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INHALE THERAPEUTIC SYSTEMS, INC.

AND

ENZON, INC.  

 
 

PREFERRED STOCK PURCHASE AGREEMENT    
  

January 7, 2002  

  

 
 

TABLE OF CONTENTS    
  

	 
	 	 
	 	 
	 	Page

	1.	 	Purchase of Preferred Stock	 	1
	 	 	1.1.	 	Agreement to Sell and Purchase	 	1
	 	 	1.2.	 	Closing; Closing Date	 	1
	 	 	1.3.	 	Delivery	 	1
	 	 	1.4.	 	Hart-Scott-Rodino Compliance	 	1
	2.	 	Representations and Warranties of the Company	 	2
	 	 	2.1.	 	Authorization	 	2
	 	 	2.2.	 	No Conflict with Other Instruments	 	2
	 	 	2.3.	 	Amended and Restated Certificate of Incorporation; Bylaws	 	2
	 	 	2.4.	 	Organization, Good Standing and Qualification	 	2
	 	 	2.5.	 	SEC Filings	 	2
	 	 	2.6.	 	Capitalization	 	3
	 	 	2.7.	 	Subsidiaries	 	3
	 	 	2.8.	 	Valid Issuance of Preferred Stock and Conversion Shares	 	4
	 	 	2.9.	 	Offering	 	4
	 	 	2.10.	 	Litigation, etc.	 	4
	 	 	2.11.	 	Governmental Consents	 	4
	 	 	2.12.	 	No Brokers	 	4
	 	 	2.13.	 	Compliance	 	4
	 	 	2.14	 	Absence of Certain Changes	 	5
	 	 	2.15	 	Contracts	 	5
	 	 	2.16	 	Intellectual Property	 	5
	3.	 	Representations and Warranties of Enzon	 	5
	 	 	3.1.	 	Legal Power	 	5
	 	 	3.2.	 	Due Execution	 	5
	 	 	3.3.	 	Investment Representations	 	5
	 	 	3.4.	 	No Brokers	 	7
	4.	 	Conditions to Closing	 	7
	 	 	4.1.	 	Conditions to Obligations of Enzon at Closing	 	7
	 	 	4.2.	 	Conditions to Obligations of the Company	 	8
	5.	 	Covenants of Enzon	 	9
	 	 	5.1.	 	Restriction on Sale or Transfer of Preferred Stock	 	9
	 	 	5.2	 	Standstill	 	9
	6.	 	Covenants of the Company	 	9
	 	 	6.1	 	Reporting Status; S-3 Eligibility	 	9
	 	 	6.2	 	Listing	 	10
	 	 	6.3	 	No Integration; Form D Filing	 	10
	7.	 	Registration Rights	 	10
	 	 	7.1	 	S-3 Demand Registration	 	10
	 	 	7.2	 	S-1 Demand Registration	 	10
	 	 	7.3	 	Suspension of Effectiveness	 	11
	 	 	7.4	 	Registration Expenses	 	12
	 	 	7.5	 	Obligations of the Company	 	12
	 	 	7.6	 	Termination of Registration Rights	 	13
	 	 	7.7	 	Furnishing Information	 	13
	 	 	7.8	 	Indemnification	 	13
	 	 	7.9	 	Assignment of Registration Rights	 	14

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	8.	 	Miscellaneous	 	15
	 	 	8.1.	 	Governing Law	 	15
	 	 	8.2.	 	Public Statements	 	15
	 	 	8.3.	 	Successors and Assigns	 	15
	 	 	8.4.	 	Entire Agreement	 	15
	 	 	8.5.	 	Severability	 	16
	 	 	8.6.	 	Amendment and Waiver	 	16
	 	 	8.7.	 	Notices	 	16
	 	 	8.8.	 	Fees and Expenses	 	16
	 	 	8.9.	 	Counterparts	 	16

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INHALE THERAPEUTIC SYSTEMS, INC.
  PREFERRED STOCK PURCHASE AGREEMENT    
  

    THIS PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is made as of January 7, 2002, by and between  INHALE THERAPEUTIC SYSTEMS,
 INC., a Delaware corporation with its principal office at 150 Industrial Road, San Carlos, California 94070 (the
"Company"), and ENZON, INC., a Delaware corporation with its principal office at 20 Kingsbridge Road, Piscataway, New Jersey 08854 ("Enzon"). 

RECITALS  

    WHEREAS, the Company and Enzon have entered into those certain Cross-License Agreement, Product Development
Agreement, Single-Chain Antibody Development Agreement and Litigation Settlement Agreement (collectively, the "Related Agreements"); and 

    WHEREAS, Shearwater Corporation, a subsidiary of the Company ("Shearwater"), is also a party to certain of the Related Agreements; 

    WHEREAS, in connection with the Related Agreements, the Company desires to sell to Enzon and Enzon desires to purchase from the Company
shares of convertible preferred stock of the Company, on the terms and subject to the conditions set forth in this Agreement. 

    NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and agreements contained herein, the parties
hereto, intending to be legally bound, do hereby agree as follows: 

1. Purchase of Preferred Stock.  

    1.1.  Agreement to Sell and Purchase.  At the Closing (as hereinafter defined), the Company will sell to
Enzon and Enzon will purchase from the Company forty thousand (40,000) shares of Series B Convertible Preferred Stock of the Company (the "Preferred Stock") at a purchase price of one thousand
dollars ($1,000) per share of Preferred Stock for an aggregate purchase price of forty million dollars ($40,000,000) (the "Purchase Price"). The rights, privileges and preferences of the Preferred
Stock are set forth in the Certificate of Designation annexed hereto as Exhibit A (the "Certificate of Designation"). 

    1.2.  Closing; Closing Date.  The completion of the sale and purchase of the Preferred Stock (the
"Closing") shall be held at 9:00 a.m. (Pacific Time) as soon as practicable following the satisfaction of the conditions set forth in this Section 1 and Section 5 (the "Closing
Date"), at the offices of Cooley Godward LLP, 3175 Hanover Street, Palo Alto, California, or at such other time and place as the Company and Enzon may agree. 

    1.3.  Delivery.  At the Closing, subject to the terms and conditions hereof, the Company will deliver to
Enzon a stock certificate or certificates, in such denominations and registered in such names as Enzon may designate by notice to the Company, representing the Preferred Stock, dated as of the Closing
Date (the "Stock Certificates"), against payment of the purchase price therefor by wire transfer, unless other means of payment shall have been agreed upon by Enzon and the Company. 

    1.4.  Hart-Scott-Rodino Compliance.  Notwithstanding anything else in this Section 1,
if the sale and issuance of the Preferred Stock is subject to the premerger notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), it shall also be a condition to the Closing that any waiting period under the HSR Act applicable to the purchase of the Preferred Stock shall have expired or been terminated. The parties shall
promptly file any necessary notifications and shall cooperate in promptly filing such notifications and in taking all steps reasonably necessary to obtain early termination of any applicable HSR Act
waiting periods. In the event that the 

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issuance of the Company's Common Stock issuable upon conversion of the Preferred Stock (the "Conversion Shares") is subject to the premerger notification requirements of the HSR Act, the issuance of
the Conversion Shares will be subject to the applicable terms of the Certificate of Designation relating thereto and to the expiration or termination of any applicable waiting period under the HSR
Act. The parties shall promptly file any necessary notifications and shall cooperate in promptly filing such notifications and in taking all steps reasonably necessary to obtain early termination of
any applicable HSR Act waiting periods. 

2. Representations and Warranties of the Company.  

    Except
as otherwise specifically disclosed in the Disclosure Schedule attached hereto, the Company hereby represents and warrants to Enzon as follows: 

    2.1.  Authorization.  All corporate action on the part of the Company, its officers, directors and
shareholders necessary for the authorization, execution and delivery of this Agreement has been taken. The Company has the requisite corporate power to enter into this Agreement and carry out and
perform its obligations under the terms of this Agreement. At the Closing, the Company will have the requisite corporate power to issue and sell the Preferred Stock and the Conversion Shares. This
Agreement has been duly authorized, executed and delivered by the Company and, upon due execution and delivery by Enzon, this Agreement will be a valid and binding agreement of the Company, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally or by equitable principles. 

    2.2.  No Conflict with Other Instruments.  The execution, delivery and performance of this Agreement will
not result in any violation of, be in conflict with, or constitute a default under, with or without the passage of time or the giving of notice: (i) any provision of the Company's Amended and
Restated Certificate of Incorporation or Bylaws as in effect on the date hereof or at the Closing; (ii) any provision of any judgment, decree or order to which the Company is a party or by
which it is bound; (iii) any contract, obligation or commitment to which the Company is a party or by which it is bound; or (iv) any statute, rule or governmental regulation applicable
to the Company. 

    2.3.  Amended and Restated Certificate of Incorporation; Bylaws.  Attached hereto as Exhibits B and C,
respectively, are true, correct and complete copies of the Amended and Restated Certificate of Incorporation, as amended and Bylaws of the Company, as in effect on the date hereof. 

    2.4.  Organization, Good Standing and Qualification.  The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted and as proposed to be
conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure so to qualify would have a material adverse effect on its business or
properties. 

    2.5.  SEC Filings.  The Company has made available to Enzon accurate and complete copies (excluding
copies of exhibits) of each report, registration statement (on a form other than Form S-3 or S-8) and definitive proxy statement filed by the Company with the Securities
and Exchange Commission (the "SEC") between January 1, 2001 and the date of this Agreement (the "Company SEC Documents").
Except as set forth on Part 2.5 of the Disclosure Schedule, each Company SEC Document was filed with the SEC in a timely manner pursuant to the requirements of the Exchange Act. As of the time
it was filed with the SEC (or, if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing): (i) each of the Company SEC Documents complied in all
material respects with the applicable requirements of the Securities Act of 1933, as amended (the "Securities Act") or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the case
may be; and (ii) none of the Company SEC Documents contained any untrue 

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statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they
were made, not misleading. The consolidated financial statements contained in the Company SEC Documents: (i) complied as to form in all material respects with the published rules and
regulations of the SEC applicable thereto; (ii) were prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods covered, except as
may be indicated in the notes to such financial statements and (in the case of unaudited statements) as permitted by Form 10-Q of the SEC, and except that unaudited financial
statements may not contain footnotes and are subject to year-end audit adjustments; and (iii) fairly present the consolidated financial position of the Company and its subsidiaries
as of the respective dates thereof and the consolidated results of operations of the Company and its subsidiaries for the periods covered thereby. Except as set forth in the financial statements
included in the Company SEC Documents, neither the Company nor its subsidiaries has any liabilities, contingent or otherwise, other than liabilities incurred in the ordinary course of business
subsequent to September 30, 2001, and liabilities of the type not required under generally accepted accounting principles to be reflected in such financial statements. Such liabilities incurred
subsequent to September 30, 2001, are not, in the aggregate, material to the financial condition or operating results of the Company and its subsidiaries, taken as a whole. 

    2.6.  Capitalization.  The authorized capital stock of the Company consists of (i) 300,000,000
shares of common stock, of which (A) 55,081,020 shares were issued and outstanding as of December 31, 2001, (B) 14,419,743 shares were reserved for issuance upon the exercise of
outstanding options and warrants as of December 31, 2001, and (C) 6,643,321 shares were reserved for issuance upon conversion of outstanding convertible indebtedness as of
December 31, 2001; and (ii) 10,000,000 shares of preferred stock, 3,100,000 shares of which have been designated Series A Junior Participating Preferred Stock, none of which are
outstanding and 40,000 shares of which shall be designated Series B Convertible Preferred Stock as of the filing of the Certificate of Designation with the Secretary of State of the State of
Delaware, none of which shall be outstanding prior to the Closing. All issued and outstanding shares of the Company's Common Stock have been duly authorized and validly issued, and are fully paid and
nonassessable. Except as set forth herein, the SEC Documents or Part 2.6 of the Disclosure Schedule, there are no (i) preemptive or other outstanding rights, options, warrants,
conversion rights or agreements for the purchase or acquisition from the Company of any shares of its capital stock or other securities of the Company; or (ii) obligations of the Company to
purchase redeem or otherwise acquire any of its outstanding capital stock or any interest therein or to pay any dividend or make any other distribution in respect thereof. There are no antidilution or
price adjustment provisions contained in the terms governing any outstanding security of the Company that will be triggered by the issuance of the Preferred Stock of the Conversion Shares. 

    2.7.  Subsidiaries.  Except as disclosed in the Part 2.7 of the Disclosure Schedule, the Company
does not presently own or control, directly or indirectly, and has no stock or other interest as owner or principal in, any other corporation or partnership, joint venture, association or other
business venture or entity (each entity identified in Schedule 2.7, a "Subsidiary"). Each Subsidiary is duly incorporated or organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation or organization and has all requisite power and authority to carry on its business as now conducted and as proposed to be conducted. Each Subsidiary is duly qualified
to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties. Except as set forth in
Part 2.7 of the Disclosure Schedule, all of the outstanding capital stock or other voting securities of each Subsidiary is owned by the Company, directly or indirectly, free and clear of any
liens, claims, or encumbrances. There are no outstanding obligations of the Company or any Subsidiary to issue any capital stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of any Subsidiary. 

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    2.8.  Valid Issuance of Preferred Stock and Conversion Shares.  The Preferred Stock and the Conversion
Shares are duly authorized and, when issued, sold and delivered in accordance with the terms hereof and, as applicable, the Certificate of Designation, will be duly and validly authorized and issued,
fully paid and nonassessable free from all taxes, liens, claims, encumbrances and charges with respect to the issue thereof; provided, however, that the Preferred Stock and the Conversion Shares may
be subject to restrictions on transfer under state and/or federal securities laws or as otherwise set forth herein. The issuance, sale and delivery of the Preferred Stock and Conversion Shares in
accordance with the terms hereof and, as applicable, the Certificate of Designation, will not be subject to preemptive rights or other similar rights of stockholders of the Company. The Conversion
Shares have been duly reserved for issuance. 

    2.9.  Offering.  Assuming the accuracy of the representations of Enzon in Section 3.3 of this
Agreement on the date hereof and on the Closing Date, the offer, issue and sale of the Preferred Stock and the issuance of the Conversion Shares (assuming no change in applicable law prior to the date
such Conversion Shares are issued), are and will be exempt from the registration and prospectus delivery requirement of the Securities Act and have been or will be registered or qualified (or are or
will be exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would
require registration under the Securities Act of the issuance of the Preferred Stock to Enzon or the issuance of the Conversion Shares upon conversion of the Preferred Stock. Neither the issuance of
the Preferred Stock to Enzon nor the issuance of the Conversion Shares will be integrated with any other issuance of the Company's securities (past, current or future) for purpose of the Securities
Act or any applicable rules of Nasdaq. 

    2.10.  Litigation, etc.  Except as set forth in the Company SEC Documents, there is no action, suit,
proceeding nor investigation pending or, to the Company's knowledge, currently threatened against the Company or any of its Subsidiaries that if adversely determined would reasonably be expected to
have a material adverse effect on the business, condition, prospects, capitalization, assets, liabilities,
operations, or financial performance of the Company and its Subsidiaries taken as a whole nor, to its knowledge, is there any basis therefor. The foregoing includes, without limitation, any action,
suit, proceeding or investigation, pending or threatened, that questions the validity of this Agreement or the right of the Company to enter into such Agreement. 

    2.11.  Governmental Consents.  No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state, local or provincial governmental authority on the part of the Company is required in connection with the consummation of the
transactions contemplated by this Agreement, except for (i) any filing required to be filed pursuant to the HSR Act as contemplated in Section 1; and (ii) notices required or
permitted to be filed with certain state and federal securities commissions, which notices will be filed on a timely basis. 

    2.12.  No Brokers.  No broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this Agreement based on arrangements made by the Company. 

    2.13.  Compliance.  The Company is not in violation of its Amended and Restated Certificate of
Incorporation or Bylaws. Neither the Company nor the Subsidiaries have been advised or have reason to believe, that it is not conducting its business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business, including, without limitation, all applicable local, state and federal environmental laws and regulations; except where failure to
be so in compliance would not materially adversely affect the business, condition, capitalization, assets, liabilities, operations, or financial performance of the Company and its Subsidiaries taken
as a whole. 

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    2.14  Absence of Certain Changes.  Except as disclosed in the Company SEC Documents, since
September 30, 2001, there has been no material adverse change in the assets, liabilities, business, properties, operations, financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole. 

    2.15  Contracts.  The material contracts of the Company and its Subsidiaries described in the Company SEC
Documents are in full force and effect on the date hereof; and neither the Company nor its Subsidiaries are in breach of or default under any of such contracts except, in each case, where the failure
of such contracts to be in full force or effect or the breach or default of such contract, as applicable, by the Company or its Subsidiaries would not have a material adverse effect on the assets,
liabilities, business, properties, operations, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole. 

    2.16  Intellectual Property.  Except for matters to which the Litigation Settlement Agreement between the
Company, Shearwater and Enzon relates or as disclosed in the Company SEC Documents (i) the Company and its Subsidiaries have sufficient trademark rights, trade names, patent rights, copyrights,
licenses, and governmental authorizations to conduct its business; (ii) neither the Company nor its Subsidiaries have knowledge of any material infringement by it of trademark rights, trade
name rights, patent rights, copyrights, licenses, trade secrets or other similar rights of others that the Company or its Subsidiaries believe to be valid; and (iii) no claim has been made or
threatened in writing against the Company or any Subsidiary regarding infringement of any third party trademark, trade name, patent, copyright, license, or trade secret except, in each case, where the
failure to have such rights, such infringement or such claim of infringement, as applicable, would not have a material adverse effect on the assets, liabilities, business, properties, operations,
financial condition or results of operations of the Company and its Subsidiaries, taken as a whole. 

3. Representations and Warranties of Enzon.  

    Enzon
hereby represents and warrants to the Company as follows: 

    3.1.  Legal Power.  Enzon has the requisite corporate power and authority to enter into this Agreement,
to carry out and perform its obligations under the terms of this Agreement. All action on Enzon's part required for the lawful execution and delivery of this Agreement have been or will be effectively
taken prior to the Closing. 

    3.2.  Due Execution.  This Agreement has been duly authorized, executed and delivered by Enzon, and, upon
due execution and delivery by the Company, this Agreement will be a valid and binding agreement of Enzon, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally or by equitable principles. 

    3.3.  Investment Representations.  In connection with the sale and issuance of the Preferred Stock and
the Conversion Shares (collectively the "Securities"), Enzon makes the following representations: 

    (a) Investment for Own Account. Enzon is acquiring the Securities for its own account, not as nominee or agent, for
investment and not with a view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act. 

    (b) Transfer Restrictions; Legends. Enzon understands that (i) the Securities have not been registered under the
Securities Act; (ii) the Securities are being offered and sold pursuant to an exemption from
registration and that the Securities must be held by Enzon indefinitely, and that Enzon must, therefore, bear the economic risk of such investment indefinitely, unless a subsequent 

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disposition thereof is registered under the Securities Act or is exempt from such registration; (iii) each certificate representing the Securities will be endorsed with the following legend: 

    THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES
ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. UNLESS SOLD PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR RULE 144 UNDER THE ACT, THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. 

	(iv)
	each
certificate representing the Preferred Stock will also be endorsed with the following legend: 

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS, INCLUDING RESTRICTIONS ON TRANSFERABILITY, OF THAT CERTAIN STOCK PURCHASE AGREEMENT, DATED
JANUARY 7, 2002. A COPY OF SUCH STOCK PURCHASE AGREEMENT WILL BE FURNISHED TO THE RECORD HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO INHALE THERAPEUTIC
SYSTEMS, INC. AT ITS PRINCIPAL PLACE OF BUSINESS. 

and
(v) the Company will instruct any transfer agent not to register the transfer of the Securities (or any portion thereof) unless the conditions specified in the foregoing legends are
satisfied, until such time as a transfer is made, pursuant to the terms of this Agreement, and in compliance with Rule 144 under the Securities Act or pursuant to a registration statement or,
if the opinion of counsel referred to above is to the further effect that such legend is not required in order to establish compliance with any provisions of the Securities Act or this Agreement, or
other satisfactory assurances of such nature are given to the Company. 

    (c) Removal of Legends. Unless otherwise required by applicable securities laws, the Company shall be obligated, at the
request of Enzon, to cause the transfer agent to reissue unlegended certificates with respect to the Conversion Shares if (i) Enzon shall have obtained an opinion of counsel reasonably
acceptable to the Company to the effect that the Conversion Shares with respect to which unlegended
certificates are to be issued may lawfully be disposed of without registration, qualification or legend; or (ii) the Conversion Shares can be sold without restriction as to the number of
securities sold under Rule 144(k). Further, the Company will instruct the transfer agent to remove the legend on Conversion Shares (i) upon the sale of such Conversion Shares pursuant to
an effective registration statement, provided the transfer agent and Company have received evidence or assurances of such sale in a form satisfactory to the transfer agent and the Company or
(ii) upon the sale of such Conversion Shares pursuant to Rule 144 under the Securities Act, provided the transfer agent and the Company have received evidence or assurances from Enzon of
compliance with Rule 144 in a form satisfactory to the transfer agent and the Company; 

    (d) Financial Sophistication. Enzon has such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in connection with the transactions contemplated in this Agreement. 

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    (e) Accredited Investor Status. Enzon is an "accredited investor" as such term is defined in Rule 501(a) of the
rules and regulations promulgated under the Securities Act. 

    3.4.  No Brokers.  No broker, finder or investment banker is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this Agreement based on arrangements made by Enzon. 

4. Conditions to Closing.  

    4.1.  Conditions to Obligations of Enzon at Closing.  Enzon's obligation to purchase the Preferred Stock
at the Closing is subject to the fulfillment to Enzon's satisfaction, on or prior to the Closing, of all of the following conditions, any of which may be waived by Enzon: 

    (a) Representations and Warranties True; Performance of Obligations. The representations and warranties made by the
Company in Section 2 hereof shall be true and correct in all material respects on the Closing Date with the same force and effect as if they had been made on and as of said date and the Company
shall have performed and complied with all obligations and conditions herein required to be performed or complied with by it on or prior to the Closing and a certificate duly executed by an officer of
the Company, to the effect of the foregoing, shall be delivered to Enzon. 

    (b) Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated at
the Closing and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to counsel to Enzon, and counsel to Enzon shall have received all
such counterpart originals or certified or other copies of such documents as they may reasonably request. The Certificate of Designation shall have been filed with the Secretary of State of the State
of Delaware and shall continue to be in full force and effect as of the Closing Date. The Company shall have delivered (or caused to have been delivered) to Enzon, the Stock Certificates. The
Conversion Shares shall have been duly authorized and reserved for issuance upon conversion of the Preferred Stock. 

    (c) Qualifications, Legal Investment. All authorizations, approvals, or permits, if any, of any governmental authority
or regulatory body of the United States or of any state that are required in connection with the lawful sale and issuance of the Preferred Stock shall have been duly obtained and shall be effective on
and as of the Closing. No stop order or other order enjoining the sale of the Preferred Stock shall have been issued and no proceedings for such purpose shall be pending or, to the knowledge of the
Company, threatened by the SEC, or any commissioner of corporations or similar officer of any state having jurisdiction over this transaction. At the time of the Closing, the sale and issuance of the
Securities shall be legally permitted by all laws and regulations to which Enzon and the Company are subject. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction
will have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement or the Related Agreements. 

    (d) Execution of Agreements. The Company shall have executed this Agreement and the Related Agreements and have
delivered such agreements to Enzon. Shearwater shall have executed the Related Agreements to which it is a party and have delivered such agreements to Enzon. 

    (e) Officer's Certificate. The Company shall have delivered to Enzon a certificate or certificates dated as of the
Closing Date and executed by the Chief Executive Officer or the Chief Financial Officer of the Company certifying, as to the Company, the matters contained in this Section 4.1(a). 

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    (f)  Secretary's Certificate. The Company shall have delivered to Enzon a certificate of the Secretary of the Company
certifying as to the truth and accuracy of (i) the resolutions of the Board of Directors' relating to the transaction contemplated hereby (a copy of which shall be included with such
certificate) and (ii) the incumbency and signatures of each of the officer of the Company executing this Agreement and the certificate set forth in Section 4.1(e) on behalf of the
Company. 

    (g) Trading and Listing. Trading and listing of the Common Stock on the Nasdaq national market shall not have been
suspended by the SEC or Nasdaq. 

    (h) Blue Sky. The Company shall have obtained all necessary "blue sky" law permits and qualifications, or have the
availability of exemptions therefrom, required by any state for the offer and sale of the Preferred Stock and the Conversion Shares. 

    (i)  Material Adverse Change. Since the date of this Agreement, there shall not have occurred any event which results in
a material adverse effect on the business, condition, capitalization, assets, liabilities, operations or financial performance of the Company and its Subsidiaries taken as a whole. 

    (j)  Opinion. The Company shall have delivered to Enzon the opinion of Cooley Godward LLP, counsel to the Company, dated
as of the Closing Date in substantially the form attached hereto as Exhibit D. 

    4.2.  Conditions to Obligations of the Company.  The Company's obligation to issue and sell the Preferred
Stock at the Closing is subject to the fulfillment to the Company's satisfaction, on or prior to the Closing of the following conditions, any of which may be waived by the Company: 

    (a) Representations and Warranties True. The representations and warranties made by Enzon in Section 3 hereof
shall be true and correct in all material respects on the Closing Date with the same force and effect as if they had been made on and as of said date. 

    (b) Performance of Obligations. Enzon shall have performed and complied with all agreements and conditions herein
required to be performed or complied with by it on or before the Closing, and a Certificate duly executed by an officer of Enzon, to the effect of the foregoing, shall be delivered to the Company.
Enzon shall have delivered the Purchase Price, by wire transfer, to the account designated by Inhale for such purpose. 

    (c) Qualifications, Legal Investment. All authorizations, approvals, or permits, if any, of any governmental authority
or regulatory body of the United States or of any state that are required in connection with the lawful sale and issuance of the Preferred Stock shall have been duly obtained and shall be effective on
and as of the Closing. No stop order or other order enjoining the sale of the Preferred Stock shall have been issued and no proceedings for such purpose shall be pending or, to the knowledge of the
Company, threatened by the SEC, or any commissioner of corporations or similar officer of any state having jurisdiction over this transaction. At the time of the Closing, the sale and issuance of the
Preferred Stock and the Conversion Shares shall be legally permitted by all laws and regulations to which Enzon and the Company are subject. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction will have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement or the Related Agreements. 

    (d) Execution of Agreements. Enzon shall have executed this Agreement and the Related Agreements and have delivered such
agreements to Inhale or, as applicable, Shearwater. 

8

   5. Covenants of Enzon.  

    5.1.  Restriction on Sale or Transfer of Preferred
Stock.  Enzon hereby covenants and agrees that, without the prior written consent of the Company, it will not contract to sell, sell or otherwise transfer, loan,
pledge or grant any rights with respect to any shares of the Preferred Stock acquired pursuant to this Agreement (or purchase or sell any derivative security that has a similar effect or enter into
any contract that has a similar effect). Notwithstanding the foregoing, Enzon may transfer the Preferred Stock to a wholly owned-subsidiary or parent corporation that owns all of the capital stock of
Enzon provided such transferee agrees to be subject to all restrictions set forth in Section 5 of this Agreement as if such transferee were Enzon. 

    5.2  Standstill.  Other than shares of Preferred Stock
which it is purchasing pursuant to this Agreement and the Conversion Shares issuable upon conversion thereof, Enzon hereby covenants and agrees that it will not, nor will it permit any of its
subsidiaries (i) to purchase or otherwise acquire, directly or indirectly, any equity securities of the Company (or rights or options to purchase such securities) or (ii) form, join or
participate in a "group" (as defined in the Securities Exchange Act of 1934 and the rules promulgated thereunder) with respect to the beneficial ownership of any equity securities of the Company
without the prior approval of the Company. Notwithstanding the foregoing, Enzon may, for purposes of any hedging or similar transaction, purchase, sell or otherwise acquire or dispose of options or
other derivative securities having the same economic effect as a purchase of the Company's equity securities ("Derivative Securities"); provided that (i) neither Enzon, its subsidiaries nor any
group which Enzon has formed, joined or participated in shall file a Schedule 13D indicating its intention to assume control of the Company, and (ii) the aggregate amount of
equity securities which Enzon acquires or has a right to acquire pursuant to such Derivative Securities at no time shall exceed 50% of the maximum number of Conversion Shares issuable upon conversion
of the Preferred Stock at the Closing Date (assuming, solely for purposes of the foregoing, that the Preferred Stock is convertible at the Closing Date at a conversion price equal to 125% of the
Closing Price (as defined in the Certificate of Designation)). This Section 5.2 shall terminate and be of no further force or effect five (5) years from the Closing or such earlier date
as shall be agreed to by the Company; provided, that this Section 5.2 shall automatically terminate upon the occurrence of any of the following events: (i) the filing with the SEC of a
Schedule 13D by any person or entity indicating that a person or entity has acquired (a) more than 33% of any class of the Company's voting equity securities, or (b) has acquired
at least 5% of any class of the Company's voting equity securities which Schedule 13D expresses the filing party's intention to assume control of the Company, whether by tender offer, merger,
proxy contest or otherwise; (ii) the commencement of a tender offer by any person or entity to acquire 33% or more of the Company's outstanding voting equity securities; or (iii) the
solicitation of proxies by any party other than the Company which is intended to effect a change in the majority of the members of the Company's Board of Directors. 

6. Covenants of the Company.  

    6.1  Reporting Status; S-3 Eligibility.  The
Company's Common Stock is registered under Section 12 of the Exchange Act. With a view to making available to Enzon the benefits of certain rules and regulations of the SEC which may permit the
sale of the Conversion Shares to the public without registration, the Company agrees to use it reasonable efforts to file with the SEC, in a timely manner all reports and other documents required of
the Company under the Exchange Act. The Company currently meets the "registrant eligibility" requirement set forth in the general instructions to Form S-3 to enable the registration
of the resale of the Conversion Shares as provided in Section 7 herein. The Company will otherwise take such further action as Enzon may reasonably request, all to the extent required from time
to time to enable Enzon to sell the Conversion Shares without registration under the Securities Act or any successor rule or regulation adopted by the SEC. 

9

 

    6.2  Listing.  On or before the 15th
business day after the date of this Agreement, the Company will secure the listing of the Conversion Shares on Nasdaq (subject to official notice of issuance) and, so long as Enzon owns any of the
Preferred Stock or the Conversion Shares, will maintain such listing or an alternative listing on the American Stock Exchange or the New York Stock Exchange and will comply in all material respects
with the Company's reporting, filing and other obligations under the bylaws or rules of the National Association of Securities Dealers, Inc. and such exchanges, if applicable. 

    6.3  No Integration; Form D Filing.  The Company
will not make any offers or sales of any security under circumstances that would cause the offering of the Preferred Stock or issuance of the Conversion Shares pursuant to this Agreement to be
integrated with any other offering of securities by the Company (i) for the purpose of any stockholder approval provision applicable to the Company or its securities of (ii) for purposes
of the registration requirements set forth in Section 5 of the Securities Act. On or before the 15th day following the Closing Date, the Company shall file a Form D
pursuant to Securities and Exchange Commission Regulation D with respect to the issuance of the Preferred Stock. 

7. Registration Rights.  

    7.1  S-3 Demand Registration.  Upon the
written request of Enzon, the Company shall use reasonable commercial efforts to prepare and file with the SEC, as promptly as reasonably practicable following receipt of such notice, a registration
statement on Form S-3 (or any successor to Form S-3), covering the resale of the Conversion Shares (the "S-3 Registration Statement") and use
commercially reasonable efforts, as soon as reasonably practicable thereafter, to effect such registration and any related qualification or compliance with respect to all Conversion Shares then
outstanding and held by Enzon or issuable upon conversion the then outstanding Preferred Stock held by Enzon; provided however, that the Company shall not be obligated to file such S-3
Registration Statement or effect any such registration, qualification or compliance: 

    (a) if Form S-3 (or any successor form) is not available for such offering by Enzon; 

    (b) at any time prior to the earlier of (i) date 60 days prior to the first anniversary of the Closing
Date, in which case the S-3 Registration Statement need not be declared effective until the first anniversary of the Closing Date, or (ii) the conversion of the Preferred Stock; 

    (c) if the Company shall furnish to Enzon a certificate signed by the Chairman of the Board of Directors of the Company
stating that in the good faith judgment of the Board of Directors of the Company, it would be materially detrimental to the Company and its shareholders for such S-3 Registration Statement
to filed or effected at such time, in which event the Company shall have the right, to defer the filing of the S-3 Registration Statement for not more than ninety (90) days after
receipt of the request of Enzon to effect such registration; provided, that a delay pursuant to this Section 7.1(c) shall be no longer than the Board of Directors reasonably deems necessary and
shall not be invoked more than one time in any twelve-month period; or 

    (d) if, at the time of the receipt of such request, all the Conversion Shares held by or issuable to Enzon may be sold
under Rule 144 in any ninety (90) day period. 

    7.2  S-1 Demand Registration.  In the event
that Form S-3 (or any successor form) is not then available for the offering requested by Enzon pursuant to Section 7.1 and otherwise permitted pursuant to the terms of this
Agreement, the Company shall, upon the written request of Enzon, use reasonable commercial efforts to prepare and file with the SEC, as promptly as reasonably practicable following receipt of such
notice, a registration statement on Form S-1 (or any successor to Form S-1), covering the resale of the Conversion Shares (the "S-1 Registration
Statement") and use commercially reasonable efforts, as soon as reasonably practicable thereafter, to effect such registration and any related qualification or compliance with respect to all
Conversion Shares then outstanding and held by 

10

 

Enzon or issuable upon conversion the then outstanding Preferred Stock held by Enzon; provided however, that the Company shall not be obligated to file such S-1 Registration Statement or
effect any such registration, qualification or compliance: 

    (a) if Form S-3 (or any successor form) is then available for such offering by Enzon; 

    (b) at any time prior to the earlier of (i) date 60 days prior to the first anniversary of the Closing
Date, in which case the S-1 Registration Statement need not be declared effective until the first anniversary of the Closing Date, or (ii) the conversion of the Preferred Stock; 

    (c) after the Company, (i) in the event that Enzon has not exercised the Extension Option (as defined below), has
effected two (2) registrations pursuant to this Section 7.2 and such registrations have been declared or ordered effective and remained effective for at least such time period as
required pursuant to Section 7.5(b); or (ii) in the event that Enzon has exercised the Extension Option, the Company has already effected one (1) registration pursuant to this
Section 7.2 and such registration has been declared or ordered effective for at least such time period as required pursuant 7.5(b); 

    (d) if the Company shall furnish to Enzon a certificate signed by the Chairman of the Board of Directors of the Company
stating that in the good faith judgment of the Board of Directors of the Company, it would be materially detrimental to the Company and its shareholders for such S-1 Registration Statement
to filed or effected at such time, in which event the Company shall have the right, to defer the filing of the S-1 Registration Statement; provided, that a delay pursuant to this
Section 7.2(d) (i) shall be no longer than the Board of Directors reasonably deems necessary, (ii) shall not be invoked more than one time with respect to any particular demand to
file an S-1 Registration Statement, or (iii) delay such filing(s) more than ninety (90) days in the aggregate for all S-1 Registration Statements, after receipt
of the request(s) of Enzon to effect such registration(s); or 

    (e) if, at the time of the receipt of such request, all the Conversion Shares held by or issuable to Enzon may be sold
under Rule 144 in any ninety (90) day period. 

As used herein, the term "Registration Statement" shall mean the S-3 Registration Statement or S-1 Registration Statement, as
applicable.

    7.3  Suspension of Effectiveness.  Notwithstanding any
other provision of this Agreement, Enzon understands and acknowledges that there may be periods during which the Company may determine, in good faith, that it is in the best interest of the Company
and its stockholders to defer disclosure of non-public information until such information has reached a more advanced stage and that during such periods sales of Conversion Shares and the
effectiveness of any Registration Statement covering Conversion Shares, may be suspended or delayed. Enzon agrees to provide one (1) day advance notice of any proposed sale by Enzon of any
Conversion Shares pursuant to the S-3 Registration Statement;
provided that such notice may set forth Enzon's intention to sell for up to thirty (30) days following the date of such notice and Enzon shall have been deemed to have provided sufficient
notice with respect all such sales. Whether or not such notice from Enzon has been provided to the Company, Enzon agrees that upon receipt of any notice from the Company of a suspension pursuant to
this Section 7.3, Enzon will forthwith discontinue its disposition of Conversion Shares pursuant to the Registration Statement until Enzon's receipt of notice from the Company that the use of
the Registration Statement may be resumed and, where appropriate as determined by the Company, a supplement or amendment to the prospectus and, if so directed by the Company, Enzon will use its best
efforts to deliver to the Company all copies, other than permanent file copies then in Enzon's possession, of the prospectus relating to such Conversion Shares current at the time of receipt of such
notice; provided however, that in no event shall such periods in which disposition of Conversion Shares pursuant to the Registration Statement is
suspended pursuant to the foregoing exceed 45 days in any one instance or an aggregate 

11

 

of 90 days in any 360 day period. Notwithstanding the foregoing, no such suspension period shall be longer than the Company reasonably deems necessary. 

    7.4  Registration Expenses.  The Company shall pay the
expenses incurred by the Company in complying with Section 7 hereof, including, all registration and filing fees, NASD fees, exchange listing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding any and all underwriting discounts and selling
commissions applicable to the sale of Conversion Shares by Enzon). The Company shall not, however, be required to pay for expenses of any registration proceeding begun pursuant to Section 7.1
or 7.2, the request of which has been subsequently withdrawn by Enzon unless (a) the withdrawal is based upon material adverse information concerning the Company of which Enzon was not aware at
the time of such request or (b) Enzon agrees to forfeit its right to one requested registration pursuant to Section 7.2. If the Company is required to pay the registration expenses of a
withdrawn offering pursuant to clause (a) above, then Enzon shall not forfeit its rights pursuant to Section 7.2 to an S-1 demand registration. 

    7.5  Obligations of the Company.  Subject to
Section 7.3, whenever required to effect the registration of any Conversion Shares, the Company shall: 

    (a) Cause any S-3 Registration Statement to remain effective until the earlier of the date on which all
Conversion Shares covered by the S-3 Registration Statement (i) have been sold, transferred or disposed of by Enzon (or a permitted assignee pursuant to Section 7.9),
pursuant to the S-3 Registration Statement or otherwise, or (ii) are eligible for sale pursuant to Rule 144(k). 

