Document:

Exhibit 4.1

                 LANDESKREDITBANK BADEN-WURTTEMBERG - FORDERBANK
                                    as Issuer

                                     - and -

                        DEUTSCHE BANK AKTIENGESELLSCHAFT
                     as registrar and principal paying agent
   in respect of the Issuer's global notes issued as dual note structure notes

                                     - and -

                      DEUTSCHE BANK TRUST COMPANY AMERICAS
                            as principal paying agent
            in respect of the Issuer's global notes issued as single
                note structure notes and as U.S.-paying agent in
                      respect of the Issuer's global notes
                       issued as dual note structure notes

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

                                AGENCY AGREEMENT

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

                                  March 22, 2005

<PAGE>

                                TABLE OF CONTENTS

Clause                                                                      Page

 1.    Definitions and Interpretation.........................................3
 2.    Appointments...........................................................5
 3.    The Notes..............................................................6
 4.    Issuance of Notes......................................................7
 5.    Payments...............................................................8
 6.    Miscellaneous Duties of the Agents....................................10
 7.    Duties of the Registrar ..............................................11
 8.    Appointment and Duties of Calculation Agent...........................12
 9.    Early Redemption of Notes.............................................13
10.    Fees and Expenses.....................................................13
11.    Terms of Appointment..................................................14
12.    Changes in Agents.....................................................15
13.    Merger and Consolidation..............................................16
14.    Notification of Changes to Agents.....................................17
15.    Communication between the Parties.....................................17
16.    Taxes and Stamp Duties................................................17
17.    Notices and Communications............................................17
18.    Governing Law and Place of Jurisdiction...............................18
19.    Severability and Partial Invalidity...................................19
20.    Amendment.............................................................19
21.    Counterparts..........................................................19

SIGNATURES...................................................................20

SCHEDULE 1A - Master Conditions - Dual Note Structure Notes
         PART I - English Version
         PART II - German Version

SCHEDULE 1B - Master Conditions - Single Note Structure Notes
         PART I - English Version
         PART II - German Version

SCHEDULE 2A - Master Global Note - Dual Note Structure Notes
         PART 1-I - Form of Euro Clearing System Global Note - English Version
         PART 1-II - Form of Euro Clearing System Global Note - German Version
         PART 2-I - Form of DTC Global Note - English Version
         PART 2-II - Form of DTC Global Note - German Version

SCHEDULE 2B - Master Global Note - Single Note Structure Notes
         PART I - English Version
         PART II - German Version

SCHEDULE 3 - Specified Offices of the Agents

SCHEDULE 4 - Form of Guarantee to be issued in case of a Substitution of Issuer
         PART I - English Version
         PART II - German Version

SCHEDULE 5 - Form Supplemental Agency Agreement

                                       2
<PAGE>

THIS AGREEMENT is made on March 22, 2005

AMONG

(1) LANDESKREDITBANK BADEN-WURTTEMBERG - FORDERBANK (the "Issuer");

(2) DEUTSCHE BANK AKTIENGESELLSCHAFT ("Deutsche Bank"); and

(3) DEUTSCHE BANK TRUST COMPANY AMERICAS ("DBTCA").

WHEREAS:

(A)      The Issuer intends to offer and sell from time to time notes
         represented by a global note deposited with or on behalf of The
         Depository Trust Company, New York ("DTC") (the "Single Note Structure
         Notes") and notes represented by (i) a global note deposited with or on
         behalf of the relevant Euro Clearing System (as defined below) and (ii)
         one or more global note(s) deposited with or on behalf of DTC (the
         "Dual Note Structure Notes").

(B)      The Issuer wishes to engage Deutsche Bank as registrar and principal
         paying agent in respect of its Dual Note Structure Notes and DBTCA to
         act as principal paying agent in respect of its Single Note Structure
         Notes and as U.S.-paying agent in respect of its Dual Note Structure
         Notes.

(C)      The parties hereto wish to record the relevant arrangements made among
         them in respect of said functions of Deutsche Bank and DBTCA as set out
         herein.

IT IS HEREBY AGREED as follows:

1.   Definitions and Interpretation

(1)      In this Agreement:

         "Agents" means the Registrar, the Dual Note Structure Principal Paying
         Agent, the Dual Note Structure U.S.-Paying Agent, the Single Note
         Structure Principal Paying Agent, the Calculation Agent or any of them.

         "Calculation Agent" means, in relation to any particular issue of
         Notes, the institution appointed as calculation agent for the purposes
         of such Notes and named as such in the relevant Conditions (which
         appointment shall, in the case of the appointment of Deutsche Bank or
         DBTCA, be pursuant to Clause 8 hereof) and any successor to such
         institution in its capacity as such.

         "Clearing System(s)" means the Euro Clearing Systems and DTC, and
         "Relevant Clearing System" means, in the case of Dual Note Structure
         Notes, the Relevant Euro Clearing System and DTC and, in the case of
         Single Note Structure Notes, DTC.

         "Conditions" means the terms and conditions applicable to a particular
         issue of Dual Note Structure Notes or Single Note Structure Notes, and
         "Master Conditions" means the forms of the terms and conditions set out
         in Schedule 1A (in respect of

                                       3
<PAGE>

         Dual Note Structure Notes) and Schedule 1B (in respect of Single Note
         Structure Notes) attached hereto.

         "Designated Currency" means the currency in which a particular issue of
         Notes is denominated, as specified from time to time in the Conditions
         applicable to such issue of Notes.

         "Euro Clearing System" means Clearstream Banking AG, Frankfurt am Main,
         Clearstream Banking, societe anonyme, Luxembourg and Euroclear Bank
         S.A./N.V. as operator of the Euroclear system or any of them, and
         "Relevant Euro Clearing System" means the Euro Clearing System
         specified in the Conditions for a particular issue of Notes.

         "Frankfurt Business Day" means a day (other than Saturdays and Sundays)
         on which commercial banks and foreign exchange markets are open for
         business (including dealings in foreign exchange and foreign currency
         deposits) in Frankfurt am Main.

         "Global Note(s)" means the Euro Global Note and the DTC Global Note(s)
         representing a particular issue of Dual Note Structure Notes and the
         Global Note(s) representing a particular issue of Single Note Structure
         Notes.

         "Holder" means the person or persons registered in the register kept by
         the relevant Registrar and holding a proportionate co-ownership or
         other beneficial interest or right in the relevant Notes.

         "Issue Date" means the date of issuance of a particular Note.

         "Issue Price" means the price, generally expressed as a percentage of
         the principal amount of the Notes, at which the relevant Notes will be
         issued.

         "local time" in relation to any payment, means the time in the city in
         which the relevant bank or the relevant branch or office thereof is
         located, and any reference to "local banking days" in relation thereto
         is to days (other than Saturdays and Sundays) on which commercial banks
         are open for business (including dealings in foreign exchange and
         foreign currency deposits) in such city or town.

         "Master Global Note" means the forms of Global Note set out in Schedule
         2A (in respect of Dual Note Structure Notes) and Schedule 2B (in
         respect of Single Note Structure Notes) attached hereto.

         "New York Business Day" means a day on which banking institutions in
         New York City are not obliged and not authorized to close.

         "Note(s)" means any of the Dual Note Structure Notes or the Single Note
         Structure Notes or all of them.

         "Paying Agent(s)" means any of the Dual Note Structure Principal Paying
         Agent, the Dual Note Structure U.S.-Paying Agent or the Single Note
         Structure Principal Paying Agent or all of them, and "Relevant Paying
         Agent" means the Paying Agent who acts as Paying Agent for a particular
         issue of Notes.

                                       4
<PAGE>

         "Principal Paying Agent" means any of the Dual Note Structure Principal
         Paying Agent or the Single Note Structure Principal Paying Agent, and
         "Relevant Principal Paying Agent" means the Principal Paying Agent who
         acts as Principal Paying Agent for a particular issue of Notes.

         "Registrar" means the registrar acting in relation to Dual Note
         Structure Notes.

         "Relevant Agreement" means an agreement between the Issuer and any
         other party or parties for the issue and sale by the Issuer and the
         purchase by such other party or parties of any Notes.

         "specified office" of any Agent means the office specified underneath
         its name in Schedule 3 hereto or, in the case of any Agent not
         originally party hereto, specified in its terms of appointment or such
         other office in the same city as such Agent may specify by notice to
         the Issuer and the other parties hereto in accordance with Clause 12(9)
         hereof.

(2)      Expressions defined elsewhere in this Agreement shall have the meanings
         so indicated. Expressions defined in the Master Conditions and not
         otherwise defined in this Agreement shall have the same meanings in
         this Agreement, except where the context otherwise requires. Any
         reference herein to "Frankfurt" shall be a reference to Frankfurt am
         Main, Federal Republic of Germany ("Germany") and any reference herein
         to "New York" shall be a reference to New York City in the State of New
         York, United States of America ("USA").

(3)      All references in this Agreement to costs or charges or expenses shall
         include any value added tax or similar tax charged or chargeable in
         respect thereof, if applicable.

(4)      All references in this Agreement to principal and/or interest or both
         in respect of the Notes or to any moneys payable by the Issuer under
         this Agreement shall have the meaning set out in ss. 4(5) of the Master
         Conditions.

2.       APPOINTMENTS

(1)      The Issuer hereby appoints Deutsche Bank to act as Registrar in respect
         of Dual Note Structure Notes of the Issuer (in such capacity the
         "Registrar") and Deutsche Bank hereby accepts its appointment and
         agrees to act in such capacity, upon the terms and subject to the
         conditions set out in this Agreement and the Conditions of the Relevant
         Notes, for the purposes of:

         (a)      maintaining a Register pertaining to the Notes in accordance
                  with this Agreement and the Conditions; and

         (b)      performing all other obligations and duties imposed upon them
                  by the Conditions and this Agreement.

                                       5
<PAGE>

(2)      The Issuer hereby appoints Deutsche Bank and DBTCA to act as Principal
         Paying Agent in respect of Dual Note Structure Notes and Single Note
         Structure Notes, respectively, of the Issuer (in such respective
         capacities the "Dual Note Structure Principal Paying Agent" and the
         "Single Note Structure Principal Paying Agent") and Deutsche Bank and
         DBTCA hereby accept their respective appointments and agree to act in
         such capacities, upon the terms and subject to the conditions set out
         in this Agreement and the Conditions of the Relevant Notes, for the
         purposes of:

         (a)      authenticating and delivering the Global Notes;

         (b)      paying sums due on Global Notes;

         (c)      determining the interest and/or other amounts payable in
                  respect of the Notes in accordance with the Conditions;

         (d)      arranging on behalf of the Issuer for notices to be
                  communicated to Holders;

         (e)      acting as Calculation Agent in respect of Notes where named as
                  such in the relevant Conditions and agreed between the Issuer
                  and Deutsche Bank or DBTCA, as applicable; and

         (f)      performing all other obligations and duties imposed upon them
                  by the Conditions and this Agreement.

(3)      The Dual Note Structure Principal Paying Agent agrees to perform its
         obligations hereunder through DBTCA in its capacity as U.S.-paying
         agent (the "Dual Note Structure U.S.-Paying Agent"), to the extent that
         this is necessary or appropriate in order to make payments to the
         registered holder(s) of DTC Global Notes.

(4)      On or before the Issue Date for any issue of Notes, the Issuer and the
         relevant Agent(s) shall enter into a supplemental agency agreement
         substantially in the form of Schedule 5 attached hereto subjecting the
         Notes to the provisions of this Agreement (the "Supplemental Agency
         Agreement"). The form(s) of the Global Note(s) and of the Conditions
         applicable to the Notes to be issued shall be appended to such
         Supplemental Agency Agreement.

3.       THE NOTES

(1)      Each Global Note shall:

         (a)      be printed or typewritten in substantially the form (duly
                  completed) set out in the relevant Schedule hereto (or in such
                  other form as the Issuer and the Relevant Paying Agent shall
                  have agreed);

         (b)      have attached thereto the Conditions;

         (c)      be executed manually by two authorized signatories or an
                  attorney-in-fact of the Issuer; and

         (d)      be authenticated manually by or on behalf of the Relevant
                  Paying Agent.

                                       6
<PAGE>

(2)      The Issuer shall promptly notify in writing the Relevant Paying Agent
         of any change in the names of the person or persons whose signatures
         are to be used.

4.       ISSUANCE OF NOTES

(1)      Upon the conclusion of any Relevant Agreement, the Issuer shall, as
         soon as practicable, but in any event, unless otherwise agreed, not
         later than 2:00 p.m. (Frankfurt time) on the fourth Frankfurt Business
         Day (in the case of Dual Note Structure Notes) or 2:00 p.m. (New York
         time) on the fourth New York Business Day (in the case of Single Note
         Structure Notes) prior to the proposed Issue Date:

         (a)      confirm to the Relevant Principal Paying Agent by telefax or
                  any electronic information system agreed between the Relevant
                  Principal Paying Agent and the Issuer all such information as
                  the Relevant Principal Paying Agent and, in case of Dual Note
                  Structure Notes, the Dual Note Structure U.S.-Paying Agent may
                  reasonably require to carry out their respective functions
                  under this Agreement and such details as are necessary to
                  enable the Relevant Principal Paying Agent to authenticate and
                  deliver the Global Note(s); and

         (b)      deliver to the Relevant Principal Paying Agent and, in case of
                  Dual Note Structure Notes, to the Dual Note Structure
                  U.S.-Paying Agent, the relevant Global Note(s) to be
                  authenticated by the respective Agent.

(2)      In case of an issue of Dual Note Structure Notes, the Issuer shall
         provide the Registrar on or before the Issue Date with the relevant
         details as to the balance of Notes which have been sold to Holders
         going to hold Notes represented by the Euro Global Note and Notes which
         have been sold to DTC Holders, respectively.

(3)      (a)      In case of an issue of Dual Note Structure Notes:

                  (i)   the Dual Note Structure Principal Paying Agent shall
                        authenticate the relevant Euro Global Note and deliver
                        such Euro Global Note to, in case of a Euro Global Note
                        to be deposited with Clearstream Banking AG, Frankfurt
                        am Main ("CBF"), the lead manager of the relevant issue
                        of Notes not later than on the second Frankfurt Business
                        Day prior to the relevant Issue Date (or any other time
                        agreed between the Dual Note Structure Principal Paying
                        Agent and the Issuer having regard to the rules of CBF)
                        for onward transfer to CBF, or in case of a Euro Global
                        Note to be deposited with Clearstream Banking, societe
                        anonyme, Luxembourg ("CBL") and Euroclear Bank S.A./N.V.
                        as operator of the Euroclear system ("Euroclear") to a
                        depositary common for CBL and Euroclear not later than
                        on the Frankfurt Business Day prior to the relevant
                        Issue Date (or any other time agreed between the Dual
                        Note Structure Principal Paying Agent and the Issuer
                        having regard to the rules of Euroclear and CBL)
                        requesting such depositary common to forward a
                        confirmation to the Dual Note Structure Principal Paying
                        Agent that it is holding the relevant Global Note in
                        safe custody for the account of CBL and/or Euroclear,
                        such Euro Global Note to be held in safe custody until
                        all obligations of the Issuer thereunder have been
                        satisfied; and

                  (ii)  the Dual Note Structure U.S.-Paying Agent shall
                        authenticate the relevant DTC Global Note(s) not later
                        than on the New York Business Day prior to the relevant
                        Issue Date (or any other time agreed between the Dual
                        Note Structure U.S. Paying Agent and the Issuer having
                        regard to the rules of DTC} and deliver such DTC Global
                        Note(s) to

                                       7
<PAGE>

                        DBTCA, to be held in safe custody by DBTCA as custodian
                        for DTC until all obligations of the Issuer thereunder
                        have been satisfied.

         (b)      In the case of an issue of Single Note Structure Notes, on or
                  before 10:00 a.m. (New York time) on the New York Business Day
                  prior to the relevant Issue Date (or any other time agreed
                  between the Single Note Structure Principal Paying Agent and
                  the Issuer having regard to the rules of DTC), the Single Note
                  Structure Principal Paying Agent shall authenticate and
                  deliver the relevant Global Note to DBTCA in its capacity as
                  custodian for DTC, who shall hold it in safe custody as
                  custodian for DTC until all obligations of the Issuer
                  thereunder have been satisfied.

(4)      The Relevant Principal Paying Agent shall hold in safe custody all
         unauthenticated Global Notes delivered to it in accordance with this
         Clause 4 until their delivery to the lead manager of the relevant Notes
         or to the Relevant Clearing System or its custodian or depositary
         common, as appropriate, and shall ensure that the Global Notes are
         authenticated and delivered only in accordance with their terms, if
         applicable, and the terms hereof.

(5)      The Relevant Principal Paying Agent is authorized by the Issuer to
         authenticate such Global Notes as may be required to be authenticated
         hereunder by the signature of any person duly authorized for the
         purpose by the Relevant Principal Paying Agent.

(6)      For the purposes of this Clause 4, the Relevant Principal Paying Agent
         is entitled to treat a telephone or telefax communication from a person
         purporting to be (and who the Relevant Principal Paying Agent believes
         in good faith to be) the authorized representative of the Issuer named
         in the list referred to in, or notified pursuant to, Clause 11(7) as
         sufficient instructions and authority of the Issuer for the Relevant
         Principal Paying Agent to act in accordance with this Clause 4,
         provided that the Relevant Principal Paying Agent takes all reasonable
         precautions necessary to verify the accuracy of such telephone or
         telefax communication before carrying out any of its tasks envisaged
         hereunder. Any telephone communication shall be followed as soon as
         practicable by a telefax confirmation of such communication.

5.       PAYMENTS

(1)      The Issuer shall, before 10.00 a.m. (local time in the relevant
         financial center of the payment currency), on each date on which any
         payment in respect of any Note becomes due, transfer in freely
         available funds to such account as the Relevant Principal Paying Agent
         shall specify such amount in the currency in which the relevant payment
         falls to be made.

(2)      The Relevant Principal Paying Agent shall give notice to the Issuer not
         later than five Frankfurt Business Days prior to any relevant payment
         date with regard to the payment to be made on that payment date
         pursuant to sub-clause (1) above. The Issuer shall give not later than
         two Frankfurt Business Days prior to the relevant payment date
         irrevocable payment instructions for the transfer of the sum to be paid
         on the relevant payment date, and the Issuer shall provide a
         confirmation with respect to the payment instructions so given to the
         Relevant Principal Paying Agent. If the Relevant Principal Paying Agent
         should not by such date receive such confirmation, it shall forthwith
         notify the Issuer thereof.

                                       8
<PAGE>

(3)      Subject to the receipt by the Relevant Principal Paying Agent of the
         payment confirmation as provided in sub-clause (2) above, the Relevant
         Principal Paying Agent shall pay or cause to be paid on behalf of the
         Issuer all amounts due in respect of the Notes on behalf of the Issuer
         in the manner provided in the Conditions. If any payment provided for
         in sub-clause (1) is made late but otherwise in accordance with the
         provisions of this Agreement, the Relevant Principal Paying Agent shall
         nevertheless make payments in respect of the Notes as aforesaid
         following receipt by it of such payment.

(4)      If for any reason the Relevant Principal Paying Agent considers in its
         sole discretion (exercised in good faith) that the amounts to be
         received by it pursuant to sub-clause (1) will be, or the amounts
         actually received by it pursuant thereto are, insufficient to satisfy
         all claims in respect of all payments then falling due in respect of
         the Notes, the Relevant Principal Paying Agent shall promptly notify
         the Issuer thereof. The Relevant Principal Paying Agent shall not be
         obliged to pay any such claims until the Relevant Principal Paying
         Agent has received the full amount of all such payments.

(5)      If the Relevant Paying Agent pays any amounts with respect to Notes at
         a time when it has not received payment in full in respect of the
         relevant Notes in accordance with sub-clause (1) (the excess of the
         amounts so paid over the amounts so received being the "Shortfall"),
         the Issuer shall, in addition to paying amounts due under sub-clause
         (1), pay to the Relevant Paying Agent on demand interest (at a rate
         which represents the Relevant Paying Agent's cost of funding the
         Shortfall) on the Shortfall (or the unreimbursed portion thereof) until
         the receipt in full by the Relevant Paying Agent of the Shortfall. The
         Relevant Paying Agent shall supply the Issuer with evidence as to the
         calculation of the Shortfall and the determination of the
         aforementioned interest rate.

