; plus

         (iv)     depreciation, amortization (including amortization of goodwill
                  and other intangibles but excluding amortization of prepaid
                  cash expenses that were paid in a prior period) and other
                  non-cash expenses (excluding any such non-cash expense to the
                  extent that it represents an accrual of or reserve for cash
                  expenses in any future period or amortization of a prepaid
                  cash expense that was paid in a prior period) of such Person
                  and its Restricted Subsidiaries for such period to the extent
                  that such depreciation, amortization and other non-cash
                  expenses were deducted in computing such Consolidated Net
                  Income; minus

         (v)      non-cash items increasing such Consolidated Net Income for
                  such period, other than the accrual of revenue in the ordinary
                  course of business,

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

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

         (i)      the Net Income (but not loss) of any Person that is not a
                  Subsidiary or that is accounted for by the equity method of
                  accounting shall be included only to the extent of the amount
                  of dividends or distributions paid in cash to the specified
                  Person or a Wholly Owned Subsidiary of the Person;

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

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

         (iv)     the aggregate amount of restructuring charges, write-downs and
                  reserves taken by the Company in connection with the
                  restructuring of its operations as described in the Offering
                  Circular under the caption "Management's Discussion and
                  Analysis of Financial Condition and Results of Operations
                  --Restructuring Activities and Special Charges" but without
                  regard to the expected timing of such restructuring charges,
                  write-downs and reserves shall be added back; provided that
                  the aggregate amount added to Consolidated Net Income pursuant
                  to this clause (iv) shall not exceed $350.6 million, which
                  shall include up to $32.6 million related to the write-down of
                  the Company's investment in

                                       5
<PAGE>   12

                  Egreetings Network, Inc., and pre-tax charges of up to $18.0
                  million related to changes in contractual relationships with
                  strategic partners of americangreetings.com, up to $90.0
                  million related to the implementation of scan-based trading at
                  select retailers, and up to $210.0 million related to
                  corporate restructuring;

         (v)      the cumulative effect of a change in accounting principles
                  shall be excluded; and

         (vi)     the Net Income (but not loss) of any Unrestricted Subsidiary
                  shall be excluded (except to the extent distributed to the
                  Company or one of its Restricted Subsidiaries).

         "Consolidated Net Worth" means, with respect to any specified Person as
of any date, the sum of:

         (i)      the consolidated equity of the common stockholders of such
                  Person and its consolidated Subsidiaries as of such date; plus

         (ii)     the respective amounts reported on such Person's balance sheet
                  as of such date with respect to any series of preferred stock
                  (other than Disqualified Stock) that by its terms is not
                  entitled to the payment of dividends unless such dividends may
                  be declared and paid only out of net earnings in respect of
                  the year of such declaration and payment, but only to the
                  extent of any cash received by such Person upon issuance of
                  such preferred stock.

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

         "Convertible Subordinated Notes" means $150 million in aggregate
principal amount of the Company's 7.00% Convertible Subordinated Notes due July
15, 2006 issued concurrently with the Notes.

         "Corporate Trust Office of the Trustee" shall be at the address of the
Trustee (which at the date of this Indenture is located at Huntington Center, 41
South High Street, Columbus, Ohio 43287, Attention: Corporate Trust Department).

         "Credit Facilities" means one or more debt facilities (including,
without limitation, the New Credit Facilities) or commercial paper facilities,
in each case with banks or other institutional lenders providing for revolving
credit loans, term loans, receivables financing (including through the sale of
receivables to such lenders or to special purpose entities formed to borrow from
such lenders against such receivables) or letters of credit, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time.

         "Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.

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

         "Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof,
substantially in the form of Exhibit A hereto except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.

                                       6
<PAGE>   13

         "Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.

         "Designated Senior Debt" means:

         (i)      any Indebtedness outstanding under the Existing Credit
                  Facility and any Credit Facility used to refinance or replace
                  at least $25.0 million of debt outstanding under the Existing
                  Credit Facility; and

         (ii)     after payment in full of all Obligations under the Existing
                  Credit Facility and any Credit Facility used to refinance or
                  replace at least $25.0 million of debt outstanding under the
                  Existing Credit Facility, any other Senior Debt permitted
                  under the indenture the principal amount of which is $25.0
                  million or more and that has been designated by the Company as
                  "Designated Senior Debt."

         "Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Capital Stock), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder of the Capital Stock, in whole or in part, on or prior to the date that
is 91 days after the date on which the notes mature. Notwithstanding the
preceding sentence, any Capital Stock that would constitute Disqualified Stock
solely because the holders of the Capital Stock have the right to require the
Company to repurchase such Capital Stock upon the occurrence of a change of
control or an asset sale will not constitute Disqualified Stock if the terms of
such Capital Stock provide that the Company may not repurchase or redeem any
such Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with Section 4.07 hereof.

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

         "Equity Offering" means any offering of common stock of the Company.

         "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.

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

         "Exchange Notes" means the Notes issued in the Exchange Offer pursuant
to Section 2.06(f) hereof.

         "Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.

         "Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.

         "Existing Credit Facility" means the Second Amended and Restated Credit
Agreement as described in the offering circular.

                                       7
<PAGE>   14

         "Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under Credit Facilities) in existence on
the date of this Indenture, until such amounts are repaid.

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

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

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

         (iii)    any interest expense on Indebtedness of another Person that is
                  Guaranteed by such Person or one of its Restricted
                  Subsidiaries or secured by a Lien on assets of such Person or
                  one of its Restricted Subsidiaries, whether or not such
                  Guarantee or Lien is called upon; plus

         (iv)     the product of (a) all dividends, whether paid or accrued and
                  whether or not in cash, on any series of preferred stock of
                  such Person or any of its Restricted Subsidiaries, other than
                  dividends on Equity Interests payable solely in Equity
                  Interests of the Company (other than Disqualified Stock) or to
                  the Company or a Restricted Subsidiary of the Company, times
                  (b) a fraction, the numerator of which is one and the
                  denominator of which is one minus the then current combined
                  federal, state and local statutory tax rate of such Person,
                  expressed as a decimal, in each case, on a consolidated basis
                  and in accordance with GAAP.

         "Fixed Charge Coverage Ratio" means with respect to any specified
Person and its Restricted Subsidiaries for any period, the ratio of the
Consolidated Cash Flow of such Person for such period to the Fixed Charges of
such Person for such period. In the event that the specified Person or any of
its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases or
redeems any Indebtedness (other than ordinary working capital borrowings) or
issues, repurchases or redeems preferred stock subsequent to the commencement of
the period for which the Fixed Charge Coverage Ratio is being calculated and on
or prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio will be calculated giving pro forma effect to such incurrence,
assumption, Guarantee, repayment, repurchase or redemption of Indebtedness, or
such issuance, repurchase or redemption of preferred stock, and the use of the
proceeds therefrom as if the same had occurred at the beginning of the
applicable four-quarter reference period.

         In addition, for purposes of calculating the Fixed Charge Coverage
Ratio:

         (i)      acquisitions that have been made by the specified Person or
                  any of its Restricted Subsidiaries, including through mergers
                  or consolidations and including any related financing
                  transactions, during the four-quarter reference period or
                  subsequent to such reference period and on or prior to the
                  Calculation Date will be given pro forma effect as if they had
                  occurred on the first day of the four-quarter reference period
                  and Consolidated

                                       8
<PAGE>   15

                  Cash Flow for such reference period will be calculated on a
                  pro forma basis in accordance with Regulation S-X under the
                  Securities Act, but without giving effect to clause (3) of the
                  proviso set forth in the definition of Consolidated Net
                  Income;

         (ii)     the Consolidated Cash Flow attributable to discontinued
                  operations, as determined in accordance with GAAP, and
                  operations or businesses disposed of prior to the Calculation
                  Date, will be excluded; and

         (iii)    the Fixed Charges attributable to discontinued operations, as
                  determined in accordance with GAAP, and operations or
                  businesses disposed of prior to the Calculation Date, will be
                  excluded, but only to the extent that the obligations giving
                  rise to such Fixed Charges will not be obligations of the
                  specified Person or any of its Subsidiaries following the
                  Calculation Date.

         "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Indenture.

         "Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in the
form of Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.

         "Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.

         "Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.

         "Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.

         "Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.

         "Holder" means a Person in whose name a Note is registered.

         "Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:

         (i)      in respect of borrowed money;

         (ii)     evidenced by bonds, notes, debentures or similar instruments
                  or letters of credit (or reimbursement agreements in respect
                  thereof);

         (iii)    in respect of banker's acceptances;

                                       9
<PAGE>   16

         (iv)     representing Capital Lease Obligations;

         (v)      representing the balance deferred and unpaid of the purchase
                  price of any property, except any such balance that
                  constitutes an accrued expense or trade payable; or

         (vi)     representing any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any indebtedness of any other Person.

         The amount of any Indebtedness outstanding as of any date shall be:

         (i)      the accreted value of the Indebtedness, in the case of any
                  Indebtedness issued with original issue discount; and

         (ii)     the principal amount of the Indebtedness, together with any
                  interest on the Indebtedness that is more than 30 days past
                  due, in the case of any other Indebtedness.

         "Indenture" means this Indenture, as amended or supplemented from time
to time.

         "Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.

         "Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of the Company such that, after
giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of in an
amount determined as provided in Section 4.07 hereof. The acquisition by the
Company or any Subsidiary of the Company of a Person that holds an Investment in
a third Person shall be deemed to be an Investment by the Company or such
Subsidiary in such third Person in an amount equal to the fair market value of
the Investment held by the acquired Person in such third Person in an amount
determined as provided in Section 4.07 hereof.

         "Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.

         "Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.

                                       10
<PAGE>   17

         "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and, except in connection with any Qualified Receivables
Transaction, any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

         "Net Income" means, with respect to any specified Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any Asset Sale, or (b) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries,
and (ii) any extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss).

         "Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result of the Asset Sale, taxes paid or
payable as a result of the Asset Sale, in each case, after taking into account
any available tax credits or deductions and any tax sharing arrangements, and
amounts required to be applied to the repayment of Indebtedness, other than
Indebtedness under a Credit Facility, secured by a Lien on the asset or assets
that were the subject of such Asset Sale and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP.

         "Non-Recourse Debt" means Indebtedness:

         (i)      as to which neither the Company nor any of its Restricted
                  Subsidiaries (a) provides credit support of any kind
                  (including any undertaking, agreement or instrument that would
                  constitute Indebtedness), (b) is directly or indirectly liable
                  as a guarantor or otherwise, or (c) constitutes the lender;

         (ii)     no default with respect to which (including any rights that
                  the holders of the Indebtedness may have to take enforcement
                  action against an Unrestricted Subsidiary) would permit upon
                  notice, lapse of time or both any holder of any other
                  Indebtedness of the Company or any of its Restricted
                  Subsidiaries to declare a default on such other Indebtedness
                  or cause the payment of the Indebtedness to be accelerated or
                  payable prior to its stated maturity; and

         (iii)    as to which the lenders have been notified in writing that
                  they will not have any recourse to the stock or assets of the
                  Company or any of its Restricted Subsidiaries.

         "Non-U.S. Person" means a Person who is not a U.S. Person.

         "Notes" has the meaning assigned to it in the preamble to this
Indenture.

         "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

         "Offering" means the offering of the Notes by the Company.

                                       11
<PAGE>   18

         "Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.

         "Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 12.05 hereof.

         "Offering Circular" means the offering circular relating to the sale of
the Notes by the Company, dated June 21, 2001.

         "Old Notes" means $300.0 million in outstanding principal amount of the
Company's 6.10% Senior Notes due 2028.

         "Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.

         "Participant" means, with respect to the Depositary, Euroclear or
Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively (and, with respect to DTC, shall include Euroclear and
Clearstream).

         "Permitted Business" means any business that derives a majority of its
revenues from the business engaged in by the Company and its Restricted
Subsidiaries on the date of original issuance of the notes and/or activities
that are reasonably similar, ancillary or related to, or a reasonable extension,
development or expansion of, the businesses in which the Company and its
Restricted Subsidiaries are engaged on the date of original issuance of the
notes.

         "Permitted Investments" means:

         (i)      any Investment in the Company or in a Restricted Subsidiary of
                  the Company;

         (ii)     any Investment in Cash Equivalents;

         (iii)    any Investment by the Company or any Restricted Subsidiary of
                  the Company in a Person, if as a result of such Investment:

                  (a)      such Person becomes a Restricted Subsidiary of the
                           Company; or

                  (b)      such Person is merged, consolidated or amalgamated
                           with or into, or transfers or conveys substantially
                           all of its assets to, or is liquidated into, the
                           Company or a Restricted Subsidiary of the Company;

         (iv)     any Investment made as a result of the receipt of non-cash
                  consideration from an Asset Sale that was made pursuant to and
                  in compliance with Section 4.10 hereof.

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

                                       12
<PAGE>   19

         (vi)     any Investments received in compromise of obligations of such
                  persons incurred in the ordinary course of trade creditors or
                  customers that were incurred in the ordinary course of
                  business, including pursuant to any plan of reorganization or
                  similar arrangement upon the bankruptcy or insolvency of any
                  trade creditor or customer;

         (vii)    Hedging Obligations;

         (viii)   the acquisition by a Receivables Subsidiary in connection with
                  a Qualified Receivables Transaction of Equity Interests of a
                  trust or other Person established by such Receivables
                  Subsidiary to effect such Qualified Receivables Transaction;
                  and any other Investment by the Company or a Subsidiary of the
                  Company in a Receivables Subsidiary or any Investment by a
                  Receivables Subsidiary in any other Person in connection with
                  a Qualified Receivables Transaction; provided, that such other
                  Investment is in the form of a note or other instrument that
                  the Receivables Subsidiary or other Person is required to
                  repay as soon as practicable from available cash collections
                  less amounts required to be established as reserves pursuant
                  to contractual agreements with entities that are not
                  Affiliates of the Company entered into as part of a Qualified
                  Receivables Transaction;

         (ix)     any Investment in a Person substantially all of the assets of
                  which are the party goods and candle businesses currently
                  operated by the Company (as such businesses are described in
                  this offering circular); and

         (x)      other Investments in any Person having an aggregate fair
                  market value (measured on the date each such Investment was
                  made and without giving effect to subsequent changes in
                  value), when taken together with all other Investments made
                  pursuant to this clause (10) that are at the time outstanding
                  not to exceed $15.0 million.

         "Permitted Junior Securities" means (i) Equity Interests in the
Company, or (ii) debt securities that are subordinated to all Senior Debt and
any debt securities issued in exchange for Senior Debt to substantially the same
extent as, or to a greater extent than, the notes are subordinated to Senior
Debt under this Indenture.

         "Permitted Liens" means:

         (i)      Liens of the Company and its Restricted Subsidiaries securing
                  Senior Debt that was permitted by the terms of this Indenture
                  to be incurred;

         (ii)     Liens in favor of the Company;

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

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

                                       13
<PAGE>   20

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

         (vi)     Liens to secure Indebtedness (including Capital Lease
                  Obligations) permitted by Section 4.09 hereof covering only
                  the assets acquired with such Indebtedness;

         (vii)    Liens existing on the date of this Indenture;

         (viii)   Liens for taxes, assessments or governmental charges or claims
                  that are not yet delinquent or that are being contested in
                  good faith by appropriate proceedings promptly instituted and
                  diligently concluded, provided that any reserve or other
                  appropriate provision as is required in conformity with GAAP
                  has been made therefor;

         (ix)     Liens on assets of the Company or a Receivables Subsidiary
                  incurred in connection with a Qualified Receivables
                  Transaction;

         (x)      Liens on assets of Unrestricted Subsidiaries that secure
                  Non-Recourse Debt of Unrestricted Subsidiaries; and

         (xi)     Liens incurred in the ordinary course of business of the
                  Company or any Restricted Subsidiary of the Company with
                  respect to obligations that do not exceed $5.0 million at any
                  one time outstanding.

         "Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that:

         (i)      the principal amount (or accreted value, if applicable) of
                  such Permitted Refinancing Indebtedness does not exceed the
                  principal amount (or accreted value, if applicable) of the
                  Indebtedness extended, refinanced, renewed, replaced, defeased
                  or refunded (plus all accrued interest on the Indebtedness and
                  the amount of all expenses and premiums incurred in connection
                  therewith);

         (ii)     such Permitted Refinancing Indebtedness has a final maturity
                  date later than the final maturity date of, and has a Weighted
                  Average Life to Maturity equal to or greater than the Weighted
                  Average Life to Maturity of, the Indebtedness being extended,
                  refinanced, renewed, replaced, defeased or refunded;

         (iii)    if the Indebtedness being extended, refinanced, renewed,
                  replaced, defeased or refunded is subordinated in right of
                  payment to the notes, such Permitted Refinancing Indebtedness
                  has a final maturity date later than the final maturity date
                  of, and is subordinated in right of payment to, the notes on
                  terms at least as favorable to the Holders of notes as those
                  contained in the documentation governing the Indebtedness
                  being extended, refinanced, renewed, replaced, defeased or
                  refunded; and

         (iv)     such Indebtedness is incurred either by the Company or by the
                  Restricted Subsidiary who is the obligor on the Indebtedness
                  being extended, refinanced, renewed, replaced, defeased or
                  refunded.

                                       14
<PAGE>   21

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

         "Principals" means Morry Weiss, Judith A. Weiss, Harry H. Stone, Gary
Weiss, Jeffrey Weiss, Zev Weiss, Elie Weiss and the Irving I. Stone Limited
Liability Co.

         "Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.

         "QIB" means a "qualified institutional buyer" as defined in Rule 144A.

         "Qualified Receivables Transaction" means any transaction or series of
transactions entered into by the Company or any of its Subsidiaries pursuant to
which the Company or any of its Subsidiaries sells, conveys or otherwise
transfers to (i) a Receivables Subsidiary (in the case of a transfer by the
Company or any of its Subsidiaries) and (ii) any other Person (in the case of a
transfer by a Receivables Subsidiary), or grants a security interest in, any
accounts receivable (whether now existing or arising in the future) of the
Company or any of its Subsidiaries, and any assets related thereto including,
without limitation, all collateral securing such accounts receivable, all
contracts and all guarantees or other obligations in respect of such accounts
receivable, proceeds of such accounts receivable and other assets which are
customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable.

         "Receivables Subsidiary" means a Subsidiary of the Company which
engages in no activities other than in connection with the financing of accounts
receivable and which is designated by the Board of Directors of the Company (as
provided below) as a Receivables Subsidiary (a) no portion of the Indebtedness
or any other Obligations (contingent or otherwise) of which (i) is guaranteed by
the Company or any Subsidiary of the Company (excluding guarantees of
Obligations (other than the principal of, 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), (ii) is recourse to or obligates the Company or any 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 (iii) subjects any
property or asset of the Company or any Subsidiary of the Company (other than
accounts receivable and related assets as provided in the definition of
"Qualified Receivables Transaction"), 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, (b) with which
neither the Company nor any Subsidiary of the Company has any material contract,
agreement, arrangement or understanding other than on terms no less favorable to
the Company or such 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 (c) with which neither the Company nor any Subsidiary of the Company has any
obligation to maintain or preserve such Subsidiary's financial condition or
cause such 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 certified copy of the resolution of the
Board of Directors of the Company giving effect to such designation and an
officers' certificate certifying that such designation complied with the
foregoing conditions.

         "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of June , 2001, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.

                                       15
<PAGE>   22

         "Regulation S" means Regulation S promulgated under the Securities Act.

         "Regulation S Global Note" means a global Note bearing the Private
Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.

         "Related Party" means (i) any controlling stockholder, 80% (or more)
owned Subsidiary, or immediate family member (in the case of an individual) of
any Principal, or (ii) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of any one or more Principals
and/or such other Persons referred to in the immediately preceding clause (i).

         "Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.

         "Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.

         "Restricted Global Note" means a Global Note bearing the Private
Placement Legend.

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

         "Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.

         "Rule 144" means Rule 144 promulgated under the Securities Act.

         "Rule 144A" means Rule 144A promulgated under the Securities Act.

         "Rule 903" means Rule 903 promulgated under the Securities Act.

         "Rule 904" means Rule 904 promulgated the Securities Act.

         "SEC" means the Securities and Exchange Commission.

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

         "Senior Debt" means:

         (i)      all Indebtedness of the Company outstanding under Credit
                  Facilities and all Hedging Obligations with respect thereto;

         (ii)     any other Indebtedness of the Company permitted to be incurred
                  under the terms of the indenture, unless the instrument under
                  which such Indebtedness is incurred expressly provides that it
                  is on a parity with or subordinated in right of payment to the
                  notes; and

         (iii)    all Obligations with respect to the items listed in the
                  preceding clauses (i) and (ii).

                                       16
<PAGE>   23

         Notwithstanding anything to the contrary in the preceding, Senior Debt
shall not include:

         (i)      any liability for federal, state, local or other taxes owed or
                  owing by the Company;

         (ii)     any intercompany Indebtedness of the Company or any of its
                  Subsidiaries to the Company or any of its Affiliates;

         (iii)    any trade payables; or

         (iv)     the portion of any Indebtedness that is incurred in violation
                  of this Indenture.

         "Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.