    (b) Cause any S-1 Registration Statement to remain effective until the earlier of (i) the date on
which all Conversion Shares covered by the S-1 Registration Statement have been sold, transferred or disposed of by Enzon (or a permitted assignee pursuant to Section 7.9), pursuant
to the S-1 Registration Statement or otherwise, (ii) the date on which all Conversion Shares covered by the S-1 Registration Statement are
eligible for sale pursuant to Rule 144(k), or (iii) (A) the date thirty (30) days following the initial effective date of the S-1 Registration Statement, or
(B) with respect to the initial S-1 Registration, if so requested by Enzon in writing, the date which is the earlier of (Y) a date subsequent to the 30th day
following the initial effective date of such S-1 Registration Statement specified by Enzon in writing or (Z) sixty (60) days following the initial effective date of such
S-1 Registration Statement (the "Extension Option"), in which event Enzon shall forfeit its right to any further requested registration pursuant to Section 7.2; provided, however,
that if use of the S-1 Registration Statement is suspended pursuant to Section 7.3, the Company shall cause such S-1 Registration Statement to remain effective for an
additional period equal to the length of time of such suspension. 

    (c) As soon as reasonably practicable, prepare and file with the SEC such amendments and supplements to such
Registration Statement and the prospectus used in connection with such Registration Statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of
all securities covered by such Registration Statement. 

    (d) As soon as reasonably practicable, furnish to Enzon such number of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such other documents as it may reasonably request in order to facilitate the disposition of Conversion Shares included in
such Registration Statement. 

    (e) Use commercially reasonable efforts to register and qualify the securities covered by such Registration Statement
under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested Enzon, provided that the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service 

12

 

of process in any such states or jurisdictions in which it is not otherwise required to so qualify or consent. 

    (f)  As soon as reasonably practicable, notify Enzon at any time when a prospectus relating to such offering is required
to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. 

    (g) As soon as reasonably practicable, notify Enzon (i) when the Registration Statement, any
pre-effective amendment, the prospectus, any prospectus supplement or post effective amendment to the Registration Statement has been filed and, with respect to the Registration Statement
or any post-effective amendment, when the same has become effective; (ii) of any written request by the SEC for amendment or supplements to the Registration Statement or prospectus
therein; (iii) of the
notification to the Company by the SEC of its initiation of any stop order suspending the effectiveness of the Registrations Statement; and (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of any Conversion Shares for sale under the applicable securities or blue sky laws of any jurisdiction. 

    7.6  Termination of Registration Rights.  All
registration rights granted under this Section 7 shall terminate and be of no further force and effect on the first date upon which the Conversion Shares are eligible for sale by Enzon pursuant
to Rule 144(k). 

    7.7  Furnishing Information.  It shall be a condition
precedent to the obligations of the Company to take any action pursuant to Section 7, that Enzon shall furnish to the Company such information regarding itself, the Conversion Shares held by
Enzon and the intended method of disposition of such securities as shall be required to effect the registration of the Conversion Shares. 

    7.8  Indemnification.  In the event any Conversion Shares
are included in a Registration Statement under Section 7: 

    (a) To the extent permitted by law, the Company will indemnify and hold harmless Enzon, its officers, directors, any
underwriter (as defined in the Securities Act) for Enzon and each person, if any, who controls Enzon or such underwriter within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "Violation") by the Company:
(i) any untrue statement or alleged untrue statement of a material fact contained in such Registration Statement, including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law in connection with the offering covered by such Registration Statement; and the Company will reimburse each of Enzon, and such officers or
directors, underwriters or controlling persons for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or
action; provided however, that the indemnity agreement contained in this Section 7.8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if
such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a Violation which 

13

 

occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by Enzon or any such officer, director, underwriter or controlling
person. 

    (b) To the extent permitted by law, Enzon will, if Conversion Shares are included in the securities as to which such
registration qualifications or compliance is being effected, indemnify and hold harmless the Company, each of its directors, its officers, and each person, if any, who controls the Company within the
meaning of the Securities Act, any underwriter and any other shareholder selling securities under such registration statement or any of such other shareholder's partners, directors or officers or any
person who controls such other shareholder, against any losses, claims, damages or liabilities (joint or several) to which the Company or any such director, officer, controlling person, underwriter or
other such shareholder, or partner, director, officer or controlling person of such other shareholder may become subject under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information furnished by Enzon under an instrument duly executed by Enzon and stated to be specifically for use in connection with such
registration; and Enzon will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, underwriter or other shareholder, or partner,
officer, director or controlling person of such other shareholder in connection with investigating or defending any such loss, claim, damage, liability or action if it is determined that there was
such a Violation; provided, however, that the indemnity agreement contained in this Section 7.8(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of Enzon, which consent shall not be unreasonably withheld. 

    (c) Promptly after receipt by an indemnified party under this Section 7.8 of notice of the commencement of any
action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 7.8, deliver to the
indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with
any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to
retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to
the indemnifying party within a reasonable time of the commencement of any such action, if materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 7.8, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 7.8. 

    (d) The obligations of the Company and Enzon under this Section 7.8 shall survive completion of any offering of
Conversion Shares in such Registration Statement. No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each indemnified party, consent to entry of
any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in
respect to such claim or litigation. 

    7.9  Assignment of Registration Rights.  The rights to
cause the Company to register Conversion Shares pursuant to this Section 6 may be assigned by Enzon only to (i) a party to whom the Preferred Stock may be transferred in accordance with
Section 5.1, or (ii) to a party to whom the Conversion 

14

 

Shares are transferred, other than pursuant to the Registration Statement or Rule 144, provided that such transferee acquires a number of Conversion Shares equal or exceeding one percent (1%)
of the Company's outstanding common stock on the date of transfer. Any such assignment shall be conditioned upon Enzon, within ten (10) days after such transfer, furnishing to the Company
written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned and such transferee agreeing to be subject to
all restrictions, limitations and obligations set forth in Section 5 and Section 7 this Agreement as if such transferee were Enzon. Any such permitted assignee shall have all the rights
of Enzon under this Section 7 with respect to the Conversion Shares transferred (or issuable upon conversion of the Preferred Stock transferred). 

8. Miscellaneous.  

    8.1.  Governing Law.  This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without regard to the choice of law provisions thereof, and the federal laws of the United States. 

    8.2.  Public Statements.  The parties agree that the
initial public announcement of the execution of this Agreement shall be in the form of the press release that describes the nature and scope of the transaction and attached to the Cross-License
Agreement as an appendix. Future characterizations of this Agreement, the Related Agreements and the transactions contemplated hereby and thereby shall be consistent with such press release, although
the parties recognize that either of them may be obligated to make more specific disclosures of financial or other terms in their filings with the SEC. It is understood by the parties that the initial
report on Form 8-K regarding the consummation of this Agreement, the Related Agreements and the transactions contemplated hereby and thereby filed by each party may contain such
additional detail; provided, however, that such initial reports will be exchanged for review and comment prior to filing and any party receiving comments in response will review and consider them in
good faith. Subject to paragraph 17.1 of the Cross-License Agreement, the terms of which shall govern the disclosure of Confidential Information (as defined in the Cross-License Agreement)
relating to or pursuant to this Agreement, each party shall use reasonable efforts to submit to the other party a draft of all press releases and other public disclosures relating to this Agreement or
the parties' relationship hereunder ("Proposed Disclosures") for review and comment by the other party at least five (5) full business days prior to the date on which such party plans to
release such Proposed Disclosure, and in any event shall submit such drafts at least 24 hours prior to the release of
such Proposed Disclosures, and shall review and consider in good faith any comments provided in response. If a party is unable to comply with the foregoing 24 hour notice requirement because of
a legal obligation or stock exchange requirement to make more rapid disclosure, such party shall not be in breach of this Agreement, but shall in that case give telephone notice to a senior executive
of the other party and provide a draft of such Proposed Disclosure with as much notice as possible prior to the release of such Proposed Disclosure. A party may publicly disclose without regard to the
preceding requirements of this Section 8.2 information that was previously disclosed (a) in a Proposed Disclosure that was in compliance with such requirements, or (b) in the
initial public announcement of the execution of this Agreement or in the initial report on Form 8-K. 

    8.3.  Successors and Assigns.  Except as otherwise
expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto. 

    8.4.  Entire Agreement.  This Agreement, the Related
Agreements and the exhibits hereto and thereto, and the other documents delivered pursuant hereto, constitute the full and entire understanding and agreement among the parties with regard to the
subjects hereof and no party shall be liable or bound to any other party in any manner by any representations, warranties, covenants, or 

15

 

agreements except as specifically set forth herein or therein. Nothing in this Agreement, express or implied, is intended to confer upon any party, other than the parties hereto and their respective
successors and assigns, any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided herein. 

    8.5.  Severability.  In the event any provision of this
Agreement shall be invalid, illegal, or unenforceable, it shall to the extent practicable, be modified so as to make it valid, legal and enforceable and to retain as nearly as practicable the intent
of the parties, and the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 

    8.6.  Amendment and Waiver.  Except as otherwise provided
herein, any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively,
and either for a specified period of time or indefinitely), with the written consent of the Company and Enzon. Any amendment or waiver effected in accordance with this Section shall be binding upon
any holder of any securities purchased under this Agreement (including securities into which such securities have been converted), each future holder of all such securities, and the Company. 

    8.7.  Notices.  All notices and other communications
required or permitted hereunder shall be in writing and shall be deemed effectively given and received (i) upon personal delivery, (ii) on the fifth day
following mailing by registered or certified mail, return receipt requested, postage prepaid, addressed to the Company and Enzon at their respective addresses first above written, or (iii) upon
confirmed delivery by overnight commercial courier service. 

    8.8.  Fees and Expenses.  The Company and Enzon shall
bear their own expenses and legal fees incurred on their behalf with respect to this Agreement and the transactions contemplated hereby. Each party hereby agrees to indemnify and to hold harmless of
and from any liability the other party for any commission or compensation in the nature of a finder's fee to any broker or other person or firm (and the costs and expenses of defending against such
liability or asserted liability) for which such indemnifying party or any of its employees or representatives are responsible. 

    8.9.  Counterparts.  This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. 

[The
Remainder of this Page is Blank] 

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    IN WITNESS WHEREOF, the foregoing Preferred Stock Purchase Agreement is hereby executed as of the date first above written. 

	 	 	INHALE THERAPEUTIC SYSTEMS, INC.
	

 	
 	

By:	
 	

/s/ AJIT S. GILL   
 Ajit S. Gill
 President and Chief Executive Officer
	

 	
 	
ENZON, INC.
	

 	
 	

By:	
 	

/s/ ARTHUR J. HIGGINS   
 Arthur J. Higgins
 Chairman and Chief Executive Officer

17

 
 

EXHIBIT A
  
    CERTIFICATE OF DESIGNATION    
  

 
 

EXHIBIT B
  
    AMENDED AND RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED    
  

 
 

EXHIBIT C
  
    BYLAWS    
  

 
 

EXHIBIT D
  
    OPINION OF COOLEY GODWARD LLP    
  

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INHALE THERAPEUTIC SYSTEMS, INC. PREFERRED STOCK PURCHASE AGREEMENT

EXHIBIT A CERTIFICATE OF DESIGNATION

EXHIBIT B AMENDED AND RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED

EXHIBIT C BYLAWS

EXHIBIT D OPINION OF COOLEY GODWARD LLP<Page>

             =======================================================

                     UNITED SURGICAL PARTNERS HOLDINGS, INC.
                                     Issuer

                     10% Senior Subordinated Notes Due 2011

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

                                    INDENTURE

                          Dated as of December 19, 2001

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

                        U.S. TRUST COMPANY OF TEXAS, N.A.
                                     Trustee

             =======================================================

<Page>

                                                                             2

<Table>
<Caption>

                              CROSS-REFERENCE TABLE

  TIA                                                Indenture
SECTION                                              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)          .............................        7.08; 7.10
     (c)          .............................        N.A.
  311(a)          .............................        7.11
     (b)          .............................        7.11
     (c)          .............................        N.A.
  312(a)          .............................        2.05
     (b)          .............................       13.03
     (c)          .............................       13.03
  313(a)          .............................        7.06
     (b)(1)       .............................        N.A.
     (b)(2)       .............................        7.06
     (c)          .............................       13.02
     (d)          .............................        7.06
  314(a)          .............................        4.13; 4.14; 4.15;
                                                            13.02
     (b)          .............................        N.A.
     (c)(1)       .............................       13.04
     (c)(2)       .............................       13.04
     (c)(3)       .............................        N.A.
     (d)          .............................        N.A.
     (e)          .............................       13.05
     (f)          .............................        N.A.
  315(a)          .............................        7.01
     (b)          .............................        7.05; 13.02
     (c)          .............................        7.01
     (d)          .............................        7.01
     (e)          .............................        6.11
  316(a)(last sentence)........................       13.06
     (a)(1)(A)    .............................        6.05
     (a)(1)(B)    .............................        6.04
     (a)(2)       .............................        N.A.
     (b)          .............................        6.07
  317(a)(1)       .............................        6.08
     (a)(2)       .............................        6.09
     (b)          .............................        2.04
  318(a)          .............................       13.01

                                            N.A. means Not Applicable.

</Table>

----------------
Note: This Cross-Reference Table shall not, for any purpose, be deemed
to be part of the Indenture.

<Page>

                                                                             3

<Table>
<Caption>

                                TABLE OF CONTENTS

                                    Article 1
                   Definitions and Incorporation by Reference
<S>                            <C>                                                                          <C>
SECTION 1.01.                  DEFINITIONS...................................................................1
SECTION 1.02.                  OTHER DEFINITIONS............................................................34
SECTION 1.03.                  INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT............................35
SECTION 1.04.                  RULES OF CONSTRUCTION........................................................35

                                    Article 2
                                 The Securities

SECTION 2.01.                  FORM AND DATING..............................................................36
SECTION 2.02.                  EXECUTION AND AUTHENTICATION.................................................37
SECTION 2.03.                  REGISTRAR AND PAYING AGENT...................................................37
SECTION 2.04.                  PAYING AGENT TO HOLD MONEY IN TRUST..........................................38
SECTION 2.05.                  SECURITYHOLDER LISTS.........................................................38
SECTION 2.06.                  TRANSFER AND EXCHANGE........................................................38
SECTION 2.07.                  REPLACEMENT SECURITIES.......................................................39
SECTION 2.08.                  OUTSTANDING SECURITIES.......................................................39
SECTION 2.09.                  TEMPORARY SECURITIES.........................................................40
SECTION 2.10.                  CANCELLATION.................................................................40
SECTION 2.11.                  DEFAULTED INTEREST...........................................................40
SECTION 2.12.                  CUSIP NUMBERS................................................................40
SECTION 2.13.                  ISSUANCE OF ADDITIONAL SECURITIES............................................41

                                    Article 3
                                   Redemption

SECTION 3.01.                  NOTICES TO TRUSTEE...........................................................41
SECTION 3.02.                  SELECTION OF SECURITIES TO BE REDEEMED.......................................42
SECTION 3.03.                  NOTICE OF REDEMPTION.........................................................42
SECTION 3.04.                  EFFECT OF NOTICE OF REDEMPTION...............................................43
SECTION 3.05.                  DEPOSIT OF REDEMPTION PRICE..................................................43
SECTION 3.06.                  SECURITIES REDEEMED IN PART..................................................43

                                    Article 4
                                    Covenants

SECTION 4.01.                  PAYMENT OF SECURITIES........................................................43
SECTION 4.02.                  CHANGE OF CONTROL............................................................44
SECTION 4.03.                  LIMITATION ON INDEBTEDNESS...................................................47
SECTION 4.04.                  LIMITATION ON RESTRICTED PAYMENTS............................................51
SECTION 4.05.                  LIMITATION ON LIENS..........................................................55
SECTION 4.06.                  LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES.....55
SECTION 4.07.                  LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK...........................57

<Page>

                                                                             4

SECTION 4.08.                  LIMITATION ON AFFILIATE TRANSACTIONS.........................................62
SECTION 4.09.                  LIMITATION ON OWNERSHIP OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES..........64
SECTION 4.10.                  DISTRIBUTIONS BY QUALIFIED RESTRICTED SUBSIDIARIES...........................64
SECTION 4.11.                  INTERCOMPANY ADVANCES........................................................64
SECTION 4.12.                  GUARANTORS...................................................................64
SECTION 4.13.                  SEC REPORTS..................................................................65
SECTION 4.14.                  COMPLIANCE CERTIFICATE.......................................................66
SECTION 4.15.                  MAINTENANCE OF OFFICE OR AGENCY..............................................66
SECTION 4.16.                  TAXES........................................................................67
SECTION 4.17.                  LIMITATION ON STATUS AS INVESTMENT COMPANY...................................67
SECTION 4.18.                  PAYMENTS FOR CONSENT.........................................................67
SECTION 4.19.                  CORPORATE EXISTENCE..........................................................67
SECTION 4.20.                  FURTHER INSTRUMENTS AND ACTS.................................................68

                                    Article 5
                                     Merger

SECTION 5.01.                  MERGER AND CONSOLIDATION.....................................................68

                                    Article 6
                              Defaults and Remedies

SECTION 6.01.                  EVENTS OF DEFAULT............................................................70
SECTION 6.02.                  ACCELERATION.................................................................73
SECTION 6.03.                  OTHER REMEDIES...............................................................73
SECTION 6.04.                  WAIVER OF PAST DEFAULTS......................................................74
SECTION 6.05.                  CONTROL BY MAJORITY..........................................................74
SECTION 6.06.                  LIMITATION ON SUITS..........................................................74
SECTION 6.07.                  RIGHTS OF HOLDERS TO RECEIVE PAYMENT.........................................75
SECTION 6.08.                  COLLECTION SUIT BY TRUSTEE...................................................75
SECTION 6.09.                  TRUSTEE MAY FILE PROOFS OF CLAIM.............................................75
SECTION 6.10.                  PRIORITIES...................................................................76
SECTION 6.11.                  UNDERTAKING FOR COSTS........................................................76
SECTION 6.12.                  WAIVER OF STAY OR EXTENSION LAWS.............................................77

                                    Article 7
                                     Trustee

SECTION 7.01.                  DUTIES OF TRUSTEE............................................................77
SECTION 7.02.                  RIGHTS OF TRUSTEE............................................................78
SECTION 7.03.                  INDIVIDUAL RIGHTS OF TRUSTEE.................................................79
SECTION 7.04.                  TRUSTEE'S DISCLAIMER.........................................................79
SECTION 7.05.                  NOTICE OF DEFAULTS...........................................................80
SECTION 7.06.                  REPORTS BY TRUSTEE TO HOLDERS................................................80
SECTION 7.07.                  COMPENSATION AND INDEMNITY...................................................80
SECTION 7.08.                  REPLACEMENT OF TRUSTEE.......................................................81
SECTION 7.09.                  SUCCESSOR TRUSTEE BY MERGER..................................................82

<Page>

                                                                             5

SECTION 7.10.                  ELIGIBILITY; DISQUALIFICATION................................................83
SECTION 7.11.                  PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY............................83

                                    Article 8
                       Discharge of Indenture; Defeasance

SECTION 8.01.                  DISCHARGE OF LIABILITY ON SECURITIES; DEFEASANCE.............................83
SECTION 8.02.                  CONDITIONS TO DEFEASANCE.....................................................84
SECTION 8.03.                  APPLICATION OF TRUST MONEY...................................................86
SECTION 8.04.                  REPAYMENT TO COMPANY.........................................................86
SECTION 8.05.                  INDEMNITY FOR GOVERNMENT OBLIGATIONS.........................................86
SECTION 8.06.                  REINSTATEMENT................................................................86

                                    Article 9
                                   Amendments

SECTION 9.01.                  WITHOUT CONSENT OF HOLDERS...................................................87
SECTION 9.02.                  WITH CONSENT OF HOLDERS......................................................88
SECTION 9.03.                  COMPLIANCE WITH TRUST INDENTURE ACT..........................................89
SECTION 9.04.                  REVOCATION AND EFFECT OF CONSENTS AND WAIVERS................................90
SECTION 9.05.                  NOTATION ON OR EXCHANGE OF SECURITIES........................................90
SECTION 9.06.                  TRUSTEE TO SIGN AMENDMENTS...................................................90

                                   Article 10
                                  Subordination

SECTION 10.01.                 AGREEMENT TO SUBORDINATE.....................................................91
SECTION 10.02.                 LIQUIDATION, DISSOLUTION, BANKRUPTCY.........................................91
SECTION 10.03.                 DEFAULT ON SENIOR INDEBTEDNESS OF THE COMPANY................................92
SECTION 10.04.                 ACCELERATION OF PAYMENT OF SECURITIES........................................93
SECTION 10.05.                 WHEN DISTRIBUTION MUST BE PAID OVER..........................................93
SECTION 10.06.                 SUBROGATION..................................................................93
SECTION 10.07.                 RELATIVE RIGHTS..............................................................94
SECTION 10.08.                 RIGHTS OF TRUSTEE AND PAYING AGENT...........................................94
SECTION 10.09.                 DISTRIBUTION OR NOTICE TO REPRESENTATIVE.....................................94
SECTION 10.10.                 ARTICLE 10 NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT RIGHT TO ACCELERATE.....95
SECTION 10.11.                 TRUST MONEYS NOT SUBORDINATED................................................95
SECTION 10.12.                 TRUSTEE ENTITLED TO RELY.....................................................95
SECTION 10.13.                 TRUSTEE TO EFFECTUATE SUBORDINATION..........................................96
SECTION 10.14.                 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS OF THE COMPANY......96
SECTION 10.15.                 RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS OF THE COMPANY ON SUBORDINATION
                               PROVISIONS...................................................................96

<Page>

                                                                             6

                                   Article 11
                                   Guaranties

SECTION 11.01.                 GUARANTIES...................................................................96
SECTION 11.02.                 LIMITATION ON LIABILITY......................................................99
SECTION 11.03.                 SUCCESSORS AND ASSIGNS.......................................................99
SECTION 11.04.                 NO WAIVER....................................................................99
SECTION 11.05.                 MODIFICATION................................................................100
SECTION 11.06.                 RELEASE OF GUARANTOR........................................................100

                                   Article 12
                           Subordination of Guaranties

SECTION 12.01.                 AGREEMENT TO SUBORDINATE....................................................100
SECTION 12.02.                 LIQUIDATION, DISSOLUTION, BANKRUPTCY........................................101
SECTION 12.03.                 DEFAULT ON SENIOR INDEBTEDNESS OF GUARANTOR.................................101
SECTION 12.04.                 DEMAND FOR PAYMENT..........................................................103
SECTION 12.05.                 WHEN DISTRIBUTION MUST BE PAID OVER.........................................103
SECTION 12.06.                 SUBROGATION.................................................................103
SECTION 12.07.                 RELATIVE RIGHTS.............................................................103
SECTION 12.08.                 RIGHTS OF TRUSTEE AND PAYING AGENT..........................................104
SECTION 12.09.                 DISTRIBUTION OR NOTICE TO REPRESENTATIVE....................................104
SECTION 12.10.                 ARTICLE 12 NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT RIGHT TO DEMAND
                               PAYMENT.....................................................................104
SECTION 12.11.                 TRUST MONEYS NOT SUBORDINATED...............................................104
SECTION 12.12.                 TRUSTEE ENTITLED TO RELY....................................................105
SECTION 12.13.                 TRUSTEE TO EFFECTUATE SUBORDINATION.........................................105
SECTION 12.14.                 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS OF GUARANTOR.......106
SECTION 12.15.                 RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS OF THE GUARANTORS ON SUBORDINATION
                               PROVISIONS..................................................................106

                                   Article 13
                                  Miscellaneous

SECTION 13.01.                 TRUST INDENTURE ACT CONTROLS................................................106
SECTION 13.02.                 NOTICES.....................................................................106
SECTION 13.03.                 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.................................107
SECTION 13.04.                 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT..........................107
SECTION 13.05.                 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION...............................108
SECTION 13.06.                 WHEN SECURITIES DISREGARDED.................................................108
SECTION 13.07.                 RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR................................108
SECTION 13.08.                 LEGAL HOLIDAYS..............................................................108
SECTION 13.09.                 GOVERNING LAW...............................................................109

<Page>

                                                                             7

SECTION 13.10.                 NO RECOURSE AGAINST OTHERS..................................................109
SECTION 13.11.                 SUCCESSORS..................................................................109
SECTION 13.12.                 MULTIPLE ORIGINALS..........................................................109
SECTION 13.13.                 TABLE OF CONTENTS; HEADINGS.................................................109

</Table>

APPENDIX A -Provisions Relating to Initial Securities,
         Private Exchange Securities and Exchange Securities
         EXHIBIT 1 - Form of Initial Security

EXHIBIT A - Form of Exchange Security or Private Exchange
         Security

<Page>

         INDENTURE dated as of December 19, 2001, among UNITED SURGICAL PARTNERS
HOLDINGS, INC., a Delaware corporation (the "COMPANY"), the guarantors from time
to time parties hereto (the "GUARANTORS") and U.S. TRUST COMPANY OF TEXAS, N.A.,
as Trustee (the "TRUSTEE").

         Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Company's Initial
Securities, Exchange Securities and Private Exchange Securities (collectively,
the "SECURITIES"):

                                  ARTICLE 1

                   DEFINITIONS AND INCORPORATION BY REFERENCE

                  SECTION 1.01.   DEFINITIONS.

                  "ADDITIONAL ASSETS" means:

                  (1) any property, plant or equipment used in a Related
         Business;

                  (2) Capital Stock of a Person that becomes a Qualified
         Restricted Subsidiary as a result of the acquisition of such Capital
         Stock by Parent or a Restricted Subsidiary; or

                  (3) Capital Stock of a Qualified Restricted Subsidiary, a
         Qualified Joint Venture or a QJVGP.

                  "ADDITIONAL SECURITIES" means, subject to the Company's
compliance with Section 4.03, 10% Senior Subordinated Notes Due 2011 issued from
time to time after the Issue Date under the terms of this Indenture (other than
pursuant to Section 2.06, 2.07, 2.09 or 3.06 of this Indenture and other than
Exchange Securities or Private Exchange Securities issued pursuant to an
exchange offer for other Securities outstanding under this Indenture).

                  "AFFILIATE" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"CONTROL" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"CONTROLLING" and "CONTROLLED" have meanings

<Page>

                                                                             2

correlative to the foregoing. "Affiliate" shall also mean any beneficial
owner of Capital Stock representing 10% or more of the total voting power of
the Voting Stock (on a fully diluted basis) of Parent or of rights or
warrants to purchase such Capital Stock (whether or not currently
exercisable)and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.

                  "ASSET DISPOSITION" means any sale, lease, issuance, transfer
or other disposition (or series of related sales, leases, issuances, transfers
or dispositions) by Parent or any Restricted Subsidiary, including any
disposition by means of a merger, consolidation or similar transaction (each
referred to for the purposes of this definition as a "DISPOSITION"), of:

                  (1) any shares of Capital Stock of the Company or any other
         Restricted Subsidiary of Parent (other than directors' qualifying
         shares or an immaterial number of shares required by applicable law to
         be held by a Person other than the Company or a Restricted Subsidiary);

                  (2) all or substantially all the assets of any division or
         line of business of Parent or any Restricted Subsidiary;

                  (3) any other assets of Parent or any Restricted Subsidiary
         outside of the ordinary course of business of Parent or such Restricted
         Subsidiary.

                  Notwithstanding the foregoing, the following shall be deemed
not to be Asset Dispositions:

                  (A) a disposition by Parent or a Restricted Subsidiary to the
         Company or a Guarantor;

                  (B) for purposes of Section 4.07 only, (i) a disposition that
         constitutes a Restricted Payment permitted by Section 4.04 or a
         Permitted Investment and (ii) a transaction in accordance with Section
         5.01;

                  (C) for purposes of Section 4.07 only, the trade or exchange
         by Parent or any Restricted Subsidiary of (i) any assets of a kind used
         or usable in the primary business of Parent and its Restricted
         Subsidiaries or any Capital Stock of a Restricted Subsidiary, a QJVGP
         or a Qualified Joint Venture for (ii) any assets of a

<Page>

                                                                             3

         kind used or usable in the primary business of Parent and its
         Restricted Subsidiaries or any Capital Stock of a Person that is, or
         that shall become upon such trade or exchange, a Qualified
         Restricted Subsidiary, a QJVGP or a Qualified Joint Venture, and any
         cash or cash equivalents necessary in order to achieve an exchange
         of equivalent value; PROVIDED, HOWEVER, that (a) the value of the
         assets received by Parent and its Restricted Subsidiaries in such
         trade or exchange is at least equal to the fair market value (as
         determined in good faith by the Board of Directors) of the assets so
         traded or exchanged and (b) such trade or exchange shall constitute
         an Asset Disposition to the extent of the amount of any cash, cash
         equivalents and assets other than assets of the types specified in
         clause (ii) above received by Parent and its Restricted Subsidiaries
         as consideration in such trade or exchange;

                  (D) for purposes of Section 4.07 only, the sale of Capital
         Stock in a Qualified Restricted Subsidiary to a Strategic Investor;
         PROVIDED, THAT (i) after giving effect to such sale, such Qualified
         Restricted Subsidiary continues to constitute a Qualified Restricted
         Subsidiary and (ii) an amount equal to the Net Available Cash from such
         sale are applied in accordance with Sections 4.07(a)(3) and 4.07(a)(4);

                  (E) the creation of a Lien;

                  (F) for purposes of Section 4.07 only, any commercially
         reasonable foreclosure of a Lien on assets; PROVIDED, THAT an amount
         equal to the Net Available Cash, if any, to Parent and its Restricted
         Subsidiaries from such foreclosure are applied in accordance with
         Sections 4.07(a)(3) and 4.07(a)(4); and

                  (G) a disposition of assets with a fair market value of less
than $2.0 million.

                  "AVERAGE LIFE" means, as of the date of determination, with
respect to any Indebtedness, the quotient obtained by dividing:

                  (1) the sum of the products of the numbers of years from the
         date of determination to the dates of each successive scheduled
         principal payment of or redemption or similar payment with respect to
         such

<Page>

                                                                             4

         Indebtedness multiplied by the amount of such payment, by

                  (2) the sum of all such payments.

                  "BANK INDEBTEDNESS" means all obligations pursuant to the
Credit Agreement.

                  "BOARD OF DIRECTORS" means the board of directors of Parent or
any committee thereof duly authorized to act on behalf of such board.

                  "BUSINESS DAY" means each day which is not a Legal Holiday.

                  "CAPITAL LEASE OBLIGATION" means an obligation that is
required to be classified and accounted for as a capital lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty.

                  "CAPITAL STOCK" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.

                  "CODE" means the Internal Revenue Code of 1986, as amended.

                  "COMMON STOCK" of any Person means Capital Stock of such
Person that does not rank senior in any respect to, and does not have any
preference or priority over, any shares of Capital Stock of any other class of
such Person, including with respect to the payment of dividends or the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person.

                  "CONSOLIDATED COVERAGE RATIO" as of any date of determination
means the ratio of (x) the aggregate amount of EBITDA of Parent for the period
of the most recent four consecutive fiscal quarters for which financial
statements are available immediately preceding the date of such

<Page>

                                                                             5

determination to (y) Consolidated Interest Expense of Parent for such four
fiscal quarters; PROVIDED, HOWEVER, that:

                  (1) if Parent or any Restricted Subsidiary has Incurred any
         Indebtedness since the beginning of such period that remains
         outstanding or if the transaction giving rise to the need to calculate
         the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or
         both, then EBITDA and Consolidated Interest Expense for such period
         shall be calculated after giving effect on a PRO FORMA basis to such
         Indebtedness and the application of the proceeds therefrom as if such
         Indebtedness had been Incurred and such proceeds had been applied on
         the first day of such period;

                  (2) if Parent or any Restricted Subsidiary has repaid,
         repurchased, defeased or otherwise discharged any Indebtedness since
         the beginning of such period or if any Indebtedness is to be repaid,
         repurchased, defeased or otherwise discharged on the date of the
         transaction giving rise to the need to calculate the Consolidated
         Coverage Ratio, then EBITDA and Consolidated Interest Expense for such
         period shall be calculated on a PRO FORMA basis as if such discharge
         had occurred on the first day of such period and as if Parent or such
         Restricted Subsidiary had not earned the interest income actually
         earned (if any) during such period in respect of cash or Temporary Cash
         Investments used to repay, repurchase, defease or otherwise discharge
         such Indebtedness;

                  (3) if, since the beginning of such period, Parent or any
         Restricted Subsidiary shall have made any Asset Disposition, then
         EBITDA for such period shall be reduced by an amount equal to EBITDA
         (if positive) directly attributable to the assets which were the
         subject of such Asset Disposition for such period, or increased by an
         amount equal to EBITDA (if negative), directly attributable thereto for
         such period and Consolidated Interest Expense for such period shall be
         reduced by an amount equal to the Consolidated Interest Expense
         directly attributable to any Indebtedness of Parent or any Restricted
         Subsidiary repaid, repurchased, defeased or otherwise discharged with
         respect to Parent and its continuing Restricted Subsidiaries in
         connection with such Asset Disposition for such period (or, if the
         Capital Stock of any Restricted Subsidiary is sold, the Consolidated
         Interest Expense for such period directly attributable

<Page>

                                                                             6

         to the Indebtedness of such Restricted Subsidiary to the extent Parent
         and its continuing Restricted Subsidiaries are no longer liable for
         such Indebtedness after such sale);

                  (4) if, since the beginning of such period, Parent or any
         Restricted Subsidiary (by merger or otherwise) shall have made an
         Investment in any Restricted Subsidiary (or any Person that becomes a
         Restricted Subsidiary) or an acquisition of assets outside of the
         ordinary course of business (including any Investment in a QJVGP or a
         Qualified Joint Venture), then EBITDA and Consolidated Interest Expense
         for such period shall be calculated after giving PRO FORMA effect
         thereto (including the Incurrence of any Indebtedness) as if such
         Investment or acquisition had occurred on the first day of such period;
         and

                  (5) if, since the beginning of such period, any Person (that
         subsequently became a Restricted Subsidiary or was merged with or into
         Parent or any Restricted Subsidiary since the beginning of such period)
         shall have made any Asset Disposition, any Investment or acquisition of
         assets that would have required an adjustment pursuant to clause (3) or
         (4) above if made by Parent or a Restricted Subsidiary during such
         period, then EBITDA and Consolidated Interest Expense for such period
         shall be calculated after giving PRO FORMA effect thereto as if such
         Asset Disposition, Investment or acquisition had occurred on the first
         day of such period.

                  For purposes of this definition, whenever PRO FORMA effect is
to be given to an acquisition of assets, the amount of income or earnings
relating thereto and the amount of Consolidated Interest Expense associated with
any Indebtedness Incurred in connection therewith, the PRO FORMA calculations
shall be determined in good faith by a responsible financial or accounting
Officer of Parent.

                  If any Indebtedness bears a floating rate of interest and is
being given PRO FORMA effect, the interest on such Indebtedness shall be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period (taking into account any Interest Rate
Agreement applicable to such Indebtedness, but if the remaining term of such
Interest Rate Agreement is less than 12 months, then such Interest Rate
Agreement

<Page>

                                                                             7

shall only be taken into account for that portion of the period equal to the
remaining term thereof).

                  The Consolidated Interest Expense attributable to interest on
any Indebtedness under a revolving credit facility the outstanding principal
balance of which is required to be computed on a PRO FORMA basis in accordance
with the foregoing shall be computed based upon the average daily balance of
such Indebtedness during the applicable period, PROVIDED, THAT such average
daily balance shall take into account the amount of any repayment of
Indebtedness under such revolving credit facility during the applicable period,
to the extent such repayment permanently reduced the commitments or amounts
available to be borrowed under such facility.

                  "CONSOLIDATED INTEREST EXPENSE" of a Person means, for any
period, the total interest expense of such Person and its Restricted
Subsidiaries, PLUS, to the extent not included in such total interest expense,
and to the extent incurred by such Person or its Restricted Subsidiaries,
without duplication:

                  (1) interest expense attributable to Capital Lease
         Obligations;

                  (2) amortization of debt discount and debt issuance cost;

                  (3) capitalized interest;

                  (4) non-cash interest expense;

                  (5) commissions, discounts and other fees and charges owed
         with respect to letters of credit and bankers' acceptance financing;

                  (6) net payments pursuant to Interest Rate Agreements;

                  (7) Disqualified Stock dividends in respect of all
         Disqualified Stock held by Persons other than such Person or a Wholly
         Owned Subsidiary of such Person (other than dividends payable solely in
         Capital Stock (other than Disqualified Stock) of such Person);
         PROVIDED, HOWEVER, that such dividends will be multiplied by a
         fraction, the numerator of which is one and the denominator of which is
         one minus the effective combined tax rate of the issuer of such
         Disqualified Stock (expressed as a decimal) for such

<Page>

                                                                             8

         period (as estimated by the chief financial officer of such Person in
         good faith);

                  (8) interest accruing on any Indebtedness of any other Person
         to the extent such Indebtedness is Guaranteed by (or secured by the
         assets of) such first Person or any of its Restricted Subsidiaries; and

                  (9) the cash contributions to any ESOP to the extent such
         contributions are used by such ESOP to pay interest or fees to any
         Person (other than such first Person) in connection with Indebtedness
         Incurred by such ESOP.