(6)      All payments due in respect of Single Note Structure Notes shall be
         made to the registered holder of the Global Note(s) as stipulated in
         sub-clause (8) below in the amounts specified in the payment provisions
         of the Conditions. All payments due in respect of Dual Note Structure
         Notes shall be made to the Relevant Euro Clearing System in the
         relevant Designated Currency and to the registered holder of the DTC
         Global Note(s) as stipulated in sub-clause (8) below, in the amounts
         specified in the payment provisions of the Conditions. The Dual Note
         Structure Principal Paying Agent shall obtain from the Registrar, and
         the Registrar shall supply, such details as are required for the Dual
         Note Structure Principal Paying Agent to make payment as stated above.
         On the occasion of any such payment, the Dual Note Structure Principal
         Paying Agent shall cause the appropriate Schedule to the relevant
         Global Note to be annotated so as to evidence the amounts and dates of
         such payments of principal and/or interest as applicable.

(7)      lf the amount of principal and/or interest then due for payment is not
         paid in full by the Issuer to the Relevant Principal Paying Agent
         (otherwise than by reason of a deduction required by law to be made
         therefrom), the Relevant Principal Paying Agent shall make a record of
         such Shortfall on the Global Note and such record shall, in the absence
         of manifest error, be prima facie evidence that the payment in question
         has not to that extent been made.

(8)      All amounts of principal and interest due in respect of Dual Note
         Structure Notes which are represented by DTC Global Notes and in
         respect of Single Note Structure Notes shall be paid in U.S. dollars,
         unless, in the case of Single Note Structure Notes where the Designated
         Currency is not the U.S. dollar, DTC has advised that the

                                       9
<PAGE>

         relevant Holder has made an effective election to receive all or a
         portion of its payment in the Designated Currency outside DTC in
         accordance with the procedures described in the payment provisions of
         the Conditions.

6.       MISCELLANEOUS DUTIES OF THE AGENTS

Listing

(1)      Where Notes are intended to be listed on the Luxembourg Stock Exchange,
         Deutsche Bank agrees to procure the appointment of a Luxembourg listing
         and paying agent (for as long as such appointment is required by the
         rules of the Luxembourg Stock Exchange).

Notices

(2)      Upon the receipt by an Agent of a demand or notice from any Holder in
         accordance with the Conditions such Agent shall forward a copy thereof
         to the Issuer.

(3)      On behalf of and at the request and expense of the Issuer, the Relevant
         Principal Paying Agent shall cause to be published, or delivered to
         Holders, all notices required to be given by the Issuer to the Holders
         in accordance with the Conditions.

Notice of Withholding or Deduction

(4)      If the Issuer is, in respect of any payment, required to withhold or
         deduct any amount for or on account of taxes or duties of whatever
         nature as specifically contemplated under the Conditions, the Issuer
         shall give notice thereof to the Relevant Principal Paying Agent as
         soon as it becomes aware of the requirement to make such withholding or
         deduction and shall give to the Relevant Principal Paying Agent such
         information as it shall require to enable it to comply with such
         requirement.

Documents Available for Inspection

(5)      The Relevant Paying Agents shall hold available for inspection at their
         specified offices during normal business hours copies of all documents
         required to be so available as provided in the relevant Conditions or
         as may be required by the rules of any stock exchange on which the
         Notes may be listed.

(6)      For the above purposes, the Issuer shall furnish to Deutsche Bank for
         distribution among the Paying Agents sufficient copies of each of the
         relevant documents.

Indemnity

(7)      Each of the Agents shall severally indemnify the Issuer and its
         respective directors, officers and employees, and any affiliate of the
         Issuer against any claim, demand, action, liability, loss, cost or
         expense (including all reasonable costs, charges or expenses paid or
         incurred in disputing or defending any of the foregoing and any
         applicable value added tax) which it may incur, as a result or arising
         out of any negligent or willful breach by such Agent of its obligations
         under this Agreement.

(8)      The Issuer shall indemnify each of the Agents and their respective
         directors, officers and employees, and any affiliate of the relevant
         Agent against any claim, demand,

                                       10
<PAGE>

         action, liability, loss, cost or expense (including all reasonable
         costs, charges or expenses paid or incurred in disputing or defending
         any of the foregoing and any applicable value added tax) which they may
         incur, as a result or arising out of any negligent or willful breach by
         the Issuer of its obligations under this Agreement.

Cancellation of Notes, Coupons and Receipts

(9)      All Notes which are redeemed shall be cancelled by the Relevant
         Principal Paying Agent. In addition, all Notes which are purchased by
         or on behalf of the Issuer and transferred to the Relevant Principal
         Paying Agent's account with the Relevant Clearing System for
         cancellation shall be cancelled by the Relevant Principal Paying Agent.
         The Relevant Principal Paying Agent shall cause any such Notes (i) when
         represented by a Euro Global Note, to be cancelled in accordance with
         the procedures established for that purpose by the Relevant Euro
         Clearing System, and (ii) when represented by a Global Note in the case
         of Single Note Structure Notes or a DTC Global Note in the case of Dual
         Note Structure Notes, to be cancelled in accordance with the procedures
         established for that purpose by DTC, resulting in either case in a
         reduction in the aggregate amount of Notes represented by the relevant
         Global Note by the aggregate amount of Notes so cancelled.

(10)     In the case of Dual Note Structure Notes, the Relevant Principal Paying
         Agent shall notify the Registrar on the same day such cancellation is
         effected to record such cancellation of Notes on the Register in such a
         way that the aggregate amount of Notes cancelled at any time together
         with the aggregate principal amount of Notes then outstanding and
         represented by the Global Note shall equal the aggregate principal
         amount of Notes originally issued by the Issuer.

(11)     Upon fulfillment of all payment obligations of the Issuer in respect of
         any issue of Notes, the Relevant Principal Paying Agent shall procure
         that the Global Note(s) representing such Notes be cancelled and that
         the Global Note(s) so cancelled be sent to the Issuer.

Repayment

(12)     If the presentation period in respect of Notes shall have lapsed and
         provided that there is no outstanding bona fide and proper claim in
         respect of any payment in respect of the relevant Notes, the Relevant
         Paying Agent shall pay to the Issuer, as soon as reasonably
         practicable, sums equivalent to any amounts paid to it by the Issuer
         for the purposes of such payments.

7.       DUTIES OF THE REGISTRAR

(1)      The Registrar shall maintain the Register pertaining to Dual Note
         Structure Notes in Frankfurt in accordance with the Conditions. The
         Register shall show the aggregate amount of Notes represented by each
         Global Note at the date of issue and all subsequent redemptions,
         transfers and exchanges involving a change in such amounts and the
         names of the Relevant Clearing System or its nominee (each a "Payee").
         On the first Frankfurt Business Day after the Record Date for any
         interest payment on the Dual Note Structure Notes, the Registrar shall
         inform the Dual Note Structure Principal Paying Agent of the aggregate
         amount of Notes represented by each Global Note as of the Record Date.

                                       11
<PAGE>

(2)      Transfers or exchanges of Dual Note Structure Notes will be made in
         accordance with the Conditions, the procedures established for this
         purpose between the Relevant Euro Clearing System, DTC and the
         Registrar and the Relevant Euro Clearing System's and DTC's regulations
         applicable to such transfers or exchanges. Any such transfer or
         exchange which results in a change to the aggregate principal amount of
         Dual Note Structure Notes held by the Relevant Euro Clearing System and
         DTC are required to be notified by the Relevant Euro Clearing System
         and DTC to the Registrar as a transfer from one Global Note to the
         other. The Registrar shall enter promptly details of the transfer or
         exchange in the Register pertaining to the Dual Note Structure Notes,
         which entry shall, without further action, cause the aggregate
         principal amounts represented by each Global Note to be amended
         accordingly.

(3)      The Registrar shall ensure that no transfers or exchanges of Dual Note
         Structure Notes shall take place during the period commencing on the
         Record Date and ending on the related payment date (both dates
         inclusive) as provided in the Conditions.

(4)      The Registrar shall at all reasonable times make the relevant Register
         available to the Issuer and the Relevant Paying Agent or any person
         authorized by either of them for inspections and for the taking of
         copies thereof or extracts therefrom, and the Registrar shall deliver
         to such persons information contained in the Register or relating to
         the Notes as they may reasonably request.

8.       APPOINTMENT AND DUTIES OF THE CALCULATION AGENT

(1)      Deutsche Bank or DBTCA may be appointed as Calculation Agent in respect
         of any particular issue of Notes by agreement with the Issuer. Deutsche
         Bank or DBTCA shall be deemed to having agreed to act as Calculation
         Agent in respect of a particular issue of Notes if it shall have been
         named as Calculation Agent in the relevant Conditions no later than
         five Frankfurt Business Days before the Issue Date or, if earlier, the
         first date on which it is required to make any calculation or
         determination and shall not have notified the Issuer that it does not
         wish to be so appointed within two Frankfurt Business Days of receipt
         by it of the relevant Conditions.

(2)      If Deutsche Bank or DBTCA has agreed, or is deemed to having agreed to
         act as Calculation Agent, it shall perform all matters expressed to be
         performed by it in, and otherwise comply with, the Conditions and the
         provisions of this Agreement and, in connection therewith, shall take
         all such action as may be incidental thereto.

(3)      The Calculation Agent shall in respect of each particular issue of
         Notes in relation to which it is appointed as such:

         (a)      obtain such quotes and rates and/or make such determinations,
                  calculations, adjustments, notifications and publications as
                  may be required to be made by it by the Conditions at the
                  times and otherwise in accordance with the Conditions; and

         (b)      maintain a record of all quotations obtained by it and of all
                  amounts, rates and other items determined or calculated by it
                  and make such record available for inspection at all
                  reasonable times during normal business hours by the Issuer
                  and the Relevant Paying Agents.

                                       12
<PAGE>

(4)      If the Calculation Agent does not at any time for any reason determine
         and/or publish and/or notify the Rate of Interest, the Interest Amount
         and/or the relevant Interest Payment Date in respect of any Interest
         Period as provided in this Clause, it shall forthwith notify the Issuer
         and the Relevant Paying Agents of such fact.

9.       EARLY REDEMPTION OF NOTES

(1)      If the Issuer decides to redeem any Notes for the time being
         outstanding prior to their Maturity Date in accordance with the
         Conditions, it shall give notice of such decision to the Relevant
         Principal Paying Agent not less than 14 Frankfurt Business Days (or any
         other date agreed between the Issuer and the Relevant Principal Paying
         Agent) before the date on which it will give notice to the Holders in
         accordance with the Conditions of such redemption in order to enable
         the Relevant Principal Paying Agent to undertake its obligations herein
         and in the Conditions.

(2)      If only some of the Notes are to be redeemed on such date, the Relevant
         Principal Paying Agent shall take the required steps for identifying
         the Notes to be redeemed in accordance with the Conditions.

(3)      The Issuer shall provide the Relevant Principal Paying Agent with the
         final form of the notification to be published not later than seven
         Frankfurt Business Days (or any other date agreed between the Issuer
         and the Relevant Principal Paying Agent) before the date on which it
         will give notice to the Holders in accordance with the Conditions. The
         Relevant Principal Paying Agent shall publish the notice required in
         connection with any such redemption in accordance with Clause 6(3)
         above. Such notice shall specify the date fixed for redemption, the
         redemption amount and the manner in which redemption will be effected.
         Such notice will be published in accordance with the Conditions.

(4)      In case of Notes, the Conditions of which provide for redemption at the
         option of Holders, the Relevant Principal Paying Agent shall at the end
         of each period for the exercise of such option promptly notify the
         Issuer and the Registrar, if any, of the principal amount of the Notes
         in respect of which such option has been exercised. Upon such
         notification, the Issuer shall comply with its obligations under Clause
         5.

10.      FEES AND EXPENSES

(1)      The Issuer shall pay to the Relevant Principal Paying Agent for account
         of the Agents (to the extent such functions are performed by entities
         within the Deutsche Bank network) such fees as may have been agreed
         between itself and Deutsche Bank on November 8, 2004 in respect of the
         services of the Agents hereunder. The Issuer shall not be concerned
         with the apportionment of payment among the Agents.

(2)      The Issuer shall reimburse each Agent for all reasonable expenses
         (including legal fees and any applicable value added tax) properly
         incurred in connection with its services hereunder.

(3)      In the event that Deutsche Bank deems it necessary that the fees agreed
         between itself and the Issuer be amended, Deutsche Bank shall negotiate
         such amendment with Issuer in good faith with the aim of continuing the
         provision of the services under this Agreement. Should the Issuer and
         Deutsche Bank reach no agreement regarding

                                       13
<PAGE>

         the amendment of the fee agreement, the initial agreement between the
         parties shall remain in force.

(4)      The Issuer shall pay all documentary and other taxes and duties
         (including any interest and penalties thereon or in connection
         therewith) which may be payable upon or in connection with the
         execution and delivery of this Agreement and any letters of appointment
         under which any Agent is appointed as agent hereunder. The Issuer shall
         indemnify each Agent against any claim, demand, action, liability, loss
         or expense (including legal fees and any applicable value added tax)
         which it may incur or which may be made against it as a result or
         arising out of any failure to pay or delay in paying any of the same.

11.      TERMS OF APPOINTMENT

(1)      Each of the Paying Agents and (in the case of (b), (c), (d) and (e))
         the Registrar and each Calculation Agent may, in connection with their
         respective services hereunder:

         (a)      except as ordered by a court of competent jurisdiction or as
                  required by law, treat the registered holder of any Global
                  Note as the owner thereof and make payments thereon
                  accordingly;

         (b)      assume that the terms of each Note as issued are correct;

         (c)      rely upon the terms of any notice, communication or other
                  document reasonably believed by it to be genuine;

         (d)      engage and pay for the advice or services of any lawyers or
                  other experts whose advice or services may to it seem
                  necessary and rely upon any advice so obtained. Such Agent
                  shall be protected and shall incur no liability as against the
                  Issuer in respect of any action taken, or suffered to be
                  taken, in accordance with such advice and in good faith; and

         (e)      treat itself as being released from any obligation to take any
                  action hereunder which it reasonably expects will result in
                  any expense or liability to it, the payment of which within a
                  reasonable time is not, in its reasonable opinion, assured to
                  it.

(2)      In acting hereunder and in connection with the Notes, the Agents shall
         act solely as agents of the Issuer and will not thereby assume any
         obligations towards or relationship of agency or trust for or with any
         of the Holders.

(3)      In acting hereunder and in connection with the Notes, the Agents shall
         not be liable for the legality, validity or enforceability of any Note.

(4)      Each Agent may purchase, hold and dispose of Notes and may enter into
         any transaction (including, among other transactions, any depositary,
         trust or agency transaction) with any Holder or with any other party
         hereto in the same manner as if it had not been appointed as the agent
         of the Issuer.

(5)      The Issuer shall indemnify each Agent against any claim, demand,
         action, liability, loss or expense (including legal fees and any
         applicable value added tax) which such

                                       14
<PAGE>

         Agent may incur, otherwise than as a result of or arising out of any
         negligent or willful breach by such Agent of its obligations under this
         Agreement.

(6)      The obligations of the Agents hereunder shall be several and not joint.

(7)      The Issuer shall provide the other parties to this Agreement with a
         list of persons authorized to execute documents and take action on its
         behalf in connection with this Agreement, such list to be signed by two
         duly authorized signatories of the Issuer. The Issuer shall notify the
         the other parties to this Agreement immediately if any of such persons
         ceases to be so authorized or if any additional person becomes so
         authorized by notice signed by two duly authorized signatories of the
         Issuer.

12.      CHANGES IN AGENTS

(1)      Any Agent may (subject as provided in sub-clause (3) below) at any time
         resign in its capacity as such by giving at least 90 days' written
         notice to the Issuer of such intention on its part, specifying the date
         on which its desired resignation shall become effective.

(2)      Any Agent may (subject as provided in sub-clause (3) below) be removed
         at any time by the Issuer on at least 45 days' notice by the filing
         with it of an instrument in writing signed on behalf of the Issuer
         specifying such removal and the date when it shall become effective.

(3)      Any resignation under sub-clause (1) or removal under sub-clauses (2)
         or (4) shall only take effect upon the appointment by the Issuer as
         hereinafter provided, of a successor Agent and (other than in cases of
         insolvency of any Agent) on the expiry of the notice to be given under
         Clause 14. The Issuer agrees with each Agent that if, by the day
         falling ten days before the expiry of any notice under sub-clause (1),
         it has not appointed a successor Agent, then the resigning Agent shall
         be entitled, on behalf of the Issuer, to appoint as a successor Agent
         in its place a reputable financial institution of good standing which
         the Issuer shall approve (such approval not to be unreasonably withheld
         or delayed).

(4)      In case at any time any Agent resigns, or is removed, or becomes
         incapable of acting or is adjudged insolvent, or files a voluntary
         petition in insolvency or makes an assignment for the benefit of its
         creditors or consents to the appointment of an administrator,
         liquidator or other receiver of all or a substantial part of its
         property, or admits in writing its inability to pay or meet its debts
         as they mature or suspends payment thereof, or if any order of any
         court is entered approving any petition filed by or against it under
         the provisions of any applicable bankruptcy or insolvency law, a
         successor Agent, which shall be a reputable financial institution of
         good standing may be appointed by the Issuer by an instrument in
         writing filed with the successor Agent. Upon the appointment as
         aforesaid of a successor Agent and acceptance by the latter of such
         appointment and (other than in case of insolvency of an Agent when it
         shall be of immediate effect) upon expiry of the notice to be given
         under Clause 14 the Agent so superseded shall cease to be an Agent
         hereunder.

(5)      Subject to the applicable provisions of the Conditions, the Issuer may,
         after prior consultation with Deutsche Bank, appoint one or more
         further Paying Agents or Calculation Agents by giving to Deutsche Bank
         at least 45 days' notice in writing to that effect.

                                       15
<PAGE>

(6)      Upon its resignation or removal becoming effective, the Agent
         concerned:

         (a)      shall forthwith transfer all moneys held by it hereunder and,
                  if applicable, the documents and records referred to in
                  Clauses 6(5), (6) and 7(1) to its successor Agent hereunder;
                  and

         (b)      shall be entitled to the payment by the Issuer of its fees and
                  expenses for the services therefore rendered hereunder in
                  accordance with the terms of Clause 10.

(7)      In the event of the resignation of any Agent or in the case of the
         removal of any Agent by the Issuer required as a result of the
         occurrence of any of the circumstances set out in sub-clause (4) above,
         such Agent shall bear all reasonable costs associated with the
         termination of its services and the appointment of a successor Agent
         performing the relevant functions (including, but not limited to, the
         cost of all required publications, agency fees and legal fees, if any,
         for the preparation and execution of any necessary documents in this
         context).

(8)      Upon its appointment becoming effective, a successor Agent shall,
         without further act, become vested with all the rights and obligations
         of its predecessor with like effect as if originally named as Agent in
         such capacity hereunder.

(9)      lf any Agent determines to change its specified office it shall (after
         having, in any such case other than a change of specified office within
         the same city, obtained the prior written approval of the Issuer
         thereto) give to the Issuer and the other Agents written notice of such
         determination giving the address of the new specified office and
         stating the date on which such change is to take effect, which shall
         not be less than 45 days thereafter. The Relevant Principal Paying
         Agent (on behalf of the Issuer) shall, at the expense of the relevant
         Agent, within 15 days of receipt of such notice (unless the appointment
         of the relevant Agent is to terminate pursuant to the above sub-clauses
         on or prior to the date of such change) give or cause to be given not
         more than 45 days' nor less than 30 days' notice thereof to the Holders
         in accordance with the Conditions.