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

         "Special Interest" means all special interest then owing pursuant to
Section 2(c) of the Registration Rights Agreement.

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

         "Subsidiary" means, with respect to any specified Person:

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

         (ii)     any partnership (a) the sole general partner or the managing
                  general partner of which is such Person or a Subsidiary of
                  such Person or (b) the only general partners of which are that
                  Person or one or more Subsidiaries of that Person (or any
                  combination thereof).

         "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.

         "Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.

         "Unrestricted Global Note" means a permanent global Note substantially
in the form of Exhibit A attached hereto that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.

                                       17
<PAGE>   24

         "Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.

         "Unrestricted Subsidiary" means any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
board resolution, but only to the extent that such Subsidiary:

         (i)      has no Indebtedness other than Non-Recourse Debt;

         (ii)     is not party to any agreement, contract, arrangement or
                  understanding with the Company or any Restricted Subsidiary of
                  the Company unless the terms of any such agreement, contract,
                  arrangement or understanding are 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;

         (iii)    is a Person with respect to which neither the Company nor any
                  of its Restricted Subsidiaries has any direct or indirect
                  obligation (a) to subscribe for additional Equity Interests or
                  (b) to maintain or preserve such Person's financial condition
                  or to cause such Person to achieve any specified levels of
                  operating results;

         (iv)     has not guaranteed or otherwise directly or indirectly
                  provided credit support for any Indebtedness of the Company or
                  any of its Restricted Subsidiaries; and

         (v)      has at least one director on its Board of Directors that is
                  not a director or executive officer of the Company or any of
                  its Restricted Subsidiaries and has at least one executive
                  officer that is not a director or executive officer of the
                  Company or any of its Restricted Subsidiaries.

         Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be evidenced to the trustee by filing with the trustee a
certified copy of the board resolution giving effect to such designation and an
officers' certificate certifying that such designation complied with the
preceding conditions and was permitted by Section 4.07 hereof. If, at any time,
any Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof, the Company shall be in
default of such covenant. The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (1) such
Indebtedness is permitted under Section 4.09 hereof calculated on a pro forma
basis as if such designation had occurred at the beginning of the four-quarter
reference period and (2) no Default or Event of Default would be in existence
following such designation.

         "U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.

         "Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.

         "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (x) the amount

                                       18
<PAGE>   25

of each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in respect
of the Indebtedness, by (y) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such payment,
by (b) the then outstanding principal amount of such Indebtedness.

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

Section 1.02.     Other Definitions.

<TABLE>
<CAPTION>
                                                                                                Defined in
        Term                                                                                      Section
        ----                                                                                      -------
<S>                                                                                                <C>
        "Affiliate Transaction".............................................................       4.11
        "Asset Sale"........................................................................       4.10
        "Asset Sale Offer"..................................................................       3.09
        "Authentication Order"..............................................................       2.02
        "Bankruptcy Law"....................................................................       4.01
        "Change of Control Offer"...........................................................       4.15
        "Change of Control Payment".........................................................       4.15
        "Change of Control Payment Date"....................................................       4.15
        "Covenant Defeasance"...............................................................       8.03
        "Event of Default"..................................................................       6.01
        "Excess Proceeds"...................................................................       4.10
        "incur".............................................................................       4.09
        "Legal Defeasance"..................................................................       8.02
        "Moody's"...........................................................................       4.19
        "Offer Amount"......................................................................       3.09
        "Offer Period"......................................................................       3.09
        "Paying Agent"......................................................................       2.03
        "Permitted Debt"....................................................................       4.09
        "Purchase Date".....................................................................       3.09
        "Ratings Events Date"...............................................................       4.19
        "Registrar".........................................................................       2.03
        "Restricted Payments"..............................................................        4.07
        "S&P"...............................................................................       4.19
</TABLE>

Section 1.03 Incorporation by Reference of Trust Indenture Act.

         Whenever this Indenture refers to a provision of the TIA, the 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 Notes;

         "indenture security Holder" means a Holder of a Note;

         "indenture to be qualified" means this Indenture;

                                       19
<PAGE>   26

         "indenture trustee" or "institutional trustee" means the Trustee; and

         "obligor" on the Notes means the Company and any successor obligor upon
the Notes.

         All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.

Section 1.04.     Rules of Construction.

         Unless the context otherwise requires:

         (a) a term has the meaning assigned to it;

         (b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;

         (c) "or" is not exclusive;

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

         (e) provisions apply to successive events and transactions; and

         (f) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.

                                   ARTICLE 2.
                                    THE NOTES

Section 2.01.     Form and Dating.

         (a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.

         The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.

         (b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibit A attached hereto (including the Global Note Legend thereon
and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes

                                       20
<PAGE>   27

represented thereby shall be made by the Trustee or the Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.06 hereof.

         (c) Euroclear and Clearstream Procedures Applicable. The provisions of
the "Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Clearstream
Banking" and "Customer Handbook" of Clearstream shall be applicable to transfers
of beneficial interests in the Regulation S Global Notes that are held by
Participants through Euroclear or Clearstream.

Section 2.02.     Execution and Authentication.

         One Officer shall sign the Notes for the Company by manual or facsimile
signature.

         If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.

         A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.

         The Trustee shall, upon a written order of the Company signed by an
Officer (an "Authentication Order"), authenticate Notes for original issue up to
the aggregate principal amount stated in paragraph 4 of the Notes. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.07 hereof.

         The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.

Section 2.03.     Registrar and Paying Agent.

         The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.

         The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.

         The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.

                                       21
<PAGE>   28

Section 2.04.     Paying Agent to Hold Money in Trust.

         The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Special Interest, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.

Section 2.05.     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
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days 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 the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).

Section 2.06.     Transfer and Exchange.

         (a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee. Upon the occurrence of either of
the preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names as the Depositary shall instruct the Trustee. Global Notes also may
be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b), (c) or (f) hereof.

         (b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:

                                       22
<PAGE>   29

         (i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to Persons
who take delivery thereof in the form of a beneficial interest in the same
Restricted Global Note in accordance with the transfer restrictions set forth in
the Private Placement Legend; provided, however, that prior to the expiration of
the Restricted Period, transfers of beneficial interests in the Regulation S
Global Note may not be made to a U.S. Person or for the account or benefit of a
U.S. Person (other than an Initial Purchaser). Beneficial interests in any
Unrestricted Global Note may be transferred to Persons who take delivery thereof
in the form of a beneficial interest in an Unrestricted Global Note. No written
orders or instructions shall be required to be delivered to the Registrar to
effect the transfers described in this Section 2.06(b)(i).

         (ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor of
such beneficial interest must deliver to the Registrar either (A) (1) a written
order from a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to credit or
cause to be credited a beneficial interest in another Global Note in an amount
equal to the beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures containing
information regarding the Participant account to be credited with such increase
or (B) (1) a written order from a Participant or an Indirect Participant given
to the Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions given by
the Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer or
exchange referred to in (1) above. Upon consummation of an Exchange Offer by the
Company in accordance with Section 2.06(f) hereof, the requirements of this
Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the
Registrar of the instructions contained in the Letter of Transmittal delivered
by the Holder of such beneficial interests in the Restricted Global Notes. Upon
satisfaction of all of the requirements for transfer or exchange of beneficial
interests in Global Notes contained in this Indenture and the Notes or otherwise
applicable under the Securities Act, the Trustee shall adjust the principal
amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof.

         (iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be transferred to
a Person who takes delivery thereof in the form of a beneficial interest in
another Restricted Global Note if the transfer complies with the requirements of
Section 2.06(b)(ii) above and the Registrar receives the following:

                  (A) if the transferee will take delivery in the form of a
         beneficial interest in the 144A Global Note, then the transferor must
         deliver a certificate in the form of Exhibit B hereto, including the
         certifications in item (1) thereof;

                  (B) if the transferee will take delivery in the form of a
         beneficial interest in the Regulation S Global Note, then the
         transferor must deliver a certificate in the form of Exhibit B hereto,
         including the certifications in item (2) thereof; and

         (iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any holder
thereof for a beneficial interest in an Unrestricted Global Note or transferred
to a Person who takes delivery thereof in the form of a beneficial

                                       23
<PAGE>   30

interest in an Unrestricted Global Note if the exchange or transfer complies
with the requirements of Section 2.06(b)(ii) above and:

                  (A) such exchange or transfer is effected pursuant to the
         Exchange Offer in accordance with the Registration Rights Agreement and
         the holder of the beneficial interest to be transferred, in the case of
         an exchange, or the transferee, in the case of a transfer, certifies in
         the applicable Letter of Transmittal that it is not (1) a
         broker-dealer, (2) a Person participating in the distribution of the
         Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
         144) of the Company;

                  (B) such transfer is effected pursuant to the Shelf
         Registration Statement in accordance with the Registration Rights
         Agreement;

                  (C) such transfer is effected by a Broker-Dealer pursuant to
         the Exchange Offer Registration Statement in accordance with the
         Registration Rights Agreement; or

                  (D) the Registrar receives the following:

                           (1) if the holder of such beneficial interest in a
                  Restricted Global Note proposes to exchange such beneficial
                  interest for a beneficial interest in an Unrestricted Global
                  Note, a certificate from such holder in the form of Exhibit C
                  hereto, including the certifications in item (1)(a) thereof;
                  or

                           (2) if the holder of such beneficial interest in a
                  Restricted Global Note proposes to transfer such beneficial
                  interest to a Person who shall take delivery thereof in the
                  form of a beneficial interest in an Unrestricted Global Note,
                  a certificate from such holder in the form of Exhibit B
                  hereto, including the certifications in item (4) thereof;

         and, in each such case set forth in this subparagraph (D), if the
         Registrar so requests or if the Applicable Procedures so require, an
         Opinion of Counsel in form reasonably acceptable to the Registrar to
         the effect that such exchange or transfer is in compliance with the
         Securities Act and that the restrictions on transfer contained herein
         and in the Private Placement Legend are no longer required in order to
         maintain compliance with the Securities Act.

         If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.

         Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.

         (c) Transfer or Exchange of Beneficial Interests for Definitive Notes.

                  (i) Beneficial Interests in Restricted Global Notes to
         Restricted Definitive Notes. If any holder of a beneficial interest in
         a Restricted Global Note proposes to exchange such beneficial interest
         for a Restricted Definitive Note or to transfer such beneficial
         interest to a

                                       24
<PAGE>   31

         Person who takes delivery thereof in the form of a Restricted
         Definitive Note, then, upon receipt by the Registrar of the following
         documentation:

                           (A) if the holder of such beneficial interest in a
                  Restricted Global Note proposes to exchange such beneficial
                  interest for a Restricted Definitive Note, a certificate from
                  such holder in the form of Exhibit C hereto, including the
                  certifications in item (2)(a) thereof;

                           (B) if such beneficial interest is being transferred
                  to a QIB in accordance with Rule 144A under the Securities
                  Act, a certificate to the effect set forth in Exhibit B
                  hereto, including the certifications in item (1) thereof;

                           (C) if such beneficial interest is being transferred
                  to a Non-U.S. Person in an offshore transaction in accordance
                  with Rule 903 or Rule 904 under the Securities Act, a
                  certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (2) thereof;

                           (D) if such beneficial interest is being transferred
                  pursuant to an exemption from the registration requirements of
                  the Securities Act in accordance with Rule 144 under the
                  Securities Act, a certificate to the effect set forth in
                  Exhibit B hereto, including the certifications in item (3)(a)
                  thereof;

                           (E) if such beneficial interest is being transferred
                  to an Institutional Accredited Investor in reliance on an
                  exemption from the registration requirements of the Securities
                  Act other than those listed in subparagraphs (B) through (D)
                  above, a certificate to the effect set forth in Exhibit B
                  hereto, including the certifications, certificates and Opinion
                  of Counsel required by item (3) thereof, if applicable;

                           (F) if such beneficial interest is being transferred
                  to the Company or any of its Subsidiaries, a certificate to
                  the effect set forth in Exhibit B hereto, including the
                  certifications in item (3)(b) thereof; or

                           (G) if such beneficial interest is being transferred
                  pursuant to an effective registration statement under the
                  Securities Act, a certificate to the effect set forth in
                  Exhibit B hereto, including the certifications in item (3)(c)
                  thereof,

         the Trustee shall cause the aggregate principal amount of the
         applicable Global Note to be reduced accordingly pursuant to Section
         2.06(h) hereof, and the Company shall execute and the Trustee shall
         authenticate and deliver to the Person designated in the instructions a
         Definitive Note in the appropriate principal amount. Any Definitive
         Note issued in exchange for a beneficial interest in a Restricted
         Global Note pursuant to this Section 2.06(c) shall be registered in
         such name or names and in such authorized denomination or denominations
         as the holder of such beneficial interest shall instruct the Registrar
         through instructions from the Depositary and the Participant or
         Indirect Participant. The Trustee shall deliver such Definitive Notes
         to the Persons in whose names such Notes are so registered. Any
         Definitive Note issued in exchange for a beneficial interest in a
         Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear
         the Private Placement Legend and shall be subject to all restrictions
         on transfer contained therein.

                  (ii) Beneficial Interests in Restricted Global Notes to
         Unrestricted Definitive Notes. A holder of a beneficial interest in a
         Restricted Global Note may exchange such beneficial

                                       25
<PAGE>   32

         interest for an Unrestricted Definitive Note or may transfer such
         beneficial interest to a Person who takes delivery thereof in the form
         of an Unrestricted Definitive Note only if:

                           (A) such exchange or transfer is effected pursuant to
                  the Exchange Offer in accordance with the Registration Rights
                  Agreement and the holder of such beneficial interest, in the
                  case of an exchange, or the transferee, in the case of a
                  transfer, certifies in the applicable Letter of Transmittal
                  that it is not (1) a broker-dealer, (2) a Person participating
                  in the distribution of the Exchange Notes or (3) a Person who
                  is an affiliate (as defined in Rule 144) of the Company;

                           (B) such transfer is effected pursuant to the Shelf
                  Registration Statement in accordance with the Registration
                  Rights Agreement;

                           (C) such transfer is effected by a Broker-Dealer
                  pursuant to the Exchange Offer Registration Statement in
                  accordance with the Registration Rights Agreement; or

                           (D) the Registrar receives the following:

                                    (1) if the holder of such beneficial
                           interest in a Restricted Global Note proposes to
                           exchange such beneficial interest for a Definitive
                           Note that does not bear the Private Placement Legend,
                           a certificate from such holder in the form of Exhibit
                           C hereto, including the certifications in item (1)(b)
                           thereof; or

                                    (2) if the holder of such beneficial
                           interest in a Restricted Global Note proposes to
                           transfer such beneficial interest to a Person who
                           shall take delivery thereof in the form of a
                           Definitive Note that does not bear the Private
                           Placement Legend, a certificate from such holder in
                           the form of Exhibit B hereto, including the
                           certifications in item (4) thereof;

                  and, in each such case set forth in this subparagraph (D), if
                  the Registrar so requests or if the Applicable Procedures so
                  require, an Opinion of Counsel in form reasonably acceptable
                  to the Registrar to the effect that such exchange or transfer
                  is in compliance with the Securities Act and that the
                  restrictions on transfer contained herein and in the Private
                  Placement Legend are no longer required in order to maintain
                  compliance with the Securities Act.

                  (iii) Beneficial Interests in Unrestricted Global Notes to
         Unrestricted Definitive Notes. If any holder of a beneficial interest
         in an Unrestricted Global Note proposes to exchange such beneficial
         interest for a Definitive Note or to transfer such beneficial interest
         to a Person who takes delivery thereof in the form of a Definitive
         Note, then, upon satisfaction of the conditions set forth in Section
         2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal
         amount of the applicable Global Note to be reduced accordingly pursuant
         to Section 2.06(h) hereof, and the Company shall execute and the
         Trustee shall authenticate and deliver to the Person designated in the
         instructions a Definitive Note in the appropriate principal amount. Any
         Definitive Note issued in exchange for a beneficial interest pursuant
         to this Section 2.06(c)(iii) shall be registered in such name or names
         and in such authorized denomination or denominations as the holder of
         such beneficial interest shall instruct the Registrar through
         instructions from the Depositary and the Participant or Indirect
         Participant. The Trustee shall deliver such Definitive Notes to the
         Persons in whose names such Notes are so registered. Any Definitive
         Note issued in exchange for a beneficial interest pursuant to this
         Section 2.06(c)(iii) shall not bear the Private Placement Legend.

                                       26
<PAGE>   33

         (d) Transfer and Exchange of Definitive Notes for Beneficial Interests.

                  (i) Restricted Definitive Notes to Beneficial Interests in
         Restricted Global Notes. If any Holder of a Restricted Definitive Note
         proposes to exchange such Note for a beneficial interest in a
         Restricted Global Note or to transfer such Restricted Definitive Notes
         to a Person who takes delivery thereof in the form of a beneficial
         interest in a Restricted Global Note, then, upon receipt by the
         Registrar of the following documentation:

                           (A) if the Holder of such Restricted Definitive Note
                  proposes to exchange such Note for a beneficial interest in a
                  Restricted Global Note, a certificate from such Holder in the
                  form of Exhibit C hereto, including the certifications in item
                  (2)(b) thereof;

                           (B) if such Restricted Definitive Note is being
                  transferred to a QIB in accordance with Rule 144A under the
                  Securities Act, a certificate to the effect set forth in
                  Exhibit B hereto, including the certifications in item (1)
                  thereof;

                           (C) if such Restricted Definitive Note is being
                  transferred to a Non-U.S. Person in an offshore transaction in
                  accordance with Rule 903 or Rule 904 under the Securities Act,
                  a certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (2) thereof;

                           (D) if such Restricted Definitive Note is being
                  transferred pursuant to an exemption from the registration
                  requirements of the Securities Act in accordance with Rule 144
                  under the Securities Act, a certificate to the effect set
                  forth in Exhibit B hereto, including the certifications in
                  item (3)(a) thereof;

                           (E) if such Restricted Definitive Note is being
                  transferred to an Institutional Accredited Investor in
                  reliance on an exemption from the registration requirements of
                  the Securities Act other than those listed in subparagraphs
                  (B) through (D) above, a certificate to the effect set forth
                  in Exhibit B hereto, including the certifications,
                  certificates and Opinion of Counsel required by item (3)
                  thereof, if applicable;

                           (F) if such Restricted Definitive Note is being
                  transferred to the Company or any of its Subsidiaries, a
                  certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (3)(b) thereof; or

                           (G) if such Restricted Definitive Note is being
                  transferred pursuant to an effective registration statement
                  under the Securities Act, a certificate to the effect set
                  forth in Exhibit B hereto, including the certifications in
                  item (3)(c) thereof,

         the Trustee shall cancel the Restricted Definitive Note, increase or
         cause to be increased the aggregate principal amount of, in the case of
         clause (A) above, the appropriate Restricted Global Note, in the case
         of clause (C) above, the Regulation S Global Note, and in all other
         cases, the 144A Global Note.

                  (ii) Restricted Definitive Notes to Beneficial Interests in
         Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
         exchange such Note for a beneficial interest in an Unrestricted Global
         Note or transfer such Restricted Definitive Note to a Person who takes
         delivery thereof in the form of a beneficial interest in an
         Unrestricted Global Note only if:

                                       27
<PAGE>   34

                           (A) such exchange or transfer is effected pursuant to
                  the Exchange Offer in accordance with the Registration Rights
                  Agreement and the Holder, in the case of an exchange, or the
                  transferee, in the case of a transfer, certifies in the
                  applicable Letter of Transmittal that it is not (1) a
                  broker-dealer, (2) a Person participating in the distribution
                  of the Exchange Notes or (3) a Person who is an affiliate (as
                  defined in Rule 144) of the Company;

                           (B) such transfer is effected pursuant to the Shelf
                  Registration Statement in accordance with the Registration
                  Rights Agreement;

                           (C) such transfer is effected by a Broker-Dealer
                  pursuant to the Exchange Offer Registration Statement in
                  accordance with the Registration Rights Agreement; or

                           (D) the Registrar receives the following:

                                    (1) if the Holder of such Definitive Notes
                           proposes to exchange such Notes for a beneficial
                           interest in the Unrestricted Global Note, a
                           certificate from such Holder in the form of Exhibit C
                           hereto, including the certifications in item (1)(c)
                           thereof; or

                                    (2) if the Holder of such Definitive Notes
                           proposes to transfer such Notes to a Person who shall
                           take delivery thereof in the form of a beneficial
                           interest in the Unrestricted Global Note, a
                           certificate from such Holder in the form of Exhibit B
                           hereto, including the certifications in item (4)
                           thereof;

                  and, in each such case set forth in this subparagraph (D), if
                  the Registrar so requests or if the Applicable Procedures so
                  require, an Opinion of Counsel in form reasonably acceptable
                  to the Registrar to the effect that such exchange or transfer
                  is in compliance with the Securities Act and that the
                  restrictions on transfer contained herein and in the Private
                  Placement Legend are no longer required in order to maintain
                  compliance with the Securities Act.

                  Upon satisfaction of the conditions of any of the
         subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the
         Definitive Notes and increase or cause to be increased the aggregate
         principal amount of the Unrestricted Global Note.