                  "CONSOLIDATED NET INCOME" of a Person means, for any period,
the net income of such Person and its consolidated Subsidiaries; PROVIDED,
HOWEVER, that there shall not be included in such Consolidated Net Income:

                  (1) any net income of any Person (other than such first
         Person) if such other Person is not a Restricted Subsidiary, except
         that:

                           (A) subject to the exclusion contained in clause (4)
                  below, such first Person's equity in the net income of any
                  such other Person for such period shall be included in such
                  Consolidated Net Income only to the extent of the aggregate
                  amount of cash actually distributed by such other Person
                  during such period to such first Person or any of its
                  Restricted Subsidiaries as a dividend or other distribution
                  (subject, in the case of a dividend or other distribution paid
                  to a Restricted Subsidiary of such first Person, to the
                  limitations contained in clause (3) below); and

                           (B) such first Person's equity in a net loss of any
                  such other Person for such period shall be included in
                  determining such Consolidated Net Income;

                  (2) any net income (or loss) of any Person acquired by such
         first Person or a Subsidiary of such first Person in a pooling of
         interests transaction for any period prior to the date of such
         acquisition;

                  (3) any net income of any Restricted Subsidiary of such first
         Person to the extent such Restricted Subsidiary is subject to
         restrictions, directly or

<Page>

                                                                             9

         indirectly, on the payment of dividends or the making of distributions
         by such Restricted Subsidiary, directly or indirectly, to such first
         Person, except that:

                           (A) subject to the exclusion contained in clause (4)
                  below, the net income of any such Restricted Subsidiary for
                  such period shall be included in such Consolidated Net Income
                  to the extent of the aggregate amount of cash actually
                  distributed by such Restricted Subsidiary during such period
                  to such first Person or another Restricted Subsidiary of such
                  first Person as a dividend or other distribution (subject, in
                  the case of a dividend or other distribution paid to another
                  Restricted Subsidiary of such first Person, to the limitation
                  contained in this clause); and

                           (B) the net loss of any such Restricted Subsidiary
                  for such period shall be included in determining such
                  Consolidated Net Income;

                  (4) any gain (but not loss) realized upon the sale or other
         disposition of any assets of such first Person or its consolidated
         Subsidiaries (including pursuant to any Sale/Leaseback Transaction) not
         made in the ordinary course of business and any gain (but not loss)
         realized upon the sale or other disposition of any Capital Stock of any
         Person;

                  (5) extraordinary gains or losses;

                  (6) the cumulative effect of a change in accounting
         principles;

                  (7) any unrealized gain or loss from foreign exchange
         transactions; and

                  (8) any non-cash compensation expense in connection with the
         issuance of employee or independent contractor stock options.

                  Notwithstanding the foregoing, for the purposes of Section
4.04 only, there shall be excluded from Consolidated Net Income any repurchases,
repayments or redemptions of Investments, proceeds realized on the sale of
Investments or return of capital to Parent or a Restricted Subsidiary to the
extent such repurchases, repayments, redemptions, proceeds or returns would
increase

<Page>

                                                                             10

the amount of Restricted Payments permitted under such section pursuant to
Section 4.04(a)(3)(D).

                  "CREDIT AGREEMENT" means the Credit Agreement dated as of
December 19, 2001, among USP Domestic Holdings, Inc. and USPE Holdings, Ltd. as
co-borrowers, the lenders from time to time parties thereto, Credit Suisse First
Boston as Administrative Agent, Lehman Commercial Paper Inc. as Syndication
Agent, and Societe Generale as Documentation Agent, together with the related
documents thereto (including any guarantees and security documents), as amended,
extended, renewed, restated, supplemented or otherwise modified (in whole or in
part, and without limitation as to amount, terms, conditions, covenants and
other provisions) from time to time, and any agreement (and related documents)
governing Indebtedness Incurred to Refinance, in whole or in part, the
borrowings and commitments then outstanding or permitted to be outstanding under
such credit agreement or a successor credit agreement, whether by the same or
any other lenders or agents or group of lenders or agents.

                  "CREDIT FACILITIES" means, with respect to Parent and its
Restricted Subsidiaries, one or more debt facilities (including the Credit
Agreement) or commercial paper facilities with banks or other institutional
lenders providing revolving credit loans, term loans, production payments,
receivables financing (including through the sale of 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.

                  "CURRENCY AGREEMENT" means, in respect of a Person, any
foreign exchange contract, currency swap agreement or other similar agreement
designed to protect such Person against fluctuations in currency values.

                  "DEFAULT" means any event which is, or after notice or passage
of time or both would be, an Event of Default.

                  "DESIGNATED SENIOR INDEBTEDNESS" with respect to a Person
means:

                  (1) the Bank Indebtedness; and

                  (2) any other Senior Indebtedness of such Person which, at the
         date of determination, has an aggregate principal amount outstanding
         of, or under which, at the date of determination, the holders thereof
         are

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                                                                             11

         committed to lend up to, at least $25.0 million and is specifically
         designated by such Person in the instrument evidencing or governing
         such Senior Indebtedness as "Designated Senior Indebtedness" for
         purposes of this Indenture.

                  "DISQUALIFIED STOCK" means, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable at the option of the holder) or
upon the happening of any event:

                  (1) matures or is mandatorily redeemable (other than
         redeemable only for Capital Stock of such Person which is not itself
         Disqualified Stock) pursuant to a sinking fund obligation or otherwise;

                  (2) is convertible or exchangeable at the option of the
         holder for Indebtedness or Disqualified Stock; or

                  (3) is mandatorily redeemable or must be purchased upon the
         occurrence of certain events or otherwise, in whole or in part;

in each case on or prior to the first anniversary of the Stated Maturity of the
Securities; PROVIDED, HOWEVER, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to purchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Securities shall not constitute
Disqualified Stock if:

                           (A) the "asset sale" or "change of control"
                  provisions applicable to such Capital Stock are not more
                  favorable to the holders of such Capital Stock than the terms
                  applicable to the Securities under Sections 4.02 and 4.07; and

                           (B) any such requirement only becomes operative after
                  compliance with such terms applicable to the Securities,
                  including the purchase of any Securities tendered pursuant
                  thereto.

                  The amount of any Disqualified Stock that does not have a
fixed redemption, repayment or repurchase price will be calculated in accordance
with the terms of such

<Page>

                                                                             12

Disqualified Stock as if such Disqualified Stock were redeemed, repaid or
repurchased on any date on which the amount of such Disqualified Stock is to
be determined pursuant to this Indenture; PROVIDED, HOWEVER, that if such
Disqualified Stock could not be required to be redeemed, repaid or
repurchased at the time of such determination, the redemption, repayment or
repurchase price will be the book value of such Disqualified Stock as
reflected in the most recent financial statements of such Person.

                  "DOMESTIC GUARANTOR" means Parent and each Domestic Subsidiary
of Parent that executes this Indenture on the Issue Date as a guarantor and each
other Domestic Subsidiary of Parent that thereafter Guarantees the Securities
pursuant to the terms of this Indenture, in each case unless and until such
Domestic Guarantor is released from its obligations under its Guaranty pursuant
to the terms of this Indenture.

                  "DOMESTIC SUBSIDIARY" means any Restricted Subsidiary that is
not a Foreign Subsidiary, and "DOMESTIC WHOLLY OWNED SUBSIDIARY" means any
Domestic Subsidiary that is a Wholly Owned Subsidiary.

                  "EBITDA" of a Person for any period means the sum of
Consolidated Net Income, plus the following to the extent deducted in
calculating such Consolidated Net Income:

                  (1) all income tax expense of such Person and its Restricted
          Subsidiaries;

                  (2) Consolidated Interest Expense of such Person;

                  (3) depreciation and amortization expense of such Person and
         its Restricted Subsidiaries;

                  (4) all other non-cash charges of such Person and its
         Restricted Subsidiaries (excluding any such non-cash charge to the
         extent that it represents an accrual of or reserve for cash
         expenditures in any future period); and

                  (5) any loss realized upon the sale or other disposition of
         any assets of such Person or its Subsidiaries (including pursuant to
         any Sale/Leaseback Transaction) not made in the ordinary course of
         business and any loss realized upon the sale or other disposition of
         any Capital Stock of any Person;

<Page>
                                                                          13

in each case for such period.

                  Notwithstanding the foregoing, the provisions above for
taxes, depreciation, amortization and non-cash charges of a Restricted
Subsidiary shall be added to Consolidated Net Income to compute EBITDA only
to the extent (and in the same proportion, including by reason of minority
interests) that the net income of such Restricted Subsidiary was included in
calculating Consolidated Net Income.

                  "ESOP" means any employee stock ownership plan or a trust
established by Parent or any of its Subsidiaries for the benefit of their
employees.

                  "EXCHANGE ACT" means the U.S. Securities Exchange Act of
1934, as amended.

                  "FOREIGN GUARANTOR" means each Foreign Subsidiary of Parent
that, after the Issue Date, Guarantees the Securities pursuant to the terms
of this Indenture, in each case unless and until such Foreign Subsidiary is
released from its obligations under its Guaranty pursuant to the terms of
this Indenture.

                  "FOREIGN SUBSIDIARY" means any Subsidiary that (1) is not
organized under the laws of the United States, any state thereof or the
District of Columbia and (2) conducts substantially all of its business
operations outside of the United States.

                  "GAAP" means generally accepted accounting principles in
the United States of America as in effect as of the Issue Date, including
those set forth in:

                  (1) the opinions and pronouncements of the Accounting
         Principles Board of the American Institute of Certified Public
         Accountants;

                  (2) statements and pronouncements of the Financial Accounting
         Standards Board;

                  (3) such other statements by such other entity as approved by
         a significant segment of the accounting profession; and

                  (4) the rules and regulations of the SEC governing the
         inclusion of financial statements (including PRO FORMA financial
         statements) in periodic reports required to be filed pursuant to
         Section 13 of

<Page>
                                                                          14

         the Exchange Act, including opinions and pronouncements in staff
         accounting bulletins and similar written statements from the
         accounting staff of the SEC.

                  "GUARANTEE" means any obligation, contingent or otherwise,
of any Person directly or indirectly guaranteeing any Indebtedness of any
Person (including as a general partner of a partnership) and any obligation,
direct or indirect, contingent or otherwise, of such Person:

                  (1) to purchase or pay (or advance or supply funds for the
         purchase or payment of) such Indebtedness of such Person (whether
         arising by virtue of partnership arrangements, or by agreements to
         keep-well, to purchase assets, goods, securities or services, to
         take-or-pay or to maintain financial statement conditions or
         otherwise); or

                  (2) entered into for the purpose of assuring in any other
         manner the obligee of such Indebtedness of the payment thereof or to
         protect such obligee against loss in respect thereof (in whole or in
         part);

PROVIDED, HOWEVER, that the term "Guarantee" shall not include endorsements
for collection or deposit in the ordinary course of business. The term
"Guarantee" used as a verb has a corresponding meaning.

                  "GUARANTOR" means each Domestic Guarantor and, if any, each
Foreign Guarantor.

                  "GUARANTY" means a Guarantee by a Guarantor of the
Company's obligations with respect to the Securities.

                  "HEDGING OBLIGATIONS" of any Person means the obligations
of such Person pursuant to any Interest Rate Agreement or Currency Agreement.

                  "HOLDER" or "SECURITYHOLDER" means the Person in whose name
a Security is registered on the Registrar's books.

                  "INCUR" means issue, assume, Guarantee, incur or otherwise
become liable for; PROVIDED, HOWEVER, that any Indebtedness or Disqualified
Stock of a Person existing at the time such Person becomes a Restricted
Subsidiary (whether by merger, consolidation, acquisition or

<Page>
                                                                          15

otherwise) shall be deemed to be Incurred by such Person at the time it
becomes a Restricted Subsidiary. The term "INCURRENCE" when used as a noun
shall have a correlative meaning. Solely for purposes of determining
compliance with Section 4.03, (1) amortization of debt discount or the
accretion of principal with respect to a non-interest bearing or other
discount security, (2) the payment of regularly scheduled interest in the
form of additional Indebtedness of the same instrument or the payment of
regularly scheduled dividends on Capital Stock in the form of additional
Capital Stock of the same class and with the same terms, and (3) unrealized
losses or charges in respect of Hedging Obligations (including those
resulting from the application of FAS 133), in each case will be deemed not
to be Incurrences of Indebtedness.

                  "INDEBTEDNESS" means, with respect to any Person on any
date of determination (without duplication):

                  (1) the principal in respect of (A) indebtedness of such
         Person for money borrowed and (B) indebtedness evidenced by notes,
         debentures, bonds or other similar instruments for the payment of which
         such Person is responsible or liable, including, in each case, any
         premium on such indebtedness to the extent such premium has become due
         and payable;

                  (2) all Capital Lease Obligations of such Person;

                  (3) all obligations of such Person issued or assumed as the
         deferred purchase price of property, all conditional sale obligations
         of such Person and all obligations of such Person under any title
         retention agreement (but excluding trade accounts payable arising in
         the ordinary course of business);

                  (4) all obligations of such Person for the reimbursement of
         any obligor on any letter of credit, banker's acceptance or similar
         credit transaction;

                  (5) the amount of all obligations of such Person with respect
         to the payment, purchase, redemption or other acquisition or retirement
         for value of any Disqualified Stock of such Person or, with respect to
         any Preferred Stock of any Subsidiary of such Person, the principal
         amount of such Preferred Stock to be determined in accordance with this
         Indenture (but excluding, in each case, any accrued dividends);

<Page>
                                                                          16

                  (6) all obligations of the type referred to in clauses (1)
         through (5) of other Persons and all dividends of other Persons for the
         payment of which, in either case, such Person is responsible or liable,
         directly or indirectly, as obligor, guarantor or otherwise, including
         by means of any Guarantee;

                  (7) all obligations of the type referred to in clauses (1)
         through (6) of other Persons secured by any Lien on any assets of such
         Person (whether or not such obligation is assumed by such Person), the
         amount of such obligation being deemed to be the lesser of the value of
         such assets and the amount of the obligation so secured; and

                  (8) to the extent not otherwise included in this definition,
         Hedging Obligations of such Person,

if and to the extent, in the case of obligations of the types referred to in
clauses (1), (2) and (3) above, such obligations would appear as a liability
upon a balance sheet of such Person prepared in accordance with GAAP.

                  Notwithstanding the foregoing, in connection with the
purchase by Parent or any Restricted Subsidiary of any business, the term
"Indebtedness" will exclude post-closing payment adjustments to which the
seller may become entitled to the extent such payment is determined by a
final closing balance sheet or such payment depends on the performance of
such business after the closing; PROVIDED, HOWEVER, that, at the time of
closing, the amount of any such payment is not determinable and, to the
extent such payment thereafter becomes fixed and determined, the amount is
paid within 30 days thereafter.

                  The amount of Indebtedness of any Person at any date shall
be the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at
such date; PROVIDED, HOWEVER, that in the case of Indebtedness sold at a
discount, the amount of such Indebtedness at any time will be the accreted
value thereof at such time.

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

                  "INDEPENDENT QUALIFIED PARTY" means an investment banking
firm, accounting firm or appraisal firm of national

<Page>
                                                                          17

standing; PROVIDED, HOWEVER, that such firm is not an Affiliate of Parent.

                  "INTEREST" with respect to a Security includes additional
interest payable pursuant to the Registration Rights Agreement.

                  "INTEREST RATE AGREEMENT" means in respect of a Person, any
interest rate swap agreement, interest rate cap agreement or other financial
agreement or arrangement designed to protect such Person against fluctuations
in interest rates.

                  "INVESTMENT" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of the
lender) or other extensions of credit (including by way of Guarantee or
similar arrangement) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for
the account or use of others), or any purchase or acquisition of Capital
Stock, Indebtedness or other similar instruments issued by such Person.
Except as otherwise provided for herein, the amount of an Investment shall be
its fair value at the time the Investment is made and without giving effect
to subsequent changes in value.

                  For purposes of the definition of "Unrestricted
Subsidiary," the definition of "Restricted Payment" and Section 4.04:

                  (1) "Investment" shall include the portion (proportionate to
         Parent's equity interest in such Subsidiary) of the fair market value
         of the net assets of any Subsidiary at the time that such Subsidiary is
         designated an Unrestricted Subsidiary; and

                  (2) any property transferred to or from an Unrestricted
         Subsidiary shall be valued at its fair market value at the time of such
         transfer, in each case as determined in good faith by the Board of
         Directors.

                  "ISSUE DATE" means December 19, 2001.

                  "LIEN" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof).

<Page>
                                                                          18

                  "MANAGEMENT AGREEMENTS" means the management, service or
similar agreements pursuant to which Parent, any of its Qualified Restricted
Subsidiaries or any QJVGP or Qualified Joint Venture manages the assets and
businesses of any of its Restricted Subsidiaries or any Qualified Joint
Ventures.

                  "MINORITY INTERESTS" means the interests in income of
Parent's Restricted Subsidiaries held by Persons other than Parent or a
Restricted Subsidiary, as reflected on Parent's consolidated financial
statements.

                  "MOODY'S" means Moody's Investors Service, Inc.

                  "NET AVAILABLE CASH" from an Asset Disposition means cash
payments received therefrom (including any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable or
otherwise, and proceeds from the sale or other disposition of any securities
received as consideration, but only as and when received, but excluding any
other consideration received in the form of assumption by the acquiring
Person of Indebtedness or other obligations relating to such properties or
assets or received in any other noncash form), in each case net of:

                  (1) all legal, accounting, investment banking, title and
         recording tax expenses, commissions and other fees and expenses
         incurred, relocation costs, and all Federal, state, provincial, foreign
         and local taxes required to be accrued as a liability under GAAP, as a
         consequence of such Asset Disposition;

                  (2) all payments made on any Indebtedness which is secured by
         any assets subject to such Asset Disposition, in accordance with the
         terms of any Lien upon or other security agreement of any kind with
         respect to such assets, or which must by its terms, or in order to
         obtain a necessary consent to such Asset Disposition, or by applicable
         law, be repaid out of the proceeds from such Asset Disposition; and

                  (3) the deduction of appropriate amounts provided by the
         seller as a reserve, in accordance with GAAP, against any liabilities
         associated with the property or other assets disposed in such Asset
         Disposition and retained by Parent or any Restricted Subsidiary after
         such Asset Disposition.

<Page>
                                                                          19

                  "NET CASH PROCEEDS," with respect to any issuance or sale
of Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.

                  "NON-RECOURSE DEBT" means Indebtedness:

                  (1) as to which neither Parent nor any Restricted Subsidiary
         (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;

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

                  (3) as to which the lenders of such Indebtedness have been
         notified in writing or have agreed in writing (in the agreement
         relating to the Indebtedness or otherwise) that they will not have any
         recourse to the assets of Parent or any of its Restricted Subsidiaries,

in each case, except for Investments made by Parent or a Restricted
Subsidiary in compliance with Section 4.03 and Section 4.04.

                  "OFFERING CIRCULAR" means the Confidential Offering
Circular dated December 14, 2001 issued by the Company in relation to
$150,000,000 aggregate principal amount of 10% Senior Subordinated Notes Due
2011 to be issued on the Issue Date.

                  "OFFICER" means the Chairman of the Board, the President,
any Vice President, the Treasurer or the Secretary of the Company.

                  "OFFICERS' CERTIFICATE" means a certificate signed by two
Officers.

<Page>
                                                                          20

                  "OPINION OF COUNSEL" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of
or counsel to the Company or the Trustee.

                  "PARENT" means United Surgical Partners International, Inc.

                  "PERMITTED ASSET DISPOSITION CONSIDERATION" means, in
connection with any Asset Disposition, (1) cash and Temporary Cash
Investments, (2) securities, notes and other obligations received by Parent
or any Restricted Subsidiary from the transferee that are converted into cash
within 90 days of receipt ("CONVERTED OBLIGATIONS"), (3) the assumption by a
Person (other than Parent or a Subsidiary of Parent) of Senior Indebtedness
of the Company or any Guarantor or Indebtedness of a Restricted Subsidiary of
Parent that is not a Guarantor (in each case other than Indebtedness owed to
Parent or a Subsidiary of Parent) and the release of Parent and its
Restricted Subsidiaries from all liability on such Indebtedness in connection
with such Asset Disposition, and (4) any other consideration received by
Parent or any Restricted Subsidiary in connection with such Asset Disposition
in an aggregate amount that, when taken together with all other amounts
outstanding under this clause (4) at the time of receipt of such
consideration, does not exceed the greater of (A) $5.0 million and (B) 5% of
Total Net Tangible Assets. For purposes of clause (4) of this definition, (i)
the "amount" of any item of consideration shall be the fair market value
thereof at the time of receipt by Parent or such Restricted Subsidiary, as
determined in good faith by the Board of Directors, and (ii) the "amount
outstanding" of any item of consideration at any time shall be (a) the amount
thereof at the time of receipt by Parent or such Restricted Subsidiary
(without giving effect to any subsequent changes in the fair market value
thereof) minus (b) the amount of cash, Temporary Cash Investments and
converted obligations received by Parent or a Restricted Subsidiary upon the
subsequent disposition of such item of consideration to the extent such
subsequent disposition was made (and the proceeds thereof have been applied)
in accordance with Section 4.07 (regardless of whether such subsequent
disposition constituted an Asset Disposition and as if such covenant required
100% of the consideration received to be cash, Temporary Cash Investments and
converted obligations), but in no event may the amount outstanding of any
item of consideration be less than zero.

<Page>
                                                                          21

                  "PERMITTED HOLDERS" means any of (i) Welsh, Carson,
Anderson & Stowe VII, L.P. and any of its affiliates, (ii) Donald E. Steen
and any of his affiliates, and (iii) any Person ("NEW PARENT") that acquires
all of the Capital Stock of Parent if the holders of securities that
represented 100% of the Voting Stock of Parent immediately prior to such
acquisition directly own 100% of the Voting Stock of New Parent immediately
after such acquisition and in the exact same percentages as they owned Voting
Stock of Parent immediately prior to such acquisition.

                  "PERMITTED INVESTMENT" means an Investment by Parent or any
Restricted Subsidiary in:

                  (1) the Company, a Domestic Guarantor or a Person that will,
         upon the making of such Investment, become a Domestic Guarantor;
         PROVIDED, HOWEVER, that the primary business of such Domestic Guarantor
         is a Related Business;

                  (2) another Person if as a result of such Investment such
         other Person is merged or consolidated with or into, or transfers or
         conveys all or substantially all its assets to, the Company or a
         Domestic Guarantor; PROVIDED, HOWEVER, that such Person's primary
         business is a Related Business;

                  (3) a Qualified Restricted Subsidiary, a Person that will,
         upon the making of such Investment, become a Qualified Restricted
         Subsidiary, or a Person that transfers or conveys all or substantially
         all of its assets to a Qualified Restricted Subsidiary;

                  (4) Qualified Joint Ventures and QJVGPs in an aggregate amount
         that when taken together with all other Investments made pursuant to
         this clause (4) does not exceed the sum of (A) $25.0 million, (B) if,
         subsequent to the Issue Date, Parent issues Capital Stock (other than
         Disqualified Stock) to a Person (other than an issuance to a Subsidiary
         of Parent or an ESOP) in exchange for the acquisition by Parent or any
         of its Restricted Subsidiaries of Capital Stock of a Qualified
         Restricted Subsidiary or a Person that becomes a Qualified Restricted
         Subsidiary as a result of such transaction or assets of a kind used or
         usable in the primary business of Parent and its Restricted
         Subsidiaries, an amount equal to 100% of the aggregate net proceeds of
         such issuance, based upon the fair market value of the Capital Stock or
         assets acquired

<Page>
                                                                          22

         by Parent and its Restricted Subsidiaries, as determined by the Board
         of Directors in good faith or, if such amount would be in excess of
         $10.0 million, as determined by an Independent Qualified Party, and
         (C) in the case of a Qualified Joint Venture that becomes a Qualified
         Restricted Subsidiary because of additional Investments therein made
         by Parent and its Subsidiaries, the portion (proportionate to Parent's
         direct or indirect equity interest in such Qualified Restricted
         Subsidiary) of the fair market value of the net assets of such
         Qualified Joint Venture at the time such Qualified Joint Venture
         becomes a Qualified Restricted Subsidiary; PROVIDED, HOWEVER, that the
         amount under this clause (C) shall not exceed, in the case of each
         such Qualified Joint Venture, the amount of Investments previously
         made by Parent and its Restricted Subsidiaries in such Qualified Joint
         Venture and any related QJVGP;

                  (5) cash and Temporary Cash Investments;

                  (6) receivables owing to Parent or any Restricted Subsidiary
         if created or acquired in the ordinary course of business and payable
         or dischargeable in accordance with customary trade terms; PROVIDED,
         HOWEVER, that such trade terms may include such concessionary trade
         terms as Parent or any such Restricted Subsidiary deems reasonable
         under the circumstances;

                  (7) payroll, travel and similar advances to cover matters that
         are expected at the time of such advances ultimately to be treated as
         expenses for accounting purposes and that are made in the ordinary
         course of business;

                  (8) loans or advances to employees or independent contractors
         made in the ordinary course of business consistent with past practices
         of Parent or such Restricted Subsidiary;

                  (9) stock, obligations or securities received in settlement of
         debts created in the ordinary course of business and owing to Parent or
         any Restricted Subsidiary or in satisfaction of judgments;

                  (10) any Investment made as a result of the receipt of
         non-cash consideration from a sale of assets that was made pursuant to
         and in compliance with Section 4.07;

<Page>
                                                                          23

                  (11) any Investments to the extent acquired in exchange for
         the issuance of Capital Stock (other than Disqualified Stock) of
         Parent;

                  (12) Investments in securities of trade creditors,
         wholesalers, suppliers or customers received pursuant to any plan of
         reorganization or similar arrangement;

                  (13) Hedging Obligations incurred in compliance with
         Section 4.03; and

                  (14) Phoenix constituting a Guarantee by Parent of
         Non-Recourse Debt of Phoenix in an amount not to exceed $20.0 million;
         PROVIDED, THAT such Guarantee is Incurred pursuant to and in compliance
         with Section 4.03(a)(1).

                  "PERMITTED JUNIOR SECURITIES" of a Person means Capital
Stock (other than Disqualified Stock) and Indebtedness of such Person that
are contractually subordinated in right of payment to all Senior Indebtedness
at least to the same extent as the Securities are subordinated to Senior
Indebtedness, and has no scheduled installment of principal due, by
redemption, sinking fund payment or otherwise, on or prior to the Stated
Maturity of the Securities.

                  "PERMITTED PAYMENT RESTRICTION" means any consensual
encumbrance or restriction (each, a "RESTRICTION") on the ability of any
Restricted Subsidiary, QJVGP or Qualified Joint Venture to (a) pay dividends
or make any other distributions on its Capital Stock or pay any Indebtedness
owed to Parent or a Restricted Subsidiary, (b) make any loans or advances to
Parent or a Restricted Subsidiary or (c) transfer any of its property or
assets to Parent or a Restricted Subsidiary, which restriction satisfies all
of the following conditions: (i) such restriction becomes effective only upon
the occurrence of a default by such Restricted Subsidiary, QJVGP or Qualified
Joint Venture in the payment of principal of or interest on Indebtedness that
was Incurred by such Restricted Subsidiary, QJVGP or Qualified Joint Venture
in compliance with this Indenture, (ii) such restriction was entered into by
such Restricted Subsidiary, QJVGP or Qualified Joint Venture in good faith as
a condition to the Incurrence by such Restricted Subsidiary, QJVGP or
Qualified Joint Venture of such Indebtedness, and (iii) at the time such
restriction was Incurred, there did not exist, and Parent

<Page>
                                                                          24

and such Restricted Subsidiary, QJVGP or Qualified Joint Venture in good
faith did not believe it to be likely that in the reasonably foreseeable
future there would exist, a default under such Indebtedness or an event or
condition that, with the giving of notice or the passage of time or both,
would constitute such a default.

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

                  "PHOENIX" means an Unrestricted Subsidiary of Parent the
primary business of which is to construct and operate a short-stay surgical
hospital in the greater Phoenix, Arizona area and a surgery center in
Chandler, Arizona.

                  "PREFERRED STOCK," as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends or distributions, or as to
the distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class
of such Person.

                  "PRINCIPAL" of a Security means the principal of the
Security plus the premium, if any, payable on the Security which is due or
overdue or is to become due at the relevant time.

                  "QUALIFIED EQUITY OFFERING" means the issuance after the
Issue Date of Common Stock of Parent to any Person or Persons (other than a
Subsidiary of Parent, an ESOP or an employee or director of Parent or any of
its Subsidiaries) in a transaction resulting in Net Cash Proceeds to Parent
of at least $20.0 million.

                  "QUALIFIED JOINT VENTURE" means any Person that is not a
Subsidiary and that satisfies all of the following requirements:

                  (1) Parent, a Qualified Restricted Subsidiary, a QJVGP or a
         Qualified Joint Venture has a Management Agreement to provide
         day-to-day management services to such Person;

                  (2) except for Permitted Payment Restrictions, there are no
         restrictions, directly or indirectly, on

<Page>
                                                                          25

         the ability of such Person to pay dividends or make distributions to
         the holders of its Capital Stock;

                  (3) the Capital Stock of such Person consists solely of (A)
         Capital Stock owned by Parent, its Qualified Restricted Subsidiaries
         and QJVGPs, (B) Common Stock owned by Strategic Investors and (C)
         directors' qualifying shares;

                  (4) the primary business of such Person is a Related
         Business; and

                  (5) such Person has no Indebtedness other than Non-Recourse
         Debt.

                  "QUALIFIED JOINT VENTURE GENERAL PARTNER" or "QJVGP" means any
Unrestricted Subsidiary of Parent that satisfies all of the following
requirements:

                  (1) the Capital Stock of such QJVGP consists solely of Capital
         Stock owned by Parent and its Wholly Owned Subsidiaries and Common
         Stock owned by Strategic Investors;

                  (2) except for Permitted Payment Restrictions, there are no
         restrictions, directly or indirectly, on the ability of such QJVGP to
         pay dividends or make distributions to the holders of its Capital
         Stock;

                  (3) except to the extent restricted pursuant to a Permitted
         Payment Restriction, such QJVGP customarily declares and pays regular
         monthly, quarterly or semi-annual dividends or distributions to the
         holders of its Capital Stock in an amount equal to substantially all of
         the available cash flow of such QJVGP for such period, as determined in
         good faith by the board of directors, board of governors or such other
         individuals performing similar functions, subject to such ordinary and
         customary reserves and other amounts as, in the good faith judgment of
         such individuals, may be necessary so that the business of such QJVGP
         may be properly and advantageously conducted at all times, and Parent
         intends to cause such QJVGP to continue to declare and pay such regular
         dividends or distributions in the manner set forth above;

                  (4) all Capital Stock owned by such QJVGP is Capital Stock of
         a Qualified Joint Venture that is a partnership;

<Page>
                                                                          26

                  (5) such QJVGP conducts no business other than (A) owning
         general partnership interests in, and making other Investments in,
         Qualified Joint Ventures that are partnerships and (B) providing
         day-to-day management services to Qualified Joint Ventures pursuant to
         Management Agreements; and

                  (6) such QJVGP has no Indebtedness other than Non-Recourse
         Debt.

                  "QUALIFIED RESTRICTED SUBSIDIARY" means (a) the Company and
(b) any other Restricted Subsidiary of Parent, including a Wholly Owned
Subsidiary, that satisfies all of the following requirements:

                  (1) except for Permitted Payment Restrictions, there are no
         restrictions, directly or indirectly, on the ability of such Restricted
         Subsidiary to pay dividends or make distributions to the holders of its
         Capital Stock;

                  (2) except to the extent restricted pursuant to a Permitted
         Payment Restriction, such Restricted Subsidiary customarily declares
         and pays regular monthly, quarterly or semi-annual dividends or
         distributions to the holders of its Capital Stock in an amount equal to
         substantially all of the available cash flow of such Restricted
         Subsidiary for such period, as determined in good faith by the board of
         directors, board of governors or such other individuals performing
         similar functions, subject to such ordinary and customary reserves and
         other amounts as, in the good faith judgment of such individuals, may
         be necessary so that the business of such Restricted Subsidiary may be
         properly and advantageously conducted at all times, and Parent intends
         to cause such Restricted Subsidiary to continue to declare and pay such
         regular dividends or distributions in the manner set forth above;

                  (3) the Capital Stock of such Restricted Subsidiary consists
         solely of (A) Capital Stock owned by Parent and its Qualified
         Restricted Subsidiaries, (B) Common Stock owned by Strategic Investors
         and (C) directors' qualifying shares; and

                  (4) the primary business of such Restricted Subsidiary is a
         Related Business.

<Page>
                                                                          27

                  "REFINANCE" means, in respect of any Indebtedness, to
refinance or refund, or to issue other Indebtedness in exchange or
replacement for, such Indebtedness. "REFINANCED" and "REFINANCING" shall have
correlative meanings.

                  "REFINANCING INDEBTEDNESS" means Indebtedness that
Refinances any Indebtedness of the Company or any Restricted Subsidiary
existing on the Issue Date or Incurred in compliance with this Indenture,
including Indebtedness that Refinances Refinancing Indebtedness; PROVIDED,
HOWEVER, that:

                  (1) such Refinancing Indebtedness has a Stated Maturity no
          earlier than the Stated Maturity of the Indebtedness being Refinanced;

                  (2) such Refinancing Indebtedness has an Average Life at the
         time such Refinancing Indebtedness is Incurred that is equal to or
         greater than the Average Life of the Indebtedness being Refinanced;

                  (3) such Refinancing Indebtedness has an aggregate principal
         amount (or if Incurred with original issue discount, an aggregate issue
         price) that is equal to or less than the aggregate principal amount (or
         if Incurred with original issue discount, the aggregate accreted value)
         then outstanding or committed (plus fees and expenses, including any
         premium and defeasance costs) under the Indebtedness being Refinanced;

                  (4) if the Indebtedness being Refinanced is subordinated in
         right of payment to the Securities or any Guaranty, such Refinancing
         Indebtedness is subordinated in right of payment to the Securities or
         such Guaranty on terms at least as favorable to the Securityholders as
         those contained in the documentation governing the Indebtedness being
         Refinanced; and

                  (5) such Refinancing Indebtedness is Incurred only by the
         Person that is the obligor on the Indebtedness being Refinanced.

         "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement dated December 19, 2001, among the Company, the Guarantors, Credit
Suisse First Boston Corporation, Lehman Brothers, Inc. and SG Cowen
Securities Corporation.

<Page>
                                                                          28

                  "RELATED BUSINESS" means any business in which Parent was
engaged on the Issue Date and any business directly related to the primary
business in which Parent was engaged on the Issue Date.

                  "REPRESENTATIVE" means with respect to a Person any
trustee, agent or representative (if any) for an issue of Senior Indebtedness
of such Person.

                  "RESTRICTED PAYMENT" with respect to any Person means:

                  (1) the declaration or payment of any dividends or any other
         distributions of any sort in respect of its Capital Stock (including
         any payment in connection with any merger or consolidation involving
         such Person) or similar payment to the direct or indirect holders of
         its Capital Stock (other than dividends or distributions payable solely
         in its Capital Stock (other than Disqualified Stock) and dividends or
         distributions payable solely to Parent or a Wholly Owned Subsidiary);

                  (2) the purchase, redemption or other acquisition or
         retirement for value of any Capital Stock of Parent or any Restricted
         Subsidiary (other than a Wholly Owned Subsidiary), including the
         exercise of any option to exchange any Capital Stock (other than into
         Capital Stock of Parent that is not Disqualified Stock);

                  (3) the purchase, repurchase, redemption, defeasance or other
         acquisition or retirement for value, prior to scheduled maturity,
         scheduled repayment or scheduled sinking fund payment of any
         Subordinated Obligations of such Person; or

                  (4) the making of any Investment (other than a Permitted
          Investment) in any Person.

                  "RESTRICTED SUBSIDIARY" means any Subsidiary that is not an
Unrestricted Subsidiary.

                  "RESTRICTED SUBSIDIARY LEVERAGE RATIO" as of any date of
determination means the ratio, on a PRO FORMA basis, of (1) the consolidated
Indebtedness of Parent's Restricted Subsidiaries (other than the Company and
the Domestic Guarantors) as of such date of determination (other than
Indebtedness Incurred pursuant to and in

<Page>
                                                                          29

compliance with Section 4.03(b)(1)) to (2) EBITDA of such Persons for the
period of the most recent four consecutive fiscal quarters for which
financial statements are available immediately preceding the date of such
determination plus the Minority Interests for such period.

                  "S&P" means Standard and Poor's Ratings Group.

                  "SALE/LEASEBACK TRANSACTION" means an arrangement relating
to property owned by Parent or a Restricted Subsidiary on the Issue Date or
thereafter acquired by Parent or a Restricted Subsidiary whereby Parent or a
Restricted Subsidiary transfers such property to a Person and Parent or a
Restricted Subsidiary thereafter leases it from such Person.

                  "SEC" means the Securities and Exchange Commission.

                  "SECURITIES" means the Securities issued under this
Indenture.

                  "SECURITIES ACT" means the U.S. Securities Act of 1933, as
amended.

                  "SENIOR INDEBTEDNESS" means with respect to the Company or
any Guarantor:

                  (1) Indebtedness of such Person, whether outstanding on the
          Issue Date or thereafter Incurred; and
                  (2) accrued and unpaid interest (including interest accruing
         on or after the filing of any petition in bankruptcy or for
         reorganization relating to such Person whether or not post-filing
         interest is allowed in such proceeding) in respect of (A) indebtedness
         of such Person for money borrowed and (B) indebtedness evidenced by
         notes, debentures, bonds or other similar instruments for the payment
         of which such Person is responsible or liable;

unless, in the case of clauses (1) and (2), in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
provided that such obligations are subordinate or PARI PASSU in right of
payment to the Securities or the Guaranty of such Person, as the case may be;
PROVIDED, HOWEVER, that Senior Indebtedness shall not include:

<Page>
                                                                          30

                  (A) any obligation of such Person to any Subsidiary;

                  (B) any liability for Federal, state, local or other taxes
          owed or owing by such Person;

                  (C) any accounts payable or other liability to trade creditors
         arising in the ordinary course of business (including Guarantees
         thereof or instruments evidencing such liabilities);

                  (D) any Indebtedness of such Person (and any accrued and
         unpaid interest in respect thereof) which is subordinate or junior in
         right of payment to any other Indebtedness or other obligation of such
         Person; or

                  (E) that portion of any Indebtedness which at the time of
         Incurrence is Incurred in violation of this Indenture.

                  "SENIOR SUBORDINATED INDEBTEDNESS" means, with respect to a
Person, the Securities, the Guaranties and any other Indebtedness of such
Person that specifically provides that such Indebtedness is to rank PARI
PASSU with the Securities or such Guaranty, as the case may be, in right of
payment and is not subordinated by its terms in right of payment to any
Indebtedness or other obligation of such Person which is not Senior
Indebtedness of such Person.

                  "SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary
that would be a "Significant Subsidiary" of Parent within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC.

                  "STATED MATURITY" means, with respect to any security, the
date specified in such security as the fixed date on which the final payment
of principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).

                  "STRATEGIC INVESTORS" means physicians, hospitals, health
systems, other healthcare providers, other healthcare companies and other
similar strategic joint venture partners which joint venture partners are
actively involved in the day-to-day operations of providing

<Page>
                                                                          31

surgical care and surgery-related services, or, in the case of physicians,
that have retired therefrom, individuals who are former owners or employees
of surgical care facilities purchased by Parent, any of its Restricted
Subsidiaries or any Qualified Joint Venture, and consulting firms that
receive Common Stock solely as consideration for consulting services
performed.