13.      MERGER AND CONSOLIDATION

         Without prejudice to Clause 12(7) any corporation into which any Agent
         may be merged or converted, or any corporation with which any Agent may
         be consolidated, or any corporation resulting from any merger,
         conversion or consolidation to which any Agent shall be a party, or any
         corporation to which any Agent shall sell or otherwise transfer all or
         substantially all of its assets shall, on the date when such merger,
         conversion, consolidation or transfer becomes effective and to the
         extent permitted by any applicable laws, become the successor Agent in
         the same capacity under this Agreement without the execution or filing
         of any paper or any further act on the part of the parties hereto,
         unless otherwise required by the Issuer and after the said effective
         date all references in this Agreement to such Agent shall be deemed to
         be references to such corporation. Written notice of any such merger,
         conversion, consolidation or transfer shall forthwith be given to the
         Issuer by the Agent concerned.

                                       16
<PAGE>

14.      NOTIFICATION OF CHANGES TO AGENTS

         Following receipt of notice of resignation from any Agent and forthwith
         upon appointing a successor Agent or on giving notice to terminate the
         appointment of any Agent, the Relevant Registrar (on behalf of and at
         the expense of the Issuer or in the case of Clause 12(7) at the expense
         of the Agent) shall give or cause to be given not more than 45 days'
         nor less than 30 days' notice thereof to the Holders in accordance with
         the Conditions.

15.      COMMUNICATION BETWEEN THE PARTIES

         A copy of all communications relating to the subject matter of this
         Agreement between the Issuer and the Holders on the one hand and any of
         the Paying Agents on the other hand shall be sent by such Paying Agent
         to the Relevant Principal Paying Agent and the Registrar, if any.

16.      TAXES AND STAMP DUTIES

         The Issuer agrees to pay any and all stamp or documentary taxes or
         duties which may be payable in connection with the execution, delivery,
         performance and enforcement of this Agreement.

17.      NOTICES AND COMMUNICATIONS

(1)      Any document or information furnished or supplied under this Agreement
         shall be, if provided to the Issuer or Deutsche Bank, in the German or
         English language, and if provided to DBTCA, in the English language.

(2)      All notices and communications under this Agreement shall be by letter
         or telefax, posted or delivered by hand, or (but only where
         specifically provided in the Procedures Memorandum) by telephone. Each
         notice or communication shall be given as follows:

         (a) if to the Issuer, at:

                  Landeskreditbank Baden-Wurttemberg - Forderbank
                  Schlossplatz 10
                  76131 Karlsruhe
                  Germany

                  Telephone:  +49-721 150-1144 or -3916
                  Telefax:    +49-721 150-1280
                  Attention:  -  Bereich Treasury / Abwicklung -

         (b)      if to the Registrar, the Dual Note Structure Principal Paying
                  Agent or to the Calculation Agent, where Deutsche Bank is the
                  Calculation Agent, at:

                  Deutsche Bank Aktiengesellschaft
                  Trust & Securities Services
                  Grosse Gallusstrasse 10-14

                                       17
<PAGE>

                  60272 Frankfurt am Main
                  Germany

                  Telephone: +49-69-910 30817
                  Telefax:   +49-69-910 38672
                  Attention: Trust & Securities Services

         (c)      if to the Single Note Structure Principal Paying Agent, the
                  Dual Note Structure U.S.-Paying Agent or to the Calculation
                  Agent, where DBTCA is the Calculation Agent, at:

                  Deutsche Bank Trust Company Americas
                  Trust & Securities Services Global Debt Services
                  60 Wall Street
                  27th Floor - MS NYC60-2710
                  New York, New York 10005
                  United States of America

                  Telephone: +1-212 250 2157
                  Telefax:   +1-732 578 4635
                  Attention: Trust & Securities Services

         (d)      if to an Agent not originally a party hereto, to the address
                  specified by notice to the other parties hereto at or about
                  the time of its appointment as the agent of the Issuer;

         (e)      if to the Calculation Agent where neither Deutsche Bank nor
                  DBTCA is the Calculation Agent, to it at the address, telefax
                  number or telephone number, specified by notice to the other
                  parties hereto at or about the time of its appointment as
                  agent of the Issuer;

         or, in any case, to such other address, telefax number or telephone
         number or for the attention of such other person or department as the
         addressee has by prior notice to the sender specified for the purpose.

(3)      Every notice or communication sent in accordance with sub-clause (2)
         shall be effective as follows:

         (a) Letter or Telefax: if sent by letter or telefax, upon receipt by
             the addressee;

         (b) Telephone: if made on the telephone, upon being made.

         In the case of (a) above, any such notice or communication which would
         otherwise take effect after 4:00 p.m. in the place of the addressee on
         any particular day shall not take effect until 10:00 a.m. on the
         immediately succeeding business day in the place of the addressee.

                                       18
<PAGE>

18.      GOVERNING LAW AND PLACE OF JURISDICTION

(1)      This Agreement shall be governed by, and construed in accordance with,
         German law.

(2)      Any action or other legal proceedings arising out of or in connection
         with this Agreement shall be brought exclusively in the courts in
         Frankfurt am Main.

19.      SEVERABILITY AND PARTIAL INVALIDITY

Should any provision of this Agreement be or become invalid in whole or in part,
the other provisions shall remain in force. The invalid provision shall be
deemed substituted by a valid provision which accomplishes as far as legally
possible the economic purposes of the invalid provision.

20.    AMENDMENT

This Agreement may be amended by agreement among the parties hereto without the
consent of the Holders.

21.    COUNTERPARTS

This Agreement may be signed in any number of counterparts, all of which, taken
together, shall constitute one and the same agreement

                                       19
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agency Agreement as of
the date first above written.

LANDESKREDITBANK BADEN-WURTTEMBERG - FORDERBANK

/s/ Mona Fuetterer                  /s/ Claudia Prutscher
-------------------                 ---------------------
Mona Fuetterer                      Claudia Prutscher
Deputy Manager                      Legal Counsel

DEUTSCHE BANK AKTIENGESELLSCHAFT

/s/ Keith Barclay                   /s/ Vivien Wichmann
-------------------                 -------------------
Keith Barclay                       Vivien Wichmann
Assistant Vice President            Vice President

DEUTSCHE BANK TRUST COMPANY AMERICAS

/s/ Rodney Gaughan
-------------------
Rodney Gaughan
Vice President

                                       20
<PAGE>

                                                                     SCHEDULE 1A
                                                                     -----------
                                                                          PART I
                                                                          ------

                             English Version of the
               MASTER CONDITIONS OF THE DUAL NOTE STRUCTURE NOTES

<PAGE>

                             ENGLISH VERSION OF THE
                          TERMS AND CONDITIONS OF NOTES

                                     ss. 1
            PRINCIPAL AMOUNT, DENOMINATION, FORM, CERTAIN DEFINITIONS

(1) Principal; Denomination. This Series of Notes (the "Notes") of
Landeskreditbank Baden-Wurttemberg - Forderbank (the "Issuer") is issued in
[insert Designated Currency] (the "Designated Currency") in the aggregate
principal amount of [insert Designated Currency] [insert aggregate principal
amount] (in words: [insert aggregate principal amount in words] [insert
Designated Currency]) and is divided into [insert number of Notes] Notes in the
principal amount of [insert amount and Designated Currency] (the "Designated
Denominations") each.

(2) Certification and Custody. The Notes are represented by two or more
permanent global certificates without interest coupons. One of the permanent
global certificates (the "Euro Global Note") will be kept in custody by
[Clearstream Banking AG, Frankfurt am Main] [a common depositary for Euroclear
Bank S.A./N.V. and Clearstream Banking, societe anonyme, Luxembourg] (the "Euro
Clearing System") until all obligations of the Issuer under the Bonds have been
satisfied. The Euro Global Note is issued in bearer form and represents the
Notes kept in custody for financial institutions that are accountholders of the
Euro Clearing System, including such Notes which are held through [Clearstream
Banking AG, Frankfurt am Main] [,] [or] [Euroclear Bank, S.A./N.V.] [, or]
[Clearstream Banking Societe anonyme, Luxembourg], and further including such
Notes which are held through any other clearing system which maintains an
account with the Euro Clearing System. The other permanent global certificate
(the "DTC Global Note") will be kept in custody by Deutsche Bank Trust Company
Americas ("DBTCA"), or any successor, as custodian for The Depository Trust
Company, New York ("DTC") until all obligations of the Issuer under the Notes
have been satisfied. The DTC Global Note is issued in registered form in the
name of Cede & Co., as nominee of DTC, and represents the Notes kept in custody
for financial institutions that are participants in DTC. The Euro Global Note
and the DTC Global Note shall each be manually signed by two authorized
representatives of the Issuer and shall each be manually authenticated by or on
behalf of the Principal Paying Agent (ss. 6). Together, the Notes represented by
the Euro Global Note and the DTC Global Note, respectively, will equal the
aggregate principal amount of the Notes outstanding at any time. The amount of
Notes represented by each of the Euro Global Note and the DTC Global Note is
evidenced by the register (the "Register") maintained for that purpose by the
Registrar (ss. 6). Definitive certificates representing individual Notes and
interest coupons shall not be issued. Copies of the Euro Global Note and the DTC
Global Note are available free of charge at the specified offices of the Paying
Agents (ss. 6).

(3) Transfer. Transfers of Notes shall require appropriate entries in securities
accounts. Transfers of Notes between Euro Clearing System accountholders on the
one hand and DTC participants on the other hand and exchanges of Notes pursuant
to subparagraph (4) may not be effected during the period commencing on the
Record Date (ss. 4(2)) and ending on the related payment date (both dates
inclusive).

(4) Exchange. The Notes represented by the DTC Global Note may be exchanged for
Notes represented by the Euro Global Note and vice versa. Such exchanges shall
be recorded by the Registrar in the Register and shall be effected by an
increase or a reduction in the aggregate amount of Notes represented by the DTC
Global Note by the aggregate principal amount of Notes so exchanged and a
corresponding reduction or increase in the aggregate amount of Notes represented
by the Euro Global Note.

                                       22
<PAGE>

(5) Holder of Notes. "Holder" means any holder of a proportionate co-ownership
or other beneficial interest or right in the Notes.

                                     ss. 2
                                     STATUS

[In the case of unsubordinated Notes insert: The Notes constitute unsecured and
unsubordinated obligations of the Issuer and rank pari passu with all other
unsecured and unsubordinated obligations of the Issuer except as otherwise
determined by mandatory rules of law.]

[In the case of subordinated Notes insert: The Notes constitute unsecured and
subordinated obligations of the Issuer and rank pari passu with all other
subordinated obligations of the Issuer, except as otherwise determined by
mandatory rules of law. In the event of insolvency proceedings over the
assets(1) of the Issuer or the liquidation of the Issuer, such obligations will
be subordinated to the claims of all unsubordinated creditors of the Issuer so
that in any such event no amounts shall be payable under such obligations until
the claims of all unsubordinated creditors of the Issuer shall have been
satisfied in full. No Holder may set off his claims arising under the Notes
against any claims of the Issuer. No security of whatever kind is, or shall at
any time be, provided by the Issuer or any other person securing rights of the
Holders under such Notes. No subsequent agreement may limit the subordination
pursuant to the provisions set out in this ss. 2 or amend the Maturity Date (ss.
5(1)) in respect of the Notes to any earlier date or shorten any applicable
notice period (Kundigungsfrist). If the Notes are redeemed before the Maturity
Date otherwise than in the circumstances described in this ss. 2 or repurchased
by the Issuer otherwise than in accordance with the provisions of ss. 10(5a)
sentence 6 Kreditwesengesetz (German Banking Act), then the amounts redeemed or
paid must be returned to the Issuer irrespective of any agreement to the
contrary unless the amounts paid have been replaced by other liable capital
(haftendes Eigenkapital) of at least equal status within the meaning of the
German Banking Act, or the Federal Supervisory Authority for Financial Services
(Bundesanstalt fur Finanzdienstleistungsaufsicht) has consented to such
redemption or repurchase.]

                                     ss. 3
                                    INTEREST

[In the case of Fixed Rate Notes insert:

(1) Rate of Interest and Interest Payment Dates. The Notes shall bear interest
on their principal amount at the rate of [insert Rate of Interest] per cent. per
annum from (and including) [insert Interest Commencement Date] to (but
excluding) the Maturity Date (as defined in ss. 5[(1)]). Interest shall be
payable in arrears on [insert Fixed Interest Date or Dates] in each year (each
such date, an "Interest Payment Date"). The first payment of interest shall be
made on [insert First Interest Payment Date] [if First Interest Payment Date is
not first anniversary of Interest Commencement Date insert: and will amount to
[insert Initial Broken Amount per first Designated Denomination] per Note in a
denomination of [insert first Designated Denomination] [and] [insert further
Initial Broken Amount(s) per further Designated Denominations] per Note in a
denomination of

______________________________

1    Pursuant to ss. 12 Insolvenzordnung (Insolvency Act) and ss. 45
     Baden-Wurttembergisches Ausfuhrungsgesetz zum Gerichtsverfassungsgesetz
     (Implementing Law of the State of Baden-Wurttemberg relating to the Federal
     Judicature Act), insolvency proceedings may not be instituted against
     L-Bank.

                                       23
<PAGE>

[insert further Designated Denominations].] [If Maturity Date is not a Fixed
Interest Date insert: Interest in respect of the period from [insert Fixed
Interest Date preceding the Maturity Date] (inclusive) to the Maturity Date
(exclusive) will amount to [insert Final Broken Amount per first Designated
Denomination] per Note in a denomination of [insert first Designated
Denomination] and [insert further Final Broken Amount(s) per further Designated
Denominations] per Note in a denomination of [insert further Designated
Denominations].]

[If Actual/Actual (ISMA Rule 251) is the applicable Day Count Fraction insert:
The number of Interest Payment Dates per calendar year (each a "Determination
Date") is [insert number of regular interest payment dates per calendar year].]

(2) Accrual of Interest. The Notes shall cease to bear interest from the expiry
of the day preceding their due date for redemption. If the Issuer shall fail to
redeem the Notes when due, interest shall continue to accrue on the outstanding
principal amount of the Notes beyond the due date until the expiry of the day
preceding the actual redemption of the Notes at the default rate of interest
established by law(2).

(3) Calculation of Interest for Partial Periods. If interest is required to be
calculated for a period of less than a full year, such interest shall be
calculated on the basis of the Day Count Fraction (as defined below).]

[In the case of Floating Rate Notes insert:

(1) Rate of Interest and Interest Payment Dates.

(a) The Notes bear interest on their principal amount from [insert Interest
Commencement Date] (inclusive) (the "Interest Commencement Date") to the first
Interest Payment Date (exclusive) and thereafter from each Interest Payment Date
(inclusive) to the next following Interest Payment Date (exclusive). Interest on
the Notes shall be payable on each Interest Payment Date.

(b) "Interest Payment Date" means

[in the case of Specified Interest Payment Dates insert: each [insert Specified
Interest Payment Dates].]

[in the case of Specified Interest Periods insert: each date which (except as
otherwise provided in these Terms and Conditions) falls [insert number] [weeks]
[months] [insert other specified periods] after the preceding Interest Payment
Date or, in the case of the first Interest Payment Date, after the Interest
Commencement Date.]

(c) If any Interest Payment Date (other than the Interest Payment Date falling
on the Maturity Date) would otherwise fall on a day which is not a Business Day
(as defined below), it shall be:

[if Modified Following Business Day Convention insert: postponed to the next day
which is a Business Day unless it would thereby fall into the next calendar
month, in which event the Interest Payment Date shall be the immediately
preceding Business Day.]

__________________________

2    The default rate of interest established by law is five percentage points
     above the basic rate of interest published by Deutsche Bundesbank for the
     periods as of January 1 and July 1, respectively, of each year, ss.ss.
     288(1), 247(1) German Civil Code.

                                       24
<PAGE>

[if FRN Convention insert: postponed to the next day which is a Business Day
unless it would thereby fall into the next calendar month, in which event the
payment date shall be the immediately preceding Business Day, and in the event
of interest, each subsequent Interest Payment Date shall be the day that
numerically corresponds to the preceding Interest Payment Date in the calendar
month that falls [insert number] [months] [insert other specified periods] after
the preceding Interest Payment Date or, in the case of the first Interest
Payment Date for the Notes, the Issue Date, except that (a) if there is not any
such numerically corresponding day in the calendar month in which the relevant
Interest Payment Date should occur, then the Interest Payment Date will be the
last day that is a Business Day in that month, (b) if the relevant Interest
Payment Date would otherwise fall on a day that is not a Business Day, then the
Interest Payment Date will be the first following day that is a Business Day
unless that day falls in the next calendar month, in which case the Interest
Payment Date will be the first preceding day that is a Business Day, and (c) if
the preceding applicable Interest Payment Date occurred on the last day in a
calendar month that was a Business Day, then all subsequent applicable Interest
Payment Dates prior to the Maturity Date (as defined in ss. 5(1)) will be the
last day that is a Business Day in the month that falls [insert number] [months]
[insert other specified periods] after the preceding applicable Interest Payment
Date.]

[if Following Business Day Convention insert: postponed to the next day which is
a Business Day.]

[if Preceding Business Day Convention insert: the immediately preceding Business
Day.]

(d) "Business Day" means (i) in respect of any payment that would have to be
made on such Business Day in respect of any Notes in the Designated Currency, [a
Frankfurt Business Day] [and] [,] [a [insert other relevant location] Business
Day] [and] [a TARGET Business Day], and (ii) in respect of any payment that
would have to be made on such Business Day in respect of any Notes in U.S.
dollar to the registered holder of the DTC Global Notes, [a Frankfurt Business
Day] [and] [,] a New York Business Day [and] [,] [a [insert other relevant
location] Business Day] [and a TARGET Business Day]. ["Frankfurt Business Day"
means any day (other than a Saturday or Sunday) on which commercial banks are
open for business (including dealings in foreign exchange and foreign currency)
in Frankfurt.] "New York Business Day" means any day on which banking
institutions in New York City are not obliged and not authorized to close.
["[Insert relevant location] Business Day" means any day (other than a Saturday
or Sunday) on which commercial banks are open for business (including dealings
in foreign exchange and foreign currency) in [insert relevant location].]
["TARGET Business Day" means any day on which the Trans-European Automated
Real-time Gross Settlement Express Transfer System (TARGET) is operating.]

(2) Rate of Interest. [if Screen Rate Determination insert: The rate of interest
(the "Rate of Interest") for each Interest Period (as defined below) will,
except as provided below, be the offered quotation (expressed as a percentage
rate per annum) for deposits in the Designated Currency for that Interest Period
which appears on the Screen Page as of 11:00 a.m. ([insert relevant location]
time) on the Interest Determination Date (as defined below) [if Margin insert:
[plus] [minus] the Margin (as defined below)], all as determined by the
Calculation Agent.

"Interest Period" means each period from (and including) the Interest
Commencement Date to (but excluding) the first Interest Payment Date and from
(and including) each Interest Payment Date to (but excluding) the following
Interest Payment Date.

                                       25
<PAGE>

"Interest Determination Date" means the [insert applicable number of days]
[TARGET] [insert relevant location] Business Day prior to the commencement of
the relevant Interest Period. [in case of a Business Day not defined in ss.
3(1)(d) above, insert: "[insert relevant location] Business Day" means any day
which is a day (other than a Saturday or Sunday) on which commercial banks are
open for business (including dealings in foreign exchange and foreign currency)
in [insert relevant location].

[If Margin insert:  "Margin" means [   ] per cent. per annum.]

"Screen Page" means [insert relevant Screen Page].

If the Screen Page is not available or if no such quotation appears as at such
time, the Calculation Agent shall request the Reference Banks (as defined below)
to provide the Calculation Agent with their offered quotation (expressed as a
percentage rate per annum) for deposits in the Designated Currency for the
relevant Interest Period to leading banks in the [insert relevant location]
interbank market [in the Euro-Zone] at approximately 11.00 a.m. ([insert
relevant location] time) on the Interest Determination Date. If two or more of
the Reference Banks provide the Calculation Agent with such offered quotations,
the Rate of Interest for such Interest Period shall be the arithmetic mean
(rounded if necessary to the nearest one [if the Reference Rate is EURIBOR
insert: thousandth of a percentage point, with 0.0005] [if the Reference Rate is
not EURIBOR insert: hundred-thousandth of a percentage point, with 0.000005]
being rounded upwards) of such offered quotations [if Margin insert: [plus]
[minus] the Margin], all as determined by the Calculation Agent.