                  (iii) Unrestricted Definitive Notes to Beneficial Interests in
         Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note
         may exchange such Note for a beneficial interest in an Unrestricted
         Global Note or transfer such Definitive Notes to a Person who takes
         delivery thereof in the form of a beneficial interest in an
         Unrestricted Global Note at any time. Upon receipt of a request for
         such an exchange or transfer, the Trustee shall cancel the applicable
         Unrestricted Definitive Note and increase or cause to be increased the
         aggregate principal amount of one of the Unrestricted Global Notes.

                  If any such exchange or transfer from a Definitive Note to a
         beneficial interest is effected pursuant to subparagraphs (ii)(B),
         (ii)(D) or (iii) above at a time when an Unrestricted Global Note has
         not yet been issued, the Company shall issue and, upon receipt of an
         Authentication Order in accordance with Section 2.02 hereof, the
         Trustee shall authenticate one or more Unrestricted Global Notes in an
         aggregate principal amount equal to the principal amount of Definitive
         Notes so transferred.

                                       28
<PAGE>   35

         (e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).

                  (i) Restricted Definitive Notes to Restricted Definitive
         Notes. Any Restricted Definitive Note may be transferred to and
         registered in the name of Persons who take delivery thereof in the form
         of a Restricted Definitive Note if the Registrar receives the
         following:

                           (A) if the transfer will be made pursuant to Rule
                  144A under the Securities Act, then the transferor must
                  deliver a certificate in the form of Exhibit B hereto,
                  including the certifications in item (1) thereof;

                           (B) if the transfer will be made pursuant to Rule 903
                  or Rule 904, then the transferor must deliver a certificate in
                  the form of Exhibit B hereto, including the certifications in
                  item (2) thereof; and

                           (C) if the transfer will be made pursuant to any
                  other exemption from the registration requirements of the
                  Securities Act, then the transferor must deliver a certificate
                  in the form of Exhibit B hereto, including the certifications,
                  certificates and Opinion of Counsel required by item (3)
                  thereof, if applicable.

                  (ii) Restricted Definitive Notes to Unrestricted Definitive
         Notes. Any Restricted Definitive Note may be exchanged by the Holder
         thereof for an Unrestricted Definitive Note or transferred to a Person
         or Persons who take delivery thereof in the form of an Unrestricted
         Definitive Note if:

                           (A) such exchange or transfer is effected pursuant to
                  the Exchange Offer in accordance with the Registration Rights
                  Agreement and the Holder, in the case of an exchange, or the
                  transferee, in the case of a transfer, certifies in the
                  applicable Letter of Transmittal that it is not (1) a
                  broker-dealer, (2) a Person participating in the distribution
                  of the Exchange Notes or (3) a Person who is an affiliate (as
                  defined in Rule 144) of the Company;

                           (B) any such transfer is effected pursuant to the
                  Shelf Registration Statement in accordance with the
                  Registration Rights Agreement;

                           (C) any such transfer is effected by a Broker-Dealer
                  pursuant to the Exchange Offer Registration Statement in
                  accordance with the Registration Rights Agreement; or

                           (D) the Registrar receives the following:

                                    (1) if the Holder of such Restricted
                           Definitive Notes proposes to exchange such Notes for
                           an Unrestricted Definitive Note, a certificate from
                           such Holder in the form of Exhibit C hereto,
                           including the certifications in item (1)(d) thereof;
                           or

                                       29
<PAGE>   36

                                    (2) if the Holder of such Restricted
                           Definitive Notes proposes to transfer such Notes to a
                           Person who shall take delivery thereof in the form of
                           an Unrestricted Definitive Note, a certificate from
                           such Holder in the form of Exhibit B hereto,
                           including the certifications in item (4) thereof;

                  and, in each such case set forth in this subparagraph (D), if
                  the Registrar so requests, an Opinion of Counsel in form
                  reasonably acceptable to the Company to the effect that such
                  exchange or transfer is in compliance with the Securities Act
                  and that the restrictions on transfer contained herein and in
                  the Private Placement Legend are no longer required in order
                  to maintain compliance with the Securities Act.

                  (iii) Unrestricted Definitive Notes to Unrestricted Definitive
         Notes. A Holder of Unrestricted Definitive Notes may transfer such
         Notes to a Person who takes delivery thereof in the form of an
         Unrestricted Definitive Note. Upon receipt of a request to register
         such a transfer, the Registrar shall register the Unrestricted
         Definitive Notes pursuant to the instructions from the Holder thereof.

         (f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.

         (g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.

                  (i) Private Placement Legend.

                           (A) Except as permitted by subparagraph (B) below,
                  each Global Note and each Definitive Note (and all Notes
                  issued in exchange therefor or substitution thereof) shall
                  bear the legend in substantially the following form:

"THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE
903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (4) TO AN

                                       30
<PAGE>   37

INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES."

                           (B) Notwithstanding the foregoing, any Global Note or
                  Definitive Note issued pursuant to subparagraphs (b)(iv),
                  (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f)
                  to this Section 2.06 (and all Notes issued in exchange
                  therefor or substitution thereof) shall not bear the Private
                  Placement Legend.

                  (ii) Global Note Legend. Each Global Note shall bear a legend
         in substantially the following form:

"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF AMERICAN GREETINGS
CORPORATION."

                  (iii) Original Issue Discount Legend. Each Note shall bear a
         legend in substantially the following form:

"FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT;
FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE PRICE IS $_____,
THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $_____, THE ISSUE DATE IS JUNE 29, 2001
AND THE YIELD TO MATURITY IS 11.75% PER ANNUM."

         (h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.

         (i) General Provisions Relating to Transfers and Exchanges.

                                       31
<PAGE>   38

                  (i) To permit registrations of transfers and exchanges, the
         Company shall execute and the Trustee shall authenticate Global Notes
         and Definitive Notes upon the Company's order or at the Registrar's
         request.

                  (ii) No service charge shall be made to a holder of a
         beneficial interest in a Global Note or to a Holder of a Definitive
         Note for any registration of transfer or exchange, but the Company 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
         exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15
         and 9.05 hereof).

                  (iii) The Registrar shall not be required to register the
         transfer of or exchange any Note selected for redemption in whole or in
         part, except the unredeemed portion of any Note being redeemed in part.

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

                  (v) The Company shall not be required (A) to issue, to
         register the transfer of or to exchange any Notes during a period
         beginning at the opening of business 15 days before the day of any
         selection of Notes for redemption under Section 3.02 hereof and ending
         at the close of business on the day of selection, (B) to register the
         transfer of or to exchange any Note so selected for redemption in whole
         or in part, except the unredeemed portion of any Note being redeemed in
         part or (C) to register the transfer of or to exchange a Note between a
         record date and the next succeeding Interest Payment Date.

                  (vi) Prior to due presentment for the registration of a
         transfer of any Note, the Trustee, any Agent and the Company may deem
         and treat the Person in whose name any Note is registered as the
         absolute owner of such Note for the purpose of receiving payment of
         principal of and interest on such Notes and for all other purposes, and
         none of the Trustee, any Agent or the Company shall be affected by
         notice to the contrary.

                  (vii) The Registrar and the Trustee may require a Holder to
         furnish appropriate endorsements and transfer documents in connection
         with a transfer of Notes.

                  (viii) The Trustee shall authenticate Global Notes and
         Definitive Notes in accordance with the provisions of Section 2.02
         hereof.

                  (ix) All certifications, certificates and Opinions of Counsel
         required to be submitted to the Registrar pursuant to this Section 2.06
         to effect a registration of transfer or exchange may be submitted by
         facsimile.

Section 2.07.     Replacement Notes.

         If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the

                                       32
<PAGE>   39

Trustee, any Agent and any authenticating agent from any loss that any of them
may suffer if a Note is replaced. The Company may charge for its expenses in
replacing a Note.

         Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.

Section 2.08.     Outstanding Notes.

         The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.

         If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.

         If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.

         If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.

Section 2.09.     Treasury Notes.

         In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.

Section 2.10.     Cancellation.

         The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.

Section 2.11.     Defaulted Interest.

         If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest

                                       33
<PAGE>   40

proposed to be paid on each Note and the date of the proposed payment. The
Company shall fix or cause to be fixed each such special record date and payment
date, provided that no such special record date shall be less than 10 days prior
to the related payment date for such defaulted interest. At least 15 days before
the special record date, the Company (or, upon the written request of the
Company, the Trustee in the name and at the expense of the Company) shall mail
or cause to be mailed to Holders a notice that states the special record date,
the related payment date and the amount of such interest to be paid.

                                   ARTICLE 3.
                            REDEMPTION AND PREPAYMENT

Section 3.01.     Notices to Trustee.

         If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.

Section 3.02.     Selection of Notes to Be Redeemed.

         If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate. In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.

         The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.

Section 3.03.     Notice of Redemption.

         Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address, except that redemption
notices may be mailed more than 60 days prior to a redemption date if the notice
is issued in connection with a defeasance of the Notes or a satisfaction and
discharge of this Indenture.

         The notice shall identify the Notes to be redeemed and shall state:

         (a) the redemption date;

         (b) the redemption price;

                                       34
<PAGE>   41

         (c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;

         (d) the name and address of the Paying Agent;

         (e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;

         (f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;

         (g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and

         (h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.

         At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.

Section 3.04.     Effect of Notice of Redemption.

         Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.

Section 3.05.     Deposit of Redemption Price.

         One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.

         If the Company complies with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.

                                       35
<PAGE>   42

Section 3.06.     Notes Redeemed in Part.

         Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.

Section 3.07.     Optional Redemption.

         (a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to July 15, 2005. Thereafter, the Company shall have the option to redeem
the Notes, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Special Interest thereon,
if any, to the applicable redemption date, if redeemed during the twelve-month
period beginning on July 15 of the years indicated below:

<TABLE>
<CAPTION>
        Year                                                                                  Percentage
        ----                                                                                  ----------
<S>                                                                                            <C>
        2005.............................................................................      105.875%
        2006.............................................................................      102.938%
        2007.............................................................................      100.000%
</TABLE>

         (b) Notwithstanding the provisions of clause (a) of this Section 3.07,
at any time prior to July 15, 2004, the Company may on any one or more occasions
redeem up to 35% of the aggregate principal amount of Notes issued under this
Indenture with the net cash proceeds of one or more Equity Offerings at a
redemption price equal to 111.75% of the principal amount thereof plus accrued
and unpaid interest and Special Interest thereon, if any, to the redemption
date; provided that at least 65% in aggregate principal amount of the Notes
originally issued under this Indenture remains outstanding immediately after the
occurrence of such redemption (excluding Notes held by the Company and its
Restricted Subsidiaries) and that such redemption occurs within 90 days of the
date of the closing of such Equity Offering.

         (c) Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Section 3.01 through 3.06 hereof.

Section 3.08.     Mandatory Redemption.

         The Company shall not be required to make mandatory redemption payments
with respect to the Notes.

Section 3.09.     Offer to Purchase by Application of Excess Proceeds.

         In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to all Holders to purchase Notes (an "Asset
Sale Offer"), it shall follow the procedures specified below.

         The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered,

                                       36
<PAGE>   43

all Notes tendered in response to the Asset Sale Offer. Payment for any Notes so
purchased shall be made in the same manner as interest payments are made.

         If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.

         Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:

         (a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall
remain open;

         (b) the Offer Amount, the purchase price and the Purchase Date;

         (c) that any Note not tendered or accepted for payment shall continue
to accrete or accrue interest;

         (d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;

         (e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may elect to have Notes purchased in integral multiples of $1,000
only;

         (f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;

         (g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;

         (h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and

         (i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).

         On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to

                                       37
<PAGE>   44

the Asset Sale Offer, or if less than the Offer Amount has been tendered, all
Notes tendered, and shall deliver to the Trustee an Officers' Certificate
stating that such Notes or portions thereof were accepted for payment by the
Company in accordance with the terms of this Section 3.09. The Company, the
Depositary or the Paying Agent, as the case may be, shall promptly (but in any
case not later than five days after the Purchase Date) mail or deliver to each
tendering Holder an amount equal to the purchase price of the Notes tendered by
such Holder and accepted by the Company for purchase, and the Company shall
promptly issue a new Note, and the Trustee, upon written request from the
Company shall authenticate and mail or deliver such new Note to such Holder, in
a principal amount equal to any unpurchased portion of the Note surrendered. Any
Note not so accepted shall be promptly mailed or delivered by the Company to the
Holder thereof. The Company shall publicly announce the results of the Asset
Sale Offer on the Purchase Date.

         Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.

                                   ARTICLE 4.
                                    COVENANTS

Section 4.01.     Payment of Notes.

         The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Interest on the Notes will accrue at the rate of 11.75% per annum;
provided that if Adjusted Consolidated Cash Flow, as shown on any financial
statement furnished to the Holders of Notes pursuant the Section 4.03 (or any
amendment or restatement thereof) for any four full consecutive fiscal quarters
ending on or prior May 31, 2003, is less than $225 million, interest on the
Notes will begin to accrue (on and after such date) at a rate of 12.75% per
annum (the "Increased Rate") and will continue to accrue at the Increased Rate
until the maturity of the Notes. Principal, premium, if any, and interest shall
be considered paid on the date due if the Paying Agent, if other than the
Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due
date money deposited by the Company in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, and
interest then due. The Company shall pay all Special Interest, if any, in the
same manner on the dates and in the amounts set forth in the Registration Rights
Agreement.

         The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Special Interest (without regard to any applicable grace period) at the same
rate to the extent lawful.

Section 4.02.     Maintenance of Office or Agency.

         The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company 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 Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.

                                       38
<PAGE>   45

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

         The Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.03.

Section 4.03.     Reports.

         (a) Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company
were required to file such forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report on the annual financial statements by the
Company's certified independent accountants and (ii) all current reports that
would be required to be filed with the SEC on Form 8-K if the Company were
required to file such reports, in each case, within the time periods specified
in the SEC's rules and regulations. In addition, following consummation of the
Exchange Offer, whether or not required by the rules and regulations of the SEC,
the Company shall file a copy of all such information and reports with the SEC
for public availability within the time periods specified in the SEC's rules and
regulations (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. The Company shall at all times comply with TIA ss. 314(a).

         (b) For so long as any Notes 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.

         (c) If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then the quarterly and annual financial information
required by the preceding paragraphs shall include a reasonably detailed
presentation, either on the face of the financial statements or in the footnotes
thereto, and in "Management's Discussion and Analysis of Financial Condition and
Results of Operations," of the financial condition and results of operations of
the Company and its Restricted Subsidiaries separate from the financial
condition and results of operations of the Unrestricted Subsidiaries of the
Company.

Section 4.04.     Compliance Certificate.

         (a) The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company 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 Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of

                                       39
<PAGE>   46

the principal of or interest, if any, on the Notes is prohibited or if such
event has occurred, a description of the event and what action the Company is
taking or proposes to take with respect thereto.

         (b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof 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 Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.

Section 4.05.     Taxes.

         The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.

Section 4.06.     Stay, Extension and Usury Laws.

         The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company and each of the Guarantors
(to the extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.

Section 4.07.     Restricted Payments.

         The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Subsidiaries' Equity Interests (including, without limitation, any payment in
connection with any merger or consolidation involving the Company or any of its
Restricted Subsidiaries) or to the direct or indirect holders of the Company's
or any of its Restricted Subsidiaries' Equity Interests in their capacity as
such (other than dividends or distributions payable in Equity Interests (other
than Disqualified Stock) of the Company or to the Company or a Restricted
Subsidiary of the Company); (ii) purchase, redeem or otherwise acquire or retire
for value (including, without limitation, in connection with any merger or
consolidation involving the Company) any Equity Interests of the Company or any
direct or indirect parent of the Company; (iii) make any payment on or with
respect to, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness that is subordinated to the Notes, except a payment of
interest or principal at Stated Maturity; or (iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (iv) above
being

                                       40
<PAGE>   47

collectively referred to as "Restricted Payments"), unless, at the time of and
after giving effect to such Restricted Payment:

                  (a) no Default or Event of Default shall have occurred and be
         continuing or would occur as a consequence of such Restricted Payment;
         and

                  (b) The Company would, at the time of such Restricted Payment
         and after giving pro forma effect thereto as if such Restricted Payment
         had been made at the beginning of the applicable four-quarter period,
         have been permitted to incur at least $1.00 of additional Indebtedness
         pursuant to the Fixed Charge Coverage Ratio test set forth in Section
         4.09(i); and

                  (c) such Restricted Payment, together with the aggregate
         amount of all other Restricted Payments made by the Company and its
         Restricted Subsidiaries after the date of this Indenture (excluding
         Restricted Payments permitted by clause (ii), (iii) and (iv) of the
         next succeeding paragraph), is less than the sum, without duplication,
         of (i) 50% of the Consolidated Net Income of the Company for the period
         (taken as one accounting period) from the beginning of the first fiscal
         quarter commencing after the date of this Indenture to the end of the
         Company's most recently ended fiscal quarter for which internal
         financial statements are available at the time of such Restricted
         Payment (or, if such Consolidated Net Income for such period is a
         deficit, less 100% of such deficit), plus (ii) 100% of the aggregate
         net cash proceeds received by the Company since the date of the
         Indenture as a contribution to its common equity capital or from the
         issue or sale of Equity Interests of the Company (other than
         Disqualified Stock) or from the issue or sale of convertible or
         exchangeable Disqualified Stock or convertible or exchangeable debt
         securities of the Company that have been converted into or exchanged
         for such Equity Interests (other than Equity Interests (or Disqualified
         Stock or debt securities) sold to a Subsidiary of the Company), plus
         (iii) to the extent that any Restricted Investment that was made after
         the date of this Indenture is sold for cash or otherwise liquidated or
         repaid for cash, the lesser of (A) the cash return of capital with
         respect to such Restricted Investment (less the cost of disposition, if
         any) and (B) the initial amount of such Restricted Investment.

         So long as no Default shall have occurred and be continuing or would be
caused thereby, the preceding provisions shall not prohibit (i) the payment of
any dividend within 60 days after the date of declaration of the dividend, if at
the date of declaration the dividend payment would have complied with the
provisions of this Indenture; (ii) the redemption, repurchase, retirement,
defeasance or other acquisition of any subordinated Indebtedness or Equity
Interests of the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of,
Equity Interests of the Company (other than any Disqualified Stock); provided
that the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement, defeasance or other acquisition shall be
excluded from clause (c) (ii) of the preceding paragraph; (iii) the defeasance,
redemption, repurchase or other acquisition of subordinated Indebtedness of the
Company with the net cash proceeds from an incurrence of Permitted Refinancing
Indebtedness; (iv) the payment of any dividend by a Restricted Subsidiary of the
Company to the holders of its Equity Interests on a pro rata basis; and (v) the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company or any Restricted Subsidiary of the Company held
by any member of the Company's (or any of its Restricted Subsidiaries')
management pursuant to any management equity subscription agreement, stock
option agreement or similar agreement; provided that the aggregate price paid
for all such repurchased, redeemed, acquired or retired Equity Interests shall
not exceed $5.0 million in any twelve-month period; (vi) the purchase by the
Company of fractional shares arising out of stock dividends, splits or
combinations, business combinations or upon conversion of the Convertible
Subordinated Notes; and (vii) other Restricted Payments in an amount not to
exceed $50.0 million;

                                       41
<PAGE>   48

provided that Restricted Payments made pursuant to this clause (vii) shall not
exceed $25.0 million in the aggregate in any twelve-month period.

         The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any assets or securities that are required to be valued
by this Section 4.07 shall be determined by the Board of Directors whose
resolution with respect thereto shall be delivered to the Trustee, such
determination to be based upon an opinion or appraisal issued by an accounting,
appraisal or investment banking firm of national standing if the fair market
value exceeds $10.0 million. 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 is permitted and setting forth the basis
upon which the calculations required by this Section 4.07 were computed,
together with a copy of any fairness opinion or appraisal required by this
Indenture.

Section 4.08.     Dividend and Other Payment Restrictions Affecting
                  Subsidiaries.

         The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (a)(i) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (A) on its Capital Stock or
(B) with respect to any other interest or participation in, or measured by, its
profits or (ii) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (b) make loans or advances to the Company or any of its
Restricted Subsidiaries or (c) transfer any of its properties or assets to the
Company or any of its Restricted Subsidiaries, except for such encumbrances or
restrictions existing under or by reasons of:

                  (i) agreements governing Existing Indebtedness and Credit
         Facilities as in effect on the date of this Indenture and any
         amendments, modifications, restatements, renewals, increases,
         supplements, refundings, replacements or refinancings of those
         agreements, provided that the amendments, modifications, restatements,
         renewals, increases, supplements, refunding, replacement or
         refinancings are no more restrictive, taken as a whole, with respect to
         such dividend and other payment restrictions than those contained in
         those agreements on the date of this Indenture.