                  "SUBORDINATED OBLIGATION" means, with respect to a Person,
any Indebtedness of such Person (whether outstanding on the Issue Date or
thereafter Incurred) which is subordinate or junior in right of payment to
the Securities or a Guaranty of such Person, as the case may be, pursuant to
a written agreement to that effect.

                  "SUBSIDIARY" means, with respect to any Person:

                  (A) any corporation, association, partnership, limited
liability company or other business entity of which more than 50% of the
total voting power of shares of Voting Stock is at the time owned or
controlled, directly or indirectly, by:

                  (1) such Person;

                  (2) such Person and one or more Subsidiaries of such Person;
         or

                  (3) one or more Subsidiaries of such Person; or

                  (B) any corporation, association, partnership, limited
liability company or other business entity, the financial statements of which
are consolidated with the Parent's financial statements under GAAP as applied
by the Parent on the Issue Date.

                  Unless otherwise specified or appropriate in the context,
"Subsidiary" means a Subsidiary of Parent, and includes the Company where
appropriate in the context.

                  "SUPPLEMENTAL GUARANTY AGREEMENT" means a supplemental
indenture, in a form reasonably satisfactory to the Trustee, pursuant to
which a Guarantor guarantees the Company's obligations with respect to the
Securities on the terms provided for in this Indenture.

                  "TEMPORARY CASH INVESTMENTS" means any of the following:

<Page>
                                                                          32

                  (1) any investment in direct obligations of the United States
         of America or any agency thereof or obligations guaranteed by the
         United States of America or any agency thereof;

                  (2) investments in time deposit accounts, certificates of
         deposit and money market deposits maturing within 180 days of the date
         of acquisition thereof issued by a bank or trust company which is
         organized under the laws of the United States of America, any State
         thereof or any foreign country recognized by the United States of
         America, and which bank or trust company has capital, surplus and
         undivided profits aggregating in excess of $50.0 million (or the
         foreign currency equivalent thereof) and has outstanding debt which is
         rated "A" (or such similar equivalent rating) or higher by at least one
         nationally recognized statistical rating organization (as defined in
         Rule 436 under the Securities Act) or any money-market fund sponsored
         by a registered broker dealer or mutual fund distributor;

                  (3) repurchase obligations with a term of not more than 30
         days for underlying securities of the types described in clause (1)
         above entered into with a bank meeting the qualifications described in
         clause (2) above;

                  (4) investments in commercial paper, maturing not more than 90
         days after the date of acquisition, issued by a corporation (other than
         an Affiliate of Parent) organized and in existence under the laws of
         the United States of America or any foreign country recognized by the
         United States of America with a rating at the time as of which any
         investment therein is made of "P-1" (or higher) according to Moody's or
         "A-1" (or higher) according to S&P; and

                  (5) investments in securities with maturities of six months or
         less from the date of acquisition issued or fully guaranteed by any
         state, commonwealth or territory of the United States of America, or by
         any political subdivision or taxing authority thereof, and rated at
         least "A" by S&P or "A" by Moody's.

                  "TIA" means the Trust Indenture Act of 1939 (15
U.S.C. Sections 77aaa-77bbbb) as in effect on the Issue Date.

                  "TOTAL NET TANGIBLE ASSETS" means the total consolidated
net assets, less goodwill and intangibles, of

<Page>
                                                                          33

Parent and its Restricted Subsidiaries, as shown on the balance sheet of
Parent as of the end of the most recent fiscal quarter for which financial
statements are available.

                  "TRUSTEE" means U.S. Trust Company of Texas, N.A. until a
successor replaces it and, thereafter, means the successor.

                  "TRUST OFFICER" means any officer of the Trustee assigned
by the Trustee to administer its corporate trust matters.

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

                  "UNRESTRICTED SUBSIDIARY" means:

                  (1) any Subsidiary of Parent that at the time of determination
         shall be designated an Unrestricted Subsidiary by the Board of
         Directors in the manner provided below;

                  (2) any Subsidiary of an Unrestricted Subsidiary; and

                  (3) Global Healthcare Partners, Ltd., Phoenix, the QJVGPs in
          existence on the Issue Date and their respective Subsidiaries, if any;

in each case unless and until such time as such Subsidiary is designated a
Restricted Subsidiary for purposes of this Indenture.

                  The Board of Directors may designate any Subsidiary of
Parent (including any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary if (A) neither such Subsidiary nor any of its
Subsidiaries owns any Capital Stock or Indebtedness of, or holds any Lien on
any property of, Parent or any other Subsidiary of Parent that is not a
Subsidiary of the Subsidiary to be so designated, (B) such designation would
be permitted under Section 4.04 (the amount of such Restricted Payment being
calculated in the manner set forth in the definition of the term
"Investment"),(C) such Subsidiary has no Indebtedness other than Non-Recourse
Debt and (D)immediately after giving effect to such designation, the Company
could Incur $1.00 of additional Indebtedness under Section 4.03(a)(1).

<Page>
                                                                          34

                  The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary if, immediately after giving effect
to such designation (A) the Company could Incur $1.00 of additional
Indebtedness under Section 4.03(a)(1) and (B) no Default shall have occurred
and be continuing.

                  Any such designation by the Board of Directors shall be
evidenced to the Trustee by promptly filing with the Trustee a copy of the
resolution of the Board of Directors giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.

                  "U.S. GOVERNMENT OBLIGATIONS" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof)
for the payment of which the full faith and credit of the United States of
America is pledged and which are not callable at the issuer's option.

                  "VOTING STOCK" of a Person means all classes of Capital
Stock or other interests (including partnership interests) of such Person
then outstanding and normally entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof.

                  "WHOLLY OWNED SUBSIDIARY" means a Restricted Subsidiary all
the Capital Stock of which (other than directors' qualifying shares) is owned
by Parent or one or more Wholly Owned Subsidiaries.

                  SECTION 1.02.  OTHER DEFINITIONS.

<Table>
<Caption>
                                                                       DEFINED IN
                                            TERM                         SECTION
                                            ----                       ----------
<S>                                                                    <C>
         "Affiliate Transaction" ....................................  4.08(a)
         "Bankruptcy Law" ...........................................  6.01
         "Blockage Notice" ..........................................  10.03/12.03
         "Change of Control" ........................................  4.02(a)
         "Change of Control Offer" ..................................  4.02(b)
         "covenant defeasance option" ...............................  8.01(b)
         "Custodian" ................................................  6.01
         "Event of Default" .........................................  6.01
         "legal defeasance option" ..................................  8.01(b)
         "Legal Holiday" ............................................  13.08
         "Obligations" ..............................................  11.01

<Page>
                                                                          35

         "Offer" ....................................................  4.07(b)
         "Offer Amount" .............................................  4.07(c)(2)
         "Offer Period" .............................................  4.07(c)(2)
         "pay its Guaranty" .........................................  12.03
         "pay the Securities" .......................................  10.03
         "Paying Agent" .............................................  2.03
         "Payment Default" ..........................................  10.03/12.03
         "Payment Blockage Period" ..................................  10.03/12.03
         "Purchase Date" ............................................  4.07(c)(1)
         "Registrar".................................................  2.03
         "Required Filing Dates".....................................  4.13
         "Successor Company" ........................................  5.01(a)(1)
</Table>

                  SECTION 1.03.  INCORPORATION BY REFERENCE OF TRUST
INDENTURE ACT.  This Indenture is subject to the mandatory provisions of the
TIA which are incorporated by reference in and made a part of this Indenture.
The following TIA terms have the following meanings:

                  "Commission" means the SEC;

                  "indenture securities" means the Securities;

                  "indenture security holder" means a Securityholder;

                  "indenture to be qualified" means this Indenture;

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

                  "obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.

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

                  SECTION 1.04.  RULES OF CONSTRUCTION.  Unless the context
otherwise requires:

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

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

                  (3) "or" is not exclusive;

<Page>
                                                                          36

                  (4) "including" means including without limitation;

                  (5) words in the singular include the plural and words in the
          plural include the singular;

                  (6) unsecured Indebtedness shall not be deemed to be
         subordinate or junior to Secured Indebtedness merely by virtue of its
         nature as unsecured Indebtedness;

                  (7) the principal amount of any non-interest bearing or other
         discount security at any date shall be the principal amount thereof
         that would be shown on a balance sheet of the issuer dated such date
         prepared in accordance with GAAP;

                  (8) the principal amount of any Preferred Stock shall be (i)
         the maximum liquidation value of such Preferred Stock or (ii) the
         maximum mandatory redemption or mandatory repurchase price with respect
         to such Preferred Stock, whichever is greater; and

                  (9) all references to the date the Securities were originally
          issued shall refer to the Issue Date.

                                    ARTICLE 2

                                 THE SECURITIES

                  SECTION 2.01.  FORM AND DATING. Provisions relating to the
Initial Securities, the Private Exchange Securities and the Exchange
Securities are set forth in the Appendix A attached hereto which is hereby
incorporated in and expressly made part of this Indenture. The Initial
Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit 1 to Appendix A, which is hereby
incorporated in and expressly made a part of this Indenture. The Exchange
Securities, the Private Exchange Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A, which is
hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form
acceptable to the Company). Each Security shall be dated the date of its
authentication. The terms of the Securities set forth in

<Page>
                                                                          37

Exhibit 1 to Appendix A and Exhibit A are part of the terms of this Indenture.

                  SECTION 2.02.  EXECUTION AND AUTHENTICATION. Two Officers
shall sign the Securities for the Company by manual or facsimile signature.
The Company's seal may be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.

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

                  A Security shall not be valid until an authorized signatory
of the Trustee manually signs the certificate of authentication on the
Security. The signature shall be conclusive evidence that the Security has
been authenticated under this Indenture.

                  The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by
the terms of such appointment, an authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture
to authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or
agent for service of notices and demands.

                  SECTION 2.03.  REGISTRAR AND PAYING AGENT. The Company
shall maintain an office or agency where Securities may be presented for
registration of transfer or for exchange (the "REGISTRAR") and an office or
agency where Securities may be presented for payment (the "PAYING AGENT").
The Registrar shall keep a register of the Securities and of their transfer
and exchange. The Company may have one or more co-registrars and one or more
additional paying agents. The term "REGISTRAR" includes any appointed
co-registrar and the term "PAYING AGENT" includes any additional paying agent.

                  The Company shall enter into an appropriate agency
agreement with any Registrar, Paying Agent or co-registrar not a party to
this Indenture, which shall incorporate the terms of the TIA. The agreement
shall implement the provisions of this Indenture that relate to such agent.
The Company shall notify the Trustee of the name and address of any such
agent. If the Company fails to maintain a Registrar or Paying Agent, the
Trustee shall

<Page>
                                                                          38

act as such and shall be entitled to appropriate compensation therefor
pursuant to Section 7.07. The Company or any Wholly Owned Subsidiary
incorporated or organized within The United States of America may act as
Paying Agent, Registrar, co-registrar or transfer agent.

                  The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.

                  SECTION 2.04.  PAYING AGENT TO HOLD MONEY IN TRUST. Prior
to each due date of the principal and interest on any Security, the Company
shall deposit with the Paying Agent a sum sufficient to pay such principal
and interest when so becoming due. The Company shall require each Paying
Agent (other than the Trustee) to agree in writing that the Paying Agent
shall hold in trust for the benefit of Securityholders or the Trustee all
money held by the Paying Agent for the payment of principal of or interest on
the Securities and shall notify the Trustee of any default by the Company in
making any such payment. If the Company or a Subsidiary acts as Paying Agent,
it shall segregate the money held by it as Paying Agent and hold it as a
separate trust fund. The Company at any time may require a Paying Agent to
pay all money held by it to the Trustee and to account for any funds
disbursed by the Paying Agent. Upon complying with this Section, the Paying
Agent shall have no further liability for the money delivered to the Trustee.

                  SECTION 2.05.  SECURITYHOLDER 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 Securityholders. If the
Trustee is not the Registrar, the Company shall furnish to the Trustee, in
writing, at least five 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 Securityholders.

                  SECTION 2.06.  TRANSFER AND EXCHANGE. The Securities shall
be issued in registered form and shall be transferable only upon the
surrender of a Security for registration of transfer. When a Security is
presented to the Registrar or a co-registrar with a request to register a
transfer, the Registrar shall register the transfer as requested if the
requirements of this Indenture and Section 8-401(a) of the Uniform Commercial
Code are met. When Securities are presented to the Registrar or a
co-registrar

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                                                                          39

with a request to exchange them for an equal principal amount of Securities
of other denominations, the Registrar shall make the exchange as requested if
the same requirements are met.

                  SECTION 2.07.  REPLACEMENT SECURITIES. If a mutilated
Security is surrendered to the Registrar or if the Holder of a Security
claims that the Security has been lost, destroyed or wrongfully taken, the
Company shall issue, and the Trustee shall authenticate, a replacement
Security if the requirements of Section 8-405 of the Uniform Commercial Code
are met and the Holder satisfies any other reasonable requirements of the
Trustee. If required by the Trustee or the Company, such Holder shall furnish
an indemnity bond sufficient in the judgment of the Company and the Trustee
to protect the Company, the Trustee, the Paying Agent, the Registrar and any
co-registrar from any loss which any of them may suffer if a Security is
replaced. The Company and the Trustee may charge the Holder for their
expenses in replacing a Security.

                  Every replacement Security is an additional obligation of
the Company.

                  SECTION 2.08.  OUTSTANDING SECURITIES. Securities
outstanding at any time are all Securities authenticated by the Trustee
except for those canceled by it, those delivered to it for cancellation and
those described in this Section as not outstanding. A Security does not cease
to be outstanding because the Company or an Affiliate of the Company holds
the Security.

                  If a Security is replaced pursuant to Section 2.07, it
ceases to be outstanding unless the Trustee and the Company receive proof
satisfactory to them that the replaced Security is held by a bona fide
purchaser.

                  If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with
respect to the Securities (or portions thereof) to be redeemed or maturing,
as the case may be, and the Paying Agent is not prohibited from paying such
money to the Securityholders on that date pursuant to the terms of this
Indenture, then on and after that date such Securities (or portions thereof)
cease to be outstanding and interest on them ceases to accrue.

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                                                                          40

                  SECTION 2.09.  TEMPORARY SECURITIES. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee
shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations
that the Company considers appropriate for temporary Securities. Without
unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities and deliver them in exchange for temporary
Securities.

                  SECTION 2.10.  CANCELLATION. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the
Paying Agent shall forward to the Trustee any Securities surrendered to them
for registration of transfer, exchange or payment. The Trustee and no one
else shall cancel and destroy (subject to the record retention requirements
of the Exchange Act) all Securities surrendered for registration of transfer,
exchange, payment or cancellation and deliver a certificate of such
destruction to the Company unless the Company directs the Trustee to deliver
canceled Securities to the Company. The Company may not issue new Securities
to replace Securities it has redeemed, paid or delivered to the Trustee for
cancellation.

                  SECTION 2.11.  DEFAULTED INTEREST. If the Company defaults
in a payment of interest on the Securities, the Company shall pay defaulted
interest (plus interest on such defaulted interest to the extent lawful) in
any lawful manner. The Company may pay the defaulted interest to the persons
who are Securityholders on a subsequent special record date. The Company
shall fix or cause to be fixed any such special record date and payment date
to the reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.

                  SECTION 2.12.  CUSIP NUMBERS. The Company in issuing the
Securities may use "CUSIP" numbers and corresponding "ISINs" (if then
generally in use) and, if so, the Trustee shall use "CUSIP" numbers and
corresponding "ISINs" in notices of redemption as a convenience to Holders;
PROVIDED, HOWEVER, that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the
Securities or as contained in any notice of a redemption and that reliance
may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall

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                                                                          41

not be affected by any defect in or omission of such numbers.

                  SECTION 2.13.  ISSUANCE OF ADDITIONAL SECURITIES. The
Company shall be entitled, subject to its compliance with Section 4.03, to
issue Additional Securities under this Indenture which shall have identical
terms as the Initial Securities issued on the Issue Date, other than with
respect to the date of issuance and issue price. The Initial Securities
issued on the Issue Date and any Additional Securities issued in exchange
therefor shall be treated as a single class for all purposes under this
Indenture.

                  With respect to any Additional Securities, the Company
shall set forth in a resolution of the Board of Directors and an Officers'
Certificate, a copy of each of which shall be delivered to the Trustee, the
following information:

                  (1) the aggregate principal amount of such Additional
         Securities to be authenticated and delivered pursuant to this
         Indenture;

                  (2) the issue price, the issue date and the CUSIP number and
         corresponding ISIN of such Additional Securities; and

                  (3) whether such Additional Securities shall be Transfer
         Restricted Securities and issued in the form of Initial Securities as
         set forth in Appendix A or shall be issued in the form of Exchange
         Securities as set forth in Exhibit A.

                                    ARTICLE 3

                                   REDEMPTION

                  SECTION 3.01.  NOTICES TO TRUSTEE. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities, it shall notify
the Trustee in writing of the redemption date, the principal amount of
Securities to be redeemed and the paragraph of the Securities pursuant to
which the redemption will occur.

                  The Company shall give each notice to the Trustee provided
for in this Section at least 60 days before the redemption date unless the
Trustee consents to a shorter period. Such notice shall be accompanied by an
Officers'

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                                                                          42

Certificate and an Opinion of Counsel from the Company to the effect that
such redemption will comply with the conditions herein.

                  SECTION 3.02.  SELECTION OF SECURITIES TO BE REDEEMED. If
fewer than all the Securities are to be redeemed, the Trustee shall select
the Securities to be redeemed PRO RATA or by lot or by a method that complies
with applicable legal and securities exchange requirements, if any, and that
the Trustee in its sole discretion shall deem to be fair and appropriate and
in accordance with methods generally used at the time of selection by
fiduciaries in similar circumstances. The Trustee shall make the selection
from outstanding Securities not previously called for redemption. The Trustee
may select for redemption portions of the principal of Securities that have
denominations larger than $1,000. Securities and portions of them the Trustee
selects shall be in principal amounts of $1,000 or a whole multiple of
$1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Company promptly of the Securities or portions of
Securities to be redeemed.

                  SECTION 3.03.  NOTICE OF REDEMPTION. At least 30 days but
not more than 60 days before a date for redemption of Securities, the Company
shall mail a notice of redemption by first-class mail to each Holder of
Securities to be redeemed at such Holder's registered address.

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

                  (1) the redemption date;

                  (2) the redemption price;

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

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

                  (5) if fewer than all the outstanding Securities are to be
         redeemed, the identification and principal amounts of the particular
         Securities to be redeemed;

                  (6) that, unless the Company defaults in making such
         redemption payment or the Paying Agent is prohibited from making such
         payment pursuant to the

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                                                                          43

         terms of this Indenture, interest on Securities (or portion thereof)
         called for redemption ceases to accrue on and after the redemption
         date; and

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

                  At the Company's request, the Trustee shall give the notice
of redemption in the Company's name and at the Company's expense. In such
event, the Company shall provide the Trustee with the information required by
this Section.

                  SECTION 3.04.  EFFECT OF NOTICE OF REDEMPTION. Once notice
of redemption is mailed, Securities called for redemption become due and
payable on the redemption date and at the redemption price stated in the
notice. Upon surrender to the Paying Agent, such Securities shall be paid at
the redemption price stated in the notice, plus accrued interest to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the related interest payment date).
Failure to give notice or any defect in the notice to any Holder shall not
affect the validity of the notice to any other Holder.

                  SECTION 3.05.  DEPOSIT OF REDEMPTION PRICE. Prior to the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in
trust) money sufficient to pay the redemption price of and accrued interest
on all Securities to be redeemed on that date other than Securities or
portions of Securities called for redemption which have been delivered by the
Company to the Trustee for cancellation.

                  SECTION 3.06.  SECURITIES REDEEMED IN PART. Upon surrender
of a Security that is redeemed in part, the Company shall execute and the
Trustee shall authenticate for the Holder (at the Company's expense) a new
Security equal in principal amount to the unredeemed portion of the Security
surrendered.

                                    ARTICLE 4

                                    COVENANTS

                  SECTION 4.01.  PAYMENT OF SECURITIES. The

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                                                                          44

Company shall promptly pay the principal of and interest on the Securities on
the dates and in the manner provided in the Securities and in this Indenture.
Payment shall be made in New York, New York unless the Trustee otherwise
specifies. Principal and interest shall be considered paid on the date due if
on such date the Trustee or the Paying Agent holds in accordance with this
Indenture money sufficient to pay all principal and interest then due and the
Trustee or the Paying Agent, as the case may be, is not prohibited from
paying such money to the Securityholders on that date pursuant to the terms
of this Indenture.

                  The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on
overdue installments of interest at the same rate to the extent lawful.

                  SECTION 4.02.  CHANGE OF CONTROL.

                  (a) Upon the occurrence of any of the following events
(each a "CHANGE OF CONTROL"), each Holder shall have the right to require
that the Company purchase such Holder's Securities at a purchase price in
cash equal to 101% of the principal amount thereof on the date of purchase
plus accrued and unpaid interest, if any, to the date of purchase (subject to
the right of holders of record on the relevant record date to receive
interest on the relevant interest payment date), in accordance with the terms
contemplated in Section 4.02(b):

                  (1) any "person" (as such term is used in Sections 13(d) and
         14(d) of the Exchange Act) (other than a Permitted Holder or Parent or
         a Wholly Owned Subsidiary of Parent as a stockholder of the Company) is
         or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
         under the Exchange Act, except that for purposes of this clause (1)
         such person shall be deemed to have "beneficial ownership" of all
         shares that any such person has the right to acquire, whether such
         right is exercisable immediately or only after the passage of time),
         directly or indirectly, of more than 35% of the total voting power of
         the Voting Stock of Parent or the Company;

                  (2) individuals who on the Issue Date constituted the Board of
         Directors (together with any new directors whose election by such Board
         of Directors or whose nomination for election by the stockholders of
         Parent was approved by a vote of at least a majority of the directors
         of Parent then still in office who were either directors on the Issue
         Date

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                                                                          45

         or whose election or nomination for election was previously so
         approved) cease for any reason to constitute a majority of the Board of
         Directors then in office;

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

                  (4) the merger or consolidation of the Company or Parent with
         or into another Person (other than a Permitted Holder) or the merger of
         another Person (other than a Permitted Holder, Parent or the Company)
         with or into the Company or Parent, or the sale of all or substantially
         all the assets of Parent and its Restricted Subsidiaries (determined on
         a consolidated basis) to another Person (other than a Permitted
         Holder), other than a transaction following which, in the case of a
         merger or consolidation transaction, holders of securities that
         represented 100% of the Voting Stock of the Company or Parent, as
         applicable, immediately prior to such transaction (or other securities
         into which such securities are converted as part of such merger or
         consolidation transaction) own directly or indirectly at least a
         majority of the voting power of the Voting Stock of the surviving
         Person in such merger or consolidation transaction immediately after
         such transaction and in substantially the same proportion as before the
         transaction.

                  In the event that at the time of such Change of Control,
the terms of the Credit Agreement prohibit the Company from making a Change
of Control Offer or from purchasing the Securities pursuant to this Section
4.02, the Company shall, prior to the mailing of the notice to Holders
provided for in Section 4.02(b) below, but in any event within 30 days
following any Change of Control: (1) repay in full all Indebtedness
outstanding under the Credit Agreement; or (2) obtain the requisite consent
under the Credit Agreement to permit the purchase of the Securities as
provided for in Section 4.02(b).

                  (b) Within 30 days following any Change of Control, the
Company shall mail a notice to each Holder with a copy to the Trustee (the
"CHANGE OF CONTROL OFFER") stating:

                  (1) that a Change of Control has occurred and that such Holder
         has the right to require the Company

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                                                                          46

         to purchase such Holder's Securities at a purchase price in cash equal
         to 101% of the principal amount thereof on the date of purchase, plus
         accrued and unpaid interest, if any, to the date of purchase (subject
         to the right of Holders of record on the relevant record date to
         receive interest on the relevant interest payment date);

                  (2) the purchase date (which shall be no earlier than 30 days
         nor later than 90 days from the date such notice is mailed); and

                  (3) the instructions, as determined by the Company, consistent
         with this Section, that a Holder must follow in order to have its
         Securities purchased.

                  (c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed,
to the Company at the address specified in the notice at least three Business
Days prior to the purchase date. Holders will be entitled to withdraw their
election if the Trustee or the Company receives not later than one Business
Day prior to the purchase date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the
Security which was delivered for purchase by the Holder and a statement that
such Holder is withdrawing their election to have such Security purchased.

                  (d) On the purchase date, all Securities purchased by the
Company under this Section shall be delivered by the Company to the Trustee
for cancellation, and the Company shall pay the purchase price plus accrued
and unpaid interest, if any, to the Holders entitled thereto.

                  (e) Notwithstanding the foregoing provisions of this
Section, the Company shall not be required to make a Change of Control Offer
following 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 applicable to a Change of Control
Offer made by the Company and purchases all Securities properly tendered and
not withdrawn under the Change of Control Offer.

                  (f) The Company shall comply, to the extent applicable,
with the requirements of Section 14(e) of the Exchange Act and any other
securities laws or regulations in connection with the purchase of Securities
pursuant to

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                                                                          47

this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section by virtue of its
compliance with such securities laws or regulations.

                  SECTION 4.03.  LIMITATION ON INDEBTEDNESS.

                  (a) The Company and Parent shall not, and shall not permit
any Restricted Subsidiary to, Incur, directly or indirectly, any
Indebtedness; PROVIDED, HOWEVER, that:

                  (1) the Company and the Domestic Guarantors shall be entitled
         to Incur Indebtedness if, on the date of such Incurrence and after
         giving effect thereto and to the use of the proceeds therefrom on a pro
         FORMA basis, no Event of Default has occurred and is continuing and the
         Consolidated Coverage Ratio exceeds (A) during the period from the
         Issue Date to December 15, 2003, 2.25 to 1, and (B) from and after
         December 15, 2003, 2.5 to 1; and

                  (2) Restricted Subsidiaries of Parent (other than the Company
         and the Domestic Guarantors) shall be entitled to Incur Indebtedness
         if, on the date of such Incurrence and after giving effect thereto and
         to the use of the proceeds therefrom on a PRO FORMA basis, (A) such
         Restricted Subsidiary would constitute a Qualified Restricted
         Subsidiary, (B) the Company would have been entitled to Incur at least
         $1.00 of additional Indebtedness pursuant to Section 4.03(a)(1) and (C)
         the Restricted Subsidiary Leverage Ratio is greater than zero and less
         than or equal to 1.25 to 1.

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                                                                          48

                  (b) Notwithstanding the foregoing paragraph (a), Parent and
its Restricted Subsidiaries shall be entitled to Incur any or all of the
following Indebtedness:

                  (1) (A) Indebtedness of the Company and the Domestic
         Guarantors Incurred pursuant to Credit Facilities, and Indebtedness
         constituting Guarantees thereof Incurred by the Company and the
         Guarantors, and (B) Indebtedness of USPE Holdings, Ltd. Incurred
         pursuant to Credit Facilities, and Indebtedness constituting Guarantees
         thereof Incurred by the Company, the Guarantors and Foreign
         Subsidiaries; PROVIDED, HOWEVER, that after giving effect to any such
         Incurrence, the aggregate principal amount of all Indebtedness Incurred
         under this clause (1) and then outstanding does not exceed $100.0
         million less the sum of all principal payments with respect to such
         Indebtedness pursuant to Section 4.07(a)(3)(A);

                  (2) (A) short-term Indebtedness of Parent or any of its Wholly
         Owned Subsidiaries owed to a Restricted Subsidiary, a Qualified Joint
         Venture or any other Person in a Related Business that receives
         day-to-day management services from Parent, a Qualified Restricted
         Subsidiary, a QJVGP or a Qualified Joint Venture pursuant to a
         Management Agreement to the extent such Indebtedness is Incurred by
         Parent or such Wholly Owned Subsidiary solely as a result of cash
         advanced by such Restricted Subsidiary, Qualified Joint Venture or
         other Person to Parent or such Wholly Owned Subsidiary in the ordinary
         course of business for purposes of cash management; PROVIDED, HOWEVER,
         that any subsequent issuance or transfer of any Capital Stock which
         results in any such creditor under this subparagraph (A) ceasing to be
         a Restricted Subsidiary, a Qualified Joint Venture or a Person of the
         type described above, or any subsequent transfer of such Indebtedness
         (other than to Parent or a Qualified Restricted Subsidiary) shall be
         deemed, in each case, to constitute the Incurrence of such Indebtedness
         by the obligor thereon; and (B) Indebtedness owed to and held by Parent
         or a Wholly Owned Subsidiary; PROVIDED, HOWEVER, that any subsequent
         issuance or transfer of any Capital Stock which results in any such
         Wholly Owned Subsidiary under this subparagraph (B) ceasing to be a
         Wholly Owned Subsidiary, or any subsequent transfer of such
         Indebtedness (other than to Parent or a Wholly Owned Subsidiary) shall
         be deemed, in each case, to constitute the Incurrence of such
         Indebtedness by the

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                                                                          49

         obligor thereon; PROVIDED FURTHER, HOWEVER, in the case of both
         subparagraphs (A) and (B), if the Company or a Guarantor is the
         obligor on such Indebtedness, such Indebtedness is expressly
         subordinated to the prior payment in full in cash of all obligations
         with respect to the Securities or such Guarantor's Guaranty;

                  (3) the Securities, the Exchange Securities (other than any
         Additional Securities) and the Guaranties;

                  (4) Indebtedness outstanding on the Issue Date (other than
         Indebtedness described in clause (1), (2) or (3) of this Section
         4.03(b));

                  (5) Refinancing Indebtedness in respect of Indebtedness
         Incurred pursuant to Section 4.03(a) or pursuant to clause (3) or (4)
         of this Section 4.03(b) or this clause (5);

                  (6) Hedging Obligations consisting of Interest Rate Agreements
         directly related to Indebtedness permitted to be Incurred by Parent and
         its Restricted Subsidiaries pursuant to this Indenture;

                  (7) Hedging Obligations consisting of Currency Agreements
         entered into for bona fide hedging purposes of Parent and its
         Restricted Subsidiaries and not for speculative purposes;

                  (8) obligations in respect of letters of credit to support
         workers compensation obligations, performance, bid and surety bonds and
         completion guarantees provided by Parent or any Restricted Subsidiary
         in the ordinary course of business;

                  (9) Indebtedness arising from the honoring by a bank or other
         financial institution of a check, draft or similar instrument drawn
         against insufficient funds in the ordinary course of business;
         PROVIDED, HOWEVER, that such Indebtedness is extinguished within two
         Business Days of its Incurrence;

                  (10) Indebtedness arising from agreements providing for
         indemnification, adjustment of purchase price or similar obligations,
         or from letters of credit, surety bonds or performance bonds securing
         any obligations of Parent or any Restricted Subsidiary pursuant to such
         agreements, in each case incurred in

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                                                                          50

         connection with the disposition of any business assets or Restricted
         Subsidiaries of Parent in a principal amount not to exceed the gross
         proceeds actually received by Parent and its Restricted Subsidiaries
         in connection with such disposition; and

                  (11) Indebtedness of the Company, the Domestic Guarantors and
         Qualified Restricted Subsidiaries in an aggregate principal amount that
         when taken together with all other Indebtedness outstanding under this
         clause (11) on the date of such Incurrence does not exceed $10.0
         million.

                  (c) Notwithstanding the foregoing, the Company and Parent
shall not, and shall not permit any Restricted Subsidiary to, Incur any
Indebtedness pursuant to Section 4.03(b) if the proceeds thereof are used,
directly or indirectly, to Refinance any Subordinated Obligations of the
Company or any Guarantor unless such Indebtedness shall be subordinated to
the Securities or the applicable Guaranty to at least the same extent as such
Subordinated Obligations.

                  (d) For purposes of determining compliance with this
Section 4.03, (1) in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness described above, the
Company, in its sole discretion, shall classify such item of Indebtedness at
the time of Incurrence and only be required to include the amount and type of
such Indebtedness in one of the above clauses and (2) the Company shall be
entitled to divide and classify an item of Indebtedness in more than one of
the types of Indebtedness described above.

                  (e) Notwithstanding Section 4.03(a) and 4.03(b), the
Company and Parent shall not, and shall not permit any Restricted Subsidiary
to: (1) in the case of the Company or any Guarantor, Incur any Indebtedness
if such Indebtedness is subordinate or junior in right of payment to any
Senior Indebtedness of such Person, unless such Indebtedness is Senior
Subordinated Indebtedness or is expressly subordinated in right of payment to
Senior Subordinated Indebtedness of such Person and (2) in the case of a
Restricted Subsidiary that is not a Guarantor, Incur any Indebtedness that is
subordinate or junior in right of payment to any other Indebtedness of such
Restricted Subsidiary.

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                                                                          51

                  SECTION 4.04.  LIMITATION ON RESTRICTED PAYMENTS.

                  (a) The Company and Parent shall not, and shall not permit
any Restricted Subsidiary, directly or indirectly, to make a Restricted
Payment if at the time Parent or such Restricted Subsidiary makes such
Restricted Payment:

                  (1) a Default shall have occurred and be continuing (or would
         result therefrom);

                  (2) the Company is not entitled to Incur an additional $1.00
         of Indebtedness pursuant to Section 4.03(a)(1); or

                  (3) the aggregate amount of such Restricted Payment, all other
         Restricted Payments since the Issue Date made pursuant to this clause
         (a)(3) and all Restricted Payments since the Issue Date made pursuant
         to paragraph (b) of Section 4.04 (other than subparagraphs (b)(3),
         (b)(4), (b)(5), (b)(6), (b)(8), (b)(9), (b)(10) and (b)(11)) would
         exceed the sum of (without duplication):

                           (A) 50% of the Consolidated Net Income of Parent
                  accrued during the period (treated as one accounting period)
                  from the beginning of the fiscal quarter immediately following
                  the fiscal quarter during which the Issue Date occurs to the
                  end of the most recent fiscal quarter for which financial
                  statements are available immediately preceding the date of
                  such Restricted Payment (or, in case such Consolidated Net
                  Income shall be a deficit, minus 100% of such deficit); PLUS

                           (B) 100% of the aggregate Net Cash Proceeds received
                  by Parent from the issuance or sale of its Capital Stock
                  (other than Disqualified Stock) subsequent to the Issue Date
                  (other than an issuance or sale to a Subsidiary of Parent and
                  other than an issuance or sale to an ESOP) and 100% of any
                  cash capital contribution received by Parent from its
                  stockholders subsequent to the Issue Date; PLUS

                           (C) the amount by which Indebtedness of Parent is
                  reduced on Parent's balance sheet upon the conversion or
                  exchange (other than by a Subsidiary of Parent) subsequent to
                  the Issue Date of any Indebtedness of Parent convertible or

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                                                                          52

                  exchangeable for Capital Stock (other than Disqualified Stock)
                  of Parent (less the amount of any cash, or the fair value of
                  any other property, distributed by Parent upon such conversion
                  or exchange); PLUS

                           (D) an amount equal to the sum of (x) the net
                  reduction in the Investments (other than Permitted
                  Investments) made by Parent or any Restricted Subsidiary in
                  any Person resulting from repurchases, repayments or
                  redemptions of such Investments by such Person, proceeds
                  realized on the sale of such Investment and proceeds
                  representing the return of capital (excluding dividends,
                  distributions and other amounts that contribute to
                  Consolidated Net Income) in each case received by the Company,
                  any Domestic Guarantor or any other Restricted Subsidiary of
                  Parent (but in the case of any such Restricted Subsidiary
                  other than the Company or a Domestic Guarantor, only the
                  portion thereof proportionate to Parent's direct or indirect
                  equity interest in such Restricted Subsidiary), and (y) the
                  portion (proportionate to Parent's direct or indirect equity
                  interest in such Subsidiary) of the fair market value of the
                  net assets of an Unrestricted Subsidiary at the time such
                  Unrestricted Subsidiary is designated a Restricted Subsidiary;
                  PROVIDED, HOWEVER, that the foregoing sum shall not exceed, in
                  the case of any such Person or Unrestricted Subsidiary, the
                  amount of Investments (excluding Permitted Investments)
                  previously made (and treated as a Restricted Payment) by
                  Parent and its Restricted Subsidiaries in such Person or
                  Unrestricted Subsidiary.