If on any Interest Determination Date only one or none of the Reference Banks
provides the Calculation Agent with such offered quotations as provided in the
preceding paragraph, the Rate of Interest for the relevant Interest Period shall
be the rate per annum which the Calculation Agent determines as being the
arithmetic mean (rounded if necessary to the nearest one [if the Reference Rate
is EURIBOR insert: thousandth of a percentage point, with 0.0005] [if the
Reference Rate is not EURIBOR insert: hundred-thousandth of a percentage point,
with 0.000005] being rounded upwards) of the rates, as communicated to (and at
the request of) the Calculation Agent by the Reference Banks or any two or more
of them, at which such banks were offered, as at 11.00 a.m. ([insert relevant
location] time) on the relevant Interest Determination Date, deposits in the
Designated Currency for the relevant Interest Period by leading banks in the
[insert relevant location] interbank market [in the Euro-Zone] [if Margin
insert: [plus] [minus] the Margin] or, if fewer than two of the Reference Banks
provide the Calculation Agent with such offered rates, the offered rate for
deposits in the Designated Currency for the relevant Interest Period, or the
arithmetic mean (rounded as provided above) of the offered rates for deposits in
the Designated Currency for the relevant Interest Period, at which, on the
relevant Interest Determination Date, any one or more banks (which bank or banks
is or are in the opinion of the Calculation Agent and the Issuer suitable for
such purpose) inform(s) the Calculation Agent it is or they are quoting to
leading banks in the [insert relevant location] interbank market [in the
Euro-Zone] (or, as the case may be, the quotations of such bank or banks to the
Calculation Agent) [if Margin insert: [plus] [minus] the Margin]. If the Rate of
Interest cannot be determined in accordance with the foregoing provisions of
this paragraph, the Rate of Interest shall be the offered quotation or the
arithmetic mean of the offered quotations on the Screen Page, as described
above, on the last day preceding the Interest Determination Date on which such
quotations were offered [if Margin insert: [plus] [minus] the Margin (though
substituting, where a different Margin is to be applied to the relevant Interest
Period from that which applied to the last preceding Interest Period, the Margin
relating to the relevant Interest Period in place of the Margin relating to that
last preceding Interest Period)].

                                       26
<PAGE>

As used herein, "Reference Banks" means [those offices of four of such banks
whose offered rates were used to determine such quotation when such quotation
last appeared on the Screen Page] [insert any other Reference Banks here].

[In the case of the interbank market in the Euro-Zone insert: "Euro-Zone" means
the region comprised of those member states of the European Union that have
adopted, or will have adopted from time to time, the single currency in
accordance with the Treaty establishing the European Community (signed in Rome
on March 25, 1957), as amended by the Treaty on European Union (signed in
Maastricht on February 7, 1992) and the Amsterdam Treaty of October 2, 1997, as
further amended from time to time.]

[If Reference Rate is other than LIBOR or EURIBOR, insert relevant details in
lieu of the provisions of this subparagraph (2)]

[If ISDA Determination applies insert the relevant provisions and attach the
2000 ISDA Definitions published by the International Swaps and Derivatives
Association, Inc. "ISDA"]

[If other method of determination applies insert relevant details in lieu of the
provisions of this subparagraph (2)]

[If Minimum and/or Maximum Rate of Interest applies insert:

(3) [Minimum] [and] [Maximum] Rate of Interest.

[If Minimum Rate of Interest applies insert: If the Rate of Interest in respect
of any Interest Period determined in accordance with the above provisions is
less than [insert Minimum Rate of Interest], the Rate of Interest for such
Interest Period shall be [insert Minimum Rate of Interest].]

[If Maximum Rate of Interest applies insert: If the Rate of Interest in respect
of any Interest Period determined in accordance with the above provisions is
greater than [insert Maximum Rate of Interest], the Rate of Interest for such
Interest Period shall be [insert Maximum Rate of Interest].]]

[(4)] Interest Amount. The Calculation Agent will, at or as soon as practicable
after each time at which the Rate of Interest is to be determined, determine the
Rate of Interest and calculate the amount of interest (the "Interest Amount")
payable on the Notes for the relevant Interest Period. Each Interest Amount
shall be calculated by applying the Rate of Interest and the Day Count Fraction
(as defined below) and rounding the resultant figure to the nearest [insert
Designated Currency unit], with 0.5 of such unit being rounded upwards.

[(5)] Notification of Rate of Interest and Interest Amount. The Calculation
Agent will cause the Rate of Interest, each Interest Amount for each Interest
Period, each Interest Period and the relevant Interest Payment Date to be
notified to the Issuer, the Principal Paying Agent and the Holders in accordance
with ss. 11 as soon as possible after their determination, but in no event later
than the fourth [TARGET] [insert relevant reference] Business Day (as defined in
ss. 3[(1) [and] [(2))] thereafter and, if required by the rules of any stock
exchange on which the Notes are from time to time listed, to such stock
exchange, as soon as possible after their determination, but in no event later
than the first day of the relevant Interest Period. Each Interest Amount and
Interest Payment Date so notified may subsequently be amended (or appropriate
alternative arrangements made by way of adjustment) without notice in the event
of an extension or shortening of the Interest Period. Any such amendment will be

                                       27
<PAGE>

promptly notified to any stock exchange on which the Notes are then listed and
to the Holders in accordance with ss. 11.

[(6)] Determinations Binding. All certificates, communications, opinions,
determinations, calculations, quotations and decisions given, expressed, made or
obtained for the purposes of the provisions of this ss. 3 by the Calculation
Agent shall (in the absence of manifest error) be binding on the Issuer, the
Registrar, the Paying Agents and the Holders.

[(7)] Accrual of Interest. If the Issuer shall fail to redeem the Notes when
due, interest shall continue to accrue on the outstanding principal amount of
the Notes beyond the due date until the expiry of the day preceding the actual
redemption of the Notes. The applicable Rate of Interest will be the default
rate of interest established by law.]

[In the case of Zero Coupon Notes Insert:

(1) No Periodic Payments of Interest. There will not be any periodic payments of
interest on the Notes.

(2) Accrual of Interest. If the Issuer shall fail to redeem the Notes when due,
interest shall accrue on the outstanding principal amount of the Notes as from,
and including, the due date to, but excluding, the date of actual redemption at
the default rate of interest established by law(3).]

[In the case of Dual Currency Notes, Index Linked Notes, Instalment Notes or
Notes with another kind of interest determination, set forth applicable
provisions regarding interest herein.]

[(o)] Day Count Fraction. "Day Count Fraction" means, in respect of the
calculation of an amount of interest on any Note for any period of time (the
"Calculation Period"):

[if Actual/Actual (ISMA Rule 251) insert:
(a) if the Calculation Period (from and including the first day of such period
but excluding the last) is equal or shorter than the Determination Period (as
defined below) during which the Calculation Period ends, the number of days in
such Calculation Period (from and including the first day of such period but
excluding the last) divided by the product of (i) the number of days in such
Determination Period and (ii) the number of Determination Dates (as defined in
ss. 3(1)) that would occur in one calendar year; or

(b) if the Calculation Period is longer than the Determination Period during
which the Calculation Period ends, the sum of: (A) the number of days in such
Calculation Period falling in the Determination Period in which the Calculation
Period begins divided by the product of (i) the number of days in such
Determination Period and (ii) the number of Determination Dates (as defined in
ss. 3(1)) that would occur in one calendar year, and (B) the number of days in
such Calculation Period falling in the next Determination Period divided by the
product of (i) the number of days in such Determination Period and (ii) the
number of Determination Dates that would occur in one calendar year.

"Determination Period" means the period from (and including) a Determination
Date to, but excluding, the next Determination Date.]

___________________________

3    The default rate of interest established by law is five percentage points
     above the basic rate of interest published by Deutsche Bundesbank for the
     periods as of January 1 and July 1, respectively, of each year, ss.ss.
     288(1), 247(1) German Civil Code.

                                       28
<PAGE>

[insert other relevant Actual/Actual methodology pursuant to ISMA]

[if Actual/Actual (ISDA) insert: the actual number of days in the Calculation
Period divided by 365 (or, if any portion of that Calculation Period falls in a
leap year, the sum of (A) the actual number of days in that portion of the
Calculation Period falling in a leap year divided by 366 and (B) the actual
number of days in that portion of the Calculation Period falling in a non-leap
year divided by 365).]

[if Actual/365 (Fixed) insert: the actual number of days in the Calculation
Period divided by 365.]

[if Actual/360 insert: the actual number of days in the Calculation Period
divided by 360.]

[if 30/360, 360/360 or Bond Basis insert: the number of days in the Calculation
Period divided by 360, the number of days to be calculated on the basis of a
year of 360 days with 12 30-day months (unless (A) the last day of the
Calculation Period is the 31st day of a month, but the first day of the
Calculation Period is a day other than the 30th or 31st day of a month, in which
case the month that includes that last day shall not be considered to be
shortened to a 30-day month, or (B) the last day of the Calculation Period is
the last day of the month of February in which case the month of February shall
not be considered to be lengthened to a 30-day month).]

[if 30E/360 or Eurobond Basis insert: the number of days in the Calculation
Period divided by 360 (the number of days to be calculated on the basis of a
year of 360 days with 12 30-day months, without regard to the date of the first
day or last day of the Calculation Period, unless, in the case of the final
Calculation Period, the last day of that Calculation Period is the last day of
the month of February, in which case the month of February shall not be
considered to be lengthened to a 30-day month).]

                                     ss. 4
                                    PAYMENTS

(1) Payments.

(a) Payments of principal of [in the case of Notes other than Zero Coupon Notes
insert: and interest on,] the Notes shall be made to the Euro Clearing System in
the Designated Currency and to the registered holder of the DTC Global Note in
U.S. dollars or the Designated Currency as set forth below. The amount of
payments to the Euro Clearing System and to the registered holder of the DTC
Global Note, respectively, shall correspond to the aggregate principal amount of
Notes represented by the Euro Global Note and the DTC Global Note, as
established by the Registrar (ss. 6) at the close of business on the relevant
Record Date (subparagraph (2)). Payments of principal shall be made upon
surrender of the Euro Global Note and the DTC Global Note, as the case may be,
to the relevant Paying Agent (ss. 6).

(b) Any Holder holding Notes through DTC (a "DTC Holder") shall receive payments
of principal and interest in respect of the Notes in U.S. dollars, unless such
DTC Holder elects to receive payments in the Designated Currency in accordance
with the procedures set out below. To the extent that DTC Holders shall not have
made such election in respect of any payment of principal or interest, the
aggregate amount designated for all such DTC Holders in respect of such payment
(the "Designated Currency Conversion Amount") shall be converted by or on behalf
of the U.S.-Paying Agent into U.S. dollars and paid by wire transfer of same day

                                       29
<PAGE>

funds to the registered holder of the DTC Global Note for payment through DTC's
settlement system to the relevant DTC participants. All costs of any such
conversion shall be deducted from such payments. Any such conversion shall be
based on the bid quotation of or on behalf of the U.S.-Paying Agent, at or prior
to 11:00 a.m. Frankfurt time, on the second Conversion Business Day preceding
the relevant payment date, for the purchase by or on behalf of such Paying Agent
of the Designated Currency Conversion Amount with U.S. dollars for settlement on
such payment date. "Conversion Business Day" means a day which is a New York
Business Day, [a [insert relevant location] Business Day] [and][,] [a Frankfurt
Business Day] [and a TARGET Business Day] (subparagraph (3)). If such bid
quotation is not available, the U.S.-Paying Agent shall obtain or cause to be
obtained a bid quotation from a leading foreign exchange bank in New York City
selected by or on behalf of the U.S.-Paying Agent for such purpose. If no bid
quotation from a leading foreign exchange bank is available, payment of the
Designated Currency Conversion Amount will be made in the Designated Currency to
the account or accounts specified by DTC to the U.S.-Paying Agent. Until such
account or accounts are so specified, the funds still held by the U.S.-Paying
Agent shall bear interest at the rate of interest quoted by the U.S.-Paying
Agent for deposits with it on an overnight basis, to the extent that the Paying
Agent is reasonably able to reinvest such funds.

(c) Any DTC Holder may elect to receive payment of principal and interest with
respect to the Notes in the Designated Currency by causing DTC, through the
relevant DTC participant, to notify the U.S.-Paying Agent by the time specified
below of (i) such DTC Holder's election to receive all or a portion of such
payment in the Designated Currency and (ii) wire transfer instructions to the
Designated Currency account. Such election in respect of any payment shall be
made by the DTC Holder at the time and in the manner required by the DTC
procedures applicable from time to time and shall, in accordance with such
procedures, be irrevocable. DTC's notification of such election, wire transfer
instructions and of the amount payable in the Designated Currency pursuant to
this subparagraph (1)(c) must be received by the U.S.-Paying Agent prior to 5:00
p.m., New York time on the fifth New York Business Day (subparagraph (3))
following the relevant Record Date (subparagraph (2)) in the case of interest
and prior to 5:00 p.m. New York time on the eighth New York Business Day prior
to the payment date (subparagraph (4)) for the payment of principal. Any
payments under this subparagraph (1)(c) in the Designated Currency shall be made
by wire transfer of same day funds to the Designated Currency accounts
designated by DTC.

(d) All payments made by the Issuer to the Euro Clearing System and to, or to
the order of, the registered holder of the DTC Global Note, respectively, shall
discharge the liability of the Issuer under the Notes to the extent of the sums
so paid.

(2) Record Date. The record date (the "Record Date") for purposes of transfer
restrictions (ss. 1(3)) and payments (subparagraph (1)) of principal and
interest shall be, in respect of each such payment, the earlier of the following
dates: (a) the date determined in accordance with the conventions observed by
the Euro Clearing System from time to time for the entitlement of the Euro
Clearing System accountholders to payments in respect of debt securities
denominated in the Designated Currency and represented by permanent global
certificates, and (b) the tenth New York Business Day preceding the relevant due
date.

(3) Business Days. [If any due date for payment of principal [in the case of
Notes other than Zero Coupon Notes insert: or interest] in the Designated
Currency in respect of any Notes is [not a Frankfurt Business Day] [or] [,] [not
a [insert other relevant location] Business Day] [or] [not a TARGET Business
Day], such payment will not be made until the next day which is [a Frankfurt
Business Day] [and] [,] [a [insert other relevant location] Business Day] [and a
TARGET Business Day], and no further interest shall be paid in

                                       30
<PAGE>

respect of the delay in such payment. If any date for payment of principal [in
the case of Notes other than Zero Coupon Notes insert: or interest] in U.S.
dollars to the registered holder of the DTC Global Note is [not a Frankfurt
Business Day] [or] [,] not a New York Business Day [or] [,] [not a [insert other
relevant location] Business Day] [or not a TARGET Business Day], such payment
will not be made until the next day which is [a Frankfurt Business Day] [and]
[,] a New York Business Day [and] [,] [a [insert other relevant location]
Business Day] [and a TARGET Business Day], and no further interest shall be paid
in respect of the delay in such payment. ["Frankfurt Business Day" means any day
(other than a Saturday or Sunday) on which commercial banks are open for
business (including dealings in foreign exchange and foreign currency) in
Frankfurt.] "New York Business Day" means any day on which banking institutions
in New York City are not obliged and not authorized to close. ["[Insert relevant
location] Business Day" means any day (other than a Saturday or Sunday) on which
commercial banks are open for business (including dealings in foreign exchange
and foreign currency) in [insert relevant location].] ["TARGET Business Day"
means any day on which the Trans-European Automated Real-time Gross Settlement
Express Transfer System (TARGET) is operating.][insert other applicable Business
Day convention]

(4) Payment Date and Due Date. For the purposes of these Terms and Conditions
"payment date" means the day on which the payment is actually to be made, where
applicable as adjusted in accordance with subparagraph (3), and "due date" means
the payment date provided for herein, without taking account of any such
adjustment.

(5) References to Principal. Reference in these Terms and Conditions to
principal in respect of the Notes shall be deemed to include, as applicable: the
Final Redemption Amount of the Notes; [if redeemable at the option of the Issuer
insert: the Call Redemption Amount of the Notes;] [if redeemable at option of
the Holder insert: the Put Redemption Amount of the Notes;] [in the case of Zero
Coupon Notes insert: the Amortized Face Amount of the Notes;] [in the case of
Instalment Notes insert: the Instalment Amount(s) of the Notes;] and any premium
and any other amounts which may be payable under or in respect of the Notes.

(6) Deposit of Principal and Interest. The Issuer may deposit with the
Amtsgericht in Frankfurt am Main principal or interest not claimed by Holders
within twelve months after the Maturity Date, even though such Holders may not
be in default of acceptance of payment. If and to the extent that the deposit is
effected and the right of withdrawal is waived, the respective claims of such
Holders against the Issuer shall cease.

                                     ss. 5
                                   REDEMPTION

[(1) Redemption at Maturity.]

[In the case of Notes other than Instalment Notes insert: Unless previously
redeemed in whole or in part or purchased and cancelled, the Notes shall be
redeemed at their Final Redemption Amount on [in the case of a specified
Maturity Date insert such Maturity Date] [in the case of a Redemption Month
insert: the Interest Payment Date falling in [insert Redemption Month]] (the
"Maturity Date"). The Final Redemption Amount in respect of each Note shall be
[if the Notes are redeemed at their principal amount insert: its principal
amount] [otherwise insert Final Redemption Amount per Designated
Denomination/index and/or formula by reference to which the Final Redemption
Amount is to be calculated]].]

                                       31
<PAGE>

[In the case of Instalment Notes insert: Unless previously redeemed in whole or
in part or purchased and cancelled, the Notes shall be redeemed at the
Instalment Date(s) and in the Instalment Amount(s) set forth below:

        Instalment Date(s)                    Instalment Amount(s)
    [insert Instalment Date(s)]           [insert Instalment Amount(s)]
            [      ]                              [       ]
            [      ]                              [       ]]

[If the Notes are subject to Early Redemption at the Option of the Issuer
insert: [(2)] Early Redemption at the Option of the Issuer.

(a) The Issuer may, upon notice given in accordance with clause (b), redeem all
or some only of the Notes on the Call Redemption Date(s) at the Call Redemption
Amount(s) set forth below together with accrued interest, if any, to (but
excluding) the Call Redemption Date. [if Minimum Redemption Amount or Higher
Redemption Amount applies insert: Any such redemption must be of a principal
amount equal to [at least [insert Minimum Redemption Amount]] [Higher Redemption
Amount].

        Call Redemption Date(s)               Call Redemption Amount(s)
      [insert Call Redemption Date(s)]    [insert Call Redemption Amount(s)]
            [      ]                              [       ]
            [      ]                              [       ]]

[If Notes are subject to Early Redemption at the Option of the Holder insert:
The Issuer may not exercise such option in respect of any Note which is the
subject of the prior exercise by the Holder thereof of its option to require the
redemption of such Note under subparagraph (3) of this ss. 5.]

(b) Notice of redemption shall be given by the Issuer to the Holders of the
Notes in accordance with ss. 11. Such notice shall specify:

(i)   the Series of Notes subject to redemption;

(ii)  whether such Series is to be redeemed in whole or in part only and, if in
part only, the aggregate principal amount of the Notes which are to be redeemed;

(iii) the Call Redemption Date, which shall be not less than [insert Minimum
Notice to Holders] nor more than [insert Maximum Notice to Holders] days after
the date on which notice is given by the Issuer to the Holders; and

(iv)  the Call Redemption Amount at which such Notes are to be redeemed.

(c) In the case of a partial redemption of Notes, Notes to be redeemed shall be
selected in accordance with the rules of the Euro Clearing System and DTC.]

[If the Notes are subject to Early Redemption at the Option of a Holder insert:
[(3)] Early Redemption at the Option of a Holder.

                                       32
<PAGE>

(a) The Issuer shall, at the option of the Holder of any Note, redeem such Note
on the Put Redemption Date(s) at the Put Redemption Amount(s) set forth below
together with accrued interest, if any, to (but excluding) the Put Redemption
Date.

        Put Redemption Date(s)               Put Redemption Amount(s)
      [insert Put Redemption Date(s)]    [insert Put Redemption Amount(s)]
            [      ]                              [       ]
            [      ]                              [       ]]

The Holder may not exercise such option in respect of any Note which is the
subject of the prior exercise by the Issuer of any of its options to redeem such
Note under this ss. 5.