                  (ii) agreements governing Indebtedness under Credit Facilities
         incurred pursuant to Section 4.09 hereof and any amendments,
         modifications, restatements, renewals, increases, supplements,
         refundings, replacements or refinancings of those agreements; provided
         that the encumbrance or restriction is not materially more
         disadvantageous to the Holders of the notes than is customary in
         comparable financings (as determined in good faith by the Board of
         Directors of the Company);

                  (iii) this Indenture and the Notes;

                  (iv) applicable law;

                  (v) any instrument governing Indebtedness or Capital Stock of
         a Person acquired by the Company or any of its Restricted Subsidiaries
         as in effect at the time of such acquisition (except to the extent such
         Indebtedness on Capital Stock was incurred in connection with or in
         contemplation of such acquisition), which encumbrance or restriction is
         not applicable to any Person, or the properties or assets

                                       42
<PAGE>   49

         of any Person, other than the Person, or the property or assets of the
         Person, so acquired, provided that, in the case of Indebtedness, such
         Indebtedness was permitted by the terms of this Indenture to be
         incurred;

                  (vi) customary non-assignment provisions in leases entered
         into in the ordinary course of business and consistent with past
         practices;

                  (vii) purchase money obligations for property acquired in the
         ordinary course of business that impose restrictions on that property
         of the nature described in clause (c) above;

                  (viii) any agreement for the sale or other disposition of a
         Restricted Subsidiary that restricts distributions by that Restricted
         Subsidiary pending its sale or other disposition;

                  (ix) Permitted Refinancing Indebtedness, provided that the
         restrictions contained in the agreements governing such Permitted
         Refinancing Indebtedness are no more restrictive, taken as a whole,
         than those contained in the agreements governing the Indebtedness being
         refinanced;

                  (x) Liens securing Indebtedness otherwise permitted to be
         incurred under the provisions of Section 4.12 hereof that limit the
         right of the debtor to dispose of the assets subject to such Liens;

                  (xi) provisions with respect to the disposition or
         distribution of assets or property in joint venture agreements, assets
         sale agreements, stock sale agreements and other similar agreements
         entered into in the ordinary course of business;

                  (xii) Indebtedness or other contractual requirements of a
         Receivables Subsidiary in connection with a Qualified Receivables
         Transaction, provided that such restrictions apply only to such
         Receivables Subsidiary; and

                  (xiii) restrictions on cash or other deposits or net worth
         imposed by customers under contracts entered into in the ordinary
         course of business.

Section 4.09.     Incurrence of Indebtedness and Issuance of Preferred Stock.

         The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company may incur Indebtedness (including Acquired Debt) or issue Disqualified
Stock if the Fixed Charge Coverage Ratio for the Company's most recently ended
four full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock is issued would have been at least 2.5 to 1 if such
additional Indebtedness is incurred or Disqualified Stock is issued on or prior
to June 29, 2002, at least 2.75 to 1 if such additional Indebtedness is incurred
or Disqualified Stock is issued after June 29, 2002, but on or prior to June 29,
2002, and 3.0 to 1 if such additional Indebtedness is incurred or Disqualified
Stock is issued after June 29, 2002, determined on a pro forma basis (including
a pro forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock had been issued, as
the case may be, at the beginning of such four-quarter period.

         The provisions of the first paragraph of this Section 4.09 shall not
apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):

                                       43
<PAGE>   50

                  (i) the incurrence by the Company of additional Indebtedness
         and letters of credit under Credit Facilities in an aggregate principal
         amount at any one time outstanding under this clause (1)(with letters
         of credit being deemed to have a principal amount equal to the maximum
         potential liability of the Company and its Restricted Subsidiaries
         thereunder) not to exceed $695 million (provided that such amount shall
         be reduced to the extent of any reduction or elimination of any
         commitment under any Credit Facility resulting from or relating to the
         formation of any Receivables Subsidiary or the consummation of any
         Qualified Receivables Transaction), less the aggregate amount of all
         repayments, optional or mandatory, of the principal of any term
         Indebtedness under a Credit Facility (other than repayments that are
         concurrently reborrowed) that have been made by the Company or any of
         its Restricted Subsidiaries since the date of the indenture and less
         the aggregate amount of all commitment reductions with respect to any
         revolving credit borrowings under a Credit Facility that have been made
         by the Company or any of its Restricted Subsidiaries since the date of
         this Indenture; provided that no Indebtedness incurred pursuant to this
         clause (i) shall be used to fund any acquisition by the Company or any
         of its Subsidiaries.

                  (ii) the incurrence by the Company and its Restricted
         Subsidiaries of the Existing Indebtedness;

                  (iii) the incurrence by the Company of Indebtedness
         represented by the Notes to be issued on the date of this Indenture and
         the Exchange Notes to be issued pursuant to the Registration Rights
         Agreement;

                  (iv) the incurrence by the Company or any of its Restricted
         Subsidiaries of Indebtedness represented by Capital Lease Obligations,
         mortgage financings or purchase money obligations, in each case,
         incurred for the purpose of financing all or any part of the purchase
         price or cost of construction or improvement of property, plant or
         equipment used in the business of American Greetings or such Restricted
         Subsidiary, in an aggregate principal amount, including all Permitted
         Refinancing Indebtedness incurred to refund, refinance or replace any
         Indebtedness incurred pursuant to this clause (iv), not to exceed $25.0
         million at any time outstanding;

                  (v) the incurrence by the Company or any of its Restricted
         Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
         the net proceeds of which are used to refund, refinance or replace
         Indebtedness (other than intercompany Indebtedness) that was permitted
         by this Indenture to be incurred under the first paragraph of this
         Section 4.09 or clauses (ii), (iii), (iv), (v), (xi) or (xii) of this
         paragraph;

                  (vi) the incurrence by the Company or any of its Restricted
         Subsidiaries of intercompany Indebtedness between or among the Company
         and any of its Wholly Owned Restricted Subsidiaries; provided, however,
         that:

                           (A) if the Company is the obligor on such
                  Indebtedness, such Indebtedness must be expressly subordinated
                  to the prior payment in full in cash of all Obligations with
                  respect to the Notes and

                           (B) (i) any subsequent issuance or transfer of Equity
                  Interests that results in any such Indebtedness being held by
                  a Person other than the Company or a Restricted Subsidiary of
                  the Company and (ii) any sale or other transfer of any such
                  Indebtedness to a Person that is not either the Company or a
                  Wholly Owned Restricted Subsidiary of the Company; will be
                  deemed, in each case, to constitute an incurrence of such
                  Indebtedness

                                       44
<PAGE>   51

                  by the Company or such Restricted Subsidiary, as the case may
                  be, that was not permitted by this clause (vi);

                  (vii) the incurrence by the Company or any of its Restricted
         Subsidiaries of Hedging Obligations that are incurred for the purpose
         of fixing or hedging interest rate risk with respect to any floating
         rate Indebtedness that is permitted by the terms of this Indenture to
         be outstanding;

                  (viii) the incurrence by Unrestricted Subsidiaries of the
         Company of Non-Recourse Debt; provided, however, that if any such
         Indebtedness ceases to be Non-Recourse Debt of an Unrestricted
         Subsidiary, such event will be deemed to constitute an incurrence of
         Indebtedness by a Restricted Subsidiary of the Company that was not
         permitted by this clause (viii);

                  (ix) the accrual of interest, the accretion or amortization of
         original issue discount, the payment of interest on any Indebtedness in
         the form of additional Indebtedness with the same terms, and the
         payment of dividends on Disqualified Stock in the form of additional
         shares of the same class of Disqualified Stock will not be deemed to be
         an incurrence of Indebtedness or an issuance of Disqualified Stock for
         purposes of this Section 4.09; provided, in each such case, that the
         amount thereof is included in Fixed Charges of the Company as accrued;

                  (x) the incurrence by a Receivables Subsidiary of Indebtedness
         in a Qualified Receivables Transaction that is without recourse to the
         Company or to any other Subsidiary of the Company or their assets
         (other than such Receivables Subsidiary and its assets and, as to the
         Company or any Subsidiary of the Company, other than pursuant to
         representations, warranties, covenants and indemnities customary for
         such transactions) and is not guaranteed by any such Person;

                  (xi) the Guarantee by a Restricted Subsidiary of the Company
         of Indebtedness of the Company or a Restricted Subsidiary of the
         Company that was permitted to be incurred by another provision of this
         Section 4.09.

                  (xii) the incurrence by S.A. Greetings Corporation (PTY) Ltd.
         of up to $6.0 million of Indebtedness and the Guarantee of such
         Indebtedness by the Company; and

                  (xiii) the incurrence by the Company or any of its Restricted
         Subsidiaries of additional Indebtedness in an aggregate principal
         amount (or accreted value, as applicable) at any time outstanding,
         including all Permitted Refinancing Indebtedness incurred to refund,
         refinance or replace any Indebtedness incurred pursuant to this clause
         (xiii), not to exceed $25.0 million.

         For purposes of determining compliance with this Section 4.09, in the
event that an item of proposed Indebtedness meets the criteria of more than one
of the categories of Permitted Debt described in clauses (i) through (xiii)
above, or is entitled to be incurred pursuant to the first paragraph of this
Section 4.09, the Company shall be permitted to classify such item of
Indebtedness on the date of its incurrence, or later reclassify all or a portion
of such item of Indebtedness, in any manner that complies with this Section
4.09. Indebtedness under Credit Facilities outstanding on the date on which
notes are first issued and authenticated under this Indenture shall be deemed to
have been incurred on such date in reliance on the exception provided by clause
(i) of the definition of Permitted Debt.

Section 4.10.     Asset Sales.

         The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (x) the Company (or the
Restricted Subsidiary, as the case may be) receives

                                       45
<PAGE>   52

consideration at the time of the Asset Sale at least equal to the fair market
value of the assets or Equity Interests issued or sold or otherwise disposed of
(y) the fair market value is determined by the Company's' Board of Directors and
evidenced by a resolution of the Board of Directors set forth in an Officers'
Certificate delivered to the trustee and (z) at least 75% of the consideration
received in the Asset Sale by the Company or such Restricted Subsidiary is in
the form of cash; provided, however, 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 contingent
liabilities and liabilities that are by their terms subordinated to the Notes)
that are assumed by the transferee of any such assets pursuant to a customary
novation agreement that releases the Company or such Restricted Subsidiary from
further liability; and (B) any securities, notes or other obligations received
by the Company or any such Restricted Subsidiary from such transferee that are
contemporaneously, subject to ordinary settlement periods, converted by the
Company or such Restricted Subsidiary into cash, to the extent of the cash
received in that conversion, shall be deemed to be cash for the purposes of this
provision.

         Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply the Net Proceeds from such Asset Sale, at its option
(a) to repay Senior Debt and, if the Senior Debt repaid is revolving credit
Indebtedness, to correspondingly reduce commitments with respect thereto, (b) to
acquire all or substantially all of the assets of, or a majority of the Voting
Stock of, another Permitted Business, or (c) to acquire other long-term assets
that are used or useful in a Permitted Business. Pending the final application
of any Net Proceeds, the Company may temporarily reduce revolving credit
borrowings or otherwise invest the Net Proceeds in Cash Equivalents.

         Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $10.0 million, the Company will make
an Asset Sale Offer to all Holders of Notes and all holders of other
Indebtedness that is pari passu with the Notes containing provisions similar to
those set forth in this Indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets to purchase the maximum principal amount of
Notes and such other pari passu Indebtedness that may be purchased out of the
Excess Proceeds. The offer price in any Asset Sale Offer shall be equal to 100%
of principal amount plus accrued and unpaid interest and Special Interest, if
any, to the date of purchase, and shall be payable in cash. If any Excess
Proceeds remain after consummation of an Asset Sale Offer, the Company may use
those Excess Proceeds for any purpose not otherwise prohibited by this
Indenture. If the aggregate principal amount of Notes and other pari passu
Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the trustee will select the Notes and such other pari passu
Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset
Sale Offer, the amount of Excess Proceeds will be reset at zero.

         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 those laws and regulations are applicable in connection with each
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sale
provisions of this Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the Asset Sale provisions of this Indenture by virtue of such
conflict.

Section 4.11.     Transactions with Affiliates.

         The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate

                                       46
<PAGE>   53

Transaction"), unless (a) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person and (b) the Company delivers to
the Trustee (i) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $1.0
million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (a)
above and that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (ii) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10.0 million, an opinion as to the
fairness to the Holders of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking firm of national
standing; provided, however, that (i) any employment agreement, stock option
plan or other compensation plan entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of business and consistent with
the past practice of the Company or such Restricted Subsidiary, (ii)
transactions between or among the Company and/or its Restricted Subsidiaries,
(iii) transactions with a Person that is an Affiliate of the Company solely
because the Company owns an Equity Interest in, or controls, such Person, (iv)
payment of reasonable directors' fees to Persons who are not otherwise
Affiliates of the Company, (v) sales of Equity Interests (other than
Disqualified Stock) to Affiliates of the Company, (vi) transactions between the
Company or a Restricted Subsidiary and an Affiliate existing prior to the date
of this Indenture on the terms thereof described in the offering circular, and
any amendments thereto, provided that such amendments, taken as a whole, do not
contain terms materially less advantageous to the Company than those existing on
the date of this Indenture, (vii) transactions between or among the Company
and/or its Receivables Subsidiaries or transactions between a Receivables
Subsidiary and any Person in which the Receivables Subsidiary has an Investment,
and (viii) Restricted Payments that are permitted under Section 4.07 hereof
shall not be deemed Affiliate Transactions.

Section 4.12.     Liens.

         The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly create, incur, assume or suffer to exist any Lien of any
kind securing Indebtedness or trade payables on any asset now owned or hereafter
acquired, except Permitted Liens.

Section 4.13.     Business Activities.

         The Company shall not, and shall not permit any of its Subsidiaries to,
engage in any business other than Permitted Businesses, except to such extent as
would not be material to the Company and its Subsidiaries taken as a whole.

Section 4.14.     Corporate Existence.

         Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.

                                       47
<PAGE>   54

Section 4.15.     Offer to Repurchase Upon Change of Control.

         (a) Upon the occurrence of a Change of Control, the Company shall make
an offer (a "Change of Control Offer") to each Holder to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at
a purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Special Interest thereon, if any, to the date of
purchase (the "Change of Control Payment"). Within 10 days following any Change
of Control, the Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Notes on the Change of Control Payment Date specified in the
notice, which date will be no earlier than 30 days and no later than 60 days
from the date such notice is mailed, pursuant to this Section 4.15. 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 those laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control. To the extent that the provisions of any
securities laws or regulations conflict with the Change of Control provisions of
this Indenture, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under the
Change of Control provisions of this Indenture by virtue of such conflict.

         (b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes properly accepted together with an Officers' Certificate
stating the aggregate principal amount of Notes or portions thereof being
purchased by the Company. The Paying Agent shall promptly mail to each Holder of
Notes properly tendered the Change of Control Payment in an amount equal to the
purchase price for the Notes, and the Trustee shall promptly authenticate and
mail (or cause to be transferred by book entry) to each Holder a new Note equal
in principal amount to any unpurchased portion of the Notes surrendered by such
Holder, if any; provided, that each such new Note shall be in a principal amount
of $1,000 or an integral multiple thereof.

         (c) Prior to complying with any of the provisions of this Section 4.15,
but in any event within 90 days following a Change of Control, the Company shall
either repay all outstanding Senior Debt or obtain the requisite consents, if
any, under all agreements governing outstanding Senior Debt to permit the
repurchase of notes required by this Section 4.15. The Company shall publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.

         (d) The provisions described above that require the Company to make a
Change of Control Offer following a Change of Control shall be applicable
whether or not any other provisions of this Indenture are applicable. Except as
described above with respect to a Change of Control, this Indenture does not
contain provisions that permit the Holders of the notes to require that the
Company repurchase or redeem the notes in the event of a takeover,
recapitalization or similar transaction.

         (e) Notwithstanding anything to the contrary in this Section 4.15, the
Company shall not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in this
Section 4.15 and Section 3.09 hereof and all other provisions of this Indenture
applicable to a Change of Control Offer made by the Company and purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer.

                                       48
<PAGE>   55

Section 4.16.     Anti-Layering.

         Notwithstanding the provisions of Section 4.09 hereof, the Company
shall not incur, create, issue, assume, guarantee or otherwise become liable for
any Indebtedness that is subordinate or junior in right of payment to any Senior
Debt of the Company and senior in any respect in right of payment to the Notes.

Section 4.17.     Payments for Consent.

         The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration to or for the
benefit of any Holder of Notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Notes
unless such consideration is offered to be paid or is paid to all Holders of the
Notes that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.

Section 4.18.     Designation of Restricted and Unrestricted Subsidiaries.

         The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
fair market value of all outstanding Investments owned by the Company and its
Restricted Subsidiaries in the Subsidiary properly designated shall be deemed to
be an Investment made as of the time of the designation and shall reduce the
amount available for Restricted Payments under the first paragraph of Section
4.07 hereof or Permitted Investments, as determined by the Company. That
designation shall only be permitted if the Investment would be permitted at that
time and if the Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. The Board of Directors may redesignate any Unrestricted
Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a
Default.

                                   ARTICLE 5.
                                   SUCCESSORS

Section 5.01.     Merger, Consolidation, or Sale of Assets.

         The Company shall not, directly or indirectly, consolidate or merge
with or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, another Person
unless (i) the Company is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, conveyance or other disposition shall
have been made is a corporation organized or existing under the laws of the
United States, any state thereof or the District of Columbia, (ii) the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or the Person to which such sale, assignment, transfer, conveyance or
other disposition shall have been made assumes all the obligations of the
Company under the Registration Rights Agreement, the Notes and this Indenture
pursuant to agreements reasonably satisfactory to the Trustee, (iii) immediately
after such transaction, no Default or Event of Default exists and (iv) the
Company or the Person formed by or surviving any such consolidation or merger
(if other than the Company), or to which such sale, assignment, transfer,
conveyance or other disposition shall have been made (A) shall have Consolidated
Net Worth immediately after the transaction equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the transaction and
(B) shall, on the date of such transaction after giving pro forma effect thereto
and any related financing transactions as if the same had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge

                                       49
<PAGE>   56

Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof. In
addition, the Company shall not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person. The provisions of this Section 5.01 shall not
be applicable to a sale, assignment, transfer, conveyance or other disposition
of assets between or among the Company and any of its Wholly Owned Subsidiaries.

Section 5.02.     Successor Corporation Substituted.

         Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale, assignment,
transfer, conveyance or other disposition of all of the Company's assets that
meets the requirements of Section 5.01 hereof.

                                   ARTICLE 6.
                              DEFAULTS AND REMEDIES

Section 6.01.     Events of Default.

         Each of the following is an "Event of Default":

         (a) default for 30 days in the payment when due of interest on, or
Special Interest with respect to, the Notes whether or not prohibited by the
subordination provisions of this Indenture;

         (b) default in the payment when due of principal of or premium, if any,
on the Notes whether or not prohibited by the subordination provisions of this
Indenture;

         (c) failure by the Company or any of its Subsidiaries to comply with
any of the provisions of Section 4.07, 4.09, 4.10, 4.15 or 5.01 hereof;

         (d) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture or the Notes for
60 days after notice to the Company by the Trustee or the Holders of at least
25% in aggregate principal amount of the Notes (including Additional Notes, if
any) then outstanding voting as a single class;

         (e) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries (or
the payment of which is guaranteed by the Company or any of its Subsidiaries),
whether such Indebtedness or guarantee now exists, or is created after the date
of this Indenture, if that default: (i) is caused by a failure to pay principal
of, or interest or premium, if any, on such Indebtedness prior to the expiration
of the grace period provided in such Indebtedness on the date of such default (a
"Payment Default"), or (ii) results in the acceleration of such Indebtedness
prior to its express maturity, and, in each case, the principal amount of

                                       50
<PAGE>   57

any such Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $20.0 million or more

         (f) failure by the Company or any of its Subsidiaries to pay final
judgements aggregating in excess of $20.0 million, which judgements are not
paid, discharged or stayed for a period of 60 days;

         (g) the Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary
pursuant to or within the meaning of Bankruptcy Law:

                  (i) commences a voluntary case,

                  (ii) consents to the entry of an order for relief against it
         in an involuntary case,

                  (iii) consents to the appointment of a custodian of it or for
         all or substantially all of its property,

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

                  (v) generally is not paying its debts as they become due; or

         (h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:

                  (i) is for relief against the Company or any of its
         Significant Subsidiaries or any group of Subsidiaries that, taken as a
         whole, would constitute a Significant Subsidiary in an involuntary
         case;

                  (ii) appoints a custodian of the Company or any of its
         Significant Subsidiaries or any group of Subsidiaries that, taken as a
         whole, would constitute a Significant Subsidiary or for all or
         substantially all of the property of the Company or any of its
         Significant Subsidiaries or any group of Subsidiaries that, taken as a
         whole, would constitute a Significant Subsidiary; or

                  (iii) orders the liquidation of the Company or any of its
         Significant Subsidiaries or any group of Subsidiaries that, taken as a
         whole, would constitute a Significant Subsidiary;

and the order or decree remains unstayed and in effect for 60 consecutive days;
or

Section 6.02.     Acceleration.