                  (b) The provisions of Section 4.04(a) shall not prohibit
the following Restricted Payments (but in the case of clause (1) below, only
if no Default has occurred and is continuing or would result therefrom):

                  (1) dividends or distributions paid within 60 days after the
         date of declaration thereof if at such date of declaration such
         dividend or distribution would have complied with this Section 4.04;

                  (2) any Restricted Payment made out of the Net Cash Proceeds
         of the substantially concurrent sale of, or made by exchange for,
         Capital Stock of Parent

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                                                                          53

         (other than Disqualified Stock and other than Capital Stock issued
         or sold to a Subsidiary of Parent or an ESOP to the extent that such
         sale to an ESOP is financed by loans from or guaranteed by Parent or
         any Restricted Subsidiary unless such loans have been repaid with cash
         on or prior to the date of determination) or a substantially
         concurrent cash capital contribution received by Parent from one or
         more of its stockholders;

                  (3) any purchase, repurchase, redemption, defeasance or other
         acquisition or retirement for value of Subordinated Obligations of the
         Company or a Guarantor made by exchange for, or out of the proceeds of
         the substantially concurrent Incurrence or sale of, Indebtedness of the
         Company or a Guarantor that (A) is permitted to be Incurred pursuant to
         Section 4.03 and (B) is Refinancing Indebtedness;

                  (4) the purchase, redemption or other acquisition or
         retirement for value of shares of Capital Stock of Parent or any of its
         Subsidiaries from employees, former employees, directors or former
         directors of Parent or any of its Subsidiaries (or permitted
         transferees of such employees, former employees, directors or former
         directors), pursuant to the terms of the agreements (including
         employment agreements) or plans (or amendments thereto) approved by the
         Board of Directors under which such individuals purchase or sell or are
         granted the option to purchase or sell, shares of such Capital Stock;
         PROVIDED, HOWEVER, that the aggregate amount of such purchases and
         other acquisitions shall not exceed $2.0 million in any calendar year;

                  (5) the payment of any dividend or distribution to any holder
         of Capital Stock of a Qualified Restricted Subsidiary of Parent as part
         of a PRO RATA dividend or distribution to all holders of such Capital
         Stock;

                  (6) the purchase, redemption or other acquisition or
         retirement for value of all but not less than all shares of Common
         Stock of a Qualified Restricted Subsidiary owned by a Strategic
         Investor if such purchase, redemption or other acquisition or
         retirement for value is made for consideration not in excess of the
         fair market value of such Common Stock;

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                                                                          54

                  (7) cash payments to holders of Parent's Capital Stock in lieu
         of issuance of fractional shares of its Capital Stock so long as the
         aggregate amount of payments pursuant to this clause (7) does not
         exceed $100,000 in any calendar year;

                  (8) repurchases of Capital Stock deemed to occur upon the
         exercise of stock options or warrants if such Capital Stock represents
         a portion of the exercise price thereof;

                  (9) repurchases of Capital Stock deemed to occur upon the
         acceptance of such Capital Stock as the repayment of loans made to
         employees of Parent or any Restricted Subsidiary;

                  (10) the repayment on the Issue Date of: (A) Indebtedness in
         an amount not to exceed $41.5 million owed by USP Domestic Holdings,
         Inc. to Credit Suisse First Boston, Lehman Commercial Paper Inc.,
         Societe Generale and the other lender parties to such credit agreement
         in connection with the USP Domestic Holdings, Inc. Credit Agreement
         dated as of June 13, 2001, (B) Indebtedness in an amount not to exceed
         $33.6 million owed by United Surgical Partners Europe, S.L. to a
         syndicate of lenders for which Societe Generale is administrative agent
         in connection with the credit facility of United Surgical Partners
         Europe, S.L. that was in existence prior to the Issue Date and (C)
         Indebtedness in an amount not to exceed $36.0 million owed by USP
         Domestic Holdings, Inc. to WCAS Capital Partners III, L.P. in
         connection with the 10% senior subordinated notes of USP Domestic
         Holdings, Inc., in each case PROVIDED THAT the funds used to make such
         repayments are advanced by the Company to USP Domestic Holdings, Inc.
         and United Surgical Partners Europe, S.L., as appropriate, pursuant to
         intercompany advances made in compliance with Section 4.11;

                  (11) the redemption on the Issue Date by Parent of its Series
         D Redeemable Preferred Stock for an aggregate redemption price not in
         excess of $21.1 million, PROVIDED THAT the funds used to make such
         redemption are advanced by the Company directly to Parent pursuant to
         an intercompany advance made in compliance with Section 4.11; and

                  (12) Restricted Payments in the aggregate amount of
         $10.0 million.

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                                                                          55

                  (c) The amount of all Restricted Payments (other than cash)
shall be the fair market value on the date of the Restricted Payment of the
assets proposed to be transferred by Parent or such Restricted Subsidiary, as
the case may be, in accordance with the Restricted Payment. The fair market
value of any non-cash Restricted Payment shall be determined in good faith by
the Board of Directors whose resolution with respect thereto shall be
delivered to the Trustee.

                  SECTION 4.05.  LIMITATION ON LIENS. The Company and Parent
shall not, and shall not permit any Guarantor to, directly or indirectly,
create, incur, assume or suffer to exist or become effective any Lien
securing Indebtedness of any kind (other than Senior Indebtedness), on or
with respect to any of its assets, whether owned at the Issue Date or
thereafter acquired, unless (a) in the case of any Lien securing Subordinated
Obligations, the Securities (or the appropriate Guaranty) are secured by a
Lien on such assets that is senior in priority to such Lien and (b) in the
case of any other Lien, the Securities (or the appropriate Guaranty) are
either secured equally and ratably with such Indebtedness or are secured by a
Lien on such assets that is senior in priority to such Lien.

                  SECTION 4.06.  LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS
FROM RESTRICTED SUBSIDIARIES. The Company and Parent shall not, and shall not
permit any Restricted Subsidiary to, create or otherwise cause or permit to
exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions on its Capital Stock to Parent or a Restricted Subsidiary or
pay any Indebtedness owed to Parent or a Restricted Subsidiary, (b) make any
loans or advances to Parent or a Restricted Subsidiary or (c) transfer any of
its property or assets to Parent or a Restricted Subsidiary, except:

                  (1) with respect to clauses (a), (b) and (c):

                           (A) any encumbrance or restriction pursuant to (i)
                  the Credit Agreement as entered into on the Issue Date and
                  (ii) any agreement (other than (x) agreements relating to
                  Indebtedness and (y) charter provisions and other agreements
                  relating to Capital Stock) in effect at or entered into on the
                  Issue Date;

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                                                                          56

                           (B) any encumbrance or restriction with respect to a
                  Restricted Subsidiary pursuant to an agreement relating to any
                  Indebtedness Incurred by such Restricted Subsidiary on or
                  prior to the date on which such Restricted Subsidiary was
                  acquired by Parent or any Restricted Subsidiary (other than
                  Indebtedness Incurred as consideration in, or to provide all
                  or any portion of the funds or credit support utilized to
                  consummate, the transaction or series of related transactions
                  pursuant to which such Restricted Subsidiary became a
                  Restricted Subsidiary or was acquired by Parent) and
                  outstanding on such date;

                           (C) any encumbrance or restriction pursuant to an
                  agreement effecting an amendment, modification, restatement,
                  renewal, increase, supplement, replacement or Refinancing of
                  an agreement referred to in Section 4.06(1)(A) or 4.06(1)(B)
                  or this clause (1)(C) or contained in any amendment to an
                  agreement referred to in Section 4.06(1)(A) or 4.06(1)(B) or
                  this clause (1)(C); PROVIDED, HOWEVER, that the encumbrances
                  and restrictions with respect to such Restricted Subsidiary
                  contained in any such refinancing agreement or amendment are
                  no less favorable to the Securityholders than encumbrances and
                  restrictions with respect to such Restricted Subsidiary
                  contained in such predecessor agreements;

                           (D) restrictions on cash or other deposits imposed by
                  customers under contracts entered into in the ordinary course
                  of business;

                           (E) restrictions in Management Agreements that
                  require the payment of management fees to Parent or one of its
                  Qualified Restricted Subsidiaries prior to payment of
                  dividends or distributions;

                           (F) any restriction with respect to a Restricted
                  Subsidiary imposed pursuant to an agreement entered into for
                  the sale of such Restricted Subsidiary (whether by stock sale,
                  asset sale, merger, consolidation or otherwise) pending the
                  closing of such sale or disposition; and

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                                                                          57

                           (G) any Permitted Payment Restriction;

                  (2) with respect to clause (c) only:

                           (A) any such encumbrance or restriction consisting
                  of customary nonassignment provisions in leases and licenses;
                  and

                           (B) restrictions contained in security agreements,
                  mortgages and other similar agreements securing Indebtedness
                  of a Restricted Subsidiary to the extent such restrictions
                  restrict the transfer of the property subject to such
                  agreements; and

                  (3) with respect to clauses (b) and (c) only, any encumbrance
         or restriction with respect to a Qualified Restricted Subsidiary with
         respect to any agreement or charter provision evidencing Indebtedness
         or Capital Stock otherwise permitted under this Indenture; PROVIDED,
         HOWEVER, that the provisions relating to such encumbrance or
         restriction contained in such agreement or charter provision are not
         less favorable to the Holders than the encumbrances and restrictions
         described in Section 4.06(1)(A).

                  SECTION 4.07.  LIMITATION ON SALES OF ASSETS AND SUBSIDIARY
STOCK.

                  (a) The Company and Parent shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, consummate any Asset
Disposition unless:

                  (1) Parent or such Restricted Subsidiary receives
         consideration at the time of such Asset Disposition at least equal to
         the fair market value (including as to the value of all non-cash
         consideration), as determined in good faith by the Board of Directors,
         of the shares or assets subject to such Asset Disposition;

                  (2) at least 75% of the consideration thereof received by
         Parent or such Restricted Subsidiary is in the form of Permitted Asset
         Disposition Consideration;

                  (3) with respect to Asset Dispositions by Parent and its
         Wholly Owned Subsidiaries, an amount equal to 100% of the Net Available
         Cash from such Asset Disposition is applied by Parent or such Wholly
         Owned Subsidiary, as the case may be:

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                                                                          58

                           (A) FIRST, to the extent the Company so elects (or is
                  required by the terms of any Indebtedness), to prepay, repay,
                  purchase, repurchase, redeem, defease or otherwise acquire or
                  retire for value Senior Indebtedness of the Company or any
                  Guarantor or Indebtedness of a Wholly Owned Subsidiary of
                  Parent that is not a Guarantor (in each case other than
                  Indebtedness owed to Parent or a Subsidiary of Parent) within
                  one year from the date of such Asset Disposition;

                           (B) SECOND, to the extent of the balance of such Net
                  Available Cash after application in accordance with clause
                  (A), to the extent the Company so elects, to acquire
                  Additional Assets within one year from the date of such Asset
                  Disposition; and

                           (C) THIRD, to the extent of the balance of such Net
                  Available Cash after application in accordance with clauses
                  (A) and (B), to make an offer to Securityholders (and to
                  holders of other Senior Subordinated Indebtedness of the
                  Company designated by the Company) to purchase Securities (and
                  such other Senior Subordinated Indebtedness of the Company)
                  pursuant to and subject to the conditions contained in this
                  Indenture; and

                  (4) with respect to Asset Dispositions by Restricted
         Subsidiaries that are not Wholly Owned Subsidiaries, an amount equal to
         100% of the Net Available Cash from such Asset Disposition is applied
         by such Restricted Subsidiary:

                           (A) FIRST, to the extent the Restricted Subsidiary so
                  elects (or is required by the terms of any Indebtedness), to
                  prepay, repay, purchase, repurchase, redeem, defease or
                  otherwise acquire or retire for value Indebtedness of such
                  Restricted Subsidiary within one year from the date of such
                  Asset Disposition;

                           (B) SECOND, to the extent of the balance of such Net
                  Available Cash after application in accordance with clause
                  (A), to the extent the Restricted Subsidiary so elects, to
                  acquire Additional Assets within one year from the date of
                  such Asset Disposition; and

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                                                                          59

                           (C) THIRD, to the extent of the balance of such Net
                  Available Cash after application in accordance with clauses
                  (A) and (B) of this Section 4.07(a)(4), to distribute such Net
                  Available Cash PRO RATA to holders of Common Stock of such
                  Restricted Subsidiary;

PROVIDED, THAT, upon receipt of any Net Available Cash from a Restricted
Subsidiary pursuant to subparagraph (a)(4)(A) or (a)(4)(C) of this Section
4.07, a Restricted Subsidiary that is not a Wholly Owned Subsidiary shall
apply such Net Available Cash in accordance with Section 4.07(a)(4) above,
and Parent or a Wholly Owned Subsidiary shall apply such Net Available Cash
in accordance with Section 4.07(a)(3) above; and

PROVIDED, HOWEVER, that in connection with any prepayment, repayment,
purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value of Indebtedness pursuant to subparagraph (a)(3)(A) or
(a)(4)(A) of this Section 4.07, Parent or such Restricted Subsidiary shall
permanently retire such Indebtedness and shall cause the related loan
commitment (if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased.

                  To the extent that any Net Available Cash remains after
compliance with clauses (a)(3) and (a)(4) of this Section 4.07, Parent or any
Wholly Owned Subsidiary, as the case may be, may use such Net Available Cash
for any purpose not otherwise prohibited by this Indenture.

                  Notwithstanding the foregoing provisions of this Section
4.07, Parent and its Restricted Subsidiaries shall not be required to apply
any Net Available Cash in accordance with this Section 4.07 except to the
extent that the aggregate Net Available Cash from all Asset Dispositions
which is not applied in accordance with this Section 4.07 exceeds $10.0
million. Pending application of Net Available Cash pursuant to this Section
4.07, such Net Available Cash shall be invested in Temporary Cash Investments
or applied to temporarily reduce revolving credit indebtedness.

                  (b) In the event of an Asset Disposition that requires the
purchase of Securities (and other Senior Subordinated Indebtedness of the
Company) pursuant to Section 4.07(a)(3)(C), the Company shall make such offer
(the "OFFER") to purchase Securities on or before the 366th day after the
date of such Asset Disposition, and shall

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                                                                          60

purchase Securities tendered pursuant to an Offer at a purchase price of 100%
of their principal amount (or, in the event such other Senior Subordinated
Indebtedness of the Company was issued with significant original issue
discount, 100% of the accreted value thereof) without premium, plus accrued
but unpaid interest (or, in respect of such other Senior Subordinated
Indebtedness of the Company, such lesser price, if any, as may be provided
for by the terms of such Senior Subordinated Indebtedness of the Company) in
accordance with the procedures (including prorating in the event of
oversubscription) set forth in this Section 4.07. If the aggregate purchase
price of Securities and other Senior Subordinated Indebtedness tendered
exceeds the Net Available Cash allotted to their purchase, the Company shall
select the Securities and other Senior Subordinated Indebtedness of the
Company to be purchased on a PRO RATA basis but in round denominations, which
in the case of the Securities shall be denominations of $1,000 principal
amount or multiples thereof. The Company shall not be required to make an
Offer if the Net Available Cash available therefor is less than $10.0 million
(which lesser amount shall be carried forward for purposes of determining
whether such an offer is required with respect to the Net Available Cash from
any subsequent Asset Disposition). Upon completion of any application of Net
Available Cash in accordance with the foregoing provisions of clauses (a)(3)
and (a)(4) of this Section 4.07, the amount of Net Available Cash shall be
reset at zero.

                  (c) (1) Promptly, and in any event within 10 days after the
         Company becomes obligated to make an Offer, the Company shall deliver
         to the Trustee and send, by first-class mail to each Holder, a written
         notice stating that the Holder may elect to have the Holder's
         Securities purchased by the Company either in whole or in part (subject
         to prorating as described in Section 4.07(b) in the event the Offer is
         oversubscribed) in integral multiples of $1,000 of principal amount, at
         the applicable purchase price. The notice shall specify a purchase date
         not less than 30 days nor more than 60 days after the date of such
         notice (the "PURCHASE DATE") and shall contain such information
         concerning the business of the Company which the Company in good faith
         believes will enable such Holders to make an informed decision.

                  (2) No later than one Business Day prior to the Purchase Date,
         the Company shall irrevocably deposit with the Trustee or with a Paying
         Agent (or, if the

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                                                                          61

         Company is acting as its own Paying Agent, segregate and hold in
         trust) in Temporary Cash Investments, maturing on the last day prior
         to the Purchase Date or on the Purchase Date if funds are immediately
         available by open of business, an amount equal to the amount of the
         Offer (the "OFFER AMOUNT") to be held for payment in accordance with
         the provisions of this Section. If the Offer includes other Senior
         Subordinated Indebtedness, the deposit described in the preceding
         sentence may be made with any other paying agent pursuant to
         arrangements satisfactory to the Trustee. Upon the expiration of the
         period for which the Offer remains open (the "OFFER PERIOD"), the
         Company shall deliver to the Trustee for cancellation the Securities or
         portions thereof which have been properly tendered to and are to be
         accepted by the Company. The Trustee shall, on the Purchase Date, mail
         or deliver payment (or cause the delivery of payment) to each tendering
         Holder in the amount of the purchase price. In the event that the
         aggregate purchase price of the Securities delivered by the Company to
         the Trustee is less than the Offer Amount applicable to the Securities,
         the Trustee shall deliver the excess to the Company immediately after
         the expiration of the Offer Period for application in accordance with
         this Section 4.07.

                  (3) Holders electing to have a Security purchased shall be
         required to surrender the Security, with an appropriate form duly
         completed, to the Company at the address specified in the notice at
         least three Business Days prior to the Purchase Date. Holders shall be
         entitled to withdraw their election if the Trustee or the Company
         receives not later than one Business Day prior to the Purchase Date, a
         telex, facsimile transmission or letter setting forth the name of the
         Holder, the principal amount of the Security which was delivered for
         purchase by the Holder and a statement that such Holder is withdrawing
         his election to have such Security purchased. Holders whose Securities
         are purchased only in part shall be issued new Securities equal in
         principal amount to the unpurchased portion of the Securities
         surrendered.

                  (d) The Company shall comply, to the extent applicable,
with the requirements of Section 14(e) of the Exchange Act and any other
securities laws or regulations in connection with the repurchase of
Securities pursuant to this Section 4.07. To the extent that the provisions
of any securities laws or regulations conflict with provisions

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                                                                          62

of this Section 4.07, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
under this Section by virtue of its compliance with such securities laws or
regulations.

                  SECTION 4.08.  LIMITATION ON AFFILIATE TRANSACTIONS.

                  (a) The Company and Parent shall not, and shall not permit
any Restricted Subsidiary to, enter into or permit to exist any transaction
(including the purchase, sale, lease or exchange of any property, employee
compensation arrangements or the rendering of any service) with, or for the
benefit of, any Affiliate of Parent (an "AFFILIATE TRANSACTION") unless:

                  (1) the terms of the Affiliate Transaction are no less
         favorable to the Company, Parent or such Restricted Subsidiary than
         those that could reasonably be expected to be obtained at the time of
         the Affiliate Transaction in arm's-length dealings with a Person who is
         not an Affiliate;

                  (2) if such Affiliate Transaction involves an amount in excess
         of $5.0 million, the terms of the Affiliate Transaction are set forth
         in writing and a majority of the non-employee directors of Parent
         disinterested with respect to such Affiliate Transaction shall have
         determined in good faith that the criteria set forth in clause (1) are
         satisfied and shall have approved the relevant Affiliate Transaction as
         evidenced by a resolution of the Board of Directors; and

                  (3) if such Affiliate Transaction involves an amount in excess
         of $10.0 million, the Board of Directors shall also have received a
         written opinion from an Independent Qualified Party to the effect that
         such Affiliate Transaction is fair, from a financial standpoint, to
         Parent or is not less favorable to Parent than could reasonably be
         expected to be obtained at the time in an arm's-length transaction with
         a Person who was not an Affiliate.

                  (b)  The provisions of Section 4.08(a) shall not prohibit:

                  (1) any Restricted Payment permitted to be made pursuant to
         Section 4.04;

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                                                                          63

                  (2) any issuance of securities, or other payments, awards or
         grants in cash, securities or otherwise pursuant to, or the funding of,
         employment arrangements, stock options and stock ownership plans
         approved by the Board of Directors or senior management of Parent;

                  (3) loans or advances to employees in the ordinary course of
         business of Parent and its Restricted Subsidiaries, but in any event
         not to exceed $5.0 million in the aggregate outstanding at any one
         time;

                  (4) the payment of customary directors' fees, indemnification
         and similar arrangements and payments thereunder, as well as agreements
         requiring or permitting such payments or indemnification, by Parent or
         any of its Restricted Subsidiaries;

                  (5) any transaction between or among Parent, a Restricted
         Subsidiary or any other Person that would constitute an Affiliate
         Transaction solely because Parent or a Restricted Subsidiary owns an
         equity interest in or otherwise controls such Person;

                  (6) the issuance or sale of any Capital Stock (other than
         Disqualified Stock) of Parent or any contribution to the capital of
         Parent or any Restricted Subsidiary; and

                  (7) any agreement as in effect as of the Issue Date that is
         disclosed in the Offering Circular or any amendment of any such
         agreement (so long as any such amendment is not more disadvantageous to
         the Holders than the original agreement as in effect on the Issue Date)
         or any transaction contemplated thereby.

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                                                                          64

                  SECTION 4.09.  LIMITATION ON OWNERSHIP OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES. The Company and Parent shall not, and shall not
permit any Restricted Subsidiary to, (1) permit any Restricted Subsidiary of
Parent to issue any Capital Stock (including pursuant to any merger,
consolidation, recapitalization or similar transaction) other than to Parent
or a Wholly Owned Subsidiary or (2) permit any Person other than Parent or a
Wholly Owned Subsidiary to own any Capital Stock of a Restricted Subsidiary,
except in each case for (A) directors' qualifying shares and (B) Common Stock
issued to or owned by Strategic Investors.

                  SECTION 4.10.  DISTRIBUTIONS BY QUALIFIED RESTRICTED
SUBSIDIARIES. Except to the extent restricted pursuant to any Permitted
Payment Restriction, the Company and Parent shall, and shall cause each
Restricted Subsidiary to, cause each Qualified Restricted Subsidiary to
declare and pay regular monthly, quarterly or semi-annual dividends or
distributions to the holders of its Capital Stock in an amount equal to
substantially all of the available cash flow of such Restricted Subsidiary
for such period as determined in good faith by the board of directors, board
of governors or such other individuals performing similar functions, subject
to such ordinary and customary reserves and other amounts as, in the good
faith judgment of such individuals, may be necessary so that the business of
such Restricted Subsidiary may be properly and advantageously conducted at
all times.

                  SECTION 4.11.  INTERCOMPANY ADVANCES. The Company and
Parent shall, and shall cause each Restricted Subsidiary to, evidence all
transfers made by the Company, Parent or any Restricted Subsidiary of Parent
to Parent or any Wholly Owned Subsidiary of Parent of the direct or indirect
proceeds of the issuance and sale of the Securities by executing and
delivering an intercompany promissory note. Each such intercompany promissory
note will be payable upon or before each payment of principal of the
Securities (whether upon Stated Maturity, optional redemption, required
purchase, declaration of acceleration or otherwise) and will bear interest at
the same or greater rate, payable on the same or earlier dates, as the
Securities.

                  SECTION 4.12.  GUARANTORS. Parent shall, and Parent and the
Company shall cause all present and future Subsidiaries of Parent (other than
the Company) that fall within one or more of the categories set forth below
to, Guarantee, jointly and severally, payment of the Securities

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                                                                          65

and all other amounts due under this Indenture by executing and delivering to
the Trustee a Supplemental Guaranty Agreement:

                  (a) any Domestic Wholly Owned Subsidiary of Parent;

                  (b) any Subsidiary of Parent that Guarantees any Indebtedness
         of the Company or any Domestic Guarantor (other than the Securities
         and the Guaranties);

                  (c) any Subsidiary of Parent, the assets of which are subject
         to a Lien securing any Indebtedness of the Company or any Domestic
         Guarantor (other than the Securities and the Guaranties); and

                  (d) any Subsidiary of Parent, more than 65% of the Voting
         Stock of which has been pledged, directly or indirectly, individually
         or in the aggregate, by Parent and its Subsidiaries, to secure
         Indebtedness of the Company or any Domestic Guarantor (other than the
         Securities and the Guaranties).

                  The Guaranty by a Guarantor will be released under certain
circumstances as described in Section 11.06.

                  SECTION 4.13.  SEC REPORTS. Whether or not the Company is
subject to Section 13(a) or 15(d) of the Exchange Act, or any successor
provision thereto, the Company shall file with the SEC the annual reports,
quarterly reports and other documents which the Company would have been
required to file with the SEC pursuant to such Section 13(a) or 15(d) or any
successor provision thereto if the Company were subject thereto, such
documents to be filed with the SEC on or prior to the respective dates (the
"REQUIRED FILING DATES") by which the Company would have been required to
file them; PROVIDED, HOWEVER, if the Company is not subject to Section 13(a)
or 15(d) of the Exchange Act, the Company shall not be required to file such
reports and documents with the SEC under Section 13(a) or 15(d) of the
Exchange Act (or any successor provisions thereto) so long as (i) Parent
files the reports and documents with the SEC under Section 13(a) or 15(d) of
the Exchange Act that it is required to file and (ii) the Company and Parent
are in compliance with the requirements set forth in Rule 3-10 of Regulation
S-X under the Exchange Act.

                  The Company shall also (whether or not it is required to
file reports with the SEC), within 30 days of

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                                                                          66

each Required Filing Date, (i) transmit by mail to all Securityholders, as
their names and addresses appear in the applicable security register, without
cost to such Holders, and (ii) file with the Trustee, copies of the annual
reports, quarterly reports and other documents (without exhibits) which the
Company has filed or would have filed, or which Parent has filed, with the
SEC pursuant to Section 13(a) or 15(d) of the Exchange Act, any successor
provisions thereto or this Section. The Company shall not be required to file
any report with the SEC if the SEC does not permit such filing. In addition,
the Company shall furnish to the Trustee, to the Securityholders 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 and the exhibits omitted from the information furnished
pursuant to the preceding sentence, for so long as the Securities are not
freely transferable under the Securities Act. The Company also shall comply
with the other provisions of TIA Section 314(a).

                  SECTION 4.14.  COMPLIANCE CERTIFICATE. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of
the Company an Officers' Certificate stating that in the course of the
performance by the signers of their duties as Officers of the Company they
would normally have knowledge of any Default and whether or not the signers
know of any Default that occurred during such period. If they do, the
certificate shall describe the Default, its status and what action the
Company is taking or proposes to take with respect thereto. The Company also
shall comply with TIA Section 314(a)(4).

                  SECTION 4.15.  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 Securities may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Securities 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 surrenders,
notices and demands may be made or served at an office of the Trustee in the
Borough of Manhattan, the City of New York.

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                                                                          67

         The Company may also from time to time designate one or more other
offices or agencies where Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
PROVIDED, HOWEVER, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in 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 office of the Trustee at 30 Broad
Street, B Level, New York, New York 10004, as one such office or agency of
the Company in accordance with Section 2.03 hereof.

                  SECTION 4.16.  TAXES. The Company and Parent shall pay, and
shall cause each of their 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.

                  SECTION 4.17.  LIMITATION ON STATUS AS INVESTMENT COMPANY.
Neither Parent, the Company nor any of their Subsidiaries shall take any
action or suffer to exist any condition that would require any of them to
register as an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended), or to otherwise become subject
to regulation as an investment company.

                  SECTION 4.18.  PAYMENTS FOR CONSENT. Neither Parent, the
Company nor any of their Affiliates shall, directly or indirectly, pay or
cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any Holder of any Securities for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Securities unless such consideration is offered to be paid
or agreed to be paid to all Holders that so consent, waive or agree to amend
within any time period set forth in the solicitation documents relating to
such consent, waiver or agreement.

                  SECTION 4.19.  CORPORATE EXISTENCE. Subject to Article 5
hereof, each of Parent and the Company shall do or cause to be done all
things necessary to preserve and

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keep in full force and effect its corporate existence, and the corporate,
partnership or other existence of each Subsidiary, in accordance with the
respective organizational documents (as the same may be amended from time to
time) of each Subsidiary and the rights (charter and statutory), licenses and
franchises of Parent, the Company and their Subsidiaries; PROVIDED, HOWEVER,
that Parent and the Company shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of any
of their Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
Parent and its Subsidiaries, taken as a whole, and that the loss thereof is
not adverse in any material respect to the Holders.

                  SECTION 4.20.  FURTHER INSTRUMENTS AND ACTS. Upon request
of the Trustee, the Company will execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry
out more effectively the purpose of this Indenture.

                                    ARTICLE 5

                                     MERGER

                  SECTION 5.01.  MERGER AND CONSOLIDATION.

                  (a) The Company shall not consolidate with or merge with or
into, or convey, transfer or lease, in one transaction or a series of
transactions, directly or indirectly, all or substantially all of the assets
of the Company and its Restricted Subsidiaries, taken as a whole, to, any
Person, unless:

                  (1) the resulting, surviving or transferee Person (the
         "SUCCESSOR COMPANY") shall be a Person organized and existing under the
         laws of the United States of America, any State thereof or the District
         of Columbia and the Successor Company (if not the Company) shall
         expressly assume, by an indenture supplemental hereto, executed and
         delivered to the Trustee, in form reasonably satisfactory to the
         Trustee, all the obligations of the Company under the Securities and
         this Indenture;

                  (2) immediately after giving PRO FORMA effect to such
         transaction (and treating any Indebtedness which becomes an obligation
         of the Successor Company or any Subsidiary of the Successor Company as
         a result of

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         such transaction as having been Incurred by such Successor Company or
         such Subsidiary at the time of such transaction), no Default shall
         have occurred and be continuing;

                  (3) immediately after giving PRO FORMA effect to such
         transaction, the Successor Company would be able to Incur an additional
         $1.00 of Indebtedness pursuant to Section 4.03(a)(1);

                  (4) (other than Guarantors that were Guarantors prior to such
         transaction and continue to be Guarantors after such transaction, and
         upon consummation of such transaction, the Company is the Successor
         Company), each Person that is required pursuant to the terms of this
         Indenture to be a Guarantor shall have become a Guarantor pursuant to a
         Supplemental Guaranty Agreement or shall have confirmed its Guaranty
         pursuant to a supplemental indenture in form reasonably satisfactory to
         the Trustee; and

                  (5) the Company and each appropriate Guarantor shall have
         delivered to the Trustee an Officers' Certificate and an Opinion of
         Counsel, each stating that such consolidation, merger, conveyance,
         transfer or lease and such supplemental indenture (if any) comply with
         this Indenture;

PROVIDED, HOWEVER, that clause (3) will not be applicable to (A) Parent or a
Restricted Subsidiary consolidating with, merging into, conveying,
transferring or leasing all or part of its assets to the Company or (B) the
Company merging with an Affiliate of the Company solely for the purpose and
with the sole effect of reincorporating the Company in another jurisdiction
within the United States of America.

                  The Successor Company (if not the Company) shall be the
successor to the Company and shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture, and
the predecessor Company, except in the case of a lease, shall be released
from the obligation to pay the principal of and interest on the Securities.

                  (b) Parent shall not, and the Company and Parent shall not
permit any Guarantor to, consolidate with or merge with or into, or convey,
transfer or lease, in one

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transaction or a series of transactions, all or substantially all of its
assets to any Person unless:

                  (1) (other than in the case of a Guarantor (other than Parent)
         that has been disposed of in its entirety to another Person (other than
         to Parent or a Subsidiary of Parent), whether through a merger,
         consolidation or sale of Capital Stock or assets, if in connection
         therewith the Company provides an Officers' Certificate to the Trustee
         to the effect that the Company will comply with, and does comply with,
         its obligations under Section 4.07 in respect of such disposition), the
         resulting, surviving or transferee Person (if not the Company or a
         Person that was a Guarantor immediately prior to such transaction)
         shall expressly assume, by a Supplemental Guaranty Agreement, all the
         obligations of such Guarantor under its Guaranty;

                  (2) immediately after giving effect to such transaction or
         transactions on a PRO FORMA basis (and treating any Indebtedness which
         becomes an obligation of the resulting, surviving or transferee Person
         as a result of such transaction as having been issued by such Person at
         the time of such transaction), no Default shall have occurred and be
         continuing; and

                  (3) the Company delivers to the Trustee an Officers'
         Certificate and an Opinion of Counsel, each stating that such
         consolidation, merger, conveyance, transfer or lease and such
         Supplemental Guaranty Agreement, if any, complies with this Indenture.

                                    ARTICLE 6

                              DEFAULTS AND REMEDIES

                  SECTION 6.01.  EVENTS OF DEFAULT.  Each of the following is
an "EVENT OF DEFAULT":

                  (1) the Company defaults in any payment of interest on any
         Security when the same becomes due and payable, whether or not such
         payment shall be prohibited by Article 10, and such default continues
         for 30 days;

                  (2) the Company (i) defaults in the payment of the principal
         of any Security when the same becomes due and payable at its Stated
         Maturity, upon optional

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         redemption, upon declaration of acceleration or otherwise, whether or
         not such payment shall be prohibited by Article 10 or (ii) fails to
         purchase Securities when required pursuant to this Indenture or the
         Securities, whether or not such redemption or purchase shall be
         prohibited by Article 10;

                  (3) the Company or any Guarantor fails to comply with
         Section 5.01;

                  (4) the Company or any Guarantor fails to comply with any of
         its agreements in the Securities or this Indenture (other than those
         referred to in clauses (1), (2) and (3) above) and such failure
         continues for 30 days after the notice specified below;

                  (5) Indebtedness of the Company, any Guarantor or any
         Significant Subsidiary is not paid within any applicable grace period
         after final maturity or is accelerated by the holders thereof because
         of a default and the total amount of such Indebtedness unpaid or
         accelerated exceeds $10.0 million (or its foreign currency equivalent
         at the time);

                  (6) the Company, any Guarantor or any Significant Subsidiary
         pursuant to or within the meaning of any Bankruptcy Law:

                           (A) commences a voluntary case;

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

                           (C) consents to the appointment of a Custodian of it
                  or for any substantial part of its property; or

                           (D) makes a general assignment for the benefit of
                  its creditors;

         or takes any comparable action relating to insolvency;

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

                           (A) is for relief against the Company, any Guarantor
                  or any Significant Subsidiary in an involuntary case;

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                           (B) appoints a Custodian of the Company, any
                  Guarantor or any Significant Subsidiary or for any
                  substantial part of its property; or

                           (C) orders the winding up or liquidation of the
                  Company, any Guarantor or any Significant Subsidiary;

         or any similar relief is granted under any foreign laws and the order
         or decree remains unstayed and in effect for 60 days;

                  (8) any judgment or decree for the payment of money in excess
         of $10.0 million (or its foreign currency equivalent at the time) above
         the coverage under applicable insurance policies as to which the
         relevant insurer has not disclaimed coverage is entered against the
         Company, any Guarantor or any Significant Subsidiary, remains
         outstanding for a period of 60 consecutive days following such judgment
         and is not discharged, waived or stayed; or

                  (9) a Guaranty ceases to be in full force and effect (other
         than in accordance with the terms of such Guaranty) or any Guarantor
         denies or disaffirms its obligations under its Guaranty.

                  The foregoing will constitute Events of Default whatever
the reason for any such Event of Default and whether it is voluntary or
involuntary or is effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body.

                  The term "BANKRUPTCY LAW" means Title 11, UNITED STATES
CODE, or any similar Federal or state law for the relief of debtors. The term
"CUSTODIAN" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.

                  A Default under clause (4) of this Section 6.01 is not an
Event of Default until the Trustee or the holders of at least 25% in
principal amount of the outstanding Securities notify the Company of the
default and the Company does not cure such default within the time specified
after receipt of such notice. Such notice must specify the default, demand
that it be remedied and state that such notice is a "Notice of Default."

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                                                                          73

                  The Company shall deliver to the Trustee, within 30 days
after the occurrence thereof, written notice in the form of an Officers'
Certificate of any Default or Event of Default, the status of such Default or
Event of Default and what action the Company is taking or proposes to take
with respect thereto.

                  SECTION 6.02.  ACCELERATION. If an Event of Default (other
than an Event of Default specified in Section 6.01(6) or (7) with respect to
the Company or any Guarantor) occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the outstanding Securities may
declare the principal of and accrued but unpaid interest on all the
Securities to be due and payable by notice in writing to the Company and the
Trustee specifying the respective Event of Default and that it is a "notice
of acceleration." Upon such a declaration, such principal and interest shall
be due and payable immediately. In the event of a declaration of acceleration
of the Securities because an Event of Default described in clause (5) of
Section 6.01 has occurred and is continuing, the declaration of acceleration
of the Securities shall be automatically annulled if (A) the nonpayment or
default triggering such Event of Default pursuant to clause (5) of Section
6.01 shall be remedied or cured by Parent or a Restricted Subsidiary or
waived by the holders of the relevant Indebtedness within 20 days after the
declaration of acceleration with respect thereto, (B) the annulment of the
acceleration of the Securities would not conflict with any judgment or decree
of a court of competent jurisdiction and (C) all existing Events of Default,
except nonpayment of principal, premium or interest on the Securities that
became due solely because of the acceleration of the Securities, have been
cured or waived. If an Event of Default specified in Section 6.01(6) or (7)
with respect to the Company or any Guarantor occurs and is continuing, the
principal of and interest on all the Securities shall IPSO FACTO become and
be immediately due and payable without any declaration or other act on the
part of the Trustee or any Securityholders. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with
any judgment or decree and if all existing Events of Default have been cured
or waived except nonpayment of principal or interest that has become due
solely because of acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.

                  SECTION 6.03.  OTHER REMEDIES. If an Event of

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Default occurs and is continuing, the Trustee may pursue any available
remedy to collect the payment of principal of or interest on the Securities
or to enforce the performance of any provision of the Securities or this
Indenture.

                  The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative to the extent permitted by law.

                  SECTION 6.04.  WAIVER OF PAST DEFAULTS. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
waive an existing Default and its consequences except (i) a Default in the
payment of the principal of or interest on a Security, (ii) a Default arising
from the failure to redeem or purchase any Security when required pursuant to
this Indenture or (iii) a Default in respect of a provision that under
Section 9.02 cannot be amended without the consent of each Securityholder
affected. When a Default is waived, it is deemed cured, but no such waiver
shall extend to any subsequent or other Default or impair any consequent
right.

                  SECTION 6.05.  CONTROL BY MAJORITY. The Holders of a
majority in principal amount of the outstanding Securities may direct the
time, method and place of conducting any proceeding for any remedy available
to the Trustee or of exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction that conflicts with
law or this Indenture or, subject to Section 7.01, that the Trustee
determines is unduly prejudicial to the rights of other Securityholders or
would involve the Trustee in personal liability; PROVIDED, HOWEVER, that the
Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction. Prior to taking any action hereunder, the
Trustee shall be entitled to indemnification satisfactory to it in its sole
discretion against all losses and expenses caused by taking or not taking
such action.

                  SECTION 6.06.  LIMITATION ON SUITS. Except to enforce the
right to receive payment of principal, premium (if any) or interest when due,
no Securityholder may pursue any remedy with respect to this Indenture or the
Securities

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unless:

                  (1) such Holder has previously given the Trustee notice that
         an Event of Default is continuing;

                  (2) Holders of at least 25% in principal amount of the
         outstanding Securities have requested the Trustee to pursue
         the remedy;

                  (3) such Holders have offered the Trustee reasonable security
         or indemnity against any loss, liability or expense;

                  (4) the Trustee has not complied with such request within 60
         days after receipt of the request and the offer of security or
         indemnity; and

                  (5) Holders of a majority in principal amount of the
         outstanding Securities have not given the Trustee a direction
         inconsistent with such request within such 60-day period.

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

                  SECTION 6.07.  RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of principal of and interest on the Securities held
by such Holder, on or after the respective due dates expressed in the
Securities, 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(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express
trust against the Company or any Guarantor for the whole amount then due and
owing (together with interest on any unpaid interest to the extent lawful)
and the amounts provided for in Section 7.07.

                  SECTION 6.09.  TRUSTEE MAY FILE PROOFS OF CLAIM. The
Trustee may file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee and the
Securityholders allowed in any judicial proceedings relative to the Company,
its creditors or its property and, unless

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prohibited by law or applicable regulations, may vote on behalf of the
Holders in any election of a trustee in bankruptcy or other Person performing
similar functions, and any Custodian in any such judicial proceeding is
hereby authorized by each Holder to make payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and its counsel, and any other amounts due the Trustee under Section 7.07.