(b) In order to exercise such option, the Holder must, not less than [insert
Minimum Notice to Issuer] nor more than [insert Maximum Notice to Issuer] days
before the Put Redemption Date on which such redemption is required to be made
as specified in the Put Notice (as defined below), submit during normal business
hours at the specified office of the Principal Paying Agent a duly completed
early redemption notice ("Put Notice"). No option so exercised may be revoked or
withdrawn.]

[In the case of Notes other than Zero Coupon Notes insert: [(4)] Early
Redemption Amount.

For purposes of subparagraph (2) and (3) of this ss. 5, the Early Redemption
Amount of a Note shall be its Final Redemption Amount.]

[In the case of Zero Coupon Notes insert: [(4)]  Early Redemption Amount.

For purposes of subparagraph (2) of this ss. 5, the Early Redemption Amount of a
Note shall be calculated as follows:

(a) The Early Redemption Amount of a Note shall be an amount equal to the sum
of:

(i)  [insert Reference Price] (the "Reference Price"), and

(ii) the product of [insert Amortization Yield in per cent.] (the "Amortization
Yield") and the Reference Price from (and including) [insert Issue Date] to (but
excluding) the date fixed for redemption or (as the case may be) the date upon
which the Notes become due and payable, whereby the Amortization Yield shall be
compounded annually.

Where such calculation is to be made for a period which is not a whole number of
years, the calculation in respect of the period of less than a full year (the
"Calculation Period") shall be made on the basis of the Day Count Fraction (as
defined in ss. 3).

(b) If the Issuer fails to pay the Early Redemption Amount when due, such amount
shall be calculated as provided herein, except that references in subparagraph
(a)(ii) above to the date fixed for redemption or the date on which such Note
becomes due and repayable shall refer to the date on which payment is made].

[Instead of the above, a Redemption Schedule specifying the Early Redemption
Amounts may be inserted]

                                       33
<PAGE>

[In the case of Dual Currency Notes, Index Linked Notes or Instalment Notes, set
forth applicable provisions regarding principal herein.]

                                     ss. 6
                                   THE AGENTS

(1) Appointment; Specified Offices. The initial Registrar, the initial Principal
Paying Agent [,] [and] the initial U.S.-Paying Agent (together with the
Principal Paying Agent, the "Paying Agents") [and the initial Calculation Agent]
and their respective initial specified offices are:

       Registrar:                        Deutsche Bank Aktiengesellschaft
                                         Trust & Securities Services
                                         Grosse Gallusstrasse 10-14
                                         60272 Frankfurt am Main
                                         Germany

       Principal Paying Agent:           Deutsche Bank Aktiengesellschaft
                                         Trust & Securities Services
                                         Grosse Gallusstrasse 10-14
                                         60272 Frankfurt am Main
                                         Germany

       U.S.-Paying Agent:                Deutsche Bank Trust Company Americas
                                         Trust & Securities Services
                                         Global Debt Service
                                         60 Wall Street
                                         27th Floor - MS NY C60-2710
                                         New York, NY 10005, USA

                                         [Insert any other paying agents and
                                         specified offices]

[If the Principal Paying Agent is to be appointed as Calculation Agent insert:
The Principal Paying Agent shall also act as Calculation Agent.]

[If a Calculation Agent other than the Principal Paying Agent is to be appointed
insert: The Calculation Agent and its initial specified office shall be:

              Calculation Agent:                o
                                                o
                                                o
                                                o
                                                o]

The Registrar [,] [and] the Paying Agents [and] [the Calculation Agent] reserve
the right at any time to change, with the approval of the Issuer, their
respective specified offices to some other specified office in the same city
upon giving notice thereof in accordance with ss. 11.

(2) Variation or Termination of Appointment. The Issuer reserves the right at
any time to vary or terminate the appointment of the Registrar [,] [or] any
Paying Agent [or] [the Calculation Agent] and to appoint another Registrar or
additional or other Paying Agent[s]

                                       34
<PAGE>

[or] [another Calculation Agent]. The Issuer shall at all times maintain (i) a
Registrar, (ii) a Paying Agent with a specified office in a continental European
city[,] [and] (iii) a U.S.--Paying Agent with a specified office in New York
City [in the case of Notes listed on a stock exchange[s] insert: [,] [and] (iv)
so long as the Notes are listed on the [name of Stock Exchange[s]], a Paying
Agent with a specified office in [location of Stock Exchange] and/or in such
other place as may be required by the rules of such stock exchange] [if any
Calculation Agent] is to be appointed insert: [and [(v)] a Calculation Agent.
The Issuer undertakes that, when European Union Council Directive 2003/48/EC of
June 3, 2003 on the taxation of savings income in the form of interest payments
or any European Union Directive otherwise implementing the conclusions of the
ECOFIN Council meeting of November 26-27, 2000 is brought into force, it will
ensure that it maintains a paying agent in an EU Member State that will not be
obliged to withhold or deduct tax pursuant to the such Directive, to the extent
this is possible and legally permitted in any member state of the European
Union. Any variation, termination, appointment or change shall only take effect
(other than in the case of insolvency, when it shall be of immediate effect)
after not less than 30 nor more than 45 days' prior notice thereof shall have
been given to the Holders in accordance with ss. 11.

(3) Agents of the Issuer. The Registrar[,] [and] the Paying Agents [and] [the
Calculation Agent] act solely as agents of the Issuer and do not have any
obligations towards or relationship of agency or trust to any Holder.

                                     ss. 7
                                    TAXATION

All payments by the Issuer in respect of the Notes shall be made with
withholding or deduction of taxes or other duties, if such withholding or
deduction is required by law. In the event of such deduction or withholding, the
Issuer shall not be required to pay any additional amounts in respect of the
Notes.

                                      ss. 8
                               PRESENTATION PERIOD

The presentation period provided in ss. 801 paragraph 1, sentence 1 BGB (German
Civil Code) is reduced to ten years for the Notes.

                                     ss. 9
                                  SUBSTITUTION

(1) Substitution. The Issuer may at any time without the consent of the Holders
substitute in its stead any other company as principal debtor (the "Substituted
Issuer") in respect of all obligations arising from the Notes, if:

(a) the Substituted Issuer assumes any and all obligations, and succeeds to any
and all rights, of the Issuer arising from or in connection with the Notes;

(b) the Issuer and the Substituted Issuer have obtained all necessary
authorizations and may transfer to the Principal Paying Agent in the currency
required under the Notes and without being obliged to deduct or withhold any
amount of taxes or other duties of whatever nature levied by the country or
countries in which the Substituted Issuer has its domicile or tax residence
which exceeds at the time of the effectiveness of such substitution the amount
of taxes or duties, if any, levied by withholding or deduction by the country or
countries in which

                                       35
<PAGE>

the Issuer has its domicile or tax residence, all amounts required for the
performance of the payment obligations arising from or in connection with the
Notes;

[In the case of unsubordinated Notes insert:
(c) the Issuer irrevocably and unconditionally guarantees in favor of each
Holder the payment of all sums payable by the Substituted Issuer in respect of
the Notes on terms equivalent to the terms of the form of the guarantee in
respect of unsubordinated Notes of the Issuer set out in the Agency Agreement
dated March 22, 2005 among the Issuer, the Registrar and the Paying Agents,
pursuant to which the Notes are issued;]

[In the case of subordinated Notes insert:
(c) the obligations assumed by the Substituted Issuer in respect of the Notes
are subordinated on terms identical to the terms of the Notes and (i) the
Substituted Issuer is a subsidiary (Tochterunternehmen) of the Issuer within the
meaning of ss.ss. 1(7) and 10(5a) sentence 11 Kreditwesengesetz (German Banking
Act), (ii) the Substituted Issuer deposits an amount which is equal to the
aggregate principal amount of the Notes with the Issuer on terms equivalent,
including in respect of subordination, to the terms and conditions of the Notes,
and (iii) the Issuer irrevocably and unconditionally guarantees in favor of each
Holder the payment of all sums payable by the Substituted Issuer in respect of
the Notes on terms equivalent to the terms of the form of guarantee in respect
of subordinated Notes of the Issuer set out in the Agency Agreement dated March
22, 2005 among the Issuer, the Registrar and the Paying Agents, pursuant to
which the Notes are issued;]

(d) the Holders will not lose as a result of such substitution the benefit of
the guarantee obligation pursuant to Article 5 Section 2 of the Act Concerning
Landeskreditbank Baden-Wurttemberg - Forderbank (the "Act"), the maintenance
obligation of the State of Baden-Wurttemberg pursuant to Article 5 Section 1 of
the Act and the explicit guarantee of the State of Baden-Wurttemberg pursuant to
Article 5 Section 3 of the Act, in each case with such contents as are
prevailing at the time of the effectiveness of such substitution, or of an
obligation of the State of Baden-Wurttemberg or the Federal Republic of Germany
which is equivalent thereto and which may have replaced such guarantee
obligation, maintenance obligation or guarantee; and

(e) there shall have been delivered to the Principal Paying Agent an opinion of
lawyers of recognized standing to the effect that subparagraphs (a) - (d) above
have been satisfied.

(2) References. In the event of any substitution, any reference in these Terms
and Conditions to the Issuer shall from then on be a reference to the
Substituted Issuer.

(3) Notice. Any substitution of the Issuer shall be published in accordance with
ss. 11. Upon such publication, the substitution shall become effective, and the
Issuer (and in the event of a repeated application of this ss. 9 any previous
Substituted Issuer) shall be discharged from any and all obligations under the
Notes, on the date on which such substitution is published.

                                     ss. 10
                   FURTHER ISSUES, PURCHASES AND CANCELLATION

(1) Further Issues. The Issuer may from time to time, without the consent of the
Holders, issue further Notes having the same terms and conditions as the Notes
in all respects (or in all respects except for the issue date, interest
commencement date and/or issue price) so as to form a single Series with and
increase the aggregate principal amount of, the Notes.

                                       36
<PAGE>

(2) Purchases. The Issuer may at any time purchase Notes in the open market or
otherwise and at any price. Notes purchased by the Issuer may, at the option of
the Issuer, be held, resold or surrendered to the Principal Paying Agent for
cancellation. If purchases are made by tender, tenders for such Notes must be
made available to all Holders of such Notes alike.

(3) Cancellation. All Notes redeemed in full or surrendered for cancellation
pursuant to subparagraph (2) above shall be cancelled forthwith and may not be
reissued or resold.

                                     ss. 11
                                     NOTICES

(1) All notices regarding the Notes shall be published in the following
journals: (a) at least one leading daily newspaper of general circulation in the
Federal Republic of Germany[,] [and] [Luxembourg] [and [specify other location]]
(expected to be the Borsen-Zeitung [,] [and] [the Luxemburger Wort] [the
Tageblatt] [and [insert other applicable newspaper having general circulation]])
and (b) a leading daily newspaper printed in the English language and of general
circulation in New York City (expected to be the Wall Street Journal). Any
notice will become effective for all purposes on the third day following the
date of its publication, or, if published more than once or on different dates,
on the third day following the first date of any such publication.

(2) Notification to Clearing System. The Issuer may, in lieu of publication in
the newspapers set forth in subparagraph (1) above, deliver the relevant notice
to the Euro Clearing System and to DTC, for communication by the Euro Clearing
System and by DTC to the Holders holding the Notes through the respective
clearing system, provided that, so long as any Notes are listed on any stock
exchange, the rules of such stock exchange permit such form of notice. Any such
notice shall be deemed to have been given to the Holders on the fourth day after
the day on which the said notice was given to the Clearing System.

(3) In case a notice is published according to subparagraph (1) and also
delivered according to subparagraph (2), such notice will become effective for
all purposes on the third day following the date of its publication, or, if
published more than once or on different dates, on the third day following the
first date of any such publication.

                                     ss. 12
                                 GOVERNING LAW,
                      PLACE OF JURISDICTION AND ENFORCEMENT

(1) Governing Law. The Notes, both as to form and content, and all rights and
obligations of the Issuer, the Holders and the Agents shall be governed by
German law. Transfers and pledges of Notes executed between DTC participants and
between DTC and DTC participants shall be governed by the laws of the State of
New York.

(2) Submission to Jurisdiction. The courts in Frankfurt am Main, Germany shall
have jurisdiction for any action or other legal proceedings ("Proceedings")
arising out of or in connection with the Notes. The jurisdiction of such courts
shall be exclusive according to Section 38 of the German Code of Civil Procedure
(Zivilprozessordnung) for Proceedings solely involving merchants (Kaufleute),
legal persons under public law (juristische Personen des offentlichen Rechts),
special funds under public law (offentlich-rechtliche Sondervermogen) or persons
not subject to the general jurisdiction of the courts of Germany (Personen ohne
allgemeinen Gerichtsstand), otherwise it shall be nonexclusive.

                                       37
<PAGE>

(3) Enforcement. Any Holder may in any proceedings against the Issuer or to
which the Holder and the Issuer are parties protect and enforce in its own name
its rights arising under its Notes on the basis of (a) a certificate issued by
its Custodian (i) stating the full name and address of the Holder, (ii)
specifying an aggregate principal amount of Notes credited on the date of such
statement to such Holder's securities account maintained with such Custodian and
(iii) confirming that the Custodian has given a written notice of the Euro
Clearing System or DTC, as the case may be, and the Principal Paying Agent
containing the information pursuant to (i) and (ii) and bearing acknowledgements
of the Euro Clearing System or DTC and the Euro Clearing System accountholder or
DTC participant and (b) a copy of the Euro Global Note or the DTC Global Note
certified as being a true copy of a duly authorized officer of the Euro Clearing
System or DTC, as the case may be, or the Principal Paying Agent. For purposes
of the foregoing, "Custodian" means any bank or other financial institution of
recognized standing authorized to engage in securities custody business with
which the Holder maintains a securities account in respect of any Notes and
includes the Euro Clearing System, DTC and any other clearing system which
maintains an account with the Euro Clearing System.

                                     ss. 13
                                    LANGUAGE

[If the Conditions shall be in the German language with an English language
translation insert: These Terms and Conditions are written in the German
language and provided with an English language translation. The German text
shall be controlling and binding. The English language translation is provided
for convenience only.]

[If the Conditions shall be in the English language with a German language
translation insert: These Terms and Conditions are written in the English
language and provided with a German language translation. The English text shall
be controlling and binding. The German language translation is provided for
convenience only.]

[If the Conditions shall be in the English language only insert: These Terms and
Conditions are written in the English language only.]

[In the case of Notes that are publicly offered, in whole or in part, in Germany
or distributed, in whole or in part, to non-professional investors in Germany
with English language Conditions insert: Eine deutsche Ubersetzung der
Emissionsbedingungen wird bei der Landeskreditbank Baden-Wurttemberg -
Forderbank, Schlossplatz 10, 76131 Karlsruhe, Deutschland, zur kostenlosen
Ausgabe bereitgehalten.]

                                       38
<PAGE>

                                                                     SCHEDULE 1A
                                                                     -----------
                                                                         PART II
                                                                         -------

                              German Version of the
               MASTER CONDITIONS OF THE DUAL NOTE STRUCTURE NOTES

                                       39
<PAGE>

                                GERMAN VERSION OF
                          TERMS AND CONDITIONS OF NOTES

                                     ss. 1
           GESAMTNENNBETRAG, STUCKELUNG, FORM, BESTIMMTE DEFINITIONEN

(1) Gesamtnennbetrag; Stuckelung. Diese Serie von Schuldverschreibungen (die
Schuldverschreibungen") der Landeskreditbank Baden-Wurttemberg - Forderbank (die
"Emittentin") wird in [designierte Wahrung einfugen] (die "Designierte Wahrung")
in einem Gesamtnennbetrag von [Designierte Wahrung einfugen] (in Worten:
[Gesamtnennbetrag in Worten einfugen] in [Anzahl der Teilschuldverschreibungen
einfugen] Stuckelungen von [festgelegte Stuckelungen einfugen][Designierte
Wahrung einfugen] (die "festgelegten Stuckelungen") begeben.

(2) Verbriefung und Verwahrung. Die Schuldverschreibungen werden durch zwei oder
mehr Dauerglobalurkunden ohne Zinsscheine verbrieft. Eine der beiden
Dauerglobalurkunden (die "Euro-Globalurkunde") wird von [Clearstream Banking AG,
Frankfurt am Main] [einem gemeinsamen Verwahrer fur Euroclear Bank S.A./N.V.,
als dem Betreiber des Euroclear-Systems und Clearstream Banking, societe
anonyme, Luxembourg], (das "Euro-Clearing System") verwahrt, bis samtliche
Verpflichtungen der Emittentin aus den Schuldverschreibungen erfullt sind. Die
Euro-Globalurkunde lautet auf den Inhaber. Sie verbrieft die
Schuldverschreibungen, die fur Finanzinstitute verwahrt werden, die Kontoinhaber
bei dem Euro-Clearing System sind, einschliesslich derjenigen
Schuldverschreibungen, die uber [Clearstream Banking AG, Frankfurt am Main] [,]
[oder] [Euroclear Bank S.A./N.V., als dem Betreiber des Euroclear-Systems] [,]
[oder] [Clearstream Banking, societe anonyme, Luxembourg] verwahrt werden,
welche uber eine Kontenverbindung mit dem Euro-Clearing System verfug[t][en],
und weiter einschliesslich derjenigen Schuldverschreibungen, die uber ein
anderes Clearing System verwahrt werden, das uber eine Kontenverbindung mit dem
Euro-Clearing System verfugt. Die andere Dauerglobalurkunde (die
"DTC-Globalurkunde") wird von der Deutsche Bank Trust Company Americas ("DBTCA")
oder einem etwaigen Rechtsnachfolger fur The Depository Trust Company, New York
("DTC") verwahrt, bis samtliche Verpflichtungen der Emittentin aus den
Schuldverschreibungen erfullt sind. Die DTC-Globalurkunde ist als Namenspapier
ausgegeben und auf den Namen von Cede & Co. als dem Beauftragten von DTC
ausgestellt worden. Sie verbrieft die Schuldverschreibungen, die fur
Finanzinstitute verwahrt werden, die DTC-Teilnehmer sind. Die Euro-Globalurkunde
und die DTC-Globalurkunde tragen jeweils die eigenhandigen Unterschriften zweier
ordnungsgemass bevollmachtigter Vertreter der Emittentin und sind jeweils
von der Hauptzahlstelle (ss. 6) oder in deren Namen mit einer handschriftlichen
Kontrollunterschrift versehen. Die durch die Euro-Globalurkunde und die
DTC-Globalurkunde verbrieften Schuldverschreibungen entsprechen zusammen dem
jeweils ausstehenden Gesamtnennbetrag der Anleihe. Der Betrag, der jeweils auf
die durch die Euro-Globalurkunde und die DTC-Globalurkunde verbrieften
Schuldverschreibungen entfallt, ergibt sich aus dem Register (das "Register"),
das die Registerstelle (ss. 6) zu diesem Zweck fuhrt. Effektive Urkunden uber
einzelne Schuldverschreibungen und Zinsscheine werden nicht ausgegeben. Kopien
der Euro-Globalurkunde und der DTC-Globalurkunde sind bei den Zahlstellen (ss.
6) kostenlos erhaltlich.

(3) Ubertragung. Ubertragungen von Schuldverschreibungen setzen entsprechende
Depotbuchungen voraus. Ubertragungen von Schuldverschreibungen zwischen
Euro-Clearing System-Kontoinhabern einerseits und DTC-Teilnehmern andererseits
sowie der Austausch von Schuldverschreibungen nach Absatz (4) sind wahrend des
Zeitraums vom Stichtag im Sinne von ss. 4 (2) bis zu dem zugehorigen Zahlungstag
(jeweils einschliesslich) ausgeschlossen.

                                       40

<PAGE>

(4) Austausch. Die durch die DTC-Globalurkunde verbrieften Schuldverschreibungen
konnen gegen die durch die Euro-Globalurkunde verbrieften Schuldverschreibungen
ausgetauscht werden und umgekehrt. Ein solcher Austausch ist im Register zu
vermerken und erfolgt durch Erhohung oder Verminderung des Gesamtnennbetrags der
durch die DTC-Globalurkunde verbrieften Schuldverschreibungen um den
Gesamtnennbetrag der so ausgetauschten Schuldverschreibungen und eine gleich
hohe Verminderung oder Erhohung des Gesamtnennbetrags der durch die
Euro-Globalurkunde verbrieften Schuldverschreibungen.