         If any Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 6.01 hereof with respect to the Company, any
Significant Subsidiary or any group of Significant Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Notwithstanding the foregoing, if an Event of Default specified in clause (g) or
(h) of Section 6.01 hereof occurs with respect to the Company, any of its
Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary, all outstanding Notes shall be
due and payable immediately without further action or notice. The Holders of a
majority in aggregate principal amount of the then outstanding Notes by written
notice to the Trustee may on behalf of all of the Holders rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events

                                       51
<PAGE>   58

of Default (except nonpayment of principal, interest or premium that has become
due solely because of the acceleration) have been cured or waived.

         If an Event of Default occurs on or after July 15, 2005 by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to July 15, 2005
by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount, for each of the years beginning on July 15 of the years
set forth below, as set forth below (expressed as a percentage of the principal
amount of the Notes on the date of payment that would otherwise be due but for
the provisions of this sentence):

<TABLE>
<CAPTION>
        YEAR                                                                                   PERCENTAGE
        ----                                                                                   ----------
<S>                                                                                             <C>
        2001.............................................................................       111.750%
        2002.............................................................................       110.281%
        2003.............................................................................       108.813%
        2004.............................................................................       107.344%
</TABLE>

Section 6.03.     Other Remedies.

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

         The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.

Section 6.04.     Waiver of Past Defaults.

         Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Special Interest, if any, or interest
on, the Notes (including in connection with an offer to purchase) (provided,
however, that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.

Section 6.05.     Control by Majority.

         Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or

                                       52
<PAGE>   59

exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture that the
Trustee determines may be unduly prejudicial to the rights of other Holders of
Notes or that may involve the Trustee in personal liability.

Section 6.06.     Limitation on Suits.

         A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:

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

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

         (c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;

         (d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and

         (e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.

         A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.

Section 6.07.     Rights of Holders of Notes to Receive Payment.

         Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium Special Interest, if
any, and interest on the Note, on or after the respective due dates expressed in
the Note (including in connection with an offer to purchase), 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 such Holder.

Section 6.08.     Collection Suit by Trustee.

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

Section 6.09.     Trustee May File Proofs of Claim.

         The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee,

                                       53
<PAGE>   60

and in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section 7.07
hereof. To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof out of the estate in any such
proceeding, shall be denied for any reason, payment of the same shall be secured
by a Lien on, and shall be paid out of, any and all distributions, dividends,
money, securities and other properties that the Holders may be entitled to
receive in such proceeding whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.

Section 6.10.     Priorities.

         If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:

                  First: to the Trustee, its agents and attorneys for amounts
         due under Section 7.07 hereof, including payment of all compensation,
         expense and liabilities incurred, and all advances made, by the Trustee
         and the costs and expenses of collection;

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

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

         The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.

Section 6.11.     Undertaking for Costs.

         In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, 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 does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.

                                   ARTICLE 7.
                                     TRUSTEE

Section 7.01.     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 its

                                       54
<PAGE>   61

exercise, as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.

         (b) Except during the continuance of an Event of Default:

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

                  (ii) in the absence of bad faith on its part, the Trustee may
         conclusively rely, as to the truth of the statements and the
         correctness of the opinions expressed therein, upon certificates or
         opinions 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 not they conform to the requirements
         of this Indenture.

         (c) The Trustee may not be relieved from liabilities 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;

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

                  (iii) the Trustee shall not be liable with respect to any
         action it takes or omits to take in good faith in accordance with a
         direction received by it pursuant to Section 6.05 hereof.

         (d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.

         (e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.

         (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 Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.

Section 7.02.     Rights of Trustee.

         (a) The Trustee may conclusively rely upon 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 or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete

                                       55
<PAGE>   62

authorization and protection from liability in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.

         (c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.

         (d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.

         (e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.

         (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 or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.

Section 7.03.     Individual Rights of Trustee.

         The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.

Section 7.04.     Trustee's Disclaimer.

         The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.

Section 7.05.     Notice of Defaults.

         If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.

Section 7.06.     Reports by Trustee to Holders of the Notes.

         Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event described
in TIA Section 313(a) has occurred within the twelve months preceding the
reporting date, no report need be

                                       56
<PAGE>   63

transmitted). The Trustee also shall comply with TIA Section 313(b)(2). The
Trustee shall also transmit by mail all reports as required by TIA Section
313(c).

         A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA Section 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.

Section 7.07.     Compensation and Indemnity.

         The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.

         The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
reasonable costs and expenses of enforcing this Indenture against the Company
(including this Section 7.07) and defending itself against any claim (whether
asserted by the Company or any Holder or any other person) or liability in
connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability or expense may be
attributable to its negligence or bad faith. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need not
pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.

         The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.

         To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.

         When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.

         The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.

Section 7.08.     Replacement of Trustee.

         A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.

                                       57
<PAGE>   64

         The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:

         (a) the Trustee fails to comply with Section 7.10 hereof;

         (b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;

         (c) a custodian or public officer takes charge of the Trustee or its
property; or

         (d) 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 Company 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 then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.

         If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.

         If the Trustee, after written request by any Holder who has been a
Holder for at least six months, fails to comply with Section 7.10, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.

         A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, 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. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.

Section 7.09.     Successor Trustee by Merger, etc.

         If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.

Section 7.10.     Eligibility; Disqualification.

         There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.

                                       58
<PAGE>   65

         This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).

Section 7.11.     Preferential Collection of Claims Against Company.

         The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.

                                   ARTICLE 8.
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01.     Option to Effect Legal Defeasance or Covenant Defeasance.

         The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.

Section 8.02.     Legal Defeasance and Discharge.

         Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest on such Notes when such payments
are due, (b) the Company's obligations with respect to such Notes under Article
2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and the Company's obligations in connection therewith
and (d) this Article Eight. Subject to compliance with this Article Eight, the
Company may exercise its option under this Section 8.02 notwithstanding the
prior exercise of its option under Section 8.03 hereof.

Section 8.03.     Covenant Defeasance.

         Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16,
4.17. 4.18 and 4.19 hereof and clause (iv) of Section 5.01 hereof with respect
to the outstanding Notes on and after the date the conditions set forth in
Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the Notes
shall thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant,

                                       59
<PAGE>   66

whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.01 hereof,
but, except as specified above, the remainder of this Indenture and such Notes
shall be unaffected thereby. In addition, upon the Company's exercise under
Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(c) through 6.01(f) hereof shall not constitute Events of Default.

Section 8.04.     Conditions to Legal or Covenant Defeasance.

         The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:

         In order to exercise either Legal Defeasance or Covenant Defeasance:

         (a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, 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, or interest and premium, if any, and
interest on the outstanding Notes on the stated maturity or on the applicable
redemption date, as the case may be, and the Company must specify whether the
notes are being defeased to maturity or to a particular redemption date;

         (b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes 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;

         (c) in the case of an election under Section 8.03 hereof, the Company
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
outstanding Notes 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;

         (d) 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 Notes pursuant to this Article Eight
concurrently with such incurrence) or insofar as Sections 6.01(g) or 6.01(h)
hereof is concerned, at any time in the period ending on the 91st day after the
date of deposit;

         (e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;

                                       60
<PAGE>   67

         (f) the Company shall have delivered to the Trustee an Opinion of
Counsel (which may be subject to customary exceptions) to the effect that on the
91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally;

         (g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company; and

         (h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.

Section 8.05.     Deposited Money and Government Securities to be Held in Trust;
                  Other Miscellaneous Provisions.

         Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.

         The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.

         Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.

Section 8.06.     Repayment to Company.

         Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30

                                       61
<PAGE>   68

days from the date of such notification or publication, any unclaimed balance of
such money then remaining will be repaid to the Company.

Section 8.07.     Reinstatement.

         If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.

                                   ARTICLE 9.
                        AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01.     Without Consent of Holders of Notes.

         Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Notes without the consent
of any Holder of a Note:

         (a) to cure any ambiguity, defect or inconsistency;

         (b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;

         (c) to provide for the assumption of the Company's obligations to the
Holders of the Notes by a successor to the Company pursuant to Article 5 hereof;

         (d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note;

         (e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA; or

         (f) to provide for the issuance of Additional Notes in accordance with
the limitations set forth in this Indenture as of the date hereof.

         Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.

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<PAGE>   69

Section 9.02.     With Consent of Holders of Notes.

         Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Section 3.09, 4.10 and
4.15 hereof) and the Notes with the consent of the Holders of at least a
majority in principal amount of the Notes (including Additional Notes, if any)
then outstanding voting as a single class (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any
existing Default or Event of Default (other than a Default or Event of Default
in the payment of the principal of, premium, if any, or interest on the Notes,
except a payment default resulting from an acceleration that has been rescinded)
or compliance with any provision of this Indenture or the Notes may be waived
with the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including Additional Notes, if any) voting as a single class
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, the Notes). Section 2.08 hereof shall
determine which Notes are considered to be "outstanding" for purposes of this
Section 9.02.

         Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.

         It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.

         After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes (including Additional Notes,
if any) then outstanding voting as a single class may waive compliance in a
particular instance by the Company with any provision of this Indenture or the
Notes. However, without the consent of each Holder affected, an amendment or
waiver under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):

         (a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;

         (b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the Notes
except as provided above with respect to Sections 3.09, 4.10 and 4.15 hereof;

         (c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;

         (d) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority

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<PAGE>   70

in aggregate principal amount of the then outstanding Notes (including
Additional Notes, if any) and a waiver of the payment default that resulted from
such acceleration);

         (e) make any Note payable in money other than that stated in the Notes;

         (f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of, or interest or premium or Special Interest, if any, on the
Notes;

         (g) waive a redemption payment with respect to any Note (other than a
payment required by Section 4.10 or 4.15); or

         (h) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions.

         In addition, any amendment to, or waiver of, Article 10 hereof that
adversely affects the rights of the Holders of the Notes shall require the
consent of the Holders of at least 75% in aggregate principal amount of the
Notes then outstanding , voting as a single class, (including, without
limitation, consents obtained in connection with a purchase of, or a tender
offer or exchange offer for, the Notes).

Section 9.03.     Compliance with Trust Indenture Act.

         Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental indenture that complies with the TIA as
then in effect.

Section 9.04.     Revocation and Effect of Consents.

         Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.

Section 9.05.     Notation on or Exchange of Notes.

         The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.

         Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.

Section 9.06.     Trustee to Sign Amendments, etc.

         The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article Nine if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled

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<PAGE>   71

to receive and (subject to Section 7.01 hereof) shall be fully protected in
relying upon, in addition to the documents required by Section 12.04 hereof, an
Officer's Certificate and an Opinion of Counsel stating that the execution of
such amended or supplemental indenture is authorized or permitted by this
Indenture.

                                  ARTICLE 10.
                                  SUBORDINATION

Section 10.01.    Agreement to Subordinate.

         The Company agrees, and each Holder by accepting a Note agrees, that
the Indebtedness evidenced by the Notes is subordinated in right of payment, to
the extent and in the manner provided in this Article 10, to the prior payment
in full of all Senior Debt (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Debt.

Section 10.02.    Liquidation; Dissolution; Bankruptcy.

         Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities:

                  (i) holders of Senior Debt shall be entitled to receive
         payment in full of all Obligations due in respect of such Senior Debt
         (including interest after the commencement of any such proceeding at
         the rate specified in the applicable Senior Debt) before Holders of the
         Notes shall be entitled to receive any payment with respect to the
         Notes (except that Holders may receive (A) Permitted Junior Securities
         and (B) payments and other distributions made from any defeasance trust
         created pursuant to Section 8.01 hereof); and

                  (ii) until all Obligations with respect to Senior Debt (as
         provided in clause (i) above) are paid in full, any distribution to
         which Holders would be entitled but for this Article 10 shall be made
         to holders of Senior Debt (except that Holders of Notes may receive (A)
         Permitted Junior Securities and (B) payments and other distributions
         made from any defeasance trust created pursuant to Section 8.01
         hereof), as their interests may appear.

Section 10.03.    Default on Designated Senior Debt.

         (a) The Company may not make any payment or distribution to the Trustee
or any Holder in respect of Obligations with respect to the Notes and may not
acquire from the Trustee or any Holder any Notes for cash or property (other
than (A) Permitted Junior Securities and (B) payments and other distributions
made from any defeasance trust created pursuant to Section 8.01 hereof) until
all principal and other Obligations with respect to the Senior Debt have been
paid in full if:

                  (i) a default in the payment of any principal or other
         Obligations with respect to Designated Senior Debt occurs and is
         continuing beyond any applicable grace period in the agreement,
         indenture or other document governing such Designated Senior Debt; or

                  (ii) a default, other than a payment default, on Designated
         Senior Debt occurs and is continuing that then permits holders of the
         Designated Senior Debt to accelerate its maturity and the Trustee
         receives a notice of the default (a "Payment Blockage Notice") from a
         Person who

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<PAGE>   72

         may give it pursuant to Section 10.12 hereof. If the Trustee receives
         any such Payment Blockage Notice, no subsequent Payment Blockage Notice
         shall be effective for purposes of this Section unless and until (A) at
         least 360 days shall have elapsed since the effectiveness of the
         immediately prior Payment Blockage Notice and (B) all scheduled
         payments of principal, interest, premium and Special Interest, if any,
         on the Securities that have come due have been paid in full in cash. No
         nonpayment default that existed or was continuing on the date of
         delivery of any Payment Blockage Notice to the Trustee shall be, or be
         made, the basis for a subsequent Payment Blockage Notice.

         (b) The Company may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:

                  (i) the date upon which the default is cured or waived, or

                  (ii) in the case of a default referred to in clause (ii) of
         Section 10.04(a) hereof, 179 days pass after notice is received if the
         maturity of such Designated Senior Debt has not been accelerated,

if this Article 10 otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.

Section 10.04.    Acceleration of Securities.

         If payment of the Securities is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the
acceleration.

Section 10.05.    When Distribution Must Be Paid Over.

         In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Notes at a time when the Trustee or such Holder,
as applicable, has actual knowledge that such payment is prohibited by Section
10.04 hereof, such payment shall be held by the Trustee or such Holder, in trust
for the benefit of, and shall be paid forthwith over and delivered, upon written
request, to, the holders of Senior Debt as their interests may appear or their
representative under the indenture or other agreement (if any) pursuant to which
Senior Debt may have been issued, as their respective interests may appear, for
application to the payment of all Obligations with respect to Senior Debt
remaining unpaid to the extent necessary to pay such Obligations in full in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.

         With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, 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, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.

Section 10.06.    Notice by Company.

         The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes to violate this Article

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<PAGE>   73

10, but failure to give such notice shall not affect the subordination of the
Notes to the Senior Debt as provided in this Article 10.

Section 10.07.    Subrogation.

         After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of Notes shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article 10 to holders of
Senior Debt that otherwise would have been made to Holders of Notes is not, as
between the Company and Holders, a payment by the Company on the Notes.

Section 10.08.    Relative Rights.

         This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:

                  (i) impair, as between the Company and Holders of Notes, the
         obligation of the Company, which is absolute and unconditional, to pay
         principal of and interest on the Notes in accordance with their terms;

                  (ii) affect the relative rights of Holders of Notes and
         creditors of the Company other than their rights in relation to holders
         of Senior Debt; or

                  (iii) prevent the Trustee or any Holder of Notes from
         exercising its available remedies upon a Default or Event of Default,
         subject to the rights of holders and owners of Senior Debt to receive
         distributions and payments otherwise payable to Holders of Notes.

         If the Company fails because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.

Section 10.09.    Subordination May Not Be Impaired by Company.

         No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Company or any Holder or by the failure of the Company or any
Holder to comply with this Indenture.

Section 10.10.    Distribution or Notice to Representative.

         Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
representative.

         Upon any payment or distribution of assets of the Company referred to
in this Article 10, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.

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Section 10.11.    Rights of Trustee and Paying Agent.

         Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Company or a
representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.

         The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.

Section 10.12.    Authorization to Effect Subordination.

         Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Credit Agents / representatives are hereby authorized to file an
appropriate claim for and on behalf of the Holders of the Notes.

Section 10.13.    Amendments.

         The provisions of this Article 10 shall not be amended or modified by
the Company and the Trustee without the written consent of the holders of all
Senior Debt.

                                  ARTICLE 11.
                           SATISFACTION AND DISCHARGE

Section 11.01.    Satisfaction and Discharge.

         This Indenture shall be discharged and shall cease to be of further
effect as to all Notes issued hereunder, when either:

         (a)(i) all Notes that have been authenticated, except lost, stolen or
         destroyed Notes that have been replaced or paid and Notes for whose
         payment money has been deposited in trust and thereafter repaid to the
         Company, have been delivered to the Trustee for cancellation; or (ii)
         all Notes that have not been delivered to the Trustee for cancellation
         have become due and payable by reason of the mailing of a notice of
         redemption or otherwise or shall become due and payable within one year
         and the Company has irrevocably deposited or caused to be deposited
         with the Trustee as trust funds in trust solely for the benefit of the
         Holders, cash in U.S. dollars, non-callable Government Securities, or a
         combination thereof, in amounts as shall be sufficient without
         consideration of any reinvestment of interest, to pay and discharge the
         entire indebtedness on the Notes not delivered to the Trustee for
         cancellation for principal, premium and Special Interest, if any, and
         accrued interest to the date of maturity or redemption;

         (b) no Default or Event of Default shall have occurred and be
         continuing on the date of the deposit or shall occur as a result of the
         deposit and the deposit shall not result in a breach or

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<PAGE>   75

         violation of, or constitute a default under, any other instrument to
         which the Company is a party or by which the Company is bound;

         (c) the Company has paid or caused to be paid all sums payable by it
         under this Indenture; and

         (d) the Company has delivered irrevocable instructions to the Trustee
         under this Indenture to apply the deposited money toward the payment of
         the Notes at maturity or the redemption date, as the case may be.

         In addition, the Company must deliver an Officers' Certificate and an
Opinion of Counsel to the Trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.

         Notwithstanding the satisfaction and discharge of this Indenture, if
money shall have been deposited with the Trustee pursuant to subclause (b) of
clause (1) of this Section, the provisions of Section 11.02 and Section 8.06
shall survive.

Section 11.02.    Application of Trust Money.

         Subject to the provisions of Section 8.06, all money deposited with the
Trustee pursuant to Section 11.01 shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Persons entitled thereto,
of the principal (and premium, if any) and interest for whose payment such money
has been deposited with the Trustee; but such money need not be segregated from
other funds except to the extent required by law.

         If the Trustee or Paying Agent is unable to apply any money or
Government Securities in accordance with Section 11.01 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
Company's obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 11.01; provided
that if the Company has made any payment of principal of, premium, if any, or
interest on any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or Government Securities held by the Trustee
or Paying Agent.

                                  ARTICLE 12.
                                  MISCELLANEOUS

Section 12.01.    Trust Indenture Act Controls.

         If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss.318(c), the imposed duties shall control.

Section 12.02.    Notices.

         Any notice or communication by the Company or the Trustee to the others
is duly given if in writing and delivered in Person or mailed by first class
mail (registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:

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         If to the Company:

         American Greetings Corporation
         One American Road
         Cleveland, OH  44144-2398
         Telecopier No.:  (216) 252-6777
         Attention:  Phyllis Alden

         With a copy to:
         Brouse McDowell
         500 First National Tower
         Akron, OH  44308-1471
         Telecopier No.:  (330) 253-8601
         Attention:  Stanley E. Everett

         If to the Trustee:
         The Huntington National Bank
         917 Euclid Avenue
         Cleveland, OH 44115-1497
         Telecopier No.:  (216) 515-6662
         Attention:  Frank Lamb

         The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.

         All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.

         Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA ss. 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.

         If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.

         If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.

Section 12.03.    Communication by Holders of Notes with Other Holders of Notes.

         Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).

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Section 12.04.    Certificate and Opinion as to Conditions Precedent.

         Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:

         (a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and

         (b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.

Section 12.05.    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 a certificate provided
pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss.
314(e) and shall include:

         (a) a statement that the Person making such certificate or opinion has
read such covenant or condition;

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

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

         (d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.

Section 12.06.    Rules by Trustee and Agents.

         The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.

Section 12.07.    No Personal Liability of Directors, Officers, Employees and
                  Stockholders.

         No past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.

Section 12.08.    Governing Law.

         THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE

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PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 12.09.    No Adverse Interpretation of Other Agreements.

         This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.

Section 12.10.    Successors.

         All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.

Section 12.11.    Severability.

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

Section 12.12.    Counterpart Originals.

         The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.

Section 12.13.    Table of Contents, Headings, etc.

         The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.

                         [Signatures on following page]

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                                   SIGNATURES

Dated as of June 29, 2001
                                        AMERICAN GREETINGS CORPORATION

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

                                        THE HUNTINGTON NATIONAL BANK

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

                                       73
<PAGE>   80

                                                                       EXHIBIT A

<TABLE>
<CAPTION>
<S>                                                                     <C>
-------------------------------------------------------------------------------------------------------------------

                                                                                                 CUSIP ____________

                    11.75% Senior Subordinated Notes due 2008

No. ___                                                                                               $____________

                         AMERICAN GREETINGS CORPORATION

promises to pay to Cede & Co., or registered assigns, the principal sum of
                                                                           ----------------------------------------

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

Dollars on July 15, 2008.