                  SECTION 6.10.  PRIORITIES. If the Trustee collects any
money or property pursuant to this Article 6, it shall pay out the money or
property in the following order:

                  FIRST:  to the Trustee for amounts due under Section 7.07;

                  SECOND: to holders of Senior Indebtedness of the Company and,
          if such money or property has been collected from a Guarantor, to
          holders of Senior Indebtedness of such Guarantor, in each case to the
          extent required by Articles 10 and 12;

                  THIRD: to Securityholders for amounts due and unpaid on the
          Securities for principal and interest, ratably, without preference or
          priority of any kind, according to the amounts due and payable on the
          Securities for principal and interest, respectively; and

                  FOURTH: 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 Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the
Trustee a notice that states the record date, the payment date and amount to
be paid.

                  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 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

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                                                                          77

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 pursuant to Section 6.07 or a suit by Holders
of more than 10% in principal amount of the Securities.

                  SECTION 6.12.  WAIVER OF STAY OR EXTENSION LAWS. The
Company and each Guarantor (to the extent it may lawfully do so) covenants
that it shall not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension
law wherever enacted, now or at any time hereafter in force, which may affect
the covenants or the performance of this Indenture; and the Company and each
Guarantor (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and shall not 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 had
been enacted.

                                    ARTICLE 7

                                     TRUSTEE

                  SECTION 7.01.  DUTIES OF TRUSTEE.

                  (a) If an Event of Default has occurred and is continuing,
the Trustee shall exercise the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent Person would exercise or use under the circumstances in the conduct
of such Person's own affairs.

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

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

                  (2) in the absence of bad faith on its part, the Trustee may
         conclusively rely, as to the truth of the statements and the
         correctness of the opinions expressed therein, upon certificates or
         opinions furnished to the Trustee and conforming

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                                                                          78

         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 liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:

                  (1) this paragraph does not limit the effect of paragraph
         (b) of this Section 7.01;

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

                  (3) 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.

                  (d) Every provision of this Indenture that in any way
relates to the Trustee is subject to Sections 7.01 and 7.02.

                  (e) 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.

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

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

                  (h) Every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section and to the provisions of
the TIA.

                  SECTION 7.02.  RIGHTS OF TRUSTEE.

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                                                                             79

                  (a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document.

                  (b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officers' Certificate or Opinion of Counsel.

                  (c) The Trustee may act through 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 which it believes to be authorized or within its
rights or powers; PROVIDED, HOWEVER, that the Trustee's conduct does not
constitute willful misconduct or negligence.

                  (e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.

                  SECTION 7.03.   INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee
in its individual or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with the Company or its Affiliates with the
same rights it would have if it were not Trustee. Any Paying Agent,
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11.

                  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 Securities, it shall not be accountable for the
Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement of the Company in this Indenture or in any
document issued in connection with the sale of the Securities or in the
Securities other than the Trustee's certificate of authentication.

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                                                                             80

                  SECTION 7.05.   NOTICE OF DEFAULTS. If a Default occurs and
is continuing and if it is known to the Trustee, the Trustee shall mail to
each Securityholder notice of the Default within 90 days after it occurs.
Except in the case of a Default in payment of principal of or interest on any
Security (including payments pursuant to the mandatory redemption provisions
of such Security, if any), the Trustee may withhold the notice if and so long
as a committee of its Trust Officers determines that withholding the notice
is not opposed to the interests of Securityholders.

                  SECTION 7.06.   REPORTS BY TRUSTEE TO HOLDERS. As promptly
as practicable after each May 15 beginning with the May 15 following the date
of this Indenture, and in any event prior to July 15 in each year, the
Trustee shall mail to each Securityholder a brief report dated as of May 15
that complies with TIA ss. 313(a) (but if no event described in TIA ss.
313(a) has occurred within the twelve months preceding the reporting date, no
report need be mailed). The Trustee also shall comply with TIA ss. 313(b).

                  A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.

                  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 its services. 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 upon request for all
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents, counsel, accountants and experts. The
Company shall indemnify the Trustee against any and all loss, liability or
expense (including attorneys' fees) incurred by it in connection with the
administration of this trust and the performance of its duties hereunder,
except as set forth in the last sentence of this paragraph. 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

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                                                                             81

and the Trustee may have separate counsel and the Company shall pay the fees
and expenses of such counsel. The Company need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee
through the Trustee's own willful misconduct, negligence or bad faith.

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

                  The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.01(6) or (7) with
respect to the Company, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.

                  SECTION 7.08.   REPLACEMENT OF TRUSTEE. The Trustee may
resign at any time by so notifying the Company. The Holders of a majority in
principal amount of the Securities may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. The Company may remove the
Trustee if:

                  (1) the Trustee fails to comply with Section 7.10;

                  (2) the Trustee is adjudged bankrupt or insolvent;

                  (3) a receiver or other public officer takes charge of the
           Trustee or its property; or

                  (4) the Trustee otherwise becomes incapable of acting.

                  If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.

                  A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and

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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 Securityholders. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided for in Section 7.07.

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

                  If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.

                  Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.

                  SECTION 7.09.   SUCCESSOR TRUSTEE BY MERGER. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.

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

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                                                                             83

                  SECTION 7.10.  ELIGIBILITY; DISQUALIFICATION. The Trustee
shall at all times satisfy the requirements of TIA ss. 310(a). The Trustee
shall have a combined capital and surplus (together with its holding company
and sister companies, if any) of at least $50,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply
with TIA ss. 310(b); PROVIDED, HOWEVER, that there shall be excluded from the
operation of TIA ss. 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities
of the Company are outstanding if the requirements for such exclusion set
forth in TIA ss. 310(b)(1) are met.

                  SECTION 7.11.  PREFERENTIAL COLLECTION OF CLAIMS AGAINST
COMPANY. The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.

                                  ARTICLE 8

                       DISCHARGE OF INDENTURE; DEFEASANCE

                  SECTION 8.01.   DISCHARGE OF LIABILITY ON SECURITIES;
DEFEASANCE.

                  (a) When (1) the Company delivers to the Trustee all
outstanding Securities (other than Securities replaced pursuant to Section 2.07)
for cancellation or (2) all outstanding Securities have become due and payable,
whether at maturity or on a redemption date as a result of the mailing of a
notice of redemption pursuant to Article 3 hereof or will become due and payable
within one year and the Company irrevocably deposits with the Trustee funds
sufficient to pay at maturity or upon redemption all outstanding Securities,
including interest thereon to maturity or such redemption date (other than
Securities replaced pursuant to Section 2.07), and if in either case the Company
pays all other sums payable hereunder by the Company, then this Indenture shall,
subject to Section 8.01(c), be satisfied and discharged and cease to be of
further effect. The Trustee shall acknowledge satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate and
an Opinion of Counsel and at the cost and expense of the Company.

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                                                                             84

                  (b) Subject to Sections 8.01(c) and 8.02, the Company at any
time may terminate (1) all its and the Guarantors' obligations under the
Securities and this Indenture ("LEGAL DEFEASANCE OPTION") or (2) its and the
Guarantors' obligations under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08,
4.09, 4.10, 4.11, 4.12 and 4.13 and the operation of Sections 6.01(5), 6.01(6),
6.01(7), 6.01(8) and 6.01(9) (but, in the case of Sections 6.01(6) and (7), with
respect only to Significant Subsidiaries), the limitations contained in Sections
5.01(a)(3) and 5.01(a)(4), and all rights and obligations of all Persons under
or pursuant to Articles 10, 11 and 12 ("COVENANT DEFEASANCE OPTION"). The
Company may exercise its legal defeasance option not withstanding its prior
exercise of its covenant defeasance option.

                  If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default with
respect thereto. If the Company exercises its covenant defeasance option,
payment of the Securities may not be accelerated because of an Event of Default
specified in Sections 6.01(5), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in
the case of Sections 6.01(6) and (7), with respect only to Significant
Subsidiaries) or because of the failure of the Company to comply with Sections
5.01(a)(3) or 5.01(a)(4). If the Company exercises its legal defeasance option
or its covenant defeasance option, each Guarantor, if any, shall be released
from all its obligations with respect to its Guaranty.

                  Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.

                  (c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and 7.08 and in
this Article 8 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall
survive.

                  SECTION 8.02.   CONDITIONS TO DEFEASANCE. The Company may
exercise its legal defeasance option or its covenant defeasance option only
if:

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                                                                             85

                  (1) the Company irrevocably deposits in trust with
         the Trustee money or U.S. Government Obligations for the payment of
         principal of and interest on the Securities to maturity or redemption,
         as the case may be;

                  (2) the Company delivers to the Trustee a certificate from a
         nationally recognized firm of independent accountants expressing their
         opinion that the payments of principal and interest when due and
         without reinvestment on the deposited U.S. Government Obligations plus
         any deposited money without investment will provide cash at such times
         and in such amounts as will be sufficient to pay principal and interest
         when due on all the Securities to maturity or redemption, as the case
         may be;

                  (3) 123 days pass after the deposit is made and during the
         123-day period no Default specified in Sections 6.01(6) or (7) with
         respect to the Company occurs which is continuing at the end of the
         period;

                  (4) the deposit does not constitute a default under any other
         agreement binding on the Company and is not prohibited by Article 10;

                  (5) the Company delivers to the Trustee an Opinion of Counsel
         to the effect that the trust resulting from the deposit does not
         constitute, or is qualified as, a regulated investment company under
         the Investment Company Act of 1940;

                  (6) in the case of the legal defeasance option, the Company
         shall have delivered to the Trustee an Opinion of Counsel stating 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 Securityholders will not recognize
         income, gain or loss for Federal income tax purposes as a result of
         such defeasance and will be subject to Federal income tax on the same
         amounts, in the same manner and at the same times as would have been
         the case if such defeasance had not occurred;

                  (7) in the case of the covenant defeasance option, the Company
         shall have delivered to the Trustee an Opinion of Counsel to the effect
         that the

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                                                                             86

         Securityholders 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; and

                  (8) the Company delivers to the Trustee an Officers'
         Certificate and an Opinion of Counsel, each stating that all conditions
         precedent to the defeasance and discharge of the Securities as
         contemplated by this Article 8 have been complied with.

                  Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.

                  SECTION 8.03.   APPLICATION OF TRUST MONEY. The Trustee
shall hold in trust money or U.S. Government Obligations deposited with it
pursuant to this Article 8. It shall apply the deposited money and the money
from U.S. Government Obligations through the Paying Agent and in accordance
with this Indenture to the payment of principal of and interest on the
Securities. Money and securities so held in trust are not subject to Article
10.

                  SECTION 8.04.   REPAYMENT TO COMPANY. The Trustee and the
Paying Agent shall promptly turn over to the Company upon request any excess
money or securities held by them at any time.

                  Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as general creditors.

                  SECTION 8.05.   INDEMNITY FOR GOVERNMENT OBLIGATIONS. The
Company shall pay and shall indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against deposited U.S. Government
Obligations or the principal and interest received on such U.S. Government
Obligations.

                  SECTION 8.06.   REINSTATEMENT. If the Trustee or Paying
Agent is unable to apply any money or U.S. Government Obligations in
accordance with this Article 8 by

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                                                                             87

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 Securities shall be revived and reinstated as though no deposit had
occurred pursuant to this Article 8 until such time as the Trustee or Paying
Agent is permitted to apply all such money or U.S. Government Obligations in
accordance with this Article 8; PROVIDED, HOWEVER, that, if the Company has
made any payment of interest on or principal of any Securities because of the
reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.

                                  ARTICLE 9

                                 AMENDMENTS

                  SECTION 9.01.   WITHOUT CONSENT OF HOLDERS. Notwithstanding
Section 9.02, the Company, the Guarantors and the Trustee may amend this
Indenture or the Securities without notice to or consent of any
Securityholder:

                  (1) to cure any ambiguity, omission, defect or inconsistency;

                  (2) to provide for the assumption by a successor corporation
         of the obligations of the Company or any Guarantor under this Indenture
         pursuant to comply with Section 5.01;

                  (3) to provide for uncertificated Securities in addition to or
         in place of certificated Securities; PROVIDED, HOWEVER, that the
         uncertificated Securities are issued in registered form for purposes of
         Section 163(f) of the Code, or in a manner such that the uncertificated
         Securities are described in Section 163(f)(2)(B) of the Code;

                  (4) to add guarantees with respect to the Securities,
         including any Guaranties, or to secure the Securities;

                  (5) to add to the covenants of the Company or any Guarantor
         for the benefit of the Holders or to surrender any right or power
         herein conferred upon the Company or any Guarantor;

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                                                                             88

                  (6) to make any change that does not adversely affect the
         rights of any Securityholder in any material respect;

                  (7) to comply with any requirements of the SEC in connection
         with qualifying, or maintaining the qualification of, this Indenture
         under the TIA; or

                  (8) to evidence the release of a Guarantor pursuant to and in
         accordance with the terms of this Indenture.

                  However, no amendment under this Section may make any change
that adversely affects the rights under Article 10 or Article 12 of any holder
of Senior Indebtedness of the Company or of a Guarantor then outstanding unless
such holder of such Senior Indebtedness (or its Representative) consents to such
change.

                  After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.

                  SECTION 9.02.   WITH CONSENT OF HOLDERS. The Company, the
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to any Securityholder but with the written consent of the Holders of
at least a majority in principal amount of the Securities then outstanding
(including consents obtained in connection with a tender offer or exchange
for the Securities). However, without the consent of each Securityholder
affected thereby, an amendment may not:

                  (1) reduce the amount of Securities whose Holders must
         consent to an amendment;

                  (2) reduce the rate of or extend the time for payment of
         interest on any Security;

                  (3) reduce the principal amount of or extend the Stated
         Maturity of any Security;

                  (4) reduce the amount payable upon the redemption of any
         Security or change the time at which any Security may be redeemed in
         accordance with Article 3;

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                  (5) make any Security payable in money other than that stated
         in the Security;

                  (6) impair the right of any Securityholder to receive payment
         of principal of and interest on such Securityholder's Securities on or
         after the due dates therefor or to institute suit for the enforcement
         of any payment on or with respect to such Securityholder's Securities;

                  (7) make any change in Section 6.04 or 6.07 or the second
         sentence of this Section;

                  (8) make any changes in the ranking or priority of any
         Security that would adversely affect the Securityholders; or

                  (9) make any change in any Guaranty that would adversely
         affect the Securityholders.

         Notwithstanding the foregoing, the provision under this Indenture
relative to the Company's obligation to make a Change of Control Offer or an
Offer under Section 4.07 may be waived or modified with the written consent of
the Holders of a majority in principal amount of the Securities.

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

                  An amendment under this Section may not make any change that
adversely affects the rights under Article 10 or Article 12 of any holder of
Senior Indebtedness of the Company or of a Guarantor then outstanding unless
such holder of such Senior Indebtedness (or its Representative) consents to such
change.

                  After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.

                  SECTION 9.03.   COMPLIANCE WITH TRUST INDENTURE ACT. Every
amendment to this Indenture or the Securities shall comply with the TIA as
then in effect.

                  SECTION 9.04.   REVOCATION AND EFFECT OF CONSENTS

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                                                                             90

AND WAIVERS. A consent to an amendment or a waiver by a Holder of a Security
shall bind the Holder and every subsequent Holder of that Security or portion
of the Security that evidences the same debt as the consenting Holder's
Security, even if notation of the consent or waiver is not made on the
Security. However, any such Holder or subsequent Holder may revoke the
consent or waiver as to such Holder's Security or portion of the Security if
the Trustee receives the notice of revocation before the date the amendment
or waiver becomes effective. After an amendment or waiver becomes effective,
it shall bind every Securityholder. An amendment or waiver becomes effective
upon the execution of such amendment or waiver by the Trustee.

                  The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.

                  SECTION 9.05.   NOTATION ON OR EXCHANGE OF SECURITIES. If
an amendment changes the terms of a Security, the Trustee may require the
Holder of the Security to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Security regarding the changed terms and return
it to the Holder. Alternatively, if the Company or the Trustee so determines,
the Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make
the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.

                  SECTION 9.06.   TRUSTEE TO SIGN AMENDMENTS. The Trustee
shall sign any amendment authorized pursuant to this Article 9 if the
amendment does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may but need not sign it.
In signing such amendment the Trustee shall be entitled to receive indemnity
reasonably satisfactory to it and to receive, and (subject to Section 7.01)
shall be fully

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                                                                             91

protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.

                                  ARTICLE 10

                                SUBORDINATION

                  SECTION 10.01.  AGREEMENT TO SUBORDINATE. The Company
agrees, and each Securityholder by accepting a Security agrees, that the
Indebtedness evidenced by the Securities is subordinated in right of payment,
to the extent and in the manner provided in this Article 10, to the prior
payment of all Senior Indebtedness of the Company and that the subordination
is for the benefit of and enforceable by the holders of such Senior
Indebtedness. The Securities shall in all respects rank PARI PASSU with all
other Senior Subordinated Indebtedness of the Company and only Indebtedness
of the Company which is Senior Indebtedness of the Company shall rank senior
to the Securities in accordance with the provisions set forth herein. All
provisions of this Article 10 shall be subject to Section 10.11.

                  SECTION 10.02.  LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon
any payment or distribution of the assets of the Company to creditors upon a
total or partial liquidation or a total or partial dissolution of the Company
or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property:

                  (1) holders of Senior Indebtedness of the Company shall be
         entitled to receive payment in full in cash of such Senior Indebtedness
         before Securityholders shall be entitled to receive any payment of
         principal of or interest on the Securities (except that Securityholders
         may receive and retain Permitted Junior Securities and payments from
         the trust described in Article 8); and

                  (2) until such Senior Indebtedness is paid in full in cash,
         any payment or distribution to which Securityholders would be entitled
         but for this Article 10 shall be made to holders of such Senior
         Indebtedness as their interests may appear (except that Securityholders
         may receive and retain Permitted Junior Securities and payments from
         the trust described in Article 8).

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                                                                             92

                  SECTION 10.03.  DEFAULT ON SENIOR INDEBTEDNESS OF THE
COMPANY. The Company shall not pay the principal of, premium, if any, or
interest on the Securities (except in Permitted Junior Securities or from the
trust described in Article 8) or make any deposit pursuant to Section 8.01
and may not purchase, redeem or otherwise retire any Securities (except in
Permitted Junior Securities or from the trust described in Article 8)
(collectively, "PAY THE SECURITIES") if either of the following (a "PAYMENT
DEFAULT") occurs: (1) any Designated Senior Indebtedness of the Company is
not paid in full in cash when due, or (2) any other default on Designated
Senior Indebtedness of the Company occurs and the maturity of such Designated
Senior Indebtedness is accelerated in accordance with its terms; unless, in
either case, the Payment Default has been cured or waived and any such
acceleration has been rescinded or such Designated Senior Indebtedness has
been paid in full in cash; PROVIDED, HOWEVER, that the Company shall be
entitled to pay the Securities without regard to the foregoing if the Company
and the Trustee receive written notice approving such payment from the
Representatives of all Designated Senior Indebtedness with respect to which
the Payment Default has occurred and is continuing.

                  During the continuance of any default (other than a Payment
Default) with respect to any Designated Senior Indebtedness of the Company
pursuant to which the maturity thereof may be accelerated without further notice
(except such notice as may be required to effect such acceleration) or the
expiration of any applicable grace periods, the Company shall not pay the
Securities for a period (a "PAYMENT BLOCKAGE PERIOD") commencing upon the
receipt by the Trustee of (with a copy to the Company) a written notice (a
"BLOCKAGE NOTICE") of such default from the Representative of such Designated
Senior Indebtedness specifying an election to effect a Payment Blockage Period
and ending 179 days thereafter. The Payment Blockage Period shall end earlier if
such Payment Blockage Period is terminated: (1) by written notice to the Trustee
and the Company from the Person or Persons who gave such Blockage Notice, (2)
because the default giving rise to such Blockage Notice is cured, waived or
otherwise no longer continuing, or (3) because such Designated Senior
Indebtedness has been discharged or repaid in full in cash.

                  Notwithstanding the provisions described in the above
paragraph (but subject to the provisions contained in the first sentence of this
Section), unless the holders of such Designated Senior Indebtedness or the
Representative

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                                                                             93

of such Designated Senior Indebtedness shall have accelerated the maturity of
such Designated Senior Indebtedness, the Company shall be entitled to resume
payments on the Securities after termination of such Payment Blockage Period.
The Securities shall not be subject to more than one Payment Blockage Period
in any consecutive 360-day period, irrespective of the number of defaults
with respect to Designated Senior Indebtedness of the Company during such
period; PROVIDED, HOWEVER, that if any Blockage Notice within such 360-day
period is delivered to the Trustee by or on behalf of any holders of
Designated Senior Indebtedness of the Company (other than the Bank
Indebtedness), the Representative of the Bank Indebtedness shall be entitled
to give another Blockage Notice within such period; PROVIDED FURTHER,
HOWEVER, that in no event shall the total number of days during which any
Payment Blockage Period or Periods is in effect exceed 179 days in the
aggregate during any 360-consecutive-day period, and there must be 181 days
during any consecutive 360-day period during which no Payment Blockage Period
is in effect.

                  SECTION 10.04.  ACCELERATION OF PAYMENT OF SECURITIES. If
payment of the Securities is accelerated because of an Event of Default, the
Company or the Trustee shall promptly notify the holders of Designated Senior
Indebtedness of the Company (or their Representatives) of the acceleration.

                  SECTION 10.05.  WHEN DISTRIBUTION MUST BE PAID OVER. If a
distribution is made to Securityholders that because of this Article 10
should not have been made to them, the Securityholders who receive the
distribution shall hold it in trust for holders of Senior Indebtedness of the
Company and pay it over to them as their interests may appear.

                  SECTION 10.06.  SUBROGATION. After all Senior Indebtedness
of the Company is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of such Senior
Indebtedness to receive distributions applicable to such Senior Indebtedness.
A distribution made under this Article 10 to holders of such Senior
Indebtedness which otherwise would have been made to Securityholders is not,
as between the Company and Securityholders, a payment by the Company on such
Senior Indebtedness.

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                                                                             94

                  SECTION 10.07.  RELATIVE RIGHTS.  This Article 10 defines
the relative rights of Securityholders and holders of Senior Indebtedness of
the Company.  Nothing in this Indenture shall:

                  (1) impair, as between the Company and Securityholders, the
         obligation of the Company, which is absolute and unconditional, to pay
         principal of and interest on the Securities in accordance with their
         terms; or

                  (2) prevent the Trustee or any Securityholder from exercising
         its available remedies upon a Default, subject to the rights of holders
         of Senior Indebtedness of the Company to receive distributions
         otherwise payable to Securityholders.

                  SECTION 10.08.  RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding Section 10.03, the Trustee or Paying Agent shall continue to
make payments on the Securities and shall not be charged with knowledge of
the existence of facts that under this Article 10 would prohibit the making
of any such payments unless, not less than two Business Days prior to the
date of such payment, a Trust Officer of the Trustee receives notice
satisfactory to it that such payments are prohibited by this Article 10. The
Company, the Registrar or co-registrar, the Paying Agent, a Representative or
a holder of Senior Indebtedness of the Company shall be entitled to give the
notice; PROVIDED, HOWEVER, that, if an issue of Senior Indebtedness of the
Company has a Representative, only the Representative shall be entitled to
give the notice.

                  The Trustee in its individual or any other capacity shall be
entitled to hold Senior Indebtedness of the Company with the same rights it
would have if it were not the Trustee. The Registrar and co-registrar and the
Paying Agent shall be entitled to do the same with like rights. The Trustee
shall be entitled to all the rights set forth in this Article 10 with respect to
any Senior Indebtedness of the Company which may at any time be held by it, to
the same extent as any other holder of such Senior Indebtedness; and nothing in
Article 7 shall deprive the Trustee of any of its rights as such holder. Nothing
in this Article 10 shall apply to claims of, or payments to, the Trustee under
or pursuant to Section 7.07.

                  SECTION 10.09.  DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever any Person is to make a distribution or give a notice to holders of
Senior

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                                                                             95

Indebtedness of the Company, such Person shall be entitled to make such
distribution or give such notice to their Representative (if any).

                  SECTION 10.10.  ARTICLE 10 NOT TO PREVENT EVENTS OF DEFAULT
OR LIMIT RIGHT TO ACCELERATE. The failure to make a payment pursuant to the
Securities by reason of any provision in this Article 10 shall not be
construed as preventing the occurrence of a Default. Nothing in this Article
10 shall have any effect on the right of the Securityholders or the Trustee
to accelerate the maturity of the Securities.

                  SECTION 10.11.  TRUST MONEYS NOT SUBORDINATED.
Notwithstanding anything contained herein to the contrary, payments from
money or the proceeds of U.S. Government Obligations held in trust under
Article 8 by the Trustee for the payment of principal of and interest on the
Securities shall not be subordinated to the prior payment of any Senior
Indebtedness of the Company or subject to the restrictions set forth in this
Article 10, and none of the Securityholders shall be obligated to pay over
any such amount to the Company or any holder of Senior Indebtedness of the
Company or any other creditor of the Company.

                  SECTION 10.12.  TRUSTEE ENTITLED TO RELY. Upon any payment
or distribution pursuant to this Article 10, the Trustee and the
Securityholders shall be entitled to rely (1) upon any order or decree of a
court of competent jurisdiction in which any proceedings of the nature
referred to in Section 10.02 are pending, (2) upon a certificate of the
liquidating trustee or agent or other Person making such payment or
distribution to the Trustee or to the Securityholders or (3) upon the
Representatives of Senior Indebtedness of the Company for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of such Senior Indebtedness and other Indebtedness
of the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article 10. In the event that the Trustee determines, in good faith, that
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness of the Company to participate in any payment or
distribution pursuant to this Article 10, the Trustee shall be entitled to
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of such Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and other

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facts pertinent to the rights of such Person under this Article 10, and, if
such evidence is not furnished, the Trustee shall be entitled to defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment. The provisions of Sections 7.01 and 7.02
shall be applicable to all actions or omissions of actions by the Trustee
pursuant to this Article 10.

                  SECTION 10.13.  TRUSTEE TO EFFECTUATE SUBORDINATION. Each
Securityholder by accepting a Security authorizes and directs the Trustee on
its behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Securityholders and
the holders of Senior Indebtedness of the Company as provided in this Article
10 and appoints the Trustee as attorney-in-fact for any and all such purposes.

                  SECTION 10.14.  TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
INDEBTEDNESS OF THE COMPANY. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness of the Company and shall
not be liable to any such holders if it shall mistakenly pay over or
distribute to Securityholders or the Company or any other Person, money or
assets to which any holders of Senior Indebtedness of the Company shall be
entitled by virtue of this Article 10 or otherwise.

                  SECTION 10.15.  RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS
OF THE COMPANY ON SUBORDINATION PROVISIONS. Each Securityholder by accepting
a Security acknowledges and agrees that the foregoing subordination
provisions are, and are intended to be, an inducement and a consideration to
each holder of any Senior Indebtedness of the Company, whether such Senior
Indebtedness was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold, or to continue to hold, such
Senior Indebtedness and such holder of such Senior Indebtedness shall be
deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior
Indebtedness.

                                  ARTICLE 11

                                  GUARANTIES

                  SECTION 11.01.  GUARANTIES. Each Guarantor hereby
unconditionally and irrevocably guarantees, jointly and severally, to each
Holder and to the Trustee and its

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successors and assigns (a) the full and punctual payment of principal of and
interest on the Securities when due, whether at maturity, by acceleration, by
redemption or otherwise, and all other monetary obligations of the Company
under this Indenture and the Securities and (b) the full and punctual
performance within applicable grace periods of all other obligations of the
Company under this Indenture and the Securities (all the foregoing being
hereinafter collectively called the "OBLIGATIONS"). Each Guarantor further
agrees that the Obligations may be extended or renewed, in whole or in part,
without notice or further assent from such Guarantor and that such Guarantor
will remain bound under this Article 11 notwithstanding any extension or
renewal of any Obligation.

                  Each Guarantor waives presentation to, demand of, payment from
and protest to the Company of any of the Obligations and also waives notice of
acceleration, notice of intent to accelerate and notice of protest for
nonpayment. Subject to Section 6.01, each Guarantor waives notice of any default
under the Securities or the Obligations. The obligations of each Guarantor
hereunder shall not be affected by: (a) the failure of any Holder or the Trustee
to assert any claim or demand or to enforce any right or remedy against the
Company or any other Person under this Indenture, the Securities or any other
agreement or otherwise; (b) any extension or renewal of any thereof; (c) any
rescission, waiver, amendment or modification of any of the terms or provisions
of this Indenture, the Securities or any other agreement; (d) the release of any
security held by any Holder or the Trustee for the Obligations or any of them;
(e) the failure of any Holder or the Trustee to exercise any right or remedy
against any other guarantor of the Obligations; or (f) except as set forth in
Section 11.06, any change in the ownership of such Guarantor.

                  Each Guarantor further agrees that its Guaranty herein
constitutes a guarantee of payment, performance and compliance when due (and not
a guarantee of collection) and waives any right to require that any resort be
had by any Holder or the Trustee to any security held for payment of the
Obligations.

                  Each Guaranty is, to the extent and in the manner set forth in
Article 12, subordinated and subject in right of payment to the prior payment in
full of the principal of and premium, if any, and interest on all Senior
Indebtedness of the Guarantor giving such Guaranty and each Guaranty is made
subject to such provisions of this

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                                                                             98

Indenture.

                  Except as expressly set forth in Sections 8.01(b), 11.02 and
11.06, the obligations of each Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Guarantor herein shall not be discharged or impaired or
otherwise affected by the failure of any Holder or the Trustee to assert any
claim or demand or to enforce any remedy under this Indenture, the Securities or
any other agreement, by any waiver or modification of any thereof, by any
default, failure or delay, willful or otherwise, in the performance of the
obligations, or by any other act or thing or omission or delay to do any other
act or thing which may or might in any manner or to any extent vary the risk of
such Guarantor or would otherwise operate as a discharge of such Guarantor as a
matter of law or equity.

                  Each Guarantor further agrees that its Guaranty herein shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Obligation is
rescinded or must otherwise be restored by any Holder or the Trustee upon the
bankruptcy or reorganization of the Company or otherwise.

                  In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against any
Guarantor by virtue hereof, upon the failure of the Company to pay the principal
of or interest on any Obligation when and as the same shall become due, whether
at maturity, by acceleration, by redemption or otherwise, or to perform or
comply with any other Obligation, each Guarantor hereby promises to and shall,
upon receipt of written demand by the Trustee, forthwith pay, or cause to be
paid, in cash, to the Holders or the Trustee an amount equal to the sum of (1)
the unpaid amount of such Obligations, (2) accrued and unpaid interest on such
Obligations (but only to the extent not prohibited by law) and (3) all other
monetary Obligations of the Company to the Holders and the Trustee.

                  Each Guarantor agrees that it shall not be

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                                                                             99

entitled to any right of subrogation in respect of any Obligations guaranteed
hereby until payment in full of all Obligations and all obligations to which
the Obligations are subordinated as provided in Article 12. Each Guarantor
further agrees that, as between it, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the Obligations guaranteed
hereby may be accelerated as provided in Article 6 for the purposes of such
Guarantor's Guaranty herein, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such Obligations as provided in Article 6, such Obligations (whether or not
due and payable) shall forthwith become due and payable by such Guarantor for
the purposes of this Section.

                  Each Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees) incurred by the Trustee or any
Holder in enforcing any rights under this Section.

                  SECTION 11.02.  LIMITATION ON LIABILITY. Any term or
provision of this Indenture to the contrary notwithstanding, the maximum
aggregate amount of the Obligations guaranteed hereunder by any Guarantor
shall not exceed the maximum amount that can be hereby guaranteed without
rendering this Indenture, as it relates to such Guarantor, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.

                  SECTION 11.03.  SUCCESSORS AND ASSIGNS. This Article 11
shall be binding upon each Guarantor and its successors and assigns and shall
enure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any
Holder or the Trustee, the rights and privileges conferred upon that party in
this Indenture and in the Securities shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and
conditions of this Indenture.

                  SECTION 11.04.  NO WAIVER. Neither a failure nor a delay on
the part of either the Trustee or the Holders in exercising any right, power
or privilege under this Article 11 shall operate as a waiver thereof, nor
shall a single or partial exercise thereof preclude any other or further
exercise of any right, power or privilege. The rights, remedies and benefits
of the Trustee and the Holders herein

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                                                                             100

expressly specified are cumulative and not exclusive of any other rights,
remedies or benefits which either may have under this Article 11 at law, in
equity, by statute or otherwise.

                  SECTION 11.05.  MODIFICATION. No modification, amendment or
waiver of any provision of this Article 11, nor the consent to any departure
by any Guarantor therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the purpose
for which given. No notice to or demand on any Guarantor in any case shall
entitle such Guarantor to any other or further notice or demand in the same,
similar or other circumstances.

                  SECTION 11.06.  RELEASE OF GUARANTOR.  The Guaranty of a
Guarantor (other than Parent) will be released:

                  (1) upon the sale or other disposition (including by way of
         consolidation or merger) of that Guarantor, other than to Parent or a
         Restricted Subsidiary of Parent and as permitted by this Indenture;

                  (2) upon the sale or other disposition of all or substantially
         all the assets of that Guarantor, other than to Parent or a Restricted
         Subsidiary of Parent and as permitted by this Indenture;

                  (3)      if the Company designates that Guarantor as an
         Unrestricted Subsidiary in accordance with the applicable provisions
         of this Indenture;

                  (4)      if that Guarantor ceases to be a Wholly Owned
         Subsidiary and is not required to Guarantee the Securities pursuant to
         Section 4.12; and

                  (5) in the case of a Foreign Guarantor, if that Foreign
         Guarantor is not required to Guarantee the Securities pursuant to
         Section 4.12.

                                  ARTICLE 12

                           SUBORDINATION OF GUARANTIES

                  SECTION 12.01.  AGREEMENT TO SUBORDINATE. Each Guarantor
agrees, and each Securityholder by accepting a Security agrees, that the
Indebtedness evidenced by such

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                                                                             101

Guarantor's Guaranty is subordinated in right of payment, to the extent and
in the manner provided in this Article 12, to the prior payment of all Senior
Indebtedness of such Guarantor and that the subordination is for the benefit
of and enforceable by the holders of such Senior Indebtedness. The
Obligations of a Guarantor shall in all respects rank PARI PASSU with all
other Senior Subordinated Indebtedness of such Guarantor and only Senior
Indebtedness of such Guarantor (including such Guarantor's Guaranty of Senior
Indebtedness of the Company) shall rank senior to the Obligations of such
Guarantor in accordance with the provisions set forth herein. All provisions
of this Article 12 shall be subject to Section 12.11.

                  SECTION 12.02.  LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon
any payment or distribution of the assets of any Guarantor to creditors upon
a total or partial liquidation or a total or partial dissolution of such
Guarantor or in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to such Guarantor or its property:

                  (1) holders of Senior Indebtedness of such Guarantor shall be
         entitled to receive payment in full in cash of such Senior Indebtedness
         before Securityholders shall be entitled to receive any payment
         pursuant to the Guaranty of such Guarantor (except that Securityholders
         may receive and retain Permitted Junior Securities and payments from
         the trust described in Article 8); and

                  (2) until the Senior Indebtedness of any Guarantor is paid in
         full in cash, any payment or distribution to which Securityholders
         would be entitled but for this Article 12 shall be made to holders of
         such Senior Indebtedness as their interests may appear (except that
         Securityholders may receive and retain Permitted Junior Securities and
         payments from the trust described in Article 8).

                  SECTION 12.03.  DEFAULT ON SENIOR INDEBTEDNESS OF
GUARANTOR. No Guarantor shall make any payment of principal, premium, if any,
or interest pursuant to its Guaranty (except in Permitted Junior Securities
or from the trust described in Article 8) or purchase, redeem or otherwise
retire or defease any Securities or other Obligations (except in Permitted
Junior Securities or from the trust described in Article 8) (collectively,
"PAY ITS GUARANTY") if either of the following (a "PAYMENT DEFAULT") occurs:
(1) a default in the payment of any principal of, premium, if any, or
interest on Designated Senior Indebtedness of such Guarantor occurs; or (2)
any other

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                                                                             102

default on Designated Senior Indebtedness of such Guarantor occurs and the
maturity of such Designated Senior Indebtedness is accelerated in accordance
with its terms; unless, in either case, the Payment Default has been cured or
waived and any such acceleration has been rescinded or such Designated Senior
Indebtedness has been paid in full in cash; PROVIDED, HOWEVER, that any
Guarantor shall be entitled to pay its Guaranty without regard to the
foregoing if such Guarantor and the Trustee receive written notice approving
such payment from the Representatives of all Designated Senior Indebtedness
with respect to which the Payment Default has occurred and is continuing.

                  During the continuance of any default (other than a Payment
Default) with respect to any Designated Senior Indebtedness of such Guarantor
pursuant to which the maturity thereof may be accelerated without further notice
(except such notice as may be required to effect such acceleration) or the
expiration of any applicable grace periods, such Guarantor shall not pay its
Guaranty for a period (a "PAYMENT BLOCKAGE PERIOD") commencing upon the receipt
by the Trustee of (with a copy to such Guarantor) written notice (a "BLOCKAGE
NOTICE") of such default from the Representative of such Designated Senior
Indebtedness specifying an election to effect a Payment Blockage Period and
ending 179 days thereafter. The Payment Blockage Period shall end earlier if
such Payment Blockage Period is terminated: (1) by written notice to the Trustee
and such Guarantor from the Person or Persons who gave such Blockage Notice, (2)
because the default giving rise to such Blockage Notice is cured, waived or
otherwise no longer continuing, or (3) because such Designated Senior
Indebtedness has been discharged or repaid in full in cash.

                  Notwithstanding the provisions described in the above
paragraph (but subject to the provisions contained in the first sentence of this
Section), unless the holders of such Designated Senior Indebtedness giving such
Payment Notice or the Representative of such Designated Senior Indebtedness
shall have accelerated the maturity of such Designated Senior Indebtedness, any
Guarantor shall be entitled to resume payments pursuant to its Guaranty after
termination of such Payment Blockage Period. No Guarantor shall be subject to
more than one Blockage Period in any consecutive 360-day period, irrespective of
the number of defaults with respect to Designated Senior Indebtedness of such
Guarantor during such period; PROVIDED, HOWEVER, that if any Blockage Notice
within such 360-day period is delivered to the Trustee by or on behalf of any
holders of Designated Senior Indebtedness of such Guarantor (other than the Bank
Indebtedness), the Representative of the Bank Indebtedness shall be entitled to

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give another Blockage Notice within such period; PROVIDED FURTHER, HOWEVER,
that in no event shall the total number of days during which any Payment
Blockage Period or Periods is in effect exceed 179 days in the aggregate
during any 360-consecutive-day period, and there must be 181 days during any
consecutive 360-day period during which no Payment Blockage Period is in
effect.