(5) Glaubiger von Schuldverschreibungen. "Glaubiger" bedeutet jeder Inhaber
eines Miteigentumsanteils oder anderen vergleichbaren Eigentumsanspruchs oder
Rechts an den Schuldverschreibungen.

                                     ss. 2
                                     STATUS

[Im Falle von nicht nachrangigen Schuldverschreibungen einfugen: Die
Schuldverschreibungen begrunden nicht besicherte und nicht nachrangige
Verbindlichkeiten der Emittentin, die mit allen anderen nicht besicherten und
nicht nachrangigen Verbindlichkeiten der Emittentin gleichrangig sind, es sei
denn, etwas anderes ist durch zwingende gesetzliche Regelungen vorgeschrieben.]

[Im Falle von nachrangigen Schuldverschreibungen einfugen: Die
Schuldverschreibungen begrunden nicht besicherte, nachrangige Verbindlichkeiten
der Emittentin, die mit allen anderen nachrangigen Verbindlichkeiten der
Emittentin gleichrangig sind, es sei denn, etwas anderes ist durch zwingende
gesetzliche Regelungen vorgeschrieben. Im Fall der Liquidation oder des
Insolvenzverfahrens uber das Vermogen der Emittentin(1) gehen die
Verbindlichkeiten aus den Schuldverschreibungen den Anspruchen aller Glaubiger
der Emittentin aus nicht nachrangigen Verbindlichkeiten im Range nach, so dass
Zahlungen auf die Schuldverschreibungen so lange nicht erfolgen, wie die
Anspruche aller Glaubiger der Emittentin aus nicht nachrangigen
Verbindlichkeiten nicht vollstandig befriedigt sind. Kein Glaubiger ist
berechtigt, mit Anspruchen aus den Schuldverschreibungen gegen Anspruche der
Emittentin aufzurechnen. Den Glaubigern wird fur ihre Rechte aus den
Schuldverschreibungen weder durch die Emittentin noch durch Dritte irgendeine
Sicherheit gestellt; eine solche Sicherheit wird auch zu keinem spateren
Zeitpunkt gestellt werden. Nachtraglich konnen der Nachrang gemass diesem
ss. 2 nicht beschrankt sowie die Laufzeit der Schuldverschreibungen und jede
anwendbare Kundigungsfrist nicht verkurzt werden. Werden die
Schuldverschreibungen vor dem Falligkeitstag unter anderen als den in diesem ss.
2 beschriebenen Umstanden zuruckgezahlt oder von der Emittentin (ausser in
den Fallen des ss. 10 Absatz 5a Satz 6 Kreditwesengesetz) zuruckerworben, so ist
der zuruckgezahlte oder gezahlte Betrag der Emittentin ohne Rucksicht auf
entgegenstehende Vereinbarungen zuruckzugewahren, sofern nicht der gezahlte
Betrag durch die Einzahlung anderen, zumindest gleichwertigen haftenden
Eigenkapitals im Sinne des Kreditwesengesetzes ersetzt worden ist oder die
Bundesanstalt fur Finanzdienstleistungsaufsicht der vorzeitigen Ruckzahlung oder
dem Ruckkauf zugestimmt hat.]

______________________________

1    Gemass ss. 12 Insolvenzordnung und ss. 45 Baden-Wurttembergisches
     Ausfuhrungsgesetz zum Gerichtsverfassungsgesetz kann ein Insolvenzverfahren
     uber das Vermogen der L-Bank nicht eroffnet werden.

                                       41
<PAGE>

                                     ss. 3
                                     ZINSEN

[Im Falle von festverzinslichen Schuldverschreibungen einfugen:

(1) Zinssatz und Zinszahlungstage. Die Schuldverschreibungen werden in Hohe
ihres Nennbetrages verzinst, und zwar vom [Verzinsungsbeginn einfugen]
(einschliesslich) bis zum Falligkeitstag (wie in ss. 5 [Absatz (1)]
definiert) (ausschliesslich) mit [Zinssatz einfugen] % per annum. Die Zinsen
sind nachtraglich am [Festzinstermin(e) einfugen] eines jeden Jahres zahlbar
(jeweils ein "Zinszahlungstag"). Die erste Zinszahlung erfolgt am [ersten
Zinszahlungstag einfugen] [sofern der erste Zinszahlungstag nicht der erste
Jahrestag des Verzinsungsbeginns ist, einfugen: und belauft sich auf
[anfanglichen Bruchteilszinsbetrag pro kleinste festgelegte Stuckelung einfugen]
je Schuldverschreibung im Nennbetrag von [kleinste festgelegte Stuckelung
einfugen] [und [weitere anfangliche Bruchteilszinsbetrage fur jede weitere
festgelegte Stuckelung einfugen] je Schuldverschreibung im Nennbetrag von
[weitere festgelegte Stuckelungen einfugen]]. [Sofern der Falligkeitstag kein
Festzinstermin ist, einfugen: Die Zinsen fur den Zeitraum vom [den letzten dem
Falligkeitstag vorausgehenden Festzinstermin einfugen] (einschliesslich) bis
zum Falligkeitstag (ausschliesslich) belaufen sich auf [abschliessenden
Bruchteilszinsbetrag pro kleinste festgelegte Stuckelung einfugen] je
Schuldverschreibung im Nennbetrag von [kleinste festgelegte Stuckelung einfugen]
und [weitere abschliessende Bruchteilszinsbetrage fur jede weitere
festgelegte Stuckelung einfugen] je Schuldverschreibung im Nennbetrag von
[weitere festgelegte Stuckelungen einfugen].] [Falls als Zinstagequotient
Actual/Actual (ISMA Regelung 251) anwendbar ist, einfugen: Die Anzahl der
Zinszahlungstage im Kalenderjahr (jeweils ein "Feststellungstermin") betragt
[Anzahl der regularen Zinszahlungstage im Kalenderjahr einfugen].]

(2) Auflaufende Zinsen. Der Zinslauf der Schuldverschreibungen endet mit Ablauf
des Tages, der dem Tag vorangeht, an dem sie zur Ruckzahlung fallig werden.
Falls die Emittentin die Schuldverschreibungen bei Falligkeit nicht einlost,
erfolgt die Verzinsung des ausstehenden Nennbetrages der Schuldverschreibungen
vom Tag der Falligkeit (einschliesslich) bis zum Tag der tatsachlichen
Ruckzahlung der Schuldverschreibungen (ausschliesslich) in Hohe des
gesetzlich festgelegten Satzes fur Verzugszinsen)4).

(3) Berechnung der Zinsen fur Teile von Zeitraumen. Sofern Zinsen fur einen
Zeitraum von weniger als einem Jahr zu berechnen sind, erfolgt die Berechnung
auf der Grundlage des Zinstagequotienten (wie nachstehend definiert).]

[Im Falle von variabel verzinslichen Schuldverschreibungen einfugen:

(1) Zinssatz und Zinszahlungstage.

(a) Die Schuldverschreibungen werden in Hohe ihres Nennbetrages ab dem
[Verzinsungsbeginn einfugen] (der "Verzinsungsbeginn") (einschliesslich) bis
zum ersten Zinszahlungstag (ausschliesslich) und danach von jedem
Zinszahlungstag (einschliesslich) bis zum nachstfolgenden Zinszahlungstag
(ausschliesslich) verzinst. Zinsen auf die Schuldverschreibungen sind an
jedem Zinszahlungstag zahlbar.

________________________________

2    Der gesetzliche Verzugszinssatz betragt fur das Jahr funf Prozentpunkte
     uber dem von der Deutschen Bundesbank fur die Zeitraume ab dem 1. Januar
     bzw. ab dem 1. Juli eines jeden Jahres veroffentlichten Basiszinssatz,
     ss.ss. 288 Absatz 1, 247 Absatz 1 BGB.

                                       42
<PAGE>

(b) "Zinszahlungstag" bedeutet

[im Falle von festgelegten Zinszahlungstagen einfugen: jeder [festgelegte
Zinszahlungstage einfugen].]

[im Falle von festgelegten Zinsperioden einfugen: (soweit diese
Emissionsbedingungen keine abweichenden Bestimmungen vorsehen) jeweils der Tag,
der [Zahl einfugen] [Wochen] [Monate] [andere festgelegte Zeitraume einfugen]
nach dem vorausgehenden Zinszahlungstag oder, im Fall des ersten
Zinszahlungstages, nach dem Verzinsungsbeginn liegt.]

(c) Fallt ein Zinszahlungstag (ausgenommen der Zinszahlungstag am Falligkeitstag
des Kapitals) auf einen Tag, der kein Geschaftstag (wie nachstehend definiert)
ist, so wird der Zinszahlungstag

[bei Anwendung der Modifizierter folgender Geschaftstag-Konvention einfugen: auf
den nachstfolgenden Geschaftstag verschoben, es sei denn, jener wurde dadurch in
den nachsten Kalendermonat fallen; in diesem Fall wird der Zinszahlungstag auf
den unmittelbar vorausgehenden Geschaftstag vorgezogen.]

[bei Anwendung der FRN-Konvention einfugen: auf den nachstfolgenden Geschaftstag
verschoben, es sei denn, jener wurde dadurch in den nachsten Kalendermonat
fallen; in diesem Fall wird der Zahlungstag auf den unmittelbar vorausgehenden
Geschaftstag vorgezogen. Im Falle einer Zinszahlung ist jeder nachfolgende
Zinszahlungstag der Tag, der numerisch dem vorausgehenden Zinszahlungstag in
demjenigen Kalendermonat entspricht, der [Zahl einfugen] [Monate] [andere
festgelegte Zeitraume einfugen] nach dem vorausgehenden Zinszahlungstag oder, im
Fall des ersten Zinszahlungstages, dem Begebungstag liegt, es sei denn, dass (a)
kein derartiger numerisch korrespondierender Tag in dem Kalendermonat existiert,
in den der Zinszahlungstag fallt, in welchem Fall der Zinszahlungstag der letzte
Geschaftstag in diesem Kalendermonat ist; (b) der betreffende Zinszahlungstag
auf einen Tag fallen wurde, der kein Geschaftstag ist, in welchem Fall der
Zinszahlungstag der erste darauf folgende Geschaftstag ist, es sei denn, dieser
Tag fiele in den nachsten Kalendermonat; in diesem Fall wird der Zinszahlungstag
auf den ersten vorausgehenden Geschaftstag verschoben; oder (c) der
vorausgehende anwendbare Zinszahlungstag auf den letzten Geschaftstag in einem
Kalendermonat fallen wurde, dann sind alle folgenden anwendbaren
Zinszahlungstage vor dem Falligkeitstag (wie in ss. 5 (1) definiert) der jeweils
letzte Geschaftstag des Monats, der [Zahl einfugen] [Monate] [andere festgelegte
Zeitraume einfugen] nach dem vorausgehenden anwendbaren Zinszahlungstag liegt.]

[bei Anwendung der Folgender Geschaftstag-Konvention einfugen: auf den
nachstfolgenden Geschaftstag verschoben.]

[bei Anwendung der Vorhergegangener Geschaftstag-Konvention einfugen: auf den
unmittelbar vorausgehenden Geschaftstag vorgezogen.]

(d) "Geschaftstag" bedeutet (i) mit Bezug auf eine Zahlung, die an einem solchen
Geschaftstag auf die Schuldverschreibungen in der Designierten Wahrung zu
leisten ware, [ein Frankfurter Geschaftstag] [und][,] [ein [anderen Ort
einfugen] Geschaftstag] [und] [ein TARGET Geschaftstag], und (ii) mit Bezug auf
eine Zahlung, die an einem solchen Geschaftstag auf die Schuldverschreibungen in
U.S. Dollar and den registrierten Glaubiger zu leisten ware, [ein Frankfurter
Geschaftstag] [und] [,] ein New Yorker Geschaftstag [und][,][[ein [anderen Ort
einfugen] Geschaftstag] [und ein TARGET Geschaftstag]. [Ein

                                       43
<PAGE>

"Frankfurter Geschaftstag" ist jeder Tag (der nicht ein Samstag oder Sonntag
ist) an dem Geschaftsbanken in Frankfurt fur Geschafte (einschliesslich
Devisen- und Sortengeschafte) geoffnet sind]. Ein "New Yorker Geschaftstag" ist
jeder Tag an dem Geschaftsbanken in New York nicht zur Schliessung des
Geschafts verpflichtet oder ermachtigt sind. ["[Ort einfugen] Geschaftstag" ist
jeder Tag (der nicht ein Samstag oder Sonntag ist) an dem Geschaftsbanken in
[Ort einfugen] fur Geschafte (einschliesslich Devisen- und Sortengeschafte)
geoffnet sind].] ["TARGET Geschaftstag" ist jeder Tag an dem das Trans-European
Automated Real-time Gross Settlement Express Transfer System (TARGET) in Betrieb
ist.]

(2) Zinssatz. [Bei Bildschirmfeststellung einfugen: Der Zinssatz (der
"Zinssatz") fur jede Zinsperiode (wie nachstehend definiert) ist, sofern
nachstehend nichts Abweichendes bestimmt wird, der Angebotssatz (ausgedruckt als
Prozentsatz per annum) fur Einlagen in der Designierten Wahrung fur die
jeweilige Zinsperiode, der auf der Bildschirmseite am Zinsfestlegungstag (wie
nachstehend definiert) gegen 11.00 Uhr ([zutreffenden Ort einfugen] Ortszeit)
angezeigt wird [im Falle einer Marge einfugen: [zuzuglich] [abzuglich] der Marge
(wie nachstehend definiert)], wobei alle Festlegungen durch die
Berechnungsstelle erfolgen.

"Zinsperiode" bezeichnet jeweils den Zeitraum vom Verzinsungsbeginn
(einschliesslich) bis zum ersten Zinszahlungstag (ausschliesslich) bzw.
von jedem Zinszahlungstag (einschliesslich) bis zum jeweils darauf folgenden
Zinszahlungstag (ausschliesslich).

"Zinsfestlegungstag" bezeichnet den [zutreffende Zahl von Tagen einfugen]
[TARGET] [zutreffende Bezugnahmen einfugen] Geschaftstag vor Beginn der
jeweiligen Zinsperiode. [Im Falle von anderen als den in ss. 3 (1) (d)
definierten Geschaftstagen einfugen]: ["zutreffenden Ort einfugen] Geschaftstag"
bezeichnet jeden Tag (ausser einem Samstag oder Sonntag), an dem
Geschaftsbanken in [zutreffenden Ort einfugen] fur Geschafte
(einschliesslich Devisen- und Sortengeschafte) geoffnet sind.]

[Im Falle einer Marge einfugen: Die "Marge" betragt [o] % per annum.]

"Bildschirmseite" bedeutet [Bildschirmseite einfugen].

Sollte zu der genannten Zeit die massgebliche Bildschirmseite nicht zur
Verfugung stehen oder wird kein Angebotssatz angezeigt, wird die
Berechnungsstelle von den Referenzbanken (wie nachstehend definiert) deren
jeweilige Angebotssatze (jeweils als Prozentsatz per annum ausgedruckt) fur
Einlagen in der Designierten Wahrung fur die betreffende Zinsperiode gegenuber
fuhrenden Banken im [zutreffenden Ort einfugen] Interbanken-Markt [in der
Euro-Zone] um ca. 11.00 Uhr ([zutreffenden Ort einfugen] Ortszeit) am
Zinsfestlegungstag anfordern. Falls zwei oder mehr Referenzbanken der
Berechnungsstelle solche Angebotssatze nennen, ist der Zinssatz fur die
betreffende Zinsperiode das arithmetische Mittel (falls erforderlich, auf- oder
abgerundet auf das nachste [falls der Referenzsatz EURIBOR ist, einfugen:
Tausendstel Prozent, wobei 0,0005] [falls der Referenzsatz nicht EURIBOR ist,
einfugen: Hunderttausendstel Prozent, wobei 0,000005] aufgerundet wird) dieser
Angebotssatze [im Falle einer Marge einfugen: [zuzuglich] [abzuglich] der
Marge], wobei alle Festlegungen durch die Berechnungsstelle erfolgen.

Falls an einem Zinsfestlegungstag nur eine oder keine der Referenzbanken der
Berechnungsstelle solche im vorstehenden Absatz beschriebenen Angebotssatze
nennt, ist der Zinssatz fur die betreffende Zinsperiode der Satz per annum, den
die Berechnungsstelle als das arithmetische Mittel (falls erforderlich, auf-
oder abgerundet auf das nachste [falls der Referenzsatz EURIBOR ist, einfugen:
Tausendstel Prozent, wobei 0,0005] [falls der

                                       44
<PAGE>

Referenzsatz nicht EURIBOR ist, einfugen: Hunderttausendstel Prozent, wobei
0,000005] aufgerundet wird) der Angebotssatze ermittelt, die die Referenzbanken
bzw. zwei oder mehrere von ihnen der Berechnungsstelle auf ihre Anfrage als den
jeweiligen Satz nennen, zu dem ihnen um ca. 11.00 Uhr ([zutreffenden Ort
einfugen] Ortszeit) am betreffenden Zinsfestlegungstag Einlagen in der
Designierten Wahrung fur die betreffende Zinsperiode von fuhrenden Banken im
[zutreffenden Ort einfugen] Interbanken-Markt [in der Euro-Zone] angeboten
werden [im Falle einer Marge einfugen: [zuzuglich] [abzuglich] der Marge]; falls
weniger als zwei der Referenzbanken der Berechnungsstelle solche Angebotssatze
nennen, soll der Zinssatz fur die betreffende Zinsperiode der Angebotssatz fur
Einlagen in der Designierten Wahrung fur die betreffende Zinsperiode oder das
arithmetische Mittel (gerundet wie oben beschrieben) der Angebotssatze fur
Einlagen in der Designierten Wahrung fur die betreffende Zinsperiode sein, den
bzw. die eine oder mehrere Banken (die nach Ansicht der Berechnungsstelle und
der Emittentin fur diesen Zweck geeignet sind) der Berechnungsstelle als Satze
bekannt geben, die sie an dem betreffenden Zinsfestlegungstag gegenuber
fuhrenden Banken im [zutreffenden Ort einfugen] Interbanken-Markt [in der
Euro-Zone] nennen (bzw. den diese Banken gegenuber der Berechnungsstelle nennen)
[im Falle einer Marge einfugen: [zuzuglich] [abzuglich] der Marge]. Fur den
Fall, dass der Zinssatz nicht gemass den vorstehenden Bestimmungen dieses
Absatzes ermittelt werden kann, ist der Zinssatz der Angebotssatz oder das
arithmetische Mittel der Angebotssatze auf der Bildschirmseite, wie vorstehend
beschrieben, an dem letzten Tag vor dem Zinsfestlegungstag, an dem diese
Angebotssatze angezeigt wurden [im Falle einer Marge einfugen: [zuzuglich]
[abzuglich] der Marge (wobei jedoch, falls fur die betreffende Zinsperiode eine
andere Marge als fur die unmittelbar vorausgehende Zinsperiode gilt, die Marge
der betreffenden Zinsperiode an die Stelle der Marge fur die vorausgehende
Zinsperiode tritt).]

"Referenzbanken" bezeichnet [diejenigen Niederlassungen von vier derjenigen
Banken, deren Angebotssatze zur Ermittlung des massgeblichen Angebotssatzes
zu dem Zeitpunkt benutzt wurden, als solch ein Angebot letztmals auf der
massgeblichen Bildschirmseite angezeigt wurde] [andere Referenzbanken hier
einfugen].

[Im Falle des Interbanken-Marktes in der Euro-Zone einfugen: "Euro-Zone"
bezeichnet das Gebiet derjenigen Mitgliedstaaten der Europaischen Union, die
gemass dem Vertrag uber die Grundung der Europaischen Gemeinschaft
(unterzeichnet in Rom am 25. Marz 1957), geandert durch den Vertrag uber die
Europaische Union (unterzeichnet in Maastricht am 7. Februar 1992) und den
Amsterdamer Vertrag vom 2. Oktober 1997, in seiner jeweiligen Fassung, eine
einheitliche Wahrung eingefuhrt haben oder jeweils eingefuhrt haben werden.]