Interest Payment Dates:  January 15 and July 15

Record Dates:  January 1 and July 1

Dated:  June 29, 2001

                                                     AMERICAN GREETINGS CORPORATION

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

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

THE HUNTINGTON NATIONAL BANK,
  as Trustee

By:
     --------------------------------------------
                Authorized Signatory

-------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      A-1
<PAGE>   81

                    11.75% Senior Subordinated Notes due 2008

[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]

[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]

[Insert the Original Issue Discount Legend, if applicable pursuant to the
provisions of the Indenture]

         Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.

         1. INTEREST. American Greetings Corporation, an Ohio corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
11.75% per annum from June 29, 2001 until maturity and shall pay the Special
Interest payable pursuant to Section 5 of the Registration Rights Agreement
referred to below; provided that if Adjusted Consolidated Cash Flow, as shown on
any financial statement furnished to the Holders of Notes pursuant the Section
4.03 (or any amendment or restatement thereof) for any four full consecutive
fiscal quarters ending on or prior May 31, 2003, is less than $225 million,
interest on the Notes will begin to accrue (on and after such date) at a rate of
12.75% per annum (the "Increased Rate") and will continue to accrue at the
Increased Rate until the maturity of the Notes. The Company will pay interest
and Special Interest semi-annually in arrears on January 15 and July 15 of each
year, or if any such day is not a Business Day, on the next succeeding Business
Day (each an "Interest Payment Date"). Interest on the Notes will accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance; provided that if there is no existing Default
in the payment of interest, and if this Note is authenticated between a record
date referred to on the face hereof and the next succeeding Interest Payment
Date, interest shall accrue from such next succeeding Interest Payment Date;
provided, further, that the first Interest Payment Date shall be January 15,
2002. The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the rate
then in effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Special Interest (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.

         2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Special Interest to the Persons who are
registered Holders of Notes at the close of business on the January 1 or July 1
next preceding the Interest Payment Date, even if such Notes are canceled after
such record date and on or before such Interest Payment Date, except as provided
in Section 2.12 of the Indenture with respect to defaulted interest. The Notes
will be payable as to principal, premium and Special Interest, if any, and
interest at the office or agency of the Company maintained for such purpose
within or without the City and State of New York, or, at the option of the
Company, payment of interest and Special Interest may be made by check mailed to
the Holders at their addresses set forth in the register of Holders, and
provided that payment by wire transfer of immediately available funds will be
required with respect to principal of and interest, premium and Special Interest
on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.

         3. PAYING AGENT AND REGISTRAR. Initially, The Huntington National Bank,
the Trustee under the Indenture, will act as Paying Agent and Registrar. The
Company may change any Paying

                                      A-2

<PAGE>   82

Agent or Registrar without notice to any Holder. The Company or any of its
Subsidiaries may act in any such capacity.

         4. INDENTURE. The Company issued the Notes under an Indenture dated as
of June 29, 2001 ("Indenture") between the Company and the Trustee. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and Holders
are referred to the Indenture and such Act for a statement of such terms. To the
extent any provision of this Note conflicts with the express provisions of the
Indenture, the provisions of the indenture shall govern and be controlling.

         5. OPTIONAL REDEMPTION.

         (a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to July 15, 2005.
Thereafter, the Company shall have the option to redeem the Notes, in whole or
in part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Special Interest thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on July 15
of the years indicated below:

<TABLE>
<CAPTION>
        Year                                                                                    Percentage
        ----                                                                                    ----------
<S>                                                                                              <C>
        2005.............................................................................        105.875%
        2006.............................................................................        102.938%
        2007 and thereafter..............................................................        100.000%
</TABLE>

         (b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, at any time prior to July 15, 2004, the Company may redeem up to
35% of the aggregate principal amount of Notes originally issued at a redemption
price of 111.75% of the principal amount thereof, plus accrued and unpaid
interest and Special Interest thereon, if any, to the redemption date, with the
net cash proceeds of one or more Equity Offerings; provided (1) that at least
65% of the aggregate principal amount of Notes originally issued remains
outstanding immediately after the occurrence of such redemption and (2) that
such redemption occurs within 90 days of the date of the closing of such Equity
Offering.

         6. MANDATORY REDEMPTION.

                  Except as set forth in paragraph 7 below, the Company shall
not be required to make mandatory redemption payments with respect to the Notes.

         7. REPURCHASE AT OPTION HOLDER.

         (a) If there is a Change of Control, the Company shall be required to
make an offer (a "Change of Control Offer") to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Special Interest thereon, if any, to the date of purchase
(the "Change of Control Payment"). Within 10 days following any Change of
Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.

         (b) If the Company or a Subsidiary consummates any Asset Sales, within
ten Business Days of each date on which the aggregate amount of Excess Proceeds
exceeds $10 million, the

                                      A-3

<PAGE>   83

Company shall commence an offer to all Holders of Notes (an "Asset Sale Offer")
pursuant to Section 3.09 of the Indenture to purchase the maximum principal
amount of Notes (including any Additional Notes) and such other pari passu
Indebtedness that may be purchased out of the Excess Proceeds at an offer price
in cash in an amount equal to 100% of the principal amount thereof plus accrued
and unpaid interest and Special Interest thereon, if any, to the date of
purchase, in accordance with the procedures set forth in the Indenture. To the
extent that the aggregate amount of Notes (including any Additional Notes) and
other pari passu Indebtedness tendered pursuant to an Asset Sale Offer is less
than the Excess Proceeds, the Company (or such Subsidiary) may use such
deficiency for any purpose not otherwise prohibited by the Indenture. If the
aggregate principal amount of Notes surrendered by Holders thereof and other
pari passu Indebtedness tendered exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Holders of
Notes that are the subject of an offer to purchase will receive an Asset Sale
Offer from the Company prior to any related purchase date and may elect to have
such Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes.

         8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.

         9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.

         10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.

         11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes and Additional Notes, if any, voting as a single class, and any existing
default or compliance with any provision of the Indenture or the Notes may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding Notes and Additional Notes, if any, voting as a single class.
Without the consent of any Holder of a Note, the Indenture or the Notes may be
amended or supplemented to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's obligations to Holders of
the Notes in case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder, to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act, or to
provide for the Issuance of Additional Notes in accordance with the limitations
set forth in the Indenture.

         12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for
30 days in the payment when due of interest on, or Special Interest with respect
to, the Notes whether or not prohibited by the subordination provisions of the
Indenture; (ii) default in payment when due of principal of or

                                      A-4

<PAGE>   84

premium, if any, on the Notes whether or not prohibited by the subordination
provisions of the Indenture, (iii) failure by the Company or any of its
Subsidiaries to comply with Section 4.07, 4.09, 4.10, 4.15 or 5.01 of the
Indenture; (iv) failure by the Company for 60 days after notice to the Company
by the Trustee or the Holders of at least 25% in principal amount of the Notes
(including Additional Notes, if any) then outstanding voting as a single class
to comply with certain other agreements in the Indenture or the Notes; (v)
default under certain other agreements relating to Indebtedness of the Company
or any of its Subsidiaries (or the payment of which is guaranteed by the Company
or any of its Subsidiaries) whether such Indebtedness or guarantee now exists,
or is created after the date of the Indenture, which default (a) is caused by a
failure to pay principal of, or interest or premium, if any, on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default"), or (b) results
in the acceleration of such Indebtedness prior to its express maturity, and in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$20.0 million or more; (vi) failure by the Company or any of its Subsidiaries to
pay final judgments aggregating in excess of $20.0 million, which judgements are
not paid, discharged or stayed for a period of 60 days; and (vii) certain events
of bankruptcy or insolvency with respect to the Company or any of its
Significant Subsidiaries. If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Notes will become
due and payable without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes. The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.

         13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.

         14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.

         15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.

         16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

                                      A-5
<PAGE>   85

         17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of June 29, 2001, between the Company and the parties named
on the signature pages thereof (the "Registration Rights Agreement").

         18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.

         The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:

American Greetings Corporation
One American Road
Cleveland, Ohio 44144-2398
Attention:  Phyllis Alden

                                      A-6

<PAGE>   86

                                 ASSIGNMENT FORM

         To assign this Note, fill in the form below:

<TABLE>
<CAPTION>
<S>                                               <C>
(I) or (we) assign and transfer this Note to:
                                               --------------------------------------------------------------------
                                                                   (Insert assignee's legal name)

-------------------------------------------------------------------------------------------------------------------
                                   (Insert assignee's soc. sec. or tax I.D. no.)

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

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

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

-------------------------------------------------------------------------------------------------------------------
                               (Print or type assignee's name, address and zip code)

and irrevocably appoint
                        -------------------------------------------------------------------------------------------
to transfer this Note on the books of the Company.  The agent may substitute another to act for him.

Date:  _______________

                                                     Your Signature:
                                                                      ---------------------------------------------
                                                       (Sign exactly as your name appears on the face of this Note)

Signature Guarantee*:  _________________________
</TABLE>

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

                                      A-7

<PAGE>   87

                       OPTION OF HOLDER TO ELECT PURCHASE

         If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:

                      -Section 4.10      -Section 4.15

         If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:

                                                 $___________________

Date:  _______________

<TABLE>
<CAPTION>
<S>                                                  <C>
                                                     Your Signature:
                                                                      ---------------------------------------------
                                                       (Sign exactly as your name appears on the face of this Note)

                                                     Tax Identification No.:
                                                                              -------------------------------------

Signature Guarantee*:  _________________________
</TABLE>

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

                                      A-8

<PAGE>   88

              SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

         The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:

<TABLE>
<CAPTION>
                                                                           Principal Amount
                           Amount of decrease    Amount of increase in    of this Global Note       Signature of
                           in Principal Amount      Principal Amount        following such       authorized officer
                                   of                      of                  decrease            of Trustee or
    Date of Exchange        this Global Note        this Global Note         (or increase)        Note Custodian
    ----------------        ----------------        ----------------         -------------        --------------
<S>                         <C>                     <C>                      <C>                  <C>
</TABLE>

                                      A-9

<PAGE>   89

                                                                       EXHIBIT B

                         FORM OF CERTIFICATE OF TRANSFER

American Greetings Corporation
One American Road
Cleveland, Ohio 44144-2398

The Huntington National Bank
917 Euclid Avenue
Cleveland, Ohio 44115-1497

         Re:  11.75% SENIOR SUBORDINATED NOTES DUE 2008

         Reference is hereby made to the Indenture, dated as of June 29, 2001
(the "Indenture"), between American Greetings Corporation, as issuer (the
"Company"), and The Huntington National Bank, as trustee. Capitalized terms used
but not defined herein shall have the meanings given to them in the Indenture.

         ___________________, (the "Transferor") owns and proposes to transfer
the Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to ___________________________ (the "Transferee"), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies that:

                                              [CHECK ALL THAT APPLY]

         1. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST
IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer
is being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.

         2. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST
IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S.
The Transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and, accordingly, the Transferor hereby
further certifies that (i) the Transfer is not being made to a person in the
United States and (x) at the time the buy order was originated, the Transferee
was outside the United States or such Transferor and any Person acting on its
behalf reasonably believed and believes that the Transferee was outside the
United States or (y) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S under the Securities Act, (iii) the transaction is not
part of a plan or scheme to evade the registration requirements of

                                      B-1

<PAGE>   90

the Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Restricted Period, the transfer is not being made to a U.S.
Person or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Upon consummation of the proposed transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on Transfer enumerated in the Private
Placement Legend printed on the Regulation S Global Note and/or the Definitive
Note and in the Indenture and the Securities Act.

         3. [_] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):

                  (a) [_] such Transfer is being effected pursuant to and in
         accordance with Rule 144 under the Securities Act;

                                       or

                  (b) [_] such Transfer is being effected to the Company or a
         subsidiary thereof;

                                       or

                  (c) [_] such Transfer is being effected pursuant to an
         effective registration statement under the Securities Act and in
         compliance with the prospectus delivery requirements of the Securities
         Act;

                                       or

                  (d) [_] such Transfer is being effected to an Institutional
         Accredited Investor and pursuant to an exemption from the registration
         requirements of the Securities Act other than Rule 144A, Rule 144 or
         Rule 904, and the Transferor hereby further certifies that it has not
         engaged in any general solicitation within the meaning of Regulation D
         under the Securities Act and the Transfer complies with the transfer
         restrictions applicable to beneficial interests in a Restricted Global
         Note or Restricted Definitive Notes and the requirements of the
         exemption claimed, which certification is supported by (1) a
         certificate executed by the Transferee in the form of Exhibit D to the
         Indenture and (2) if such Transfer is in respect of a principal amount
         of Notes at the time of transfer of less than $250,000, an Opinion of
         Counsel provided by the Transferor or the Transferee (a copy of which
         the Transferor has attached to this certification), to the effect that
         such Transfer is in compliance with the Securities Act. Upon
         consummation of the proposed transfer in accordance with the terms of
         the Indenture, the transferred beneficial interest or Definitive Note
         will be subject to the restrictions on transfer enumerated in the
         Private Placement Legend printed on the 144A Global Note and/or the
         Definitive Notes and in the Indenture and the Securities Act.

         4. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST
IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.

         (a)  [_] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the

                                      B-2
<PAGE>   91

United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.

         (b) [_] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.

         (c) [_] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.

         This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.

<TABLE>
<CAPTION>
<S>                                                  <C>

                                                     -----------------------------------------------------------
                                                                          [Insert Name of Transferor]

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

         Dated:  _______________________
</TABLE>

                                      B-3

<PAGE>   92

<TABLE>
<CAPTION>
<S>                                                                                 <C>
                       ANNEX A TO CERTIFICATE OF TRANSFER

         1. The Transferor owns and proposes to transfer the following:

                            [CHECK ONE OF (a) OR (b)]

                  (a) [_] a beneficial interest in the:

                           (i) [_] 144A Global Note (CUSIP 026375 AF 2), or

                           (ii) [_] Regulation S Global Note (CUSIP 026375 AG 0), or

                  (b) [_] a Restricted Definitive Note.

         2. After the Transfer the Transferee will hold:

                                   [CHECK ONE]

                  (a) [_] a beneficial interest in the:

                           (i) [_] 144A Global Note (CUSIP 026375 AF 2), or

                           (ii) [_] Regulation S Global Note (CUSIP 026375 AG 0), or

                           (iii) [_] Unrestricted Global Note (CUSIP _________); or

                  (b) [_] a Restricted Definitive Note; or

                  (c) [_] an Unrestricted Definitive Note,

                  in accordance with the terms of the Indenture.
</TABLE>

                                      B-4

<PAGE>   93

                                                                       EXHIBIT C

                         FORM OF CERTIFICATE OF EXCHANGE

American Greetings Corporation
One American Road
Cleveland, Ohio 44144-2398

The Huntington National Bank
917 Euclid Avenue
Cleveland, Ohio 44115-1497

         Re:  11.75% SENIOR SUBORDINATED NOTES DUE 2008

                              (CUSIP ____________)

         Reference is hereby made to the Indenture, dated as of June 29, 2001
(the "Indenture"), between American Greetings Corporation, as issuer (the
"Company"), and The Huntington National Bank, as trustee. Capitalized terms used
but not defined herein shall have the meanings given to them in the Indenture.

         __________________________, (the "Owner") owns and proposes to exchange
the Note[s] or interest in such Note[s] specified herein, in the principal
amount of $____________ in such Note[s] or interests (the "Exchange"). In
connection with the Exchange, the Owner hereby certifies that:

         1. [_] EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN AN UNRESTRICTED GLOBAL NOTE

         (a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.

         (b) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.

                                      C-1

<PAGE>   94
                                                                       EXHIBIT C

         (c) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.

         (d) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

         2. [_] EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN RESTRICTED GLOBAL NOTES

         (a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.

         (b) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] 144A Global Note, Regulation S Global Note, with an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer and (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, and in compliance with any applicable blue sky securities laws of any state
of the United States. Upon consummation of the proposed Exchange in accordance
with the terms of the Indenture, the beneficial interest issued will be subject
to the restrictions on transfer enumerated in the Private Placement Legend
printed on the relevant Restricted Global Note and in the Indenture and the
Securities Act.

         This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.

                                            ------------------------------------
                                                [Insert Name of Transferor]

                                      C-2
<PAGE>   95
                                                                       EXHIBIT C

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

Dated:  ______________________

                                      C-3
<PAGE>   96

                                                                       EXHIBIT D

                            FORM OF CERTIFICATE FROM
                   ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

American Greetings Corporation
One American Road
Cleveland, Ohio 44144-2398

The Huntington National Bank
917 Euclid Avenue
Cleveland, Ohio 44115-1497

         Re:  11.75% SENIOR SUBORDINATED NOTES DUE 2008

         Reference is hereby made to the Indenture, dated as of June 29, 2001
(the "Indenture"), between American Greetings Corporation, as issuer (the
"Company"), and The Huntington National Bank, as trustee. Capitalized terms used
but not defined herein shall have the meanings given to them in the Indenture.

         In connection with our proposed purchase of $____________ aggregate
principal amount of:

         (a) [_] a beneficial interest in a Global Note, or

         (b) [_] a Definitive Note,

         we confirm that:

         1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").

         2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
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 the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) 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 you and to the Company a signed letter
substantially in the form of this letter and , if such transfer is in respect of
a principal amount of Notes, at the time of transfer of less than $250,000, an
Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, (D) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or
(F) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.

                                      D-1

<PAGE>   97
                                                                       EXHIBIT D

         3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect.

         4. 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 Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.

         5. We are acquiring the Notes or beneficial interest therein purchased
by us for our own 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.

         You and the Company 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.

                                   ---------------------------------------------
                                       [Insert Name of Accredited Investor]

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

Dated:  _______________________

                                      D-2Exhibit 4d
]

                                 XL Capital Ltd

                   Zero-Coupon Convertible Debentures due 2021

                               Purchase Agreement

                                                                    May 18, 2001

Goldman, Sachs & Co.,
Deutsche Banc Alex. Brown Inc.
Dresdner Kleinwort Wasserstein LLC
     As representatives of the several Purchasers
     named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.

Ladies and Gentlemen:

     XL Capital Ltd, a Cayman Islands exempted limited company (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Purchasers named in Schedule I hereto (the "Purchasers") an aggregate of
$842,361,000 principal amount at maturity (subject to adjustment in the event
there is an upward interest adjustment) of the Zero-Coupon Convertible
Debentures (the "Debentures"), convertible into Class A Ordinary Shares, par
value $0.01 per share (the "Shares" and, together with the Debentures, the "Firm
Securities") of the Company, specified above and, at the election of the
Purchasers, up to an aggregate of $168,473,000 additional aggregate principal
amount at maturity (subject to adjustment in the event there is an upward
interest adjustment) of the Debentures (the "Optional Securities"). The Firm
Securities and the Optional Securities which the Purchasers elect to purchase
pursuant to Section 2 hereof are herein collectively called the "Securities".