                  SECTION 12.04.  DEMAND FOR PAYMENT. If a demand for payment
is made on a Guarantor pursuant to Article 11, the Trustee shall promptly
notify the holders of the Designated Senior Indebtedness of such Guarantor
(or their Representatives) of such demand.

                  SECTION 12.05.  WHEN DISTRIBUTION MUST BE PAID OVER. If a
distribution is made to Securityholders that because of this Article 12
should not have been made to them, the Securityholders who receive the
distribution shall hold it in trust for holders of Senior Indebtedness of the
applicable Guarantor and pay it over to them or their Representatives as
their interests may appear.

                  SECTION 12.06.  SUBROGATION. After all Senior Indebtedness
of a Guarantor is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of such Senior
Indebtedness to receive distributions applicable to Senior Indebtedness of
such Guarantor. A distribution made under this Article 12 to holders of such
Senior Indebtedness which otherwise would have been made to Securityholders
is not, as between the relevant Guarantor and Securityholders, a payment by
such Guarantor on such Senior Indebtedness.

                  SECTION 12.07.  RELATIVE RIGHTS.  This Article 12 defines
the relative rights of Securityholders and holders of Senior Indebtedness of
a Guarantor.  Nothing in this Indenture shall:

                  (1) impair, as between a Guarantor and Securityholders, the
         obligation of such Guarantor, which is absolute and unconditional, to
         pay its Guaranty to the extent set forth in Article 12; or

                  (2) prevent the Trustee or any Securityholder from exercising
         its available remedies upon a default by such Guarantor under its
         Guaranty, subject to the rights of holders of Senior Indebtedness of
         such Guarantor to receive distributions otherwise payable to
         Securityholders.

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                                                                             104

                  SECTION 12.08.  RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding Section 12.03, the Trustee or Paying Agent shall continue to
make payments on any Guaranty and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments
unless, not less than two Business Days prior to the date of such payment, a
Trust Officer of the Trustee receives written notice satisfactory to it that
such payments are prohibited by this Article 12. The Company, the relevant
Guarantor, the Registrar or co-registrar, the Paying Agent, a Representative
or a holder of Senior Indebtedness of such Guarantor shall be entitled to
give the notice; PROVIDED, HOWEVER, that, if an issue of Senior Indebtedness
of any Guarantor has a Representative, only the Representative shall be
entitled to give the notice.

                  The Trustee in its individual or any other capacity shall be
entitled to hold Senior Indebtedness of any Guarantor with the same rights it
would have if it were not the Trustee. The Registrar and co-registrar and the
Paying Agent shall be entitled to do the same with like rights. The Trustee
shall be entitled to all the rights set forth in this Article 12 with respect to
any Senior Indebtedness of any Guarantor which may at any time be held by it, to
the same extent as any other holder of such Senior Indebtedness; and nothing in
Article 7 shall deprive the Trustee of any of its rights as such holder. Nothing
in this Article 12 shall apply to claims of, or payments to, the Trustee under
or pursuant to Section 7.07.

                  SECTION 12.09.  DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever any Person is to make a distribution or give a notice to holders of
Senior Indebtedness of any Guarantor, such Person shall be entitled to make
such distribution or give such notice to their Representative (if any).

                  SECTION 12.10.  ARTICLE 12 NOT TO PREVENT EVENTS OF DEFAULT
OR LIMIT RIGHT TO DEMAND PAYMENT. The failure to make a payment pursuant to a
Guaranty by reason of any provision in this Article 12 shall not be construed
as preventing the occurrence of a Default. Nothing in this Article 12 shall
have any effect on the right of the Securityholders or the Trustee to make a
demand for payment on any Guarantor pursuant to its Guaranty.

                  SECTION 12.11.  TRUST MONEYS NOT SUBORDINATED.
Notwithstanding anything contained herein to the contrary, payments from
money or the proceeds of U.S. Government Obligations held in trust under
Article 8 by the Trustee

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                                                                             105

for the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of any Senior Indebtedness of any Guarantor
or subject to the restrictions set forth in this Article 12, and none of the
Securityholders shall be obligated to pay over any such amount to any
Guarantor or any holder of Senior Indebtedness of any Guarantor or any other
creditor of any Guarantor.

                  SECTION 12.12.  TRUSTEE ENTITLED TO RELY. Upon any payment
or distribution pursuant to this Article 12, the Trustee and the
Securityholders shall be entitled to rely (1) upon any order or decree of a
court of competent jurisdiction in which any proceedings of the nature
referred to in Section 12.02 are pending, (2) upon a certificate of the
liquidating trustee or agent or other Person making such payment or
distribution to the Trustee or to the Securityholders or (3) upon the
Representatives for the holders of Senior Indebtedness of any Guarantor for
the purpose of ascertaining the Persons entitled to participate in such
payment or distribution, the holders of such Senior Indebtedness and other
Indebtedness of such Guarantor, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 12. In the event that the Trustee determines, in
good faith, that evidence is required with respect to the right of any Person
as a holder of Senior Indebtedness of any Guarantor to participate in any
payment or distribution pursuant to this Article 12, the Trustee shall be
entitled to request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness of such
Guarantor held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article 12, and, if such evidence is not
furnished, the Trustee shall be entitled to defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article 12.

                  SECTION 12.13.  TRUSTEE TO EFFECTUATE SUBORDINATION. Each
Securityholder by accepting a Security authorizes and directs the Trustee on
its behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Securityholders and
the holders of Senior Indebtedness of the Guarantors as provided in this
Article 12 and appoints

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                                                                             106

the Trustee as attorney-in-fact for any and all such purposes.

                  SECTION 12.14.  TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
INDEBTEDNESS OF GUARANTOR. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness of any Guarantor and
shall not be liable to any such holders if it shall mistakenly pay over or
distribute to Securityholders or the Company or any other Person, money or
assets to which any holders of such Senior Indebtedness shall be entitled by
virtue of this Article 12 or otherwise.

                  SECTION 12.15.  RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS
OF THE GUARANTORS ON SUBORDINATION PROVISIONS. Each Securityholder by
accepting a Security acknowledges and agrees that the foregoing subordination
provisions are, and are intended to be, an inducement and a consideration to
each holder of any Senior Indebtedness of the Guarantors, whether such Senior
Indebtedness was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold, or to continue to hold, such
Senior Indebtedness and such holder of such Senior Indebtedness shall be
deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior
Indebtedness.

                                  ARTICLE 13

                                MISCELLANEOUS

                  SECTION 13.01.  TRUST INDENTURE ACT CONTROLS. If any
provision of this Indenture limits, qualifies or conflicts with another
provision which is required to be included in this Indenture by the TIA, the
required provision shall control.

                  SECTION 13.02.  NOTICES.  Any notice, request or
communication shall be in writing and delivered in person or mailed by
first-class mail addressed as follows:

                  if to the Company or any Guarantor:

                           United Surgical Partners Holdings, Inc.
                           17103 Preston Road
                           Suite 200 North
                           Dallas, Texas 75248
                           Attention:  Chief Financial Officer

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                                                                             107

                  if to the Trustee:

                           U.S. Trust Company of Texas, N.A.
                           2001 Ross Avenue, Suite 2700
                           Dallas, Texas  75201
                           Attention:  Corporate Trust

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

                  Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.

                  Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.

                  SECTION 13.03.  COMMUNICATION BY HOLDERS WITH OTHER
HOLDERS. Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or
the Securities. The Company, any Guarantor, the Trustee, the Registrar and
anyone else shall have the protection of TIA Section 312(c).

                  SECTION 13.04.  CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT. Upon any request or application by the Company to the Trustee to
take or refrain from taking any action under this Indenture, the Company
shall furnish to the Trustee:

                  (1) an Officers' Certificate in form and substance reasonably
         satisfactory to the Trustee stating that, in the opinion of the
         signers, all conditions precedent, if any, provided for in this
         Indenture relating to the proposed action have been complied with; and

                  (2) an Opinion of Counsel in form and substance reasonably
         satisfactory to the Trustee stating that, in the opinion of such
         counsel, all such conditions precedent have been complied with.

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                                                                             108

                  SECTION 13.05.  STATEMENTS REQUIRED IN CERTIFICATE OR
OPINION. Each certificate or opinion with respect to compliance with a
covenant or condition provided for in this Indenture shall include:

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

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

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

                  (4) a statement as to whether or not, in the opinion of such
         individual, such covenant or condition has been complied with.

                  SECTION 13.06.  WHEN SECURITIES DISREGARDED. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities 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
disregarded and deemed not to be outstanding, except that, for the purpose of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities which a Trust Officer of the
Trustee knows are so owned shall be so disregarded. Also, subject to the
foregoing, only Securities outstanding at the time shall be considered in any
such determination.

                  SECTION 13.07.  RULES BY TRUSTEE, PAYING AGENT AND
REGISTRAR. The Trustee may make reasonable rules for action by or a meeting
of Securityholders. The Registrar and the Paying Agent may make reasonable
rules for their functions.

                  SECTION 13.08.  LEGAL HOLIDAYS. A "LEGAL HOLIDAY" is a
Saturday, a Sunday or a day on which banking institutions are not required to
be open in the State of New York or the State of Texas. If a payment date is
a Legal Holiday, payment shall be made on the next succeeding day

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that is not a Legal Holiday, and no interest shall accrue for the intervening
period. If a regular record date is a Legal Holiday, the record date shall
not be affected.

                  SECTION 13.09.  GOVERNING LAW. This Indenture and the
Securities shall be governed by, and construed in accordance with, the laws
of the State of New York but without giving effect to applicable principles
of conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.

                  SECTION 13.10.  NO RECOURSE AGAINST OTHERS. No director,
officer, employee, incorporator or stockholder of the Company or any
Guarantor shall have any liability for any obligations of the Company or any
Guarantor under the Securities, any Guaranty or this Indenture or for any
claim based on, in respect of, or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and
release all such liability. The waiver and release shall be part of the
consideration for the issue of the Securities.

                  SECTION 13.11.  SUCCESSORS.  All agreements of the Company
in this Indenture and the Securities shall bind its successors.  All
agreements of the Trustee in this Indenture shall bind its successors.

                  SECTION 13.12.  MULTIPLE 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. One signed
copy is enough to prove this Indenture.

                  SECTION 13.13.  TABLE OF CONTENTS; HEADINGS. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any
of the terms or provisions hereof.

<Page>

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

                                   UNITED SURGICAL PARTNERS HOLDINGS, INC.

                                   By:  /s/ John J. Wellik
                                        -------------------------------------
                                   Name: John J. Wellik
                                         ------------------------------------
                                   Title: Secretary
                                          -----------------------------------

                                   UNITED SURGICAL PARTNERS
                                            INTERNATIONAL, INC.
                                   USP CHANDLER, INC.
                                   USP WEST COVINA, INC.
                                   ORTHOLINK OF COLORADO, INC.
                                   MEDCENTER MANAGEMENT SERVICES, INC.
                                   MEDICAL DOCUMENTING SYSTEMS, INC.
                                   ORTHO EXCEL, INC.
                                   ORTHOLINK PHYSICIANS CORPORATION
                                   USP DOMESTIC HOLDINGS, INC.
                                   USP INTERNATIONAL HOLDINGS, INC.
                                   USP LONG ISLAND, INC.
                                   USP NORTH TEXAS, INC.
                                   USP SARASOTA, INC.
                                   USP WINTER PARK, INC.
                                   GEORGIA MUSCULOSKELETAL NETWORK, INC.
                                   ORTHOLINK/GEORGIA ASC, INC.
                                   ORTHOLINK/NEW MEXICO ASC, INC.
                                   USP NEW JERSEY, INC.
                                   NEUROSURGICAL ASSOCIATES, INC.
                                   SOUTHWEST SPINE CENTER, INC.
                                   USP LAS CRUCES, INC.
                                   USP NEVADA, INC.
                                   DAY-OP MANAGEMENT COMPANY, INC.
                                   USP MANHATTAN, INC.
                                   USP TENNESSEE, INC.
                                   HEALTH HORIZONS OF DECATUR, INC.
                                   HEALTH HORIZONS OF KANSAS CITY, INC.
                                   HEALTH HORIZONS OF MURFREESBORO, INC.
                                   HEALTH HORIZONS OF NASHVILLE, INC.
                                   ORTHOLINK ASC CORPORATION
                                   ORTHOLINK OCCUPATIONAL MEDICINE SERVICES
                                            CORPORATION
                                   ORTHOLINK SECURITIES CORPORATION
                                   ORTHOLINK/TN ASC, INC.

                                       S-1

<Page>

                                   TENNESSEE MUSCULOSKELETAL NETWORK, INC.
                                   TEXAS OUTPATIENT SURGICARE CENTER, INC.
                                   USP PASADENA, INC.
                                   USP SOUTH HOUSTON, INC.
                                   USP FREDERICKSBURG, INC.

                                   By:  /s/ John J. Wellik
                                        -------------------------------------
                                   Name: John J. Wellik
                                         ------------------------------------
                                   Title: Vice President, Secretary and
                                          Treasurer
                                          -----------------------------------

                                   DAY-OP SURGERY CONSULTING COMPANY, LLC
                                   By:  USP Long Island, Inc., its sole member

                                   By:  /s/ John J. Wellik
                                        -------------------------------------
                                   Name: John J. Wellik
                                         ------------------------------------
                                   Title: Vice President, Secretary and
                                          Treasurer
                                          -----------------------------------

                                   NYCAS ADMINISTRATIVE SERVICES, LLC
                                   By:  USP Manhattan, Inc., its sole member

                                   By:  /s/ John J. Wellik
                                        -------------------------------------
                                   Name: John J. Wellik
                                         ------------------------------------
                                   Title: Vice President, Secretary and
                                          Treasurer
                                          -----------------------------------

                                   USP NEVADA HOLDINGS, LLC
                                   By:  USP North Texas, Inc., its sole member

                                   By:  /s/ John J. Wellik
                                        -------------------------------------
                                   Name: John J. Wellik
                                         ------------------------------------
                                   Title: Vice President, Secretary and
                                          Treasurer
                                          -----------------------------------

                                       S-2

<Page>

                                   USP TEXAS, L.P.
                                   By: USP North Texas, Inc., its general
                                       partner

                                   By:  /s/ John J. Wellik
                                        -------------------------------------
                                   Name: John J. Wellik
                                         ------------------------------------
                                   Title: Vice President, Secretary and
                                          Treasurer
                                          -----------------------------------

                                   U.S. TRUST COMPANY OF TEXAS, N.A.

                                   By: /s/ Richard B. Lindley
                                       --------------------------------------
                                   Name: Richard B. Lindley
                                         ------------------------------------
                                   Title: Vice President
                                          -----------------------------------

                                       S-3

<Page>

                                   USP COAST, INC.

                                   By: /s/ John J. Wellik
                                       --------------------------------------
                                   Name: John J. Wellik
                                         ------------------------------------
                                   Title: Vice President and Secretary
                                          -----------------------------------

                                   USP WESTWOOD, INC.

                                   By: /s/ John J. Wellik
                                       --------------------------------------
                                   Name: John J. Wellik
                                         ------------------------------------
                                   Title: Vice President and Secretary
                                          -----------------------------------

                                       S-4
<Page>

                                                                      APPENDIX A

                   PROVISIONS RELATING TO INITIAL SECURITIES,
                           PRIVATE EXCHANGE SECURITIES
                             AND EXCHANGE SECURITIES

                  1. DEFINITIONS

                  1.1  DEFINITIONS

                  For the purposes of this Appendix A the following terms shall
have the meanings indicated below:

                  "APPLICABLE PROCEDURES" means, with respect to any transfer or
transaction involving a Temporary Regulation S Global Security or beneficial
interest therein, the rules and procedures of the Depository, Euroclear and
Clearstream for such a Temporary Regulations S Global Security, in each case to
the extent applicable to such transaction and as in effect from time to time.

                  "CLEARING AGENCY" means Clearstream Banking, societe anonyme,
or any successor securities clearing agency.

                  "DEFINITIVE SECURITY" means a certificated Initial Security or
Exchange Security or Private Exchange Security bearing, if required, the
restricted securities legend set forth in Section 2.3(e).

                  "DEPOSITORY" means The Depository Trust Company its nominees
and their respective successors.

                  "DISTRIBUTION COMPLIANCE PERIOD", with respect to any
Securities, means the period of 40 consecutive days beginning on and including
the later of (i) the day on which such Securities are first offered to Persons
other than distributors (as defined in Regulation S under the Securities Act) in
reliance on Regulation S and (ii) the Issue Date with respect to such
Securities.

                  "EUROCLEAR" means Euroclear Bank S.A./N.V., as operator of the
Euroclear System or any successor securities clearing agency.

                  "EXCHANGE SECURITIES" means (1) the 10% Senior Subordinated
Notes Due 2011 issued pursuant to the Indenture in connection with a Registered
Exchange Offer

<Page>

                                                                            A-2

pursuant to a Registration Rights Agreement and (2) Additional Securities, if
any, issued pursuant to a registration statement filed with the SEC under the
Securities Act.

                  "INITIAL PURCHASERS" means (1) with respect to the Initial
Securities issued on the Issue Date, Credit Suisse First Boston Corporation,
Lehman Brothers, Inc. and SG Cowen Securities Corporation, and (2) with respect
to each issuance of Additional Securities, the Persons purchasing such
Additional Securities under the related Purchase Agreement.

                  "INITIAL SECURITIES" means (1) $150,000,000 aggregate
principal amount of 10% Senior Subordinated Notes Due 2011 issued on the Issue
Date and (2) Additional Securities, if any, issued in a transaction exempt from
the registration requirements of the Securities Act.

                  "PRIVATE EXCHANGE" means the offer by the Company, pursuant to
a Registration Rights Agreement, to the Initial Purchasers to issue and deliver
to each Initial Purchaser, in exchange for the Initial Securities held by the
Initial Purchaser as part of its initial distribution, a like aggregate
principal amount of Private Exchange Securities.

                  "PRIVATE EXCHANGE SECURITIES" means any 10% Senior
Subordinated Notes Due 2011 issued in connection with a Private Exchange.

                  "PURCHASE AGREEMENT" means (1) with respect to the Initial
Securities issued on the Issue Date, the Purchase Agreement dated December 14,
2001, among the Company, the Guarantors and the Initial Purchasers, and (2) with
respect to each issuance of Additional Securities, the purchase agreement or
underwriting agreement among the Company and the Persons purchasing such
Additional Securities.

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

                  "REGISTERED EXCHANGE OFFER" means the offer by the Company,
pursuant to a Registration Rights Agreement, to certain Holders of Initial
Securities, to issue and deliver to such Holders, in exchange for the Initial
Securities, a like aggregate principal amount of Exchange Securities registered
under the Securities Act.

<Page>

                                                                            A-3

                  "REGISTRATION RIGHTS AGREEMENT" means (1) with respect to the
Initial Securities issued on the Issue Date, the Registration Rights Agreement
dated December 19, 2001, among the Company, the Guarantors and the Initial
Purchasers, and (2) with respect to each issuance of Additional Securities
issued in a transaction exempt from the registration requirements of the
Securities Act, the registration rights agreement, if any, among the Company and
the Persons purchasing such Additional Securities under the related Purchase
Agreement.

                  "RULE 144A SECURITIES" means all Initial Securities offered
and sold to QIBs in reliance on Rule 144A.

                  "SECURITIES" means the Initial Securities, the Exchange
Securities and the Private Exchange Securities, treated as a single class.

                  "SECURITIES ACT" means the Securities Act of 1933.

                  "SECURITIES CUSTODIAN" means the custodian with respect to a
Global Security (as appointed by the Depository), or any successor Person
thereto and shall initially be the Trustee.

                  "SHELF REGISTRATION STATEMENT" means the registration
statement issued by the Company in connection with the offer and sale of Initial
Securities or Private Exchange Securities pursuant to a Registration Rights
Agreement.

                  "TRANSFER RESTRICTED SECURITIES" means Securities that bear or
are required to bear the legend set forth in Section 2.3(e)hereto.

                  1.2  OTHER DEFINITIONS

<Table>
<Caption>

                                                                                Defined in
                  Term                                                           Section:
                  ----                                                           -------
                  <S>                                                           <C>

                  "Agent Members"                                                2.1(b)
                  "Global Securities"                                            2.1(a)
                  "Permanent Regulation S Global Security"                       2.1(a)
                  "Regulation S"                                                 2.1(a)
                  "Rule 144A"                                                    2.1(a)
                  "Rule 144A Global Security"                                    2.1(a)

<Page>

                                                                            A-4

                  "Temporary Regulation S Global Security"                       2.1(a)

</Table>

                  2.   THE SECURITIES.

                  2.1  FORM AND DATING.

                  (a) The Initial Securities will be offered and sold by the
Company, from time to time, pursuant to one or more Purchase Agreements. The
Initial Securities will be resold initially only to QIBs in reliance on Rule
144A under the Securities Act ("RULE 144A") and in reliance on Regulation S
under the Securities Act ("REGULATION S"). Initial Securities may thereafter be
transferred to, among others, QIBs and purchasers in reliance on Regulation S,
subject to the restrictions on transfer set forth herein. Initial Securities
initially resold pursuant to Rule 144A shall be issued initially in the form of
one or more permanent global Securities in definitive, fully registered form
(collectively, the "RULE 144A GLOBAL SECURITY") and Initial Securities initially
resold pursuant to Regulation S shall be issued initially in the form of one or
more temporary global securities in definitive, fully registered form
(collectively, the "TEMPORARY REGULATION S GLOBAL SECURITY"), in each case
without interest coupons and with the global securities legend and restricted
securities legend set forth in Exhibit 1 hereto, which shall be deposited on
behalf of the purchasers of the Initial Securities represented thereby with the
Securities Custodian, and registered in the name of the Depository or a nominee
of the Depository, duly executed by the Company and authenticated by the Trustee
as provided in this Indenture. Beneficial ownership interests in the Temporary
Regulation S Global Security will not be exchangeable for interests in the Rule
144A Global Security, a permanent global security (the "PERMANENT REGULATION S
GLOBAL SECURITY"), or any other Security without a legend containing
restrictions on transfer of such Security prior to the expiration of the
Distribution Compliance Period and then only upon certification in form
reasonably satisfactory to the Trustee that beneficial ownership interests in
such Temporary Regulation S Global Security are owned either by non-U.S. persons
or U.S. persons who purchased such interests in a transaction that did not
require registration under the Securities Act. The Rule 144A Global Security,
the Temporary Regulation S Global Security and the Permanent Regulation S Global
Security are collectively referred to herein as "GLOBAL SECURITIES." The
aggregate principal amount of the Global Securities may from time to time be
increased or decreased by adjustments

<Page>

                                                                            A-5

made on the records of the Trustee and the Depository or its nominee as
hereinafter provided.

                  (b) BOOK-ENTRY PROVISIONS. This Section 2.1(b) shall apply
only to a Global Security deposited with or on behalf of the Depository.

                  The Company shall execute and the Trustee shall, in accordance
with this Section 2.1(b), authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depository for such
Global Security or Global Securities or the nominee of such Depository and (b)
shall be delivered by the Trustee to such Depository or pursuant to such
Depository's instructions or held by the Trustee as custodian for the
Depository.

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

                  (c) CERTIFICATED SECURITIES. Except as provided in this
Section 2.1, Section 2.3 or 2.4, owners of beneficial interests in Global
Securities shall not be entitled to receive physical delivery of Definitive
Securities.

                  2.2 AUTHENTICATION. The Trustee shall authenticate and
deliver: (1) on the Issue Date, an aggregate principal amount of $150,000,000
10% Senior Subordinated Notes Due 2011, (2) any Additional Securities for an
original issue in an aggregate principal amount specified in the written order
of the Company pursuant to Section 2.02 of the Indenture and (3) Exchange
Securities or Private Exchange Securities for issue only in a Registered
Exchange Offer or a Private Exchange, respectively, pursuant to a Registration
Rights Agreement,

<Page>

                                                                            A-6

for a like principal amount of Initial Securities, in each case upon a
written order of the Company signed by two Officers or by an Officer and
either an Assistant Treasurer or an Assistant Secretary of the Company. Such
order shall specify the amount of the Securities to be authenticated and the
date on which the original issue of Securities is to be authenticated and, in
the case of any issuance of Additional Securities pursuant to Section 2.13 of
the Indenture, shall certify that such issuance is in compliance with Section
4.03 of the Indenture.

                  2.3  TRANSFER AND EXCHANGE.

                  (a)  TRANSFER AND EXCHANGE OF DEFINITIVE SECURITIES.  When
Definitive Securities are presented to the Registrar or a co-registrar with a
request:

                  (x) to register the transfer of such Definitive Securities; or

                  (y)  to exchange such Definitive Securities for an equal
         principal amount of Definitive Securities of other authorized
         denominations,

the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
PROVIDED, HOWEVER, that the Definitive Securities surrendered for transfer or
exchange:

                  (i) shall be duly endorsed or accompanied by a written
         instrument of transfer in form reasonably satisfactory to the Company
         and the Registrar or co-registrar, duly executed by the Holder thereof
         or his attorney duly authorized in writing; and

                  (ii) if such Definitive Securities are required to bear a
         restricted securities legend, they are being transferred or exchanged
         pursuant to an effective registration statement under the Securities
         Act, pursuant to Section 2.3(b) or pursuant to clause (A), (B) or (C)
         below, and are accompanied by the following additional information and
         documents, as applicable:

                           (A) if such Definitive Securities are being delivered
                  to the Registrar by a Holder for registration in the name of
                  such Holder, without transfer, a certification from such
                  Holder to that effect;

<Page>

                                                                            A-7

                           (B)  if such Definitive Securities are being
                  transferred to the Company, a certification to that effect;
                  or

                           (C) if such Definitive Securities are being
                  transferred (x) pursuant to an exemption from registration in
                  accordance with Rule 144A, Regulation S or Rule 144 under the
                  Securities Act; or (y) in reliance upon another exemption from
                  the requirements of the Securities Act: (i) a certification to
                  that effect (in the form set forth on the reverse of the
                  Security) and (ii) if the Company so requests, an opinion of
                  counsel or other evidence reasonably satisfactory to it as to
                  the compliance with the restrictions set forth in the legend
                  set forth in Section 2.3(e)(i).

                  (b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE SECURITY FOR A
BENEFICIAL INTEREST IN A GLOBAL SECURITY. A Definitive Security may not be
exchanged for a beneficial interest in a Rule 144A Global Security or a
Permanent Regulation S Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive
Security, duly endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Trustee, together with:

                  (i) certification, in the form set forth on the reverse of the
         Security, that such Definitive Security is either (A) being transferred
         to a QIB in accordance with Rule 144A or (B) is being transferred after
         expiration of the Distribution Compliance Period by a Person who
         initially purchased such Security in reliance on Regulation S to a
         buyer who elects to hold its interest in such Security in the form of a
         beneficial interest in the Permanent Regulation S Global Security; and

                  (ii) written instructions directing the Trustee to make, or to
         direct the Securities Custodian to make, an adjustment on its books and
         records with respect to such Rule 144A Global Security (in the case of
         a transfer pursuant to clause (b)(i)(A)) or Permanent Regulation S
         Security (in the case of a transfer pursuant to clause (b)(i)(B)) to
         reflect an increase in the aggregate principal amount of the Securities
         represented by the Rule 144A Global Security or Permanent Regulation S
         Global Security, as applicable, such instructions to contain
         information

<Page>

                                                                            A-8

         regarding the Depositary account to be credited with such increase;

then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount of Securities represented by the Rule 144A Global
Security or Permanent Regulation S Global Security, as applicable, to be
increased by the aggregate principal amount of the Definitive Security to be
exchanged and shall credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the Rule 144A Global
Security or Permanent Regulation S Global Security, as applicable, equal to the
principal amount of the Definitive Security so canceled. If no Rule 144A Global
Securities or Permanent Regulation S Global Securities, as applicable, are then
outstanding, the Company shall issue and the Trustee shall authenticate, upon
written order of the Company in the form of an Officers' Certificate, a new Rule
144A Global Security or Permanent Regulation S Global Security, as applicable,
in the appropriate principal amount.

                  (c) TRANSFER AND EXCHANGE OF GLOBAL SECURITIES.

                  (i) The transfer and exchange of Global Securities or
         beneficial interests therein shall be effected through the Depository,
         in accordance with this Indenture (including applicable restrictions on
         transfer set forth herein, if any) and the procedures of the Depository
         therefor. A transferor of a beneficial interest in a Global Security
         shall deliver to the Registrar a written order given in accordance with
         the Depository's procedures containing information regarding the
         participant account of the Depository to be credited with a beneficial
         interest in the Global Security. The Registrar shall, in accordance
         with such instructions instruct the Depositary to credit to the account
         of the Person specified in such instructions a beneficial interest in
         the Global Security and to debit the account of the Person making the
         transfer the beneficial interest in the Global Security being
         transferred.

                  (ii) If the proposed transfer is a transfer of a beneficial
         interest in one Global Security to a beneficial interest in another
         Global Security, the Registrar shall reflect on its books and records
         the

<Page>

                                                                            A-9

         date and an increase in the principal amount of the Global Security
         to which such interest is being transferred in an amount equal to the
         principal amount of the interest to be so transferred, and the
         Registrar shall reflect on its books and records the date and a
         corresponding decrease in the principal amount of the Global Security
         from which such interest is being transferred.

                  (iii) Notwithstanding any other provisions of this Appendix A
         (other than the provisions set forth in Section 2.4), a Global Security
         may not be transferred as a whole except by the Depository to a nominee
         of the Depository or by a nominee of the Depository to the Depository
         or another nominee of the Depository or by the Depository or any such
         nominee to a successor Depository or a nominee of such successor
         Depository.

                  (iv) In the event that a Global Security is exchanged for
         Definitive Securities pursuant to Section 2.4 of this Appendix A, prior
         to the consummation of a Registered Exchange Offer or the effectiveness
         of a Shelf Registration Statement with respect to such Securities, such
         Securities may be exchanged only in accordance with such procedures as
         are substantially consistent with the provisions of this Section 2.3
         (including the certification requirements set forth on the reverse of
         the Initial Securities intended to ensure that such transfers comply
         with Rule 144A or Regulation S, as the case may be) and such other
         procedures as may from time to time be adopted by the Company.

                  (d) RESTRICTIONS ON TRANSFER OF TEMPORARY REGULATION S GLOBAL
SECURITIES. During the Distribution Compliance Period, beneficial ownership
interests in Temporary Regulation S Global Securities may only be sold, pledged
or transferred through Euroclear or Clearstream in accordance with the
Applicable Procedures and only (i) to the Company, (ii) so long as such Security
is eligible for resale pursuant to Rule 144A, to a Person whom the selling
holder reasonably believes is a QIB that purchases for its own account or for
the account of a QIB to whom notice is given that the resale, pledge or transfer
is being made in reliance on Rule 144A, (iii) in an offshore transaction in
accordance with Regulation S, (iv) pursuant to an exemption from registration
under the Securities Act provided by Rule 144 (if applicable) under the
Securities Act or (v) pursuant to an effective registration statement under

<Page>

                                                                            A-10

the Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States.

                  (e)  LEGEND.

                  (i) Except as permitted by the following paragraphs (ii),
         (iii) and (iv), each Security certificate evidencing the Global
         Securities and the Definitive Securities (and all Securities issued in
         exchange therefor or in substitution thereof) shall bear a legend in
         substantially the following form:

                  THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
         TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
         AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE
         OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
         REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
         THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY
         BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
         SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

                  THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE
         COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR
         OTHERWISE TRANSFERRED, ONLY (I) TO THE COMPANY, (II) IN THE UNITED
         STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
         INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
         IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE
         THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE
         904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM
         REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER
         (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
         UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V) IN
         ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
         UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
         REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE
         RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

                  Each Definitive Security will also bear the following
additional legend:

                  IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO
         THE REGISTRAR AND TRANSFER AGENT SUCH

<Page>

                                                                            A-11

         CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY
         REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
         FOREGOING RESTRICTIONS.

                  (ii) Upon any sale or transfer of a Transfer Restricted
         Security (including any Transfer Restricted Security represented by a
         Global Security) pursuant to Rule 144 under the Securities Act, the
         Registrar shall permit the transferee thereof to exchange such Transfer
         Restricted Security for a certificated Security that does not bear the
         legend set forth above and rescind any restriction on the transfer of
         such Transfer Restricted Security, if the transferor thereof certifies
         in writing to the Registrar that such sale or transfer was made in
         reliance on Rule 144 (such certification to be in the form set forth on
         the reverse of the Security).

                  (iii) After a transfer of any Initial Securities or Private
         Exchange Securities pursuant to and during the period of the
         effectiveness of a Shelf Registration Statement with respect to such
         Initial Securities or Private Exchange Securities, as the case may be,
         all requirements pertaining to legends on such Initial Security or such
         Private Exchange Security will cease to apply, the requirements
         requiring any such Initial Security or such Private Exchange Security
         issued to certain Holders be issued in global form will cease to apply,
         and a certificated Initial Security or Private Exchange Security or an
         Initial Security or Private Exchange Security in global form, in each
         case without restrictive transfer legends, will be available to the
         transferee of the Holder of such Initial Securities or Private Exchange
         Securities upon exchange of such transferring Holder's certificated
         Initial Security or Private Exchange Security or directions to transfer
         such Holder's interest in the Global Security, as applicable.

                  (iv) Upon the consummation of a Registered Exchange Offer with
         respect to the Initial Securities, all requirements pertaining to such
         Initial Securities that Initial Securities issued to certain Holders be
         issued in global form will still apply with respect to Holders of such
         Initial Securities that do not exchange their Initial Securities, and
         Exchange Securities in certificated or global form will be available to
         Holders that exchange such Initial Securities in such Registered
         Exchange Offer.

<Page>

                                                                            A-12

                  (v) Upon the consummation of a Private Exchange with respect
         to the Initial Securities, all requirements pertaining to such Initial
         Securities that Initial Securities issued to certain Holders be issued
         in global form will still apply with respect to Holders of such Initial
         Securities that do not exchange their Initial Securities, and Private
         Exchange Securities in global form with the global securities legend
         and the Restricted Securities Legend set forth in Exhibit 1 hereto will
         be available to Holders that exchange such Initial Securities in such
         Private Exchange.

                  (f) CANCELLATION OR ADJUSTMENT OF GLOBAL SECURITY. At such
time as all beneficial interests in a Global Security have either been exchanged
for Definitive Securities, redeemed, purchased or canceled, such Global Security
shall be returned to the Depository for cancellation or retained and canceled by
the Trustee. At any time prior to such cancellation, if any beneficial interest
in a Global Security is exchanged for certificated Securities, redeemed,
purchased or canceled, the principal amount of Securities represented by such
Global Security shall be reduced and an adjustment shall be made on the books
and records of the Trustee (if it is then the Securities Custodian for such
Global Security) with respect to such Global Security, by the Trustee or the
Securities Custodian, to reflect such reduction.

                  (g)  OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
         SECURITIES.

                  (i) To permit registrations of transfers and exchanges, the
         Company shall execute and the Trustee shall authenticate Definitive
         Securities and Global Securities at the Registrar's or co-registrar's
         request.

                  (ii) No service charge shall be made for any registration of
         transfer or exchange, but the Company may require payment of a sum
         sufficient to cover any transfer tax, assessments, or similar
         governmental charge payable in connection therewith (other than any
         such transfer taxes, assessments or similar governmental charge payable
         upon exchange or transfer pursuant to Sections 3.06, 4.02 and 9.05 of
         the Indenture).

                  (iii) The Registrar or co-registrar shall not be required to
         register the transfer of or exchange of

<Page>

                                                                            A-13

         (a) any Definitive Security selected for redemption in whole or in
         part pursuant to Article 3 of this Indenture, except the unredeemed
         portion of any Definitive Security being redeemed in part, or (b) any
         Security for a period beginning 15 days before the mailing of a notice
         of an offer to repurchase or redeem Securities or 15 days before an
         interest payment date.

                  (iv) Prior to the due presentation for registration of
         transfer of any Security, the Company, the Trustee, the Paying Agent,
         the Registrar or any co-registrar may deem and treat the Person in
         whose name a Security is registered as the absolute owner of such
         Security for the purpose of receiving payment of principal of and
         interest on such Security and for all other purposes whatsoever,
         whether or not such Security is overdue, and none of the Company, the
         Trustee, the Paying Agent, the Registrar or any co-registrar shall be
         affected by notice to the contrary.

                  (v) All Securities issued upon any transfer or exchange
         pursuant to the terms of this Indenture shall evidence the same debt
         and shall be entitled to the same benefits under this Indenture as the
         Securities surrendered upon such transfer or exchange.

<Page>

                                                                            A-14

                  (h)  NO OBLIGATION OF THE TRUSTEE.

                  (i) The Trustee shall have no responsibility or obligation to
         any beneficial owner of a Global Security, a member of, or a
         participant in the Depository or other Person with respect to the
         accuracy of the records of the Depository or its nominee or of any
         participant or member thereof, with respect to any ownership interest
         in the Securities or with respect to the delivery to any participant,
         member, beneficial owner or other Person (other than the Depository) of
         any notice (including any notice of redemption) or the payment of any
         amount, under or with respect to such Securities. All notices and
         communications to be given to the Holders and all payments to be made
         to Holders under the Securities shall be given or made only to or upon
         the order of the registered Holders (which shall be the Depository or
         its nominee in the case of a Global Security). The rights of beneficial
         owners in any Global Security shall be exercised only through the
         Depository subject to the applicable rules and procedures of the
         Depository. The Trustee may rely and shall be fully protected in
         relying upon information furnished by the Depository with respect to
         its members, participants and any beneficial owners.

                  (ii) The Trustee shall have no obligation or duty to monitor,
         determine or inquire as to compliance with any restrictions on transfer
         imposed under this Indenture or under applicable law with respect to
         any transfer of any interest in any Security (including any transfers
         between or among Depository participants, members or beneficial owners
         in any Global Security) other than to require delivery of such
         certificates and other documentation or evidence as are expressly
         required by, and to do so if and when expressly required by, the terms
         of this Indenture, and to examine the same to determine substantial
         compliance as to form with the express requirements hereof.