[Wenn der Referenzsatz ein anderer als LIBOR oder EURIBOR ist, sind die
entsprechenden Einzelheiten anstelle der Bestimmungen dieses Absatzes (2)
einzufugen]

[Sofern ISDA-Feststellung gelten soll, sind die entsprechenden Bestimmungen
einzufugen und die von der International Swaps and Derivatives Association, Inc.
("ISDA") veroffentlichten 2000 ISDA-Definitions diesen Emissionsbedingungen als
Anlage beizufugen] [Sofern eine andere Methode der Feststellung/Indexierung
anwendbar ist, sind die entsprechenden Einzelheiten anstelle der Bestimmungen
dieses Absatzes (2) einzufugen]

[Falls ein Mindest- und/oder Hochstzinssatz gilt, einfugen:

                                       45
<PAGE>

(3) [Mindest-] [und] [Hochst-] Zinssatz.

[Falls ein Mindestzinssatz gilt einfugen: Wenn der gemass den obigen
Bestimmungen fur eine Zinsperiode ermittelte Zinssatz niedriger ist als
[Mindestzinssatz einfugen], so ist der Zinssatz fur diese Zinsperiode
[Mindestzinssatz einfugen].]

[Falls ein Hochstzinssatz gilt: Wenn der gemass den obigen Bestimmungen fur
eine Zinsperiode ermittelte Zinssatz hoher ist als [Hochstzinssatz einfugen], so
ist der Zinssatz fur diese Zinsperiode [Hochstzinssatz einfugen].]]

[(4)] Zinsbetrag. Die Berechnungsstelle wird zu oder baldmoglichst nach jedem
Zeitpunkt, an dem der Zinssatz zu bestimmen ist, den auf die
Schuldverschreibungen zahlbaren Zinsbetrag in Bezug auf jede festgelegte
Stuckelung (der "Zinsbetrag") fur die entsprechende Zinsperiode berechnen. Der
Zinsbetrag wird ermittelt, indem der Zinssatz und der Zinstagequotient (wie
nachstehend definiert) auf jede festgelegte Stuckelung angewendet werden, wobei
der resultierende Betrag auf die kleinste Einheit in [Designierte
Wahrungseinheit einfugen] auf- oder abgerundet wird, wobei 0,5 solcher Einheiten
aufgerundet werden.

[(5)] Mitteilung von Zinssatz und Zinsbetrag. Die Berechnungsstelle wird
veranlassen, dass der Zinssatz, der Zinsbetrag fur die jeweilige Zinsperiode,
die jeweilige Zinsperiode und der betreffende Zinszahlungstag der Emittentin,
der Hauptzahlstelle sowie den Glaubigern gemass ss. 11 baldmoglichst, aber
keinesfalls spater als am vierten auf die jeweilige Berechnung folgenden
[TARGET] [zutreffende Bezugnahme einfugen] Geschaftstag (wie in ss. 3 Absatz
[(1)] [und] [(2)] definiert) sowie jeder Borse, an der die betreffenden
Schuldverschreibungen zu diesem Zeitpunkt notiert sind und deren Regeln eine
Mitteilung an die Borse verlangen, baldmoglichst nach der Bestimmung, aber
keinesfalls spater als am ersten Tag der jeweiligen Zinsperiode mitgeteilt
werden. Im Fall einer Verlangerung oder Verkurzung der Zinsperiode konnen der
mitgeteilte Zinsbetrag und Zinszahlungstag ohne Vorankundigung nachtraglich
abgeandert (oder andere geeignete Anpassungsregelungen getroffen) werden. Jede
solche Anderung wird umgehend allen Borsen, an denen die Schuldverschreibungen
zu diesem Zeitpunkt notiert sind, sowie den Glaubigern gemass ss. 11
mitgeteilt.

[(6)] Verbindlichkeit der Festsetzungen. Alle Bescheinigungen, Mitteilungen,
Gutachten, Festsetzungen, Berechnungen, Quotierungen und Entscheidungen, die von
der Berechnungsstelle fur die Zwecke dieses ss. 3 gemacht, abgegeben, getroffen
oder eingeholt werden, sind (sofern nicht ein offensichtlicher Irrtum vorliegt)
fur die Emittentin, die Registerstelle, die Zahlstellen und die Glaubiger
bindend.

[(7)] Auflaufende Zinsen. Sollte die Emittentin die Schuldverschreibungen bei
Falligkeit nicht einlosen, endet die Verzinsung des ausstehenden Nennbetrags der
Schuldverschreibungen nicht am Falligkeitstag, sondern erst mit Ablauf des
Tages, der dem Tag der tatsachlichen Ruckzahlung der Schuldverschreibungen
vorangeht. Der jeweils geltende Zinssatz ist der gesetzlich festgelegte Satz fur
Verzugszinsen.]

[Im Falle von Nullkupon-Schuldverschreibungen einfugen: (1) Keine periodischen
Zinszahlungen. Es erfolgen wahrend der Laufzeit keine periodischen Zinszahlungen
auf die Schuldverschreibungen.

(2) Auflaufende Zinsen. Sollte die Emittentin die Schuldverschreibungen bei
Falligkeit nicht einlosen, fallen auf den ausstehenden Nennbetrag der
Schuldverschreibungen ab dem

                                       46
<PAGE>

Falligkeitstag (einschliesslich) bis zum Tag der tatsachlichen Ruckzahlung
(ausschliesslich) Zinsen in Hohe des gesetzlich festgelegten Satzes fur
Verzugszinsen(3) an.]

[Im Falle von Doppelwahrungs-Schuldverschreibungen, indexierten
Schuldverschreibungen, Raten-Schuldverschreibungen oder Schuldverschreibungen
mit anderen Zinsberechnungmethoden anwendbare Bestimmungen hinsichtlich Zinsen
hier einfugen.]

[(o)] Zinstagequotient. "Zinstagequotient" bezeichnet im Hinblick auf die
Berechnung eines Zinsbetrages auf eine Schuldverschreibung fur einen beliebigen
Zeitraum (der "Zinsberechnungszeitraum"):

[im Falle von Actual/Actual (ISMA Regelung 251) einfugen: (a) wenn der
Zinsberechnungszeitraum (einschliesslich des ersten, aber
ausschliesslich des letzten Tages dieser Periode) kurzer ist als die
Feststellungsperiode (wie nachstehend definiert), in die das Ende des
Zinsberechnungszeitraumes fallt, oder ihr entspricht, die Anzahl der Tage in dem
betreffenden Zinsberechnungszeitraum (einschliesslich des ersten, aber
ausschliesslich des letzten Tages dieser Periode), geteilt durch das Produkt
(i) der Anzahl der Tage in der Feststellungsperiode und (ii) der Anzahl der
Feststellungstermine (wie in ss. 3 (1) definiert) in einem Kalenderjahr; oder

(b) wenn der Zinsberechnungszeitraum (einschliesslich des ersten, aber
ausschliesslich des letzten Tages dieser Periode) langer ist als die
Feststellungsperiode, in die das Ende des Zinsberechnungszeitraumes fallt, die
Summe (A) der Anzahl der Tage in dem Zinsberechnungszeitraum, die in die
Feststellungsperiode fallen, in welcher der Zinsberechnungszeitraum beginnt,
geteilt durch das Produkt (i) der Anzahl der Tage in dieser Feststellungsperiode
und (ii) der Anzahl der Feststellungstermine (wie in ss. 3 (1) definiert) in
einem Kalenderjahr und (B) der Anzahl der Tage in dem Zinsberechnungszeitraum,
die in die nachste Feststellungsperiode fallen, geteilt durch das Produkt (i)
der Anzahl der Tage in dieser Feststellungsperiode und (ii) der Anzahl der
Feststellungstermine (wie in ss. 3 (1) definiert) in einem Kalenderjahr.

"Feststellungsperiode" ist die Periode ab einem Feststellungstermin
(einschliesslich desselben) bis zum nachsten Feststellungstermin
(ausschliesslich desselben).]

[andere relevante Actual/Actual-Methode nach ISMA einfugen]

[Im Falle von Actual/Actual (ISDA) einfugen: die tatsachliche Anzahl von Tagen
im Zinsberechnungszeitraum, dividiert durch 365 (oder, falls ein Teil dieses
Zinsberechnungszeitraumes in ein Schaltjahr fallt, die Summe aus (A) der
tatsachlichen Anzahl der in das Schaltjahr fallenden Tage des
Zinsberechnungszeitraumes, dividiert durch 366, und (B) die tatsachliche Anzahl
der nicht in das Schaltjahr fallenden Tage des Zinsberechnungszeitraumes,
dividiert durch 365).]

[im Falle von Actual/365 (Fixed) einfugen: die tatsachliche Anzahl von Tagen im
Zinsberechnungszeitraum, dividiert durch 365.]

[im Falle von Actual/360 einfugen: die tatsachliche Anzahl von Tagen im
Zinsberechnungszeitraum, dividiert durch 360.]

______________________________

3    Der gesetzliche Verzugszinssatz betragt fur das Jahr funf Prozentpunkte
     uber dem von der Deutschen Bundesbank fur die Zeitraume ab dem 1. Januar
     bzw. ab dem 1. Juli eines jeden Jahres veroffentlichten Basiszinssatz,
     ss.ss. 288 Absatz 1, 247 Absatz 1 BGB.

                                       47
<PAGE>

[im Falle von 30/360, 360/360 oder Bond Basis einfugen: die Anzahl von Tagen im
Zinsberechnungszeitraum, dividiert durch 360, wobei die Anzahl der Tage auf der
Grundlage eines Jahres von 360 Tagen mit zwolf Monaten zu je 30 Tagen zu
ermitteln ist (es sei denn, (A) der letzte Tag des Zinsberechnungszeitraums
fallt auf den 31. Tag eines Monats, wahrend der erste Tag des
Zinsberechnungszeitraumes weder auf den 30. noch auf den 31. Tag eines Monats
fallt, in welchem Fall der diesen Tag enthaltende Monat nicht als ein auf 30
Tage gekurzter Monat zu behandeln ist, oder (B) der letzte Tag des
Zinsberechnungszeitraumes fallt auf den letzten Tag des Monats Februar, in
welchem Fall der Monat Februar nicht als ein auf 30 Tage verlangerter Monat zu
behandeln ist).]

[im Falle von 30E/360 oder Eurobond Basis einfugen: die Anzahl der Tage im
Zinsberechnungszeitraum, dividiert durch 360 (wobei die Anzahl der Tage auf der
Grundlage eines Jahres von 360 Tagen mit 12 Monaten zu 30 Tagen zu ermitteln
ist, und zwar ohne Berucksichtigung des Datums des ersten oder letzten Tages des
Zinsberechnungszeitraumes, es sei denn, dass im Falle des letzten
Zinsberechnungszeitraumes der letzte Tag dieses Zinsberechnungszeitraumes der
letzte Tag des Monats Februar ist, in welchem Fall der Monat Februar nicht als
ein auf 30 Tage verlangerter Monat zu behandeln ist.]

                                      ss. 4
                                    ZAHLUNGEN

(1) Zahlungen.

(a) Zahlungen von Kapital [im Falle von Schuldverschreibungen, die keine
Nullkupon Schuldverschreibungen sind, einfugen: und Zinsen] auf die
Schuldverschreibungen erfolgen an das Euro-Clearing System in der Designierten
Wahrung und an den eingetragenen Inhaber der DTC-Globalurkunde in US-Dollar oder
der Designierten Wahrung nach Massgabe der nachfolgenden Bestimmungen. Der
Betrag der Zahlungen an die Euro-Clearing Systeme einerseits und den
eingetragenen Inhaber der DTC-Globalurkunde andererseits bemisst sich nach der
Hohe des Gesamtnennbetrages der Schuldverschreibungen, die durch die
Euro-Globalurkunde und die DTC-Globalurkunde verbrieft werden, so wie er durch
die Registerstelle (ss. 6) bei Geschaftsschluss am jeweiligen Stichtag (Absatz
(2)) festgestellt wird. Zahlungen von Kapital erfolgen gegen Einreichung der
Euro-Globalurkunde und der DTC-Globalurkunde bei der jeweiligen Zahlstelle (ss.
6).

(b) Ein Anleiheglaubiger, der seine Schuldverschreibungen uber die DTC halt (ein
"DTC-Anleiheglaubiger"), erhalt Zahlungen von Kapital und Zinsen auf die
Schuldverschreibungen in US-Dollar, soweit er nicht gemass den nachfolgend
beschriebenen Verfahren Zahlungen in der Designierten Wahrung wahlt. Soweit
DTC-Anleiheglaubiger fur eine Zahlung von Kapital oder Zinsen keine derartige
Wahl getroffen haben, wird der fur alle diese DTC-Anleiheglaubiger bei dieser
Zahlung bestimmte Gesamtbetrag (der "Designierte Wahrungs-Umtauschbetrag") von
oder im Auftrag der US-Zahlstelle in US-Dollar umgetauscht und durch Uberweisung
in gleichtagig verfugbaren Mitteln an den eingetragenen Inhaber der
DTC-Globalurkunde zur Auszahlung uber das Abrechnungssystem der DTC an die
betreffenden DTC-Teilnehmer gezahlt. Alle Kosten eines derartigen Umtauschs
werden von diesen Zahlungen abgezogen. Jeder derartige Umtausch basiert auf dem
Ankaufskurs der US-Zahlstelle oder in ihrem Auftrag vor oder um 11.00 Uhr
Frankfurter Zeit am zweiten Umtauschgeschaftstag vor dem jeweiligen Zahlungstag
fur den Kauf des Designierten Wahrungs-Umtauschbetrages durch diese Zahlstelle
oder in ihrem Auftrag gegen US-Dollar zur Abrechnung an diesem Zahlungstag.
"Umtauschgeschaftstag" ist ein Tag, der ein New Yorker Geschaftstag, [ein
[relevanten Ort einfugen] Geschaftstag] [und][,] [ein Frankfurter Geschaftstag]
[und ein TARGET Geschaftstag] (Absatz (3)) ist. Falls es einen derartigen
Ankaufskurs nicht gibt, wird die US-Zahlstelle oder ihr Beauftragter von einer
im Devisenhandel fuhrenden Bank in New York, die

                                       48
<PAGE>

von ihr zu diesem Zweck ausgewahlt wird, einen Ankaufskurs einholen. Falls kein
Ankaufskurs einer im Devisenhandel fuhrenden Bank erhaltlich ist, erfolgt die
Zahlung des Designierten Wahrungs-Umtauschbetrages in der Designierten Wahrung
auf das Konto oder die Konten, die der US-Zahlstelle von der DTC bezeichnet
werden. Bis dieses Konto oder diese Konten derart bezeichnet sind, werden die
noch von der US-Zahlstelle gehaltenen Mittel mit einem Zinssatz, der von dieser
Zahlstelle fur bei ihr als Tagesgeld angelegte Einlagen gestellt wird, verzinst,
soweit die Zahlstelle vernunftigerweise in der Lage ist, diese Mittel wieder
anzulegen.

(c) Ein DTC-Anleiheglaubiger kann Zahlung von Kapital und Zinsen auf die
Schuldverschreibungen in der Designierten Wahrung wahlen, indem er die DTC durch
den betreffenden DTC-Teilnehmer dazu veranlasst, die US-Zahlstelle zu dem
nachfolgend bestimmten Zeitpunkt uber (i) die Wahl dieses DTC-Anleiheglaubigers,
diese Zahlung ganz oder zum Teil in der Designierten Wahrung zu empfangen, und
(ii) den Auftrag zur Uberweisung auf ein Designierte Wahrungs-Konto zu
benachrichtigen. Eine derartige Wahl hat fur die jeweilige Zahlung durch den
DTC-Anleiheglaubiger zu dem Zeitpunkt und in der Art und Weise zu erfolgen, wie
sie von den jeweils anwendbaren Verfahrensregeln der DTC gefordert wird und
welche nach solchen Verfahrensregeln unwiderruflich ist. Die Benachrichtigung
seitens der DTC uber diese Wahl, den Uberweisungsauftrag und den in der
Designierten Wahrung gemass diesem Absatz (1)(c) zahlbaren Betrag muss bei
der US-Zahlstelle vor 17.00 Uhr (New Yorker Zeit) am funften New Yorker
Geschaftstag (Absatz (3)) nach dem jeweiligen Stichtag (Absatz (2)) fur Zinsen
und vor 17.00 Uhr (New Yorker Zeit) am achten New Yorker Geschaftstag vor dem
Zahlungstag (Absatz (4)) fur die Zahlung von Kapital eingegangen sein. Zahlungen
in der Designierten Wahrung gemass diesem Absatz (1)(c) erfolgen durch
Uberweisung von gleichtagig verfugbaren Mitteln auf die von der DTC bezeichneten
Designierten Wahrungs-Konten.

(d) Zahlungen der Emittentin an das Euro-Clearing System und an den
eingetragenen Inhaber der DTC-Globalurkunde oder nach deren Weisung befreien die
Emittentin in Hohe der geleisteten Zahlungen von ihren Verbindlichkeiten aus den
Schuldverschreibungen.

(2) Stichtag. Der Stichtag (der "Stichtag") fur die Zwecke von
Ubertragungsbeschrankungen (ss. 1(3)) und fur Zahlungen (Absatz (1)) von Kapital
und Zinsen ist der jeweils fruhere der beiden folgenden Termine: (a) der Tag,
nach dem sich aufgrund der jeweils geltenden Regeln des Euro-Clearing Systems
die Empfangsberechtigung der Euro-Clearing System Kontoinhaber fur Zahlungen auf
bei dem Euro-Clearing System verwahrte Schuldverschreibungen bestimmt, die auf
die Designierte Wahrung lauten und in Dauerglobalurkunden verbrieft sind, und
(b) der zehnte New Yorker Geschaftstag (Absatz (3)) vor dem jeweiligen
Falligkeitstag.

(3) Geschaftstage. [Ist ein Falligkeitstag fur die Zahlung von Kapital [im Falle
von Schuldverschreibungen, die keine Nullkupon-Schuldverschreibungen sind,
einfugen: oder Zinsen] in der Designierten Wahrung bezuglich einer
Schuldverschreibung [ kein Frankfurter Geschaftstag] [oder][,] [ kein [anderen
Ort einfugen] Geschaftstag] [oder] [kein TARGET Geschaftstag], so wird die
betreffende Zahlung erst am nachfolgenden [[Frankfurter] [und][,] [anderen Ort
einfugen] [und] [TARGET] Geschaftstag] geleistet, ohne dass wegen dieser
Zahlungsverzogerung zusatzliche Zinsen gezahlt werden. Ist ein Falligkeitstag
fur die Zahlung von Kapital [im Falle von Schuldverschreibungen, die keine
Nullkupon-Anleihen sind, einfugen: oder Zinsen] in US-Dollar an den
registrierten Glaubiger der DTC Globalurkunde [ kein Frankfurter Geschaftstag]
[oder][,] kein New Yorker Geschaftstag [oder][,] [ kein [anderen Ort einfugen]
Geschaftstag][oder kein TARGET Geschaftstag], so wird die betreffende Zahlung
erst am nachfolgenden [Frankfurter] [und][,] New Yorker [und][,] [anderen Ort
einfugen] Geschaftstag][und TARGET Geschaftstag] geleistet, ohne dass

                                       49
<PAGE>

wegen dieser Zahlungsverzogerung zusatzliche Zinsen gezahlt werden. [Ein
"Frankfurter Geschaftstag" ist jeder Tag (der nicht ein Samstag oder Sonntag
ist), an dem Geschaftsbanken in Frankfurt fur Geschafte (einschliesslich
Devisen- und Sortengeschafte) geoffnet sind]. Ein "New Yorker Geschaftstag" ist
jeder Tag an dem Geschaftsbanken in New York nicht zur Schliessung des
Geschafts verpflichtet oder ermachtigt sind. ["[Ort hier einfugen] Geschaftstag"
ist jeder Tag (der nicht ein Samstag oder Sonntag ist) an dem Geschaftsbanken in
[anderen Ort einfugen] fur Geschafte (einschliesslich Devisen- und
Sortengeschafte) geoffnet sind].] ["TARGET Geschaftstag" ist jeder Tag an dem
das Trans-European Automated Real-time Gross Settlement Express Transfer System
(TARGET) in Betrieb ist.]] [andere relevante "Geschaftstagskonvention"
einfugen]

(4) Zahlungstag und Falligkeitstag. Im Sinne dieser Anleihebedingungen ist
"Zahlungstag" der Tag, an dem, gegebenenfalls aufgrund einer Anpassung
gemass Absatz (3), die Zahlung tatsachlich zu leisten ist, und
"Falligkeitstag" der vorgesehene Zahlungstermin ohne Berucksichtigung einer
solchen Anpassung.