     1. The Company represents and warrants to, and agrees with, each of the
Purchasers that:

          (a) An offering circular, dated May 18, 2001 (the "Offering
     Circular"), has been prepared in connection with the offering of the
     Securities and the Shares issuable upon conversion thereof. Any reference
     to the Offering Circular shall be deemed to refer to and include the
     Company's Annual Report on Form 10-K for the fiscal year

<PAGE>
                                      -2-

     ended December 31, 2000, Quarterly Report on Form 10-Q for the quarter
     ended March 31, 2001 and Current Report on Form 8-K dated February 23,
     2001, which are incorporated by reference into the Offering Circular, and
     all subsequent documents filed with the United States Securities and
     Exchange Commission (the "Commission") pursuant to Section 13(a), 13(c) or
     15(d) of the United States Securities Exchange Act of 1934, as amended (the
     "Exchange Act"), on or prior to the date of the Offering Circular and any
     reference to the Offering Circular as amended or supplemented, as of any
     specified date, shall be deemed to include (i) any documents filed with the
     Commission pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act
     after the date of the Offering Circular, and prior to such specified date
     and (ii) any Additional Issuer Information (as defined in Section 5(f))
     furnished by the Company prior to the completion of the distribution of the
     Securities; and all documents filed under the Exchange Act and so deemed to
     be included in the Offering Circular, as the case may be, or any amendment
     or supplement thereto are hereinafter called the "Exchange Act Reports."
     The Exchange Act Reports, when they were or are filed with the Commission,
     conformed or will conform in all material respects to the applicable
     requirements of the Exchange Act and the applicable rules and regulations
     of the Commission thereunder. The Offering Circular and any amendments or
     supplements thereto and the Exchange Act Reports did not and will not, as
     of their respective dates, contain an untrue statement of a material fact
     or omit to state a material fact necessary in order to make the statements
     therein, in the light of the circumstances under which they were made, not
     misleading; provided, however, that this representation and warranty shall
     not apply to any statements or omissions made in reliance upon and in
     conformity with information furnished in writing to the Company by a
     Purchaser through Goldman, Sachs & Co. expressly for use therein;

          (b) Neither the Company nor any of its Significant Subsidiaries (as
     defined below) has sustained since the date of the latest audited financial
     statements included in the Offering Circular any loss or interference with
     its business from fire, explosion, flood or other calamity, whether or not
     covered by insurance, or from any labor dispute or court or governmental
     action, order or decree, otherwise than as set forth or contemplated in the
     Offering Circular, which loss or interference would have a Material Adverse
     Effect (as defined below), or would reasonably be expected to have a
     prospective Material Adverse Effect, on the Company and its Significant
     Subsidiaries, taken as a whole; and, since the respective dates as of which
     information is given in the Offering Circular, there has not been any
     change in the capital stock (other than changes resulting from the exercise
     of stock options or the conversions of warrants or capital stock which were
     outstanding as of such date, or from the exercise of options granted after
     such date in the ordinary course of business or from repurchases of capital
     stock) or long-term debt of the Company or any of its Significant
     Subsidiaries or

<PAGE>
                                      -3-

     any material adverse change, or any development that would reasonably be
     expected to involve a prospective material adverse change, in or affecting
     the general affairs, management, financial position, stockholders' equity
     or results of operations of the Company and its Significant Subsidiaries,
     taken as a whole, otherwise than as set forth or contemplated in the
     Offering Circular;

          (c) The Company has been duly incorporated and is validly existing as
     an exempted limited company in good standing under the laws of the Cayman
     Islands, with power and authority to own its properties and conduct its
     business as described in the Offering Circular, and has been duly qualified
     as a foreign company for the transaction of business and is in good
     standing under the laws of each other jurisdiction in which it owns or
     leases properties or conducts any business so as to require such
     qualification, except where such failure to be so qualified in any such
     jurisdiction or to have any such power or authority would not have a
     material adverse effect on the current or future condition (financial or
     other), business, properties or results of operations of the Company and
     its subsidiaries taken as a whole (a "Material Adverse Effect"); and each
     Significant Subsidiary of the Company has been duly incorporated and is
     validly existing as a corporation in good standing under the laws of its
     jurisdiction of incorporation;

          (d) All of the issued share capital of the Company have been duly and
     validly authorized and issued and are fully paid and non-assessable; the
     Shares initially issuable upon conversion of the Securities have been duly
     and validly authorized and reserved for issuance and, when issued and
     delivered in accordance with the provisions of the Debentures and the
     Indenture referred to below, will be duly and validly issued, fully paid
     and non-assessable and will conform to the description of the Shares
     contained in the Offering Circular; and all of the issued share capital of
     each Significant Subsidiary of the Company which is a corporation have been
     duly and validly authorized and issued, are fully paid and non-assessable
     and (except for directors' qualifying shares) are owned directly or
     indirectly by the Company, free and clear of all liens, encumbrances,
     equities or claims (for purposes of this agreement, "Subsidiary" means, as
     applied to any person, any corporation, limited or general partnership,
     trust, association or other business entity of which an aggregate of
     greater than 50% of the outstanding Voting Shares of such person is, at any
     time, directly or indirectly, owned by such person and/or one or more
     subsidiaries of such person and "Significant Subsidiary" shall have the
     meaning of "significant subsidiary" as set forth in Regulation S-X under
     the Act; for purposes of the definition of " Subsidiary," "Voting Shares"
     means, with respect to any corporation, the capital stock having the
     general voting power under ordinary circumstances to elect at least a
     majority of the board of directors

<PAGE>

                                      -4-

     (irrespective of whether or not at the time stock of any other class or
     classes shall have or might have voting power by reason of the happening of
     any contingency));

          (e) The Securities have been duly authorized and, when issued and
     delivered pursuant to this Agreement, and when authenticated by the Trustee
     (as defined below), will have been duly executed, authenticated, issued and
     delivered and will constitute valid and legally binding obligations of the
     Company entitled to the benefits provided by the indenture to be dated as
     of May 23, 2001 (the "Indenture") between the Company and State
     Street Bank and Trust Company, as Trustee (the "Trustee"), under which they
     are to be issued; the Indenture has been duly authorized and, when
     executed and delivered by the Company and the Trustee, the Indenture will
     constitute a valid and legally binding instrument, enforceable in
     accordance with its terms, subject, as to enforcement, to (i) bankruptcy,
     insolvency, reorganization, conveyance and other similar laws now or
     hereafter in effect relating to or affecting creditors' rights or remedies
     generally and to general equity principles and to the discretion of the
     court before which any proceedings therefor may be brought (regardless of
     whether enforcement is sought in a proceeding at law or in equity) and (ii)
     the enforceability of provisions imposing liquidated damages, penalties or
     an increase in interest rate upon the occurrence of certain events may be
     limited in certain circumstances; and the Securities and the Indenture will
     conform to the descriptions thereof in the Offering Circular;

          (f) None of the transactions contemplated to be performed by the
     Company by this Agreement (including, without limitation, the use of the
     proceeds from the sale of the Securities) will violate or result in a
     violation of Section 7 of the Exchange Act, or any regulation promulgated
     thereunder, including, without limitation, Regulations T, U, and X of the
     Board of Governors of the Federal Reserve System;

          (g) Prior to the date hereof, neither the Company nor, to the
     Company's knowledge, any of its affiliates has taken any action which is
     designed to or which has constituted or which might have been expected to
     cause or result in stabilization or manipulation of the price of any
     security of the Company in connection with the offering of the Securities
     in violation of the Exchange Act;

          (h) The issue and sale by the Company of the Securities pursuant to
     this Agreement and the compliance by the Company with all of the provisions
     of the Securities, the Indenture, and this Agreement and the consummation
     of the transactions herein and therein contemplated to be performed by the
     Company will not conflict with or result in a breach or violation of any of
     the terms or provisions of, or constitute a default under, any indenture,
     mortgage, deed of trust, loan agreement or other agreement or instrument to
     which the Company or any of its Significant Subsidiaries is a party or by
     which the Company or any of its Significant Subsidiaries is bound or to

<PAGE>
                                      -5-

     which any of the property or assets of the Company or any of its
     Significant Subsidiaries is subject, nor will such action result in any
     violation of the provisions of the Articles of Association of the Company
     or any statute or any order, rule or regulation of any court or
     governmental agency or body ("Governmental Agency") having jurisdiction
     over the Company or any of its Significant Subsidiaries or any of their
     properties, except in each case (other than with respect to such Articles
     of Association or Bye-laws) for such conflicts, violations, breaches or
     defaults which would not result in a Material Adverse Effect;

          (i) No consent, approval, authorization, order, registration or
     qualification of or with any such Governmental Agency (a "Governmental
     Authorization") is required for the issue and sale by the Company of the
     Securities pursuant to this Agreement or the consummation by the Company of
     the transactions contemplated by this Agreement or the Indenture to be
     performed by the Company, except for registration of the Securities under
     the federal securities laws, and except such consents, approvals,
     authorizations, registrations or qualifications as may be required under
     state securities or Blue Sky laws and the laws of the Cayman Islands in
     connection with the purchase and distribution of the Securities by the
     Purchasers;

          (j) The statements set forth in the Offering Circular under the
     caption "Description of Debentures" and "Description of Ordinary Shares",
     insofar as they purport to constitute a summary of the terms of the
     Securities and the Shares, insofar as they purport to describe the
     provisions of the documents referred to therein, fairly summarize such
     documents in all material respects;

          (k) Other than as set forth or incorporated by reference in the
     Offering Circular, or as encountered in the ordinary course of business in
     the Company's claims activities, there are no actions, suits or proceedings
     pending or, to the knowledge of the Company, threatened against or
     affecting the Company or any of its Significant Subsidiaries or any
     property of the Company or any of its Significant Subsidiaries in any court
     or before any arbitrator of any kind or before any governmental authority
     that, individually or in the aggregate, would reasonably be expected to
     have a Material Adverse Effect;

          (l) The financial statements incorporated by reference in the Offering
     Circular present fairly the financial position of the Company and its
     consolidated Subsidiaries as of the dates shown and their results of
     operations and cash flows for the periods shown, and except as otherwise
     disclosed in the Offering Circular, such financial statements have been
     prepared in conformity with the generally accepted accounting principles in
     the United States applied on a consistent basis;

<PAGE>

                                      -6-

          (m) The Company and its Significant Subsidiaries possess adequate
     certificates, authorities or permits issued by appropriate governmental
     agencies or bodies necessary to conduct the business now operated by them
     and have not received any written notice of proceedings relating to the
     revocation or modification of any such certificate, authority or permit
     that would, individually or in the aggregate, reasonably be expected to
     have a Material Adverse Effect;

          (n) When the Securities are issued and delivered pursuant to this
     Agreement, the Securities will not be of the same class (within the meaning
     of Rule 144A under the Securities Act of 1933, as amended (the "Act")) as
     securities which are listed on a national securities exchange registered
     under Section 6 of the Exchange Act or quoted in a U.S. automated
     inter-dealer quotation system;

          (o) The Company is subject to Section 13 or 15(d) of the Exchange Act;

          (p) The Company is not, and after giving effect to the offering and
     sale of the Securities, will not be an "investment company", as such term
     is defined in the United States Investment Company Act of 1940, as amended
     (the "Investment Company Act"); (q) Neither the Company nor any person
     acting on its behalf has offered or sold the Securities by means of any
     general solicitation or general advertising within the meaning of Rule
     502(c) under the Act; provided, that the Company makes no representation as
     to the Purchasers and their affiliates;

          (r) Within the preceding six months, neither the Company nor any other
     person acting on behalf of the Company has offered or sold to any person
     any Securities, or any securities of the same or a similar class as the
     Securities, other than Securities offered or sold to the Purchasers
     hereunder; provided, that the Company makes no representation as to the
     Purchasers and their affiliates. The Company will take reasonable
     precautions designed to insure that any offer or sale, direct or indirect,
     in the United States of any Securities or any substantially similar
     security issued by the Company, within six months subsequent to the date on
     which the distribution of the Securities has been completed (as notified to
     the Company by Goldman, Sachs & Co.), is made under restrictions and other
     circumstances reasonably designed not to affect the status of the offer and
     sale of the Securities in the United States and to U.S. persons
     contemplated by this Agreement as transactions exempt from the registration
     provisions of the Securities Act;

<PAGE>

                                      -7-

          (s) PricewaterhouseCoopers LLP, the Company's auditors, are
     independent public accountants as required by the Act and the rules and
     regulations of the Commission thereunder;

          (t) Neither the Company nor any of its Significant Subsidiaries is in
     violation of its Articles of Association or Bye-laws or in default in the
     performance or observance of any material obligation, covenant or condition
     contained in any indentures, mortgage, deed of trust, loan agreement, lease
     or other agreement or instrument to which it is a party or by which it or
     any of its properties may be bound, except for such defaults which would
     not result in a Material Adverse Effect; and

          (u) No stamp or other issuance or transfer taxes or duties and no
     capital gains, income, withholding or other taxes are payable by or on
     behalf of the Purchasers to the Cayman Islands or any political subdivision
     or taxing authority thereof or therein in connection with (A) the issuance,
     sale and delivery by the Company to or for the respective accounts of the
     Purchasers of the Securities or (B) the sale or delivery outside the Cayman
     Islands by the Purchasers of the Securities to the initial purchasers
     thereof, other than as described in the opinion of Hunter & Hunter
     delivered pursuant to Section 7(c) of this Agreement.

     2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to the Purchasers, and the Purchasers agree to purchase
from the Company, at a purchase price of 97.75% of the initial amount of the
Securities, such principal amount at maturity of the Securities as set forth
opposite the name of such Purchaser in Schedule I hereto and (b) in the event
and to the extent that the Purchasers shall exercise the election to purchase
Optional Securities as provided below, the Company agrees to issue and sell to
the Purchasers, and the Purchasers agree, severally and not jointly, to purchase
from the Company, at the same purchase price set forth in clause (a) of this
Section 2, that portion of the aggregate principal amount at maturity of the
Optional Securities as to which such election shall have been exercised,
determined by multiplying such aggregate principal amount at maturity of
Optional Securities by a fraction, the numerator of which is the maximum
aggregate principal amount of Optional Securities which such Purchaser is
entitled to purchase and the denominator of which is the maximum aggregate
principal amount at maturity of Optional Securities which all of the Purchasers
are entitled to purchase hereunder.

     The Company hereby grants to the Purchasers the right to purchase at their
election up to $168,473,000 aggregate principal amount at maturity of Optional
Securities, at the purchase price set forth in clause (a) of the first paragraph
of this Section 2. Any such election to purchase Optional Securities may be
exercised by written notice from you to the Company, given within a period of 13
calendar days after the date of this Agreement, setting forth the aggregate
principal amount of Optional Securities to be purchased and the date on

<PAGE>

                                      -8-

which such Optional Securities are to be delivered, as determined by you but in
no event earlier than the First Time of Delivery (as defined in Section (4)
hereof) or, unless you and the Company otherwise agree in writing, earlier than
two or later than ten business days after the date of such notice. No Optional
Securities shall be sold or delivered unless the Firm Securities previously have
been, or simultaneously are, sold and delivered.

     3. Upon the authorization by you of the release of the Securities, each
Purchaser proposes to offer the Securities for sale upon the terms and
conditions set forth in this Agreement and the Offering Circular and each
Purchaser hereby represents and warrants to, and agrees with the Company that:

          (a) It will offer and sell the Securities only to persons who it
     reasonably believes are "qualified institutional buyers" ("QIBs") within
     the meaning of Rule 144A under the Act in transactions meeting the
     requirements of Rule 144A;

          (b) It is an Institutional Accredited Investor; and

          (c) It has not and will not offer or sell the Securities by any form
     of general solicitation or general advertising, including but not limited
     to the methods described in Rule 502(c) under the Act.

     4. The Securities to be purchased by each Purchaser hereunder, in
book-entry form, will be represented by permanent global certificates and shall
be delivered by or on behalf of the Company to the Purchasers, through the
facilities of The Depository Trust Company ("DTC"), for the account of the
Purchasers, against payment by or on behalf of such Purchaser of the purchase
price therefor by wire transfer to the Company of federal (same day) funds, by
causing DTC to credit the Securities to the account of the Purchasers. The
Company will cause the global certificates representing the Firm Securities to
be made available for checking and packaging at least twelve hours prior to the
Time of Delivery (as defined below) at the office of Skadden, Arps, Slate,
Meagher & Flom LLP. The time and date for the delivery and payment of the Firm
Securities shall be 9:30 a.m., New York City time, on May 23, 2001 or such other
time and date as Goldman, Sachs & Co. and the Company may agree upon in writing,
and, with respect to the Optional Securities, 9:30 a.m., New York City time, on
the date specified by Goldman, Sachs & Co. of the Purchasers' election to
purchase such Optional Securities, or such other time and date as Goldman, Sachs
& Co. and the Company may agree upon in writing. Such time and date of delivery
of the Firm Securities herein called the "First Time of Delivery," such time and
date of delivery of the Optional Securities, if not the First Time of Delivery,
is herein called the "Second Time of Delivery," and each such time and date of
delivery is herein called the "Time of Delivery."

<PAGE>

                                      -9-

     (a) The documents to be delivered at the Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross-receipt
for the Securities and any additional documents requested by the Purchasers
pursuant to Section 7(m) hereof, will be delivered at such time and date at the
offices of Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York, 10036
(the "Closing Location"), and the Securities will be delivered at the Designated
Office, all at the Time of Delivery. A meeting will be held at the Closing
Location at 3:00 p.m., New York City time, on the New York Business Day next
preceding the Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.

     5. The Company agrees with each of the Purchasers:

          (a) To prepare the Offering Circular in a form approved by you; to
     make no amendment or any supplement to the Offering Circular which shall be
     disapproved by you promptly after reasonable notice thereof, unless such
     amendment or supplement is legally necessary as advised by outside counsel
     to the Company; and to furnish you with a reasonable number of copies
     thereof;

          (b) Promptly from time to time to take such action as you may
     reasonably request to qualify the Securities, and the Shares issuable upon
     conversion of the Securities for offering and sale under the securities
     laws of such jurisdictions as you may reasonably request and to comply with
     such laws so as to permit the continuance of sales and dealings therein in
     such jurisdictions for as long as may be necessary to complete the
     distribution of the Securities, provided that in connection therewith the
     Company shall not be required to qualify as a foreign corporation or to
     file a general consent to service of process in any jurisdiction;

          (c) To furnish the Purchasers with copies of the Offering Circular and
     each amendment or supplement thereto and additional written and electronic
     copies thereof in such quantities as you may from time to time reasonably
     request, and if, at any time prior to the expiration of nine months after
     the date of the Offering Circular, any event shall have occurred as a
     result of which the Offering Circular as then amended or supplemented would
     include an untrue statement of a material fact or omit to state any
     material fact necessary in order to make the statements therein, in the
     light of the circumstances under which they were made when such Offering
     Circular is delivered, not misleading, or, if for any other reason it shall
     be necessary or desirable during such same period to amend or supplement
     the Offering Circular, to notify you and upon your request to prepare and
     furnish without charge to each Purchaser and to any dealer

<PAGE>

                                      -10-

     in securities as many written and electronic copies as you may from time to
     time reasonably request of an amended Offering Circular or a supplement to
     the Offering Circular which will correct such statement or omission or
     effect such compliance;

          (d) During the period beginning from the date hereof and continuing
     until the date 90 days after the Time of Delivery, not to offer, sell,
     contract to sell or otherwise dispose of, except as provided hereunder any
     securities of the Company that are substantially similar to the Securities
     or any Shares, including but not limited to any securities that are
     convertible into or exchangeable for, or that represent the right to
     receive, Shares or any such substantially similar securities (other than
     pursuant to stock option or other similar plans existing on, or upon the
     conversion or exchange of convertible or exchangeable securities
     outstanding as of, the date of this Agreement or pursuant to this Agreement
     or upon conversion of the Debentures), without your prior written consent;

          (e) Not to be or become, at any time prior to the expiration of two
     years after the Time of Delivery, an open-end investment company, unit
     investment trust, closed-end investment company or face-amount certificate
     company that is or is required to be registered under Section 8 of the
     Investment Company Act;

          (f) At any time prior to the expiration of two years after the Time of
     Delivery, when the Company is not subject to Section 13 or 15(d) of the
     Exchange Act, to furnish at its expense, upon request, to holders of
     Securities and prospective purchasers of securities information (the
     "Additional Issuer Information") satisfying the requirements of subsection
     (d)(4)(i) of Rule 144A under the Act;

          (g) To use its best efforts to cause the Debentures to be eligible for
     the PORTAL trading system of the National Association of Securities
     Dealers, Inc.;

          (h) Prior to the expiration of two years after the Time of Delivery,
     to furnish to the holders of the Securities as soon as practicable after
     the end of each fiscal year an annual report (including a balance sheet and
     statements of income, stockholders' equity and cash flows of the Company
     and its consolidated subsidiaries certified by independent public
     accountants) and, as soon as practicable after the end of each of the first
     three quarters of each fiscal year (beginning with the fiscal quarter
     ending after the date of the Offering Circular), to make available to its
     stockholders consolidated summary financial information of the Company and
     its consolidated subsidiaries for such quarter in reasonable detail,
     except, in each case, to the extent such reports or information are
     publicly available or the deadline for submission of such reports or
     information to the Commission has not yet occurred;

<PAGE>

                                      -11-

          (i) During a period of three years from the date of the Offering
     Circular, to furnish to you copies of all reports or other communications
     (financial or other) furnished to stockholders of the Company, and to
     deliver to you (i) as soon as they are available, copies of any reports and
     financial statements furnished to or filed with the Commission or any
     securities exchange on which the Securities or any class of securities of
     the Company is listed (such financial statements to be on a consolidated
     basis to the extent the accounts of the Company and its Subsidiaries are
     consolidated in reports furnished to its stockholders generally or to the
     Commission); and (ii) such additional information concerning the business
     and financial condition of the Company as you may from time to time
     reasonably request, except, in each case, such information that the Company
     determines, in its discretion, constitutes material non-public information
     (such financial statements to be on a consolidated basis to the extent the
     accounts of the Company and its Subsidiaries are consolidated in reports
     furnished to its stockholders generally or to the Commission), except, in
     each case, to the extent such reports, communications, statements or other
     information are publicly available or the deadline of such reports or
     information to the Commission has not yet occurred;

          (j) During the period of two years after the Time of Delivery, the
     Company will not, and will not permit any of its "affiliates" (as defined
     in Rule 144 under the Securities Act) to, resell any of the Securities
     which constitute "restricted securities" under Rule 144 that have been
     reacquired by any of them;

          (k) To use the net proceeds received by it from the sale of the
     Securities pursuant to this Agreement in the manner specified in the
     Offering Circular under the caption "Use of Proceeds;" and

          (l) To reserve and keep available at all times, free of preemptive
     rights, Shares for the purpose of enabling the Company to satisfy any
     obligations to issue shares of its Shares upon conversion of the
     Securities.