                  2.4  DEFINITIVE SECURITIES.

                  (a) A Global Security deposited with the Depository or with
the Trustee as Securities Custodian for the Depository pursuant to Section 2.1
shall be transferred to the beneficial owners thereof in the form of Definitive
Securities in an aggregate principal amount equal to the principal amount of
such Global Security, in exchange for

<Page>

                                                                            A-15

such Global Security, only if such transfer complies with Section 2.3 and (i)
the Depository notifies the Company that it is unwilling or unable to
continue as Depository for such Global Security or if at any time such
Depository ceases to be a "clearing agency" registered under the Exchange Act
and a successor Depositary is not appointed by the Company within 90 days of
such notice, or (ii) an Event of Default has occurred and is continuing or
(iii) the Company, in its sole discretion, notifies the Trustee in writing
that it elects to cause the issuance of Definitive Securities under this
Indenture.

                  (b) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section shall be surrendered by the Depository
to the Trustee located at its principal corporate trust office in the Borough of
Manhattan, The City of New York, to be so transferred, in whole or from time to
time in part, without charge, and the Trustee shall authenticate and deliver,
upon such transfer of each portion of such Global Security, an equal aggregate
principal amount of Definitive Securities of authorized denominations. Any
portion of a Global Security transferred pursuant to this Section shall be
executed, authenticated and delivered only in denominations of $1,000 principal
amount and any integral multiple thereof and registered in such names as the
Depository shall direct. Any Definitive Security delivered in exchange for an
interest in a Transfer Restricted Security shall, except as otherwise provided
by Section 2.3(e), bear the restricted securities legend set forth in Exhibit 1
hereto.

                  (c) Subject to the provisions of Section 2.4(b), the
registered Holder of a Global Security shall be entitled to grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.

                  (d) In the event of the occurrence of one of the events
specified in Section 2.4(a), the Company shall promptly make available to the
Trustee a reasonable supply of Definitive Securities in definitive, fully
registered form without interest coupons.

<Page>

                                                                       EXHIBIT 1
                                                                              to
                                                                      APPENDIX A

                       [FORM OF FACE OF INITIAL SECURITY]

                           [Global Securities Legend]

                  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

                  TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

                        [Restricted Securities Legend]

                  THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

                  THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (III)

<Page>

                                                                             2

OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE
904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR
(V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
IN EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM
IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

                [Temporary Regulation S Global Security Legend]

                  BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION
S GLOBAL SECURITY WILL NOT BE EXCHANGEABLE FOR INTERESTS IN THE RULE 144A
GLOBAL SECURITY OR THE PERMANENT REGULATION S GLOBAL SECURITY OR ANY OTHER
SECURITY REPRESENTING AN INTEREST IN THE SECURITIES REPRESENTED HEREBY WHICH
DO NOT CONTAIN A LEGEND CONTAINING RESTRICTIONS ON TRANSFER, UNTIL THE
EXPIRATION OF THE "40-DAY DISTRIBUTION COMPLIANCE PERIOD" (WITHIN THE MEANING
OF RULE 903(c)(3) OF REGULATION S UNDER THE SECURITIES ACT) AND THEN ONLY
UPON CERTIFICATION IN FORM REASONABLY SATISFACTORY TO THE TRUSTEE THAT SUCH
BENEFICIAL INTERESTS ARE OWNED EITHER BY NON-U.S. PERSONS OR U.S. PERSONS WHO
PURCHASED SUCH INTERESTS IN A TRANSACTION THAT DID NOT REQUIRE REGISTRATION
UNDER THE SECURITIES ACT. DURING SUCH 40-DAY DISTRIBUTION COMPLIANCE PERIOD,
BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY
MAY ONLY BE SOLD, PLEDGED OR TRANSFERRED THROUGH EUROCLEAR BANK S.A./N.A., AS
OPERATOR OF THE EUROCLEAR SYSTEM OR CLEARSTREAM BANKING, SOCIETE ANONYME AND
ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED STATES IN A TRANSACTION
IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V) IN
ACCORDANCE WITH ANY APPLICABLE UNITED SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. HOLDERS OF INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL
SECURITY WILL NOTIFY ANY PURCHASER OF SUCH RESALE RESTRICTIONS, IF THEN
APPLICABLE.

                        [Definitive Securities Legend]

<Page>

                                                                             3

                  IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO
THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS.

No.                                                                  $
    -------------                                                      ---------
                                                             CUSIP No.
                                                                       ---------
                                                             ISIN No.  _
                                                                      ----------

                     10% Senior Subordinated Notes Due 2011

                  UNITED SURGICAL PARTNERS HOLDINGS, INC., a Delaware
corporation, promises to pay to CEDE & CO., or registered assigns, the
principal sum of ________ Dollars on December 15, 2011.

                  Interest Payment Dates:  June 15 and December 15,
commencing June 15, 2002.

                  Record Dates:  June 1 and December 1.

                  Additional provisions of this Security are set forth on the
other side of this Security.

Dated:  __________, 20__

                                                     UNITED SURGICAL PARTNERS
                                                     HOLDINGS, INC.

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

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

<Page>

                                                                             4

TRUSTEE'S CERTIFICATE OF
         AUTHENTICATION

U.S. TRUST COMPANY OF TEXAS, N.A.
  as Trustee, certifies
         that this is one of
         the Securities referred
         to in the Indenture.

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

<Page>

                                                                             5

                  [FORM OF REVERSE SIDE OF INITIAL SECURITY]

                    10% Senior Subordinated Note Due 2011

1.  INTEREST

                  UNITED SURGICAL PARTNERS HOLDINGS, INC., a Delaware
corporation (such corporation, and its successors and assigns under the
Indenture hereinafter referred to, being herein called the "COMPANY"), promises
to pay interest on the principal amount of this Security at the rate per annum
shown above; PROVIDED, HOWEVER, that if a Registration Default (as defined in
the Registration Rights Agreement) occurs, additional interest will accrue on
this Security at a rate specified in the Registration Rights Agreement. The
Company will pay interest semiannually on June 15 and December 15 of each year,
commencing June 15, 2002. Interest on the Securities will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from [INSERT DATE OF ISSUANCE.] 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 Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the June 1 or December 1 next preceding the interest
payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. Payments in respect of the Securities
represented by a Global Security (including principal, premium and interest)
will be made by wire transfer of immediately available funds to the accounts
specified by The Depository Trust Company. The Company will make all payments in
respect of a certificated Security (including principal, premium and interest)
by mailing a check to the registered address of each Holder thereof; PROVIDED,
HOWEVER, that payments on a certificated Security will be made by wire transfer
to a U.S. dollar account maintained by the payee with a bank in the United
States if such Holder elects payment by wire

<Page>

                                                                             6

transfer by giving written notice to the Trustee or the Paying Agent to such
effect designating such account no later than 30 days immediately preceding
the relevant due date for payment (or such other date as the Trustee may
accept in its discretion).

3.  PAYING AGENT AND REGISTRAR

                  Initially, U.S. Trust Company of Texas, N.A. (the "TRUSTEE"),
will act as Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar or co-registrar without notice. The Company or any of
its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent,
Registrar or co-registrar.

4.  INDENTURE

                  The Company issued the Securities under an Indenture dated
as of December 19, 2001 (as such may be amended or supplemented from time to
time, "INDENTURE"), among the Company, the Guarantors and the Trustee. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the
"ACT"). Terms defined in the Indenture and not defined herein have the
meanings ascribed thereto in the Indenture. The Securities are subject to all
such terms, and Securityholders are referred to the Indenture and the Act for
a statement of those terms.

                  The Securities are general unsecured obligations of the
Company. The Company shall be entitled, subject to its compliance with Section
4.03 of the Indenture, to issue Additional Securities pursuant to Section 2.13
of the Indenture. The Initial Securities issued on the Issue Date, any
Additional Securities and all Exchange Securities or Private Exchange Securities
issued in exchange therefor will be treated as a single class for all purposes
under the Indenture. The Indenture contains covenants that limit the ability of
the Company, Parent and their subsidiaries to incur additional indebtedness; pay
dividends or distributions on, or redeem or repurchase capital stock; make
investments; issue or sell capital stock of subsidiaries; engage in transactions
with affiliates; create liens on assets; transfer or sell assets; restrict
dividends or other payments of subsidiaries; and consolidate, merge or transfer
all or substantially all of its assets and the assets of its subsidiaries. These

<Page>

                                                                             7

covenants are subject to important exceptions and qualifications.

5.       OPTIONAL REDEMPTION

                  Except as set forth below, the Company shall not be entitled
to redeem the Securities at its option prior to December 15, 2006.

                  On and after December 15, 2006, the Company shall be entitled
at its option to redeem all or a portion of the Securities upon not less than 30
nor more than 60 days' notice, at the redemption prices (expressed in
percentages of principal amount on the redemption date), plus accrued and unpaid
interest thereon, if any, to the applicable redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date), if redeemed during the 12-month period
commencing on December 15 of the years set forth below:

<Table>
<Caption>

                  Period                                      Redemption
                  ------                                        Price
                                                              ----------
                  <S>                                         <C>

                  2006                                        105.000%
                  2007                                        103.333%
                  2008                                        101.667%
                  2009                                        100.000%
                  2010                                        100.000%

</Table>

                  In addition, prior to December 15, 2004, the Company shall be
entitled at its option on one or more occasions to redeem Securities (which
includes Additional Securities, if any) in an aggregate principal amount not to
exceed 35% of the aggregate principal amount of the Securities (which includes
Additional Securities, if any) issued prior to such date at a redemption price
(expressed as a percentage of principal amount) of 110.00%, plus accrued and
unpaid interest to the redemption date, with the Net Cash Proceeds from one or
more Qualified Equity Offerings; PROVIDED, HOWEVER, that (1) at least 65% of
such aggregate principal amount of Securities (which includes Additional
Securities, if any) remains outstanding immediately after the occurrence of each
such redemption (other than Securities held, directly or indirectly, by the
Company or its Affiliates); and (2) each such redemption occurs within 90 days
after the date of the related Qualified Equity Offering.

<Page>

                                                                             8

                  Pending the application of the Net Cash Proceeds of any
Qualified Equity Offering to redeem Securities in accordance with the provisions
of this paragraph, Parent or its Restricted Subsidiaries may temporarily repay
Senior Indebtedness of the Company or any Domestic Guarantor with those Net Cash
Proceeds.

                  The Company shall be entitled, at its option, at any time as a
whole prior to December 15, 2006, to redeem the Securities (which includes the
Additional Securities, if any) at a redemption price equal to the sum of:

                           (1) the principal amount thereof, plus

                           (2) accrued and unpaid interest, if any, to the
                  redemption date, plus

                           (3) the Applicable Premium at the redemption date.

                  "APPLICABLE PREMIUM" means, with respect to any Security on
any redemption date, the greater of (1) 1.0% of the principal amount of such
Security and (2) the excess of (a) the present value at such redemption date of
(i) the redemption price of such Security at December 15, 2006 plus (ii) all
required interest payments due on such Security through December 15, 2006
(excluding accrued but unpaid interest), computed using a discount rate equal to
the Treasury Rate on such redemption date plus 50 basis points, over (b) the
principal amount of such Security.

                  "TREASURY RATE" means, as of any redemption date, the yield to
maturity as of such redemption date of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
Business Days prior to the redemption date (or, if such statistical release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the redemption date to December 15, 2006;
PROVIDED, HOWEVER, that if the period from the redemption date to December 15,
2006 is not equal to the constant maturity of a United States Treasury security
for which a weekly average yield is given, then the Treasury Rate shall be
obtained by linear interpolation (calculated to the nearest one-twelfth of a
year) from the weekly average yields of United States Treasury securities for
which such yields are given, except that if the period from the redemption date
to December 15, 2006 is less than one year, the weekly average yield on

<Page>

                                                                             9

actually traded United States Treasury securities adjusted to a constant
maturity of one year shall be used.

6.  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 of Securities to be
redeemed at the Holder's registered address. Securities in denominations of
$1,000 principal amount or less may be redeemed in whole and not in part.
Securities in denominations larger than $1,000 principal amount may be redeemed
in part but only in whole multiples of $1,000. If money sufficient to pay the
redemption price of and accrued interest on all Securities (or portions thereof)
to be redeemed on the redemption date is deposited with the Paying Agent on or
before the redemption date and certain other conditions are satisfied, on and
after such date interest ceases to accrue on such Securities (or such portions
thereof) called for redemption.

7.  PUT PROVISIONS

                  Upon a Change of Control (as defined in Section 4.02 of the
Indenture), each Holder will have the right to require that the Company purchase
such Holder's Securities at a purchase price equal to 101% of the principal
amount of the Securities to be purchased plus accrued and unpaid interest, if
any, to the date of purchase (subject to the right of holders of record on the
relevant record date to receive interest due on the related interest payment
date) as provided in, and subject to the terms of, the Indenture.

                  Under certain circumstances as set forth in the Indenture, the
Company will be required to offer to purchase Securities with the Net Available
Cash from Asset Dispositions.

8.  SUBORDINATION

                  The Securities are subordinated to Senior Indebtedness of the
Company, as defined in the Indenture. To the extent provided in the Indenture,
Senior Indebtedness of the Company must be paid before the Securities may be
paid. The Company agrees, and each Securityholder by accepting a Security
agrees, to the subordination provisions contained in the Indenture and
authorizes the Trustee to give it effect and appoints the Trustee as
attorney-in-fact for such purpose.

<Page>

                                                                             10

9.  GUARANTY

                  The payment by the Company of the principal of, and premium
and interest on, the Securities is fully and unconditionally guaranteed on a
joint and several senior subordinated basis by each of the Guarantors.

10.  DENOMINATIONS; TRANSFER; EXCHANGE

                  The Securities are in registered form without coupons in
denominations of $1,000 principal amount and whole multiples of $1,000. A Holder
may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not register the transfer of
or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or any Securities for a period of 15 days before the mailing of a notice of
redemption of Securities to be redeemed or 15 days before an interest payment
date.

11.  PERSONS DEEMED OWNERS

                  The registered Holder of this Security may be treated as the
Security's owner for all purposes.

12.  UNCLAIMED MONEY

                  If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.

13.  DISCHARGE AND DEFEASANCE

                  Subject to certain conditions, the Company at any time shall
be entitled to terminate some or all of its obligations under the Securities and
the Indenture if the Company deposits with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.

<Page>

                                                                             11

14.  AMENDMENT, WAIVER

                  Subject to certain exceptions set forth in the Indenture, (i)
the Indenture and the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company, the Guarantors and the
Trustee shall be entitled to amend the Indenture or the Securities to cure any
ambiguity, omission, defect or inconsistency, to comply with Article 5 of the
Indenture, to provide for uncertificated Securities in addition to or in place
of certificated Securities, to add guarantees with respect to the Securities,
including Guaranties, to secure the Securities, to add additional covenants or
surrender rights and powers conferred on the Company or the Guarantors, to
comply with any request of the SEC in connection with qualifying the Indenture
under the Act, or to make any change that does not adversely affect the rights
of any Securityholder in any material respect or to evidence the release of a
Guarantor.

15.  DEFAULTS AND REMEDIES

                  Under the Indenture, Events of Default include (i) default in
payment of interest on the Securities, continued for 30 days; (ii) default in
payment of principal on the Securities at maturity, upon optional redemption
pursuant to paragraph 5 of the Securities, upon declaration of acceleration or
otherwise, or failure by the Company to redeem or purchase Securities when
required; (iii) failure by the Company or any Guarantor to comply with other
agreements in the Indenture or the Securities, in certain cases subject to
notice and lapse of time; (iv) certain accelerations (including failure to pay
within any grace period after final maturity) of other Indebtedness of the
Company, any Guarantor or any Significant Subsidiary if the amount accelerated
(or so unpaid) exceeds $10 million; (v) certain events of bankruptcy or
insolvency with respect to the Company, any Guarantor and the Significant
Subsidiaries; (vi) certain judgments or decrees for the payment of money in
excess of $10 million; and (vii) certain defaults with respect to Guaranties. If
an Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the Securities may declare all the Securities
to be due and

<Page>

                                                                             12

payable by notice in writing to the Company and the Trustee, and upon such
declaration the Securities will be due and payable immediately. Certain
events of bankruptcy or insolvency are Events of Default which will result in
the Securities being due and payable immediately upon the occurrence of such
Events of Default.

                  Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives indemnity or security
satisfactory to it. Subject to certain limitations, Holders of a majority in
principal amount of the Securities may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Securityholders notice of any
continuing Default (except a Default in payment of principal or interest) if it
determines that withholding notice is in the interest of the Holders.

16.  TRUSTEE DEALINGS WITH THE COMPANY

                  Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.

17.  NO RECOURSE AGAINST OTHERS

                  No director, officer, employee, incorporator or stockholder of
the Company or any Guarantor or the Trustee shall have any liability for any
obligations of the Company or any Guarantor under the Securities, any Guaranty
or the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.

18.  AUTHENTICATION

                  This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.

<Page>

                                                                             13

19.  ABBREVIATIONS

                  Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).

20.  CUSIP NUMBERS

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

21.  HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT.

                  Each Holder of a Security, by acceptance hereof, acknowledges
and agrees to the provisions of the Registration Rights Agreement, including the
obligations of the Holders with respect to a registration and the
indemnification of the Company to the extent provided therein.

22.  GOVERNING LAW.

                  THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

                  THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE SECURITY HOLDER A COPY OF THE INDENTURE WHICH
HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO:

                  UNITED SURGICAL PARTNERS HOLDINGS, INC.
                  17103 PRESTON ROAD
                  SUITE 200 NORTH
                  DALLAS, TEXAS 75248
                  ATTENTION:  INVESTOR RELATIONS

<Page>

                                                                             14

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

                                ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

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

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

and irrevocably appoint  _______________________  agent to transfer this
Security 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 other side of this Security.

In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
after the later of the date of original issuance of such Securities and the last
date, if any, on which such Securities were owned by the Company or any
Affiliate of the Company, the undersigned confirms that such Securities are
being transferred in accordance with its terms:

CHECK ONE BOX BELOW

         (1)      / /      to the Company; or

         (2)      / /      in the United States to a "qualified institutional
                           buyer" (as defined in Rule 144A under the Securities
                           Act) that purchases for its own account or for the
                           account of a qualified institutional buyer to whom
                           notice is given that such transfer is being made in
                           reliance on Rule 144A, in

<Page>

                                                                             15

                           each case pursuant to and in compliance with
                           Rule 144A under the Securities Act; or

         (3)      / /      outside the United States in an offshore transaction
                           within the meaning of Regulation S under the
                           Securities Act in compliance with Rule 904 under the
                           Securities Act; or

         (4)      / /      pursuant to the exemption from registration provided
                           by Rule 144 under the Securities Act; or

         (5)      / /      pursuant to an effective registration statement
                           under the Securities Act.

                  If such transfer is being made pursuant to an offshore
transaction in accordance with Rule 904 under the Securities Act, the
undersigned further certifies that:

                  (i) the offer of the Securities was not made to a person in
         the United States;

                  (ii) either (a) at the time the buy offer was originated, the
         transferee was outside the United States or we and any person acting on
         our behalf reasonably believed that the transferee was outside the
         United States, or (b) the transaction was executed in, on or through
         the facilities of a designated off-shore securities market and neither
         we nor any person acting on our behalf knows that the transaction has
         been pre-arranged with a buyer in the United States;

                  (iii) no directed selling efforts have been made in the United
         States in contravention of the requirements of Rule 903 or Rule 904 of
         Regulation S, as applicable;

                  (iv) the transaction is not part of a plan or scheme to
         evade the registration requirements of the Securities Act;

                  (v) we have advised the transferee of the transfer
         restrictions applicable to the Securities; and

                  (vi) if the circumstances set forth in Rule 904(B) under the
         Securities Act, are applicable, we have complied with the additional
         conditions therein, including (if applicable) sending a confirmation or
         other notice stating that the Securities may be

<Page>

                                                                             16

         offered and sold during the distribution compliance period specified
         in Rule 903 of Regulation S; pursuant to registration of the
         Securities under the Securities Act; or pursuant to an available
         exemption from the registration requirements under the Securities Act.

         Unless one of the boxes is checked, the Trustee will refuse to register
         any of the Securities evidenced by this certificate in the name of any
         person other than the registered holder thereof; PROVIDED, HOWEVER,
         that if box (3) or (4) is checked, the Trustee shall be entitled to
         require, prior to registering any such transfer of the Securities, such
         legal opinions, certifications and other information as the Company has
         reasonably requested to confirm that such transfer is being made
         pursuant to an exemption from, or in a transaction not subject to, the
         registration requirements of the Securities Act such as the exemption
         provided by Rule 144 under such Act.

                                                     ------------------------
                                                              Signature

Signature Guarantee:

----------------------------        -------------------------
Signature must be guaranteed                Signature

         Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

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

             TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.

<Page>

                                                                             17

         The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.

Dated:
       -----------                          -----------------------------
                                            NOTICE:  To be executed by
                                                     an executive officer

<Page>

                                                                             18

                     [TO BE ATTACHED TO GLOBAL SECURITIES]

              SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

The following increases or decreases in this Global Security have been made:

<Table>
<Caption>

Date of               Amount of decrease       Amount of increase in     Principal amount of this     Signature of authorized
Exchange              in Principal amount      Principal amount of       Global Security              officer of Trustee or
                      of this Global           this Global Security      following such decrease      Securities Custodian
                      Security                                           or increase
<S>                   <C>                      <C>                       <C>                          <C>

</Table>

<Page>

                                                                             19

                       OPTION OF HOLDER TO ELECT PURCHASE

                  If you want to elect to have this Security purchased by the
Company pursuant to Section 4.02 or 4.07 of the Indenture, check the box: / /

                  If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.02 or 4.07 of the Indenture,
state the amount in principal amount: $o

Date:                      Your Signature
      ---------------                    ----------------------

                                                           (Sign exactly as your
                                                           name appears on the
                                                           other side of this
                                                           Security.)

Signature Guarantee:
                     ---------------------------------------
                                            (Signature must be guaranteed)

                  Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended.

<Page>

                                                                       EXHIBIT A

                        [FORM OF FACE OF EXCHANGE SECURITY
                        OR PRIVATE EXCHANGE SECURITY]*/**/

No.                                                                    $
    -------------                                                      ---------
                                                             CUSIP No.
                                                                       ---------
                                                             ISIN No.
                                                                       ---------

                     10% Senior Subordinated Notes Due 2011

                  UNITED SURGICAL PARTNERS HOLDINGS, INC., a Delaware
corporation, promises to pay to  __________, or registered assigns, the
principal sum of ________ Dollars on December 15, 2011.

                  Interest Payment Dates:  June 15 and December 15,
commencing June 15, 2001.

                  Record Dates:  June 1 and December 1.

                  Additional provisions of this Security are set forth on the
other side of this Security.

Dated:  __________, 20___

                                       UNITED SURGICAL PARTNERS HOLDINGS, INC.

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

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

<Page>

TRUSTEE'S CERTIFICATE OF
AUTHENTICATION

U.S. TRUST COMPANY OF TEXAS, N.A.,
  as Trustee, certifies
         that this is one of
         the Securities referred
         to in the Indenture.

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

                  */If the Security is to be issued in global form add the
Global Securities Legend from Exhibit 1 to Appendix A and the attachment from
such Exhibit 1 captioned "TO BE ATTACHED TO GLOBAL SECURITIES - SCHEDULE OF
INCREASES OR DECREASES IN GLOBAL SECURITY".

                  **/If the Security is a Private Exchange Security issued in
a Private Exchange to an Initial Purchaser holding an unsold portion of its
initial allotment, add the Restricted Securities Legend from Exhibit 1 to
Appendix A and replace the Assignment Form included in this Exhibit A with
the Assignment Form included in such Exhibit 1.

<Page>

                   [FORM OF REVERSE SIDE OF EXCHANGE SECURITY
                         OR PRIVATE EXCHANGE SECURITY]

                      10% Senior Subordinated Note Due 2011

1.  INTEREST

                  United Surgical Partners Holdings, Inc., a Delaware
corporation (such corporation, and its successors and assigns under the
Indenture hereinafter referred to, being herein called the "COMPANY"),
promises to pay interest on the principal amount of this Security at the rate
per annum shown above; PROVIDED, HOWEVER, that if a Registration Default (as
defined in the Registration Rights Agreement) occurs, additional interest
will accrue on this Security at a rate specified in the Registration Rights
Agreement. The Company will pay interest semiannually on June 15 and December
15 of each year, commencing June 15, 2002. Interest on the Securities will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from [INSERT LAST INTEREST PAYMENT DATE ON WHICH
INTEREST WAS PAID ON THE INITIAL SECURITIES OR, IF NO INTEREST HAS BEEN PAID
ON THE INITIAL SECURITIES, INSERT THE DATE OF ORIGINAL ISSUANCE OF THE INITIAL
SECURITIES.] Interest will be computed on the basis of a 360-day year of twelve
30-day months.

<Page>
                                                                          2

2.  METHOD OF PAYMENT

                  The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities
at the close of business on the June 1 or December 1 next preceding the
interest payment date even if Securities are canceled after the record date
and on or before the interest payment date. Holders must surrender Securities
to a Paying Agent to collect principal payments. The Company will pay
principal and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts. Payments in
respect of the Securities represented by a Global Security (including
principal, premium and interest) will be made by wire transfer of immediately
available funds to the accounts specified by The Depository Trust Company.
The Company will make all payments in respect of a certificated Security
(including principal, premium and interest) by mailing a check to the
registered address of each Holder thereof; PROVIDED, HOWEVER, that payments
on a certificated Security will be made by wire transfer to a U.S. dollar
account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the
Trustee or the Paying Agent to such effect designating such account no later
than 30 days immediately preceding the relevant due date for payment (or such
other date as the Trustee may accept in its discretion).

3.  PAYING AGENT AND REGISTRAR

                  Initially, U.S. Trust Company of Texas, N.A., (the
"TRUSTEE"), will act as Paying Agent and Registrar. The Company may appoint
and change any Paying Agent, Registrar or co-registrar without notice. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar or co-registrar.

4.  INDENTURE

                  The Company issued the Securities under an Indenture dated
as of December 19, 2001 (as such may be amended or supplemented from time to
time, "INDENTURE"), among the Company, the Guarantors and the Trustee. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S.C. Sections 77aaa-77bbbb) as in effect

<Page>
                                                                          3

on the date of the Indenture (the "ACT"). Terms defined in the Indenture and
not defined herein have the meanings ascribed thereto in the Indenture. The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture and the Act for a statement of those terms.

                  The Securities are general unsecured obligations of the
Company. The Company shall be entitled, subject to its compliance with
Section 4.03 of the Indenture, to issue Additional Securities pursuant to
Section 2.13 of the Indenture. The Initial Securities issued on the Issue
Date, any Additional Securities and all Exchange Securities or Private
Exchange Securities issued in exchange therefor will be treated as a single
class for all purposes under the Indenture. The Indenture contains covenants
that limit the ability of the Company, Parent and their subsidiaries to incur
additional indebtedness; pay dividends or distributions on, or redeem or
repurchase capital stock; make investments; issue or sell capital stock of
subsidiaries; engage in transactions with affiliates; create liens on assets;
transfer or sell assets; restrict dividends or other payments of
subsidiaries; and consolidate, merge or transfer all or substantially all of
its assets and the assets of its subsidiaries. These covenants are subject to
important exceptions and qualifications.

5.       OPTIONAL REDEMPTION

                  Except as set forth below, the Company shall not be
entitled to redeem the Securities at its option prior to December 15, 2006.

                  On and after December 15, 2006, the Company shall be
entitled at its option to redeem all or a portion of the Securities upon not
less than 30 nor more than 60 days' notice, at the redemption prices
(expressed in percentages of principal amount on the redemption date), plus
accrued and unpaid interest thereon, if any, to the applicable redemption
date (subject to the right of Holders of record on the relevant record date
to receive interest due on the relevant interest payment date), if redeemed
during the 12-month period commencing on December 15 of the years set forth
below:

<Page>
                                                                          4

<Table>
<Caption>
                  PERIOD                                      Redemption
                  ------                                         PRICE
                                                              ----------
<S>                                                           <C>
                  2006                                         105.000%
                  2007                                         103.333%
                  2008                                         101.667%
                  2009                                         100.000%
                  2010                                         100.000%
</Table>

                  In addition, prior to December 15, 2004, the Company shall
be entitled at its option on one or more occasions to redeem Securities
(which includes Additional Securities, if any) in an aggregate principal
amount not to exceed 35% of the aggregate principal amount of the Securities
(which includes Additional Securities, if any) issued prior to the redemption
date at a redemption price (expressed as a percentage of principal amount) of
110.00%, plus accrued and unpaid interest to the redemption date, with the
net cash proceeds from one or more Qualified Equity Offerings; PROVIDED,
HOWEVER, that (1) at least 65% of such aggregate principal amount of
Securities (which includes Additional Securities, if any) remains outstanding
immediately after the occurrence of each such redemption (other than
Securities held, directly or indirectly, by the Company or its Affiliates);
and (2) each such redemption occurs within 90 days after the date of the
related Qualified Equity Offering.

                  Pending the application of the Net Cash Proceeds of any
Qualified Equity Offering to redeem Securities in accordance with the
provisions of this paragraph, Parent or its Restricted Subsidiaries may
temporarily repay Senior Indebtedness of the Company or any Domestic
Guarantor with those Net Cash Proceeds.

                  The Company shall be entitled, at its option, at any time
as a whole prior to December 15, 2006, to redeem the Securities (which
includes the Additional Securities, if any) at a redemption price equal to
the sum of:

                  (1) the principal amount thereof, PLUS

                  (2) accrued and unpaid interest, if any, to the redemption
    date, PLUS

                  (3) the Applicable Premium at the redemption date.

                  "APPLICABLE PREMIUM" means, with respect to any Security on
any redemption date, the greater of (1) 1.0% of

<Page>
                                                                          5

the principal amount of such Security and (2) the excess of (a) the present
value at such redemption date of (i) the redemption price of such Security at
December 15, 2006 plus (ii) all required interest payments due on such
Security through December 15, 2006 (excluding accrued but unpaid interest),
computed using a discount rate equal to the Treasury Rate on such redemption
date plus 50 basis points, over (b) the principal amount of such Security.

                  "TREASURY RATE" means, as of any redemption date, the yield
to maturity as of such redemption date of United States Treasury securities
with a constant maturity (as compiled and published in the most recent
Federal Reserve Statistical Release H.15 (519) that has become publicly
available at least two Business Days prior to the redemption date (or, if
such statistical release is no longer published, any publicly available
source of similar market data)) most nearly equal to the period from the
redemption date to December 15, 2006; PROVIDED, HOWEVER, that if the period
from the redemption date to December 15, 2006 is not equal to the constant
maturity of a United States Treasury security for which a weekly average
yield is given, then the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the
weekly average yields of United States Treasury securities for which such
yields are given, except that if the period from the redemption date to
December 15, 2006 is less than one year, the weekly average yield on actually
traded United States Treasury securities adjusted to a constant maturity of
one year shall be used.

6.  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 of Securities
to be redeemed at the Holder's registered address. Securities in
denominations larger than $1,000 principal amount may be redeemed in part but
only in whole multiples of $1,000. If money sufficient to pay the redemption
price of and accrued interest on all Securities (or portions thereof) to be
redeemed on the redemption date is deposited with the Paying Agent on or
before the redemption date and certain other conditions are satisfied, on and
after such date interest ceases to accrue on such Securities (or such
portions thereof) called for redemption.

<Page>
                                                                          6

7.  PUT PROVISIONS

                  Upon a Change of Control (as defined in Section 4.02 of the
Indenture), each Holder will have the right to require that the Company
purchase such Holder's Securities at a purchase price equal to 101% of the
principal amount of the Securities to be purchased plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of holders of
record on the relevant record date to receive interest due on the related
interest payment date) as provided in, and subject to the terms of, the
Indenture.

                  Under certain circumstances as set forth in the Indenture,
the Company will be required to offer to purchase Securities with the Net
Available Cash from Asset Dispositions.

8.  SUBORDINATION

                  The Securities are subordinated to Senior Indebtedness of
the Company, as defined in the Indenture. To the extent provided in the
Indenture, Senior Indebtedness of the Company must be paid before the
Securities may be paid. The Company agrees, and each Securityholder by
accepting a Security agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give it effect and appoints the
Trustee as attorney-in-fact for such purpose.

9.  GUARANTY

                  The payment by the Company of the principal of, and premium
and interest on, the Securities is fully and unconditionally guaranteed on a
joint and several senior subordinated basis by each of the Guarantors.

10.  DENOMINATIONS; TRANSFER; EXCHANGE

                  The Securities are in registered form without coupons in
denominations of $1,000 principal amount and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or any Securities for a period of 15 days before

<Page>
                                                                          7

the mailing of a notice of redemption of Securities to be redeemed or 15 days
before an interest payment date.

11.  PERSONS DEEMED OWNERS

                  The registered Holder of this Security may be treated as
the Security's owner for all purposes.

12.  UNCLAIMED MONEY

                  If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must
look only to the Company and not to the Trustee for payment.

13.  DISCHARGE AND DEFEASANCE

                  Subject to certain conditions, the Company at any time
shall be entitled to terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money
or U.S. Government Obligations for the payment of principal and interest on
the Securities to redemption or maturity, as the case may be.

14.  AMENDMENT, WAIVER

                  Subject to certain exceptions set forth in the Indenture,
(i) the Indenture and the Securities may be amended with the written consent
of the Holders of at least a majority in principal amount outstanding of the
Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal
amount outstanding of the Securities. Subject to certain exceptions set forth
in the Indenture, without the consent of any Securityholder, the Company, the
Guarantors and the Trustee shall be entitled to amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, to
comply with Article 5 of the Indenture, to provide for uncertificated
Securities in addition to or in place of certificated Securities, to add
guarantees with respect to the Securities, including Guaranties, or to secure
the Securities, to add additional covenants or surrender rights and powers
conferred on the Company or the Guarantors, to comply with any request of the
SEC in connection with qualifying the Indenture under the Act, or to make any

<Page>
                                                                          8

change that does not adversely affect the rights of any Securityholder in any
material respect or to evidence the release of a Guarantor.

15.  DEFAULTS AND REMEDIES

                  Under the Indenture, Events of Default include (i) default
in payment of interest on the Securities continued for 30 days; (ii) default
in payment of principal on the Securities at maturity, upon optional
redemption pursuant to paragraph 5 of the Securities, upon declaration of
acceleration or otherwise, or failure by the Company to redeem or purchase
Securities when required; (iii) failure by the Company, or any Guarantor to
comply with other agreements in the Indenture or the Securities, in certain
cases subject to notice and lapse of time; (iv) certain accelerations
(including failure to pay within any grace period after final maturity) of
other Indebtedness of the Company, any Guarantor or any Significant
Subsidiary if the amount accelerated (or so unpaid) exceeds $10 million; (v)
certain events of bankruptcy or insolvency with respect to the Company, any
Guarantor and the Significant Subsidiaries; (vi) certain judgments or decrees
for the payment of money in excess of $10 million; and (vii) certain defaults
with respect to Guaranties. If an Event of Default occurs and is continuing,
the Trustee or the Holders of at least 25% in principal amount of the
Securities may declare all the Securities to be due and payable by notice in
writing to the Company and the Trustee, and upon such declaration the
Securities will be due and payable immediately. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Securities being
due and payable immediately upon the occurrence of such Events of Default.

                  Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives indemnity or
security satisfactory to it. Subject to certain limitations, Holders of a
majority in principal amount of the Securities may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Securityholders
notice of any continuing Default (except a Default in payment of principal or
interest) if it determines that withholding notice is in the interest of the
Holders.

<Page>
                                                                          9

16.  TRUSTEE DEALINGS WITH THE COMPANY

                  Subject to certain limitations imposed by the Act, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with and
collect obligations owed to it by the Company or its Affiliates and may
otherwise deal with the Company or its Affiliates with the same rights it
would have if it were not Trustee.

17.  NO RECOURSE AGAINST OTHERS

                  No director, officer, employee, incorporator or stockholder
of the Company or any Guarantor or the Trustee shall have any liability for
any obligations of the Company or any Guarantor under the Securities, any
Guaranty or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.

18.  AUTHENTICATION

                  This Security shall not be valid until an authorized
signatory of the Trustee (or an authenticating agent) manually signs the
certificate of authentication on the other side of this Security.

19.  ABBREVIATIONS

                  Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of
survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A
(=Uniform Gift to Minors Act).

20.  CUSIP NUMBERS

                  Pursuant to a recommendation promulgated by the Committee
on Uniform Security Identification Procedures the Company has caused CUSIP
numbers and corresponding ISINs to be printed on the Securities and has
directed the Trustee to use CUSIP numbers and corresponding ISINs in notices
of redemption as a convenience to Securityholders. No representation is made
as to the accuracy of such numbers either as printed on the Securities or as
contained in any

<Page>
                                                                          10

notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.

21.  HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT.

                  Each Holder of a Security, by acceptance hereof,
acknowledges and agrees to the provisions of the Registration Rights
Agreement, including the obligations of the Holders with respect to a
registration and the indemnification of the Company to the extent provided
therein.

22.  GOVERNING LAW.

                  THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

                  THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE SECURITY HOLDER A COPY OF THE INDENTURE
WHICH HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE
MADE TO:

                  UNITED SURGICAL PARTNERS HOLDINGS, INC.
                  17103 PRESTON ROAD
                  SUITE 200 NORTH
                  DALLAS, TEXAS 75248
                  ATTENTION: INVESTOR RELATIONS

<Page>
                                                                          11

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

                                 ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

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

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

and irrevocably appoint _________________________ agent to transfer this
Security 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 other side of this Security.

<Page>

                       OPTION OF HOLDER TO ELECT PURCHASE

                  If you want to elect to have this Security purchased by the
Company pursuant to Section 4.02 or 4.07 of the Indenture, check the box: / /

                  If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.02 or 4.07 of the Indenture,
state the amount in principal amount: $ -

Date:                      Your Signature:
      ---------------                      ------------------------------------
                                           (Sign exactly as your name
                                           appears on the other side of
                                           this Security.)

Signature Guarantee:
                     ----------------------------------------------------------
                                    (Signature must be guaranteed)

Signatures must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}]]