     6. The Company covenants and agrees with the several Purchasers that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
issue of the Securities and the Shares issuable upon conversion of the
Securities and all other expenses of the Company in connection with the
preparation, printing and filing of the Offering Circular and any amendments and
supplements thereto and the mailing and delivering of copies thereof to the
Purchasers and dealers; (ii) the cost of printing or producing the Indenture and
closing documents (including any compilations thereof); (iii) all expenses in
connection with the qualification of the Securities and the Shares issuable upon
conversion of the Securities for offering and sale under state securities laws
as provided in Section 5(b) hereof, including the fees and disbursements of
counsel for the Purchasers in connection with such qualification and in
con-

<PAGE>
                                      -12-

nection with the Blue Sky and legal investment surveys; (iv) any fees charged by
any securities rating service for rating the Securities; (v) the cost of
preparing the Securities; (vi) the fees and expenses of the Trustee and any
agent of the Trustee and the fees and disbursements of counsel for the Trustee
in connection with the Indenture and the Securities; (vii) any cost incurred in
connection with the designation of the Securities for trading in PORTAL and the
listing of the shares of Stock issuable upon conversion of the Securities;
(viii) all expenses and taxes arising as a result of the issuance, sale and
delivery of the Securities, of the sale and delivery outside of the Cayman
Islands of the Securities by the Purchasers to the initial purchasers thereof in
the manner contemplated under the Purchase Agreement, including, in any such
case, any Cayman Islands income, capital gains, withholding, transfer or other
tax asserted against a Purchaser by reason of the purchase and sale of the
Securities pursuant to the Purchase Agreement; and (ix) all other costs and
expenses incident to the performance of the Company's obligations hereunder
which are not otherwise specifically provided for in this Section. It is
understood, however, that, except as provided in this Section, and Sections 8
and 11 hereof, the Purchasers will pay all of their own costs and expenses,
including the fees of their counsel, transfer taxes on resale of any of the
Securities by them, and any advertising expenses connected with any offers they
may make.

     7. The obligations of the Purchasers hereunder shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company herein are, at and as of the Time of Delivery, true
and correct, the condition that the Company shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:

          (a) Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the
     Purchasers, shall have furnished to you their written opinion, dated the
     Time of Delivery, in form and substance reasonably satisfactory to you, and
     such counsel shall have received such papers and information as they may
     reasonably request to enable them to pass upon such matters;

          (b) Cahill Gordon & Reindel, counsel for the Company, shall have
     furnished to you their written opinion, dated the Time of Delivery, in form
     and substance reasonably satisfactory to you;

          (c) Hunter & Hunter, counsel for the Company, shall have furnished to
     you their written opinion, dated the Time of Delivery, in form and
     substance reasonably satisfactory to you;

          (d) Paul S. Giordano, Executive Vice President and General Counsel to
     the Company, shall have furnished to you his written opinion, dated the
     Time of Delivery, in form and substance reasonably satisfactory to you;

<PAGE>

                                      -13-

          (e) On the date of the Offering Circular prior to the execution of
     this Agreement and also at the Time of Delivery, PricewaterhouseCoopers LLP
     shall have furnished to you a letter or letters, dated the respective dates
     of delivery thereof, in form and substance reasonably satisfactory to you;

          (f) (i) Neither the Company nor any of its Significant Subsidiaries
     shall have sustained since the date of the latest audited financial
     statements included in the Offering Circular any loss or interference with
     its business from fire, explosion, flood or other calamity, whether or not
     covered by insurance, or from any labor dispute or court or governmental
     action, order or decree, otherwise than as set forth or contemplated in the
     Offering Circular, and (ii) since the respective dates as of which
     information is given in the Offering Circular there shall not have been any
     change in the capital stock (other than changes resulting from the exercise
     of stock options or the conversion of warrants or capital stock which were
     outstanding as of such date, or from the exercise of options granted after
     such date in the ordinary course of business or from repurchases of capital
     stock) or long-term debt of the Company or any of its Significant
     Subsidiaries or any change, or any development involving a prospective
     change, in or affecting the general affairs, management, financial
     position, stockholders' equity or results of operations of the Company and
     its Significant Subsidiaries, taken as a whole, otherwise than as set forth
     or contemplated in the Offering Circular, the effect of which, in any such
     case described in clause (i) or (ii), is in the judgment of Goldman, Sachs
     & Co. so material and adverse as to make it impracticable or inadvisable to
     proceed with the offering or the delivery of the Securities on the terms
     and in the manner contemplated in this Agreement and in the Offering
     Circular;

          (g) On or after the date hereof (i) no downgrading shall have occurred
     in the rating accorded the Company's debt securities or the Company's
     financial strengths or claims paying ability by any "nationally recognized
     statistical rating organization", as that term is defined by the Commission
     for purposes of Rule 436(g)(2) under the Act, and (ii) no such organization
     shall have publicly announced that it has under surveillance or review,
     with possible negative implications, its rating of any of the Company's
     debt securities or the Company's financial strengths or claims paying
     ability;

          (h) On or after the date hereof there shall not have occurred any of
     the following: (i) a suspension or material limitation in trading in
     securities generally on the New York Stock Exchange (the "Exchange"); (ii)
     a suspension or material limitation in trading in the Company's securities
     on the New York Stock Exchange; (iii) a general moratorium on commercial
     banking activities declared by either Federal or New York State
     authorities; (iv) the outbreak or escalation of hostilities involving the
     United States or the Cayman Islands or the declaration by the United States
     or the

<PAGE>

                                      -14-

     Cayman Islands of a national emergency or war, if the effect of any such
     event specified in this clause (iv) in the judgment of Goldman, Sachs & Co.
     makes it impracticable or inadvisable to proceed with the public offering
     or the delivery of the Securities on the terms and in the manner
     contemplated in the Offering Circular; (v) a change or development
     involving a prospective change in the Cayman Islands taxation affecting the
     Company, the Securities or the transfer thereof or the imposition of
     exchange controls by the United States or the Cayman Islands; or (vi) the
     occurrence of any material adverse change in the existing financial,
     political or economic conditions in the United States or elsewhere which,
     in the judgment of Goldman, Sachs & Co., would materially and adversely
     affect the financial markets or the markets for the Securities or other
     debt securities or any other equity securities;

          (i) The Company shall have furnished or caused to be furnished to you
     at the Time of Delivery certificates of officers of the Company
     satisfactory to you as to the accuracy of the representations and
     warranties of the Company herein at and as of such Time of Delivery, as to
     the performance by the Company of all of its obligations hereunder to be
     performed at or prior to such Time of Delivery, as to the matters set forth
     in subsection (e) of this Section and as to such other matters as you may
     reasonably request;

          (j) The Purchasers shall have received letters, dated the First Time
     of Delivery, from Michael Esposito, Jr. and Brian O'Hara whereby each such
     person agrees, for the period commencing on the date of the Time of
     Delivery and ending 90 days after the date of the Offering Circular, not to
     offer, sell, contract to sell, pledge or otherwise dispose of, directly or
     indirectly, any Shares or other securities convertible into or exchangeable
     or exercisable for any Shares, or publicly disclose the intention to make
     any such offer, sale, pledge or disposal (1) other than no more than 10% of
     the Shares held by each such person on the date of such letters and other
     than as bona fide gift or gifts, provided that the donee or donees thereof
     agree to be bound by such letters or (2) without the prior written consent
     of the Purchasers;

          (k) The Indenture shall have been duly executed and delivered by the
     Company and the Debentures shall have been duly executed and delivered by
     the Company and duly authenticated by the Trustee in accordance with the
     Indenture;

          (l) The Company shall have executed and delivered to the Purchasers
     the Registration Rights Agreement; and

          (m) The Company shall have furnished to the Purchasers such further
     information, certificates and documents as the Purchasers may reasonably
     request to evidence compliance with the conditions set forth in this
     Section 7.

<PAGE>

                                      -15-

     8. The Company will indemnify and hold harmless each Purchaser against any
losses, claims, damages or liabilities, joint or several, to which such
Purchaser may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in the Offering Circular, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact necessary to make the statements therein not
misleading, and will reimburse each Purchaser for any expenses reasonably
incurred by such Purchaser in connection with investigating or defending any
such action or claim as such expenses are incurred, including the reasonable
fees and expenses of one counsel (in addition to any applicable local counsel);
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Offering Circular or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by any Purchaser through Goldman, Sachs & Co. expressly for use therein.

          (a) Each Purchaser will indemnify and hold harmless the Company
     against any losses, claims, damages or liabilities to which the Company may
     become subject, under the Act or otherwise, insofar as such losses, claims,
     damages or liabilities (or actions in respect thereof) arise out of or are
     based upon an untrue statement or alleged untrue statement of a material
     fact contained in the Offering Circular, or any amendment or supplement
     thereto, or arise out of or are based upon the omission or alleged omission
     to state therein a material fact or necessary to make the statements
     therein not misleading, in each case to the extent, but only to the extent,
     that such untrue statement or alleged untrue statement or omission or
     alleged omission was made in the Offering Circular or any such amendment or
     supplement in reliance upon and in conformity with written information
     furnished to the Company by such Purchaser through Goldman, Sachs & Co.
     expressly for use therein; and will reimburse the Company for any legal or
     other expenses reasonably incurred by the Company in connection with
     investigating or defending any such action or claim as such expenses are
     incurred, including the reasonable fees and expenses of one counsel (in
     addition to any applicable local counsel).

          (b) Promptly after receipt by an indemnified party under subsection
     (a) or (b) above of notice of the commencement of any action, such
     indemnified party shall, if a claim in respect thereof is to be made
     against the indemnifying party under such subsection, notify the
     indemnifying party in writing of the commencement thereof; but the omission
     so to notify the indemnifying party shall not relieve it from any liability
     which it may have to any indemnified party otherwise than under such
     subsection. In case any such action shall be brought against any
     indemnified party and it shall notify the indemnifying party of the
     commencement thereof, the indemnifying party shall be entitled to
     participate therein and, to

<PAGE>

                                      -16-

     the extent that it shall wish, jointly with any other indemnifying party
     similarly notified, to assume the defense thereof, with counsel
     satisfactory to such indemnified party (who shall not, except with the
     consent of the indemnified party, be counsel to the indemnifying party),
     and, after notice from the indemnifying party to such indemnified party of
     its election so to assume the defense thereof, the indemnifying party shall
     not be liable to such indemnified party under such subsection for any legal
     expenses of other counsel or any other expenses, in each case subsequently
     incurred by such indemnified party, in connection with the defense thereof
     other than reasonable costs of investigation. No indemnifying party shall,
     without the written consent of the indemnified party, effect the settlement
     or compromise of, or consent to the entry of any judgment with respect to,
     any pending or threatened action or claim in respect of which
     indemnification or contribution may be sought hereunder (whether or not the
     indemnified party is an actual or potential party to such action or claim)
     unless such settlement, compromise or judgment (i) includes an
     unconditional release of the indemnified party from all liability arising
     out of such action or claim and (ii) does not include a statement as to, or
     an admission of, fault, culpability or a failure to act, by or on behalf of
     any indemnified party.

          (c) If the indemnification provided for in this Section 8 is
     unavailable to or insufficient to hold harmless an indemnified party under
     subsection (a) or (b) above in respect of any losses, claims, damages or
     liabilities (or actions in respect thereof) referred to therein, then each
     indemnifying party shall contribute to the amount paid or payable by such
     indemnified party as a result of such losses, claims, damages or
     liabilities (or actions in respect thereof) in such proportion as is
     appropriate to reflect the relative benefits received by the Company on the
     one hand and the Purchasers on the other from the offering of the
     Securities. If, however, the allocation provided by the immediately
     preceding sentence is not permitted by applicable law or if the indemnified
     party failed to give the notice required under subsection (c) above, then
     each indemnifying party shall contribute to such amount paid or payable by
     such indemnified party in such proportion as is appropriate to reflect not
     only such relative benefits but also the relative fault of the Company on
     the one hand and the Purchasers on the other in connection with the
     statements or omissions which resulted in such losses, claims, damages or
     liabilities (or actions in respect thereof), as well as any other relevant
     equitable considerations. The relative benefits received by the Company on
     the one hand and the Purchasers on the other shall be deemed to be in the
     same proportion as the total net proceeds from the offering (before
     deducting expenses) received by the Company bear to the total underwriting
     discounts and commissions received by the Purchasers, in each case as set
     forth in the Offering Circular. The relative fault shall be determined by
     reference to, among other things, whether the untrue or alleged untrue
     statement of a material fact or the omission or alleged omission to state a
     material fact relates to information supplied by the Company on the one
     hand or the Purchasers on the other and the parties' relative intent,
     knowledge, access to information and opportunity to correct or prevent such
     statement or omission. The Company and the Purchasers agree that it would
     not be just and equitable if contribution pursuant to this

<PAGE>

                                      -17-

     subsection (d) were determined by pro rata allocation (even if the
     Purchasers were treated as one entity for such purpose) or by any other
     method of allocation which does not take account of the equitable
     considerations referred to above in this subsection (d). The amount paid or
     payable by an indemnified party as a result of the losses, claims, damages
     or liabilities (or actions in respect thereof) referred to above in this
     subsection (d) shall be deemed to include any legal or other expenses
     reasonably incurred by such indemnified party in connection with
     investigating or defending any such action or claim. Notwithstanding the
     provisions of this subsection (d), no Purchaser shall be required to
     contribute any amount in excess of the amount by which the total price at
     which the Securities underwritten by it and distributed to investors were
     offered to investors exceeds the amount of any damages which such Purchaser
     has otherwise been required to pay by reason of such untrue or alleged
     untrue statement or omission or alleged omission. No person guilty of
     fraudulent misrepresentation (within the meaning of Section 11 of the Act)
     shall be entitled to contribution from any person not guilty of such
     fraudulent misrepresentation. The Purchasers' obligations in this
     subsection (d) to contribute are several in proportion to their respective
     underwriting obligations and not joint.

          (d) The obligations of the Company under this Section 8 shall be in
     addition to any liability which the Company may otherwise have and shall
     extend, upon the same terms and conditions, to each person, if any, who
     controls any Purchaser within the meaning of the Act; and the obligations
     of the Purchasers under this Section 8 shall be in addition to any
     liability which the respective Purchasers may otherwise have and shall
     extend, upon the same terms and conditions, to each officer and director of
     the Company and to each person, if any, who controls the Company within the
     meaning of the Act.

     9. If any Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, you may arrange for you or
another party or other parties satisfactory to the Company to purchase such
Securities on the terms contained herein. If within thirty-six hours after such
default by any Purchaser you do not arrange for the purchase of such Securities,
then the Company shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to you to
purchase such Securities on such terms. In the event that, within the respective
prescribed periods, you notify the Company that you have so arranged for the
purchase of such Securities, or the Company notifies you that it has so arranged
for the purchase of such Securities, you or the Company shall have the right to
postpone the Time of Delivery for a period of not more than seven days, in order
to effect whatever changes may thereby be made necessary in the Offering
Circular, or in any other documents or arrangements, and the Company agrees to
prepare promptly any amendments to the Offering Circular which in your opinion
may thereby be made necessary. The term "Purchaser" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Securities.

<PAGE>

                                      -18-

          (a) If, after giving effect to any arrangements for the purchase of
     the Securities of a defaulting Purchaser or Purchasers by you and the
     Company as provided in subsection (a) above, the aggregate principal amount
     of such Securities which remains unpurchased does not exceed one-eleventh
     of the aggregate principal amount of all the Securities, then the Company
     shall have the right to require each non-defaulting Purchaser to purchase
     the principal amount of Securities which such Purchaser agreed to purchase
     hereunder and, in addition, to require each non-defaulting Purchaser to
     purchase its pro rata share (based on the principal amount of Securities
     which such Purchaser agreed to purchase hereunder) of the Securities of
     such defaulting Purchaser or Purchasers for which such arrangements have
     not been made; but nothing herein shall relieve a defaulting Purchaser from
     liability for its default.

          (b) If, after giving effect to any arrangements for the purchase of
     the Securities of a defaulting Purchaser or Purchasers by you and the
     Company as provided in subsection (a) above, the aggregate principal amount
     of Securities which remains unpurchased exceeds one-eleventh of the
     aggregate principal amount of all the Securities, or if the Company shall
     not exercise the right described in subsection (b) above to require
     non-defaulting Purchasers to purchase Securities of a defaulting Purchaser
     or Purchasers, then this Agreement shall thereupon terminate, without
     liability on the part of any non-defaulting Purchaser or the Company,
     except for the expenses to be borne by the Company and the Purchasers as
     provided in Section 6 hereof and the indemnity and contribution agreements
     in Section 8 hereof; but nothing herein shall relieve a defaulting
     Purchaser from liability for its default.

     10. The respective indemnities, agreements, representations, warranties and
other statements of the Company and the several Purchasers, as set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Purchaser or any controlling person of any Purchaser, or the Company, or
any officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Securities.

     11. If this Agreement shall be terminated pursuant to Section 9 hereof, the
Company shall not then be under any liability to any Purchaser except as
provided in Sections 6 and 8 hereof; but, if for any other reason, the
Securities are not delivered by or on behalf of the Company as provided herein,
the Company will reimburse the Purchasers through you for all out-of-pocket
expenses approved in writing by you, including the reasonable fees and
disbursements of counsel, incurred by the Purchasers in making preparations for
the purchase, sale and delivery of the Securities, but the Company shall then be
under no further liability to any Purchaser except as provided in Sections 6 and
8 hereof.

<PAGE>

                                      -19-

     12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or given
by you.

     All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you as the Representative in care of Goldman, Sachs &
Co. at 32 Old Slip, 21st Floor, New York, New York 10005, Attention:
Registration Department; and if to the Company shall be delivered or sent by
mail, telex or facsimile transmission to the address of the Company set forth in
the Offering Circular, Attention: Secretary; provided, however, that any notice
to a Purchaser pursuant to Section 8(c) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Purchaser at its address set forth
in its Purchasers' Questionnaire, or telex constituting such Questionnaire,
which address will be supplied to the Company by you upon request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.

     13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Purchasers, the Company and, to the extent provided in Sections 8 and 10
hereof, the officers and directors of the Company and each person who controls
the Company or any Purchaser, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from any Purchaser shall be deemed a successor or assign by reason
merely of such purchase.

     14. The Company irrevocably (i) agrees that any legal suit, action or
proceeding against the Company brought by any Purchaser or by any person who
controls any Purchaser arising out of or based upon this Agreement or the
transactions contemplated hereby may be instituted in the federal district court
for the Southern District of New York and the New York County Court, (ii)
waives, to the fullest extent it may effectively do so, any objection which it
may now or hereafter have to the laying of venue of any such proceeding and
(iii) submits to the exclusive jurisdiction of such courts in any such suit,
action or proceeding. The Company has appointed CT Corporation, New York, New
York, as its authorized agent (the "Authorized Agent") upon whom process may be
served in any such action arising out of or based on this Agreement or the
transactions contemplated hereby which may be instituted in the federal district
court for the Southern District of New York and the New York County Court by any
Purchaser or by any person who controls any Purchaser, expressly consents to the
jurisdiction of any such court in respect of any such action, and waives any
other requirements of or objections to personal jurisdiction with respect
thereto. Such appointment shall be irrevocable. The Company represents and
warrants that the Authorized Agent has agreed to act as such agent for service
of process and agrees to take any and all action, including the filing of any
and all documents and instruments, that may be necessary to

<PAGE>

                                      -20-

continue such appointment in full force and effect as aforesaid. Service of
process upon the Authorized Agent and written notice of such service to the
Company shall be deemed, in every respect, effective service of process upon the
Company.

     15. In respect of any judgment or order given or made for any amount due
hereunder that is expressed and paid in a currency (the "judgment currency")
other than United States dollars, the Company will indemnify each Purchaser
against any loss incurred by such Purchaser as a result of any variation as
between (i) the rate of exchange at which the United States dollar amount is
converted into the judgment currency for the purpose of such judgment or order
and (ii) the rate of exchange at which an Purchaser is able to purchase United
States dollars with the amount of judgment currency actually received by such
Purchaser. The foregoing indemnity shall constitute a separate and independent
obligation of the Company and shall continue in full force and effect
notwithstanding any such judgment or order as aforesaid. The term "rate of
exchange" shall include any premiums and costs of exchange payable in connection
with the purchase of or conversion into United States dollars.

     16. Time shall be of the essence of this Agreement.

     17. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.

     18. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such respective counterparts shall together constitute one and the same
instrument.

<PAGE>

                                      -21-

     If the foregoing is in accordance with your understanding, please sign and
return to us one for the Company and each of the Purchasers plus one for each
counsel counterparts hereof, and upon the acceptance hereof by you, on behalf of
each of the Purchasers, this letter and such acceptance hereof shall constitute
a binding agreement between each of the Purchasers and the Company.

                                          Very truly yours,

                                          XL Capital Ltd

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

Accepted as of the date hereof:
Goldman, Sachs & Co.
Deutsche Bank Alex. Brown Inc.
Dresdner Kleinwort Wasserstein LLC

By:                                         (Goldman, Sachs & Co.)
       -----------------------------

                                   SCHEDULE I

                                                             Principal
                                                             Amount of
                                                            Securities
                                                               to be
                                                             Purchased
                                    Purchaser
                                                       ----------------------
           Goldman, Sachs & Co.                              $673,888,800
           Deutsche Banc Alex. Brown Inc.                      84,236,500
           Dresdner Kleinwort Wasserstein LLC                  84,236,500
                      Total                                  $842,361,000
                                                             ============

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