(5) Bezugnahmen auf Kapital. Bezugnahmen in diesen Emissionsbedingungen auf
Kapital der Schuldverschreibungen schliessen, soweit anwendbar, die
folgenden Betrage ein: den Ruckzahlungsbetrag der Schuldverschreibungen[,]
[falls die Emittentin das Wahlrecht hat, die Schuldverschreibungen vorzeitig
zuruckzuzahlen, einfugen: den Wahl-Ruckzahlungsbetrag (Call) der
Schuldverschreibungen[,]] [falls der Glaubiger ein Wahlrecht hat, die
Schuldverschreibungen vorzeitig zu kundigen, einfugen: den
Wahl-Ruckzahlungsbetrag (Put) der Schuldverschreibungen[,]] [im Falle von
Nullkupon-Schuldverschreibungen einfugen: den Amortisationsbetrag der
Schuldverschreibungen[,]] [im Falle von Raten-Schuldverschreibungen einfugen:
die auf die Schuldverschreibungen anwendbare(n) Rate(n)] sowie jeden Aufschlag
sowie sonstige auf oder in Bezug auf die Schuldverschreibungen zahlbaren
Betrage.

(6) Hinterlegung von Kapital und Zinsen. Die Emittentin ist berechtigt, beim
Amtsgericht Frankfurt am Main Zins- oder Kapitalbetrage zu hinterlegen, die von
den Glaubigern nicht innerhalb von zwolf Monaten nach dem Falligkeitstag
beansprucht worden sind, auch wenn die Glaubiger sich nicht in Annahmeverzug
befinden. Soweit eine solche Hinterlegung erfolgt und auf das Recht der
Rucknahme verzichtet wird, erloschen die diesbezuglichen Anspruche der Glaubiger
gegen die Emittentin.

                                      ss. 5
                                   RUCKZAHLUNG

[(1) Ruckzahlung bei Endfalligkeit.]

[Im Falle von Schuldverschreibungen, die keine Raten-Schuldverschreibungen sind,
einfugen: Soweit nicht zuvor bereits ganz oder teilweise zuruckgezahlt oder
angekauft und entwertet, werden die Schuldverschreibungen zu ihrem
Ruckzahlungsbetrag am [im Falle eines festgelegten Falligkeitstages,
Falligkeitstag einfugen] [im Falle eines Ruckzahlungsmonats einfugen: in den
[Ruckzahlungsmonat einfugen] fallenden Zinszahlungstag] (der "Falligkeitstag")
zuruckgezahlt. Der Ruckzahlungsbetrag in Bezug auf jede Schuldverschreibung
entspricht [falls die Schuldverschreibungen zu ihrem Nennbetrag zuruckgezahlt
werden einfugen: dem Nennbetrag der Schuldverschreibungen] [ansonsten den
Ruckzahlungsbetrag sind, einfugen: fur die jeweilige festgelegte
Stuckelung/Index und/oder Formel, wonach der Ruckzahlungsbetrag zu berechnen
ist, einfugen].]

                                       50
<PAGE>

[Im Falle von Raten-Schuldverschreibungen einfugen: Soweit nicht zuvor bereits
ganz oder teilweise zuruckgezahlt oder angekauft und entwertet, werden die
Schuldverschreibungen an dem/den nachstehenden Ratenzahlungstermin(en) zu
der/den folgenden Rate(n) zuruckgezahlt:

         Ratenzahlungstermin(e)                         Rate(n)
  [Ratenzahlungstermin(e) einfugen]                [Rate(n) einfugen]
      [________________________]                [________________________]
      [________________________]                [________________________]

[Falls die Emittentin das Wahlrecht hat, die Schuldverschreibungen vorzeitig
zuruckzuzahlen, einfugen: [(2)] Vorzeitige Ruckzahlung nach Wahl der Emittentin.

(a) Die Emittentin kann, nachdem sie gemass Absatz (b) gekundigt hat, die
Schuldverschreibungen insgesamt oder teilweise am/an den
Wahl-Ruckzahlungstag(en) (Call) zum/zu den Wahl-Ruckzahlungsbetrag/betragen
(Call), wie nachstehend angegeben, nebst etwaigen bis zum Wahl-Ruckzahlungstag
(Call) (ausschliesslich) aufgelaufenen Zinsen zuruckzahlen. [Bei Geltung
eines Mindestruckzahlungsbetrages oder eines erhohten Ruckzahlungsbetrages
einfugen: Eine solche Ruckzahlung muss in Hohe eines Nennbetrages von
[mindestens [Mindestruckzahlungsbetrag einfugen]] [erhohter Ruckzahlungsbetrag]
erfolgen.]

      Wahl-Ruckzahlungstag(e) (Call)     Wahl-Ruckzahlungsbetrag/betrage (Call)
 [Wahl-Ruckzahlungstag(e) einfugen]         [Wahl-Ruckzahlungsbetrag/betrage
                                                      einfugen]
          [________]                                  [_______]
          [________]                                  [_______]]

[Falls der Glaubiger ein Wahlrecht hat, die Schuldverschreibungen vorzeitig zu
kundigen, einfugen: Der Emittentin steht dieses Wahlrecht nicht in Bezug auf
eine Schuldverschreibung zu, deren Ruckzahlung bereits der Glaubiger in Ausubung
seines Wahlrechts nach Absatz (3) dieses ss. 5 verlangt hat.]

(b) Die Kundigung ist den Glaubigern der Schuldverschreibungen durch die
Emittentin gemass ss. 11 bekannt zu geben. Sie beinhaltet die folgenden
Angaben:

     (i) die zuruckzuzahlende Serie von Schuldverschreibungen;

     (ii) eine Erklarung, ob diese Serie ganz oder teilweise zuruckgezahlt wird,
     und im letzteren Fall den Gesamtnennbetrag der zuruckzuzahlenden
     Schuldverschreibungen;

     (iii) den Wahl-Ruckzahlungstag (Call), der nicht weniger als
     [Mindestkundigungsfrist einfugen] und nicht mehr als [Hochstkundigungsfrist
     einfugen] Tage nach dem Tag der Kundigung durch die Emittentin gegenuber
     den Glaubigern liegen darf; und

     (iv) den Wahl-Ruckzahlungsbetrag (Call), zu dem die Schuldverschreibungen
     zuruck gezahlt werden.

(c) Wenn die Schuldverschreibungen nur teilweise zuruckgezahlt werden, werden
die zuruckzuzahlenden Schuldverschreibungen in Ubereinstimmung mit den Regeln
des Euro Clearing-Systems und DTC ausgewahlt.]

                                       51
<PAGE>

[Falls der Glaubiger ein Wahlrecht hat, die Schuldverschreibungen vorzeitig zu
kundigen, einfugen: [(3)] Vorzeitige Ruckzahlung nach Wahl des Glaubigers.

(a) Die Emittentin hat eine Schuldverschreibung nach Ausubung des entsprechenden
Wahlrechts durch den Glaubiger am/an den Wahl-Ruckzahlungstag(en) (Put) zum/zu
den Wahl-Ruckzahlungsbetrag/betragen (Put), wie nachstehend angegeben, nebst
etwaigen bis zum Wahl-Ruckzahlungstag (Put) (ausschliesslich) aufgelaufener
Zinsen zuruckzuzahlen.

    Wahl-Ruckzahlungstag(e) (Put)       Wahl-Ruckzahlungsbetrag/betrage (Put)
  [Wahl-Ruckzahlungstag(e) einfugen] [Wahl-Ruckzahlungsbetrag/betrage einfugen]
           [_______]                              [_______]
           [_______]                              [_______]

Dem Glaubiger steht dieses Wahlrecht nicht in Bezug auf eine Schuldverschreibung
zu, deren Ruckzahlung die Emittentin zuvor in Ausubung eines ihrer Wahlrechte
nach diesem ss. 5 verlangt hat.

(b) Um dieses Wahlrecht auszuuben, hat der Glaubiger nicht weniger als
[Mindestkundigungsfrist einfugen] Tage und nicht mehr als [Hochstkundigungsfrist
einfugen] Tage vor dem Wahl-Ruckzahlungstag (Put), an dem die Ruckzahlung
gemass der Ausubungserklarung (wie nachstehend definiert) erfolgen soll, bei
der bezeichneten Geschaftsstelle der Hauptzahlstelle wahrend der normalen
Geschaftszeiten eine ordnungsgemass ausgefullte Mitteilung zur vorzeitigen
Ruckzahlung ("Ausubungserklarung") zu hinterlegen. Die Ausubung des Wahlrechts
kann nicht widerrufen werden.]

[Im Falle von Schuldverschreibungen, die keine Nullkupon-Schuldverschreibungen
sind, einfugen: [(4)] Vorzeitiger Ruckzahlungsbetrag.

Fur die Zwecke der Absatze (2) und (3) dieses ss. 5 entspricht der vorzeitige
Ruckzahlungsbetrag einer Schuldverschreibung dem Ruckzahlungsbetrag.]

[Im Falle von Nullkupon-Schuldverschreibungen einfugen:[(4)] Vorzeitiger
Ruckzahlungsbetrag.

Fur die Zwecke des Absatzes (2) dieses ss. 5 berechnet sich der vorzeitige
Ruckzahlungsbetrag einer Schuldverschreibung wie folgt:

(a) Der vorzeitige Ruckzahlungsbetrag der Schuldverschreibung entspricht der
Summe aus:

     (i) [Referenzpreis einfugen] (der "Referenzpreis"), und

     (ii) dem Produkt aus [Emissionsrendite in Prozent einfugen] (die
     "Emissionsrendite") und dem Referenzpreis ab dem [Tag der Begebung
     einfugen] (einschliesslich) bis zum vorgesehenen Ruckzahlungstag
     (ausschliesslich) oder (je nachdem) dem Tag, an dem die
     Schuldverschreibungen fallig und ruckzahlbar werden, wobei die
     Emissionsrendite jahrlich kapitalisiert wird.

     Wenn diese Berechnung fur einen Zeitraum, der nicht vollen Kalenderjahren
     entspricht, durchzufuhren ist, hat sie im Fall des nicht vollstandigen
     Jahres (der

                                       52
<PAGE>

     "Zinsberechnungszeitraum") auf der Grundlage des Zinstagequotienten (wie
     vorstehend in ss. 3 definiert) zu erfolgen.

(b) Falls die Emittentin den vorzeitigen Ruckzahlungsbetrag bei Falligkeit nicht
zahlt, wird er wie vorstehend beschrieben berechnet, jedoch mit der
Massgabe, dass die Bezugnahmen in Unterabsatz (a)(ii) auf den fur die
Ruckzahlung vorgesehenen Ruckzahlungstag oder den Tag, an dem diese
Schuldverschreibungen fallig und ruckzahlbar werden, durch den Tag ersetzt
werden, an dem die Ruckzahlung erfolgt.]

[Anstelle des Vorstehenden kann ein Ruckzahlungsplan, der die
Ruckzahlungsbetrage beinhaltet, hier eingefugt werden]

[Im Falle von Doppelwahrungs-Schuldverschreibungen, indexierten
Schuldverschreibungen oder Raten-Schuldverschreibungen anwendbare Bestimmungen
hinsichtlich Kapital hier einfugen]

                                      ss. 6
                              VERRICHTUNGSGEHILFEN

(1) Bestellung; bezeichnete Geschaftsstelle. Die anfanglich bestellte
Registerstelle, die anfanglich bestellte Hauptzahlstelle [,] [und] die
anfanglich bestellte US-Zahlstelle (zusammen mit der Hauptzahlstelle, die
"Zahlstellen") [und die anfanglich bestellte Berechnungsstelle] und ihre
bezeichneten Geschaftsstellen lauten wie folgt:

Registerstelle:                    Deutsche Bank Aktiengesellschaft
                                   Trust & Securities Services
                                   Grosse Gallusstrasse 10-14
                                   60272 Frankfurt am Main
                                   Deutschland

Hauptzahlstelle:                   Deutsche Bank Aktiengesellschaft
                                   Trust & Securities Services
                                   Grosse Gallusstrasse 10-14
                                   60272 Frankfurt am Main
                                   Deutschland

US-Zahlstelle:                     Deutsche Bank Trust Company Americas
                                   Trust & Securities Services
                                   Global Debt Service
                                   60 Wall Street
                                   27th Floor - MS NY C60-2710
                                   New York, NY 10005, USA

                                   [Andere Zahlstellen,
                                   soweit anwendbar, einfugen]

[Falls die Hauptzahlstelle als Berechnungsstelle bestellt werden soll, einfugen:
Die Hauptzahlstelle handelt auch als Berechnungsstelle.]

[Falls eine Berechnungsstelle bestellt werden soll, die nicht die
Hauptzahlstelle ist, einfugen: Die Berechnungsstelle und ihre anfanglich
bezeichnete Geschaftsstelle lauten:

                                       53
<PAGE>

Berechnungsstelle: [Namen und bezeichnete Geschaftsstelle einfugen]

Die Registerstelle [,] [und] die Zahlstellen [und die Berechnungsstelle]
behalten sich das Recht vor, jederzeit mit Zustimmung der Emittentin ihre
bezeichneten Geschaftsstellen durch eine andere bezeichnete Geschaftsstelle in
derselben Stadt zu ersetzen und dies gemass ss. 11 bekannt zu machen.

(2) Anderung der Bestellung oder Abberufung. Die Emittentin behalt sich das
Recht vor, jederzeit die Bestellung der Registerstelle [,] [oder] einer
Zahlstelle [oder der Berechnungsstelle] zu andern oder zu beenden und eine
andere Registerstelle oder [eine] zusatzliche oder andere Zahlstelle[n] [oder
eine andere Berechnungsstelle] zu bestellen. Die Emittentin wird zu jedem
Zeitpunkt (i) eine Registerstelle unterhalten, (ii) eine Zahlstelle mit einer
Geschaftsstelle in einer kontinentaleuropaischen Stadt unterhalten[,] [und]
(iii) eine US-Zahlstelle mit einer Geschaftstelle in New York unterhalten [im
Falle von Schuldverschreibungen, die an einer Borse notiert sind, einfugen:[,]
[und] (iv) solange die Schuldverschreibungen an der [Name der Borse] notiert
sind, eine Zahlstelle (die die Registerstelle sein kann) mit bezeichneter
Geschaftsstelle in [Sitz der Borse] und/oder an solchen anderen Orten
unterhalten, wie es die Regeln dieser Borse verlangen] [falls eine
Berechnungsstelle bestellt werden soll, einfugen: und (v) eine Berechnungsstelle
unterhalten]. Die Emittentin versichert, dass sie, wenn die EU-Richtlinie vom 3.
Juni 2003 uber die Besteuerung von Zinsertragen oder irgend eine andere
EU-Richtlinie, die die Ergebnisse des ECOFIN Gruppentreffen vom 26.-27 November
2000 umsetzt, wirksam wird, sicherstellen wird, dass sie eine Zahlstelle in
einem EU-Mitgliedsstaat unterhalt, die nicht zum Einbehalt oder zum Abzug von
Steuern aufgrund genannter Richtlinien verplichtet ist soweit dies in einem
Mitgliedsstaat der Europaischen Union moeglich und rechtlich zulaessig ist. Jede
Anderung, Abberufung, Bestellung oder ein sonstiger Wechsel wird nur wirksam
(ausser im Insolvenzfall, in dem eine solche Anderung sofort wirksam wird),
sofern die Glaubiger hieruber gemass ss. 11 vorab unter Einhaltung einer Frist
von mindestens 30 und nicht mehr als 45 Tagen informiert wurden.

(3) Erfullungsgehilfen der Emittentin. Die Registerstelle[,] [und] die
Zahlstellen [und die Berechnungsstelle] handeln ausschliesslich als
Erfullungsgehilfen der Emittentin und ubernehmen keinerlei Verpflichtungen
gegenuber den Glaubigern und es wird kein Auftrags- oder Treuhandverhaltnis
zwischen ihnen und den Glaubigern begrundet.

                                      ss. 7
                                     STEUERN

Samtliche auf die Schuldverschreibungen zu zahlenden Betrage werden unter
Einbehalt oder Abzug von Steuern oder sonstigen Abgaben geleistet, falls ein
solcher Einbehalt oder Abzug gesetzlich vorgeschrieben ist. Im Falle eines
solchen Einbehalts oder Abzugs ist die Emittentin nicht verpflichtet,
irgendwelche zusatzlichen Betrage auf die Schuldverschreibungen zu leisten.

                                      ss. 8
                                 VORLEGUNGSFRIST

                                       54
<PAGE>

Die in ss. 801 Absatz 1 Satz 1 BGB bestimmte Vorlegungsfrist wird fur die
Schuldverschreibungen auf zehn Jahre verkurzt.

                                      ss. 9
                                    ERSETZUNG

(1) Ersetzung. Die Emittentin ist jederzeit berechtigt, ohne Zustimmung der
Glaubiger jedes andere Unternehmen an ihrer Stelle als Hauptschuldnerin (die
"Nachfolgeschuldnerin") fur alle Verpflichtungen aus und im Zusammenhang mit
diesen Schuldverschreibungen einzusetzen, vorausgesetzt, dass:

(a)  die Nachfolgeschuldnerin alle Rechte und Verpflichtungen der Emittentin in
     Bezug auf die Schuldverschreibungen ubernimmt;

(b)  die Emittentin und die Nachfolgeschuldnerin alle erforderlichen
     Genehmigungen erlangt haben und berechtigt sind, an die Hauptzahlstelle die
     zur Erfullung der Zahlungsverpflichtungen aus den Schuldverschreibungen
     zahlbaren Betrage in der hierin Designierten Wahrung zu zahlen, ohne
     verpflichtet zu sein, jeweils in dem Land oder in den Landern, in denen die
     Nachfolgeschuldnerin ihren Sitz oder Steuersitz hat, erhobene Steuern oder
     andere Abgaben jeder Art abzuziehen oder einzubehalten, die zum Zeitpunkt
     des Inkrafttretens der Ersetzung den Betrag an Steuern oder Abgaben
     ubersteigen, die in dem Land oder in den Landern, in denen die Emittentin
     ihren Sitz oder Steuersitz hat, einbehalten oder abgezogen werden;

[Im  Falle von nicht nachrangigen Schuldverschreibungen einfugen: (c) die
     Emittentin unwiderruflich und unbedingt gegenuber den Glaubigern die
     Zahlung aller von der Nachfolgeschuldnerin auf die Schuldverschreibungen
     zahlbaren Betrage zu Bedingungen garantiert, die den Bedingungen der im
     Agency Agreement vom 22 Marz 2005 zwischen der Emittentin, der
     Registerstelle- und den Zahlstellen, auf deren Grundlage die
     Schuldverschreibungen begeben werden, enthaltenen Garantie hinsichtlich
     nicht nachrangiger Schuldverschreibungen der Emittentin entsprechen;]

[Im  Falle von nachrangigen Schuldverschreibungen einfugen: (c) hinsichtlich der
     von der Nachfolgeschuldnerin bezuglich der Schuldverschreibungen
     ubernommenen Verpflichtungen der Nachrang zu mit den Bedingungen der
     Schuldverschreibungen ubereinstimmenden Bedingungen begrundet wird und (i)
     die Nachfolgeschuldnerin ein Tochterunternehmen der Emittentin im Sinne der
     ss.ss. 1 Absatz 7 und 10 Absatz 5a Satz 11 des Kreditwesengesetzes ist,
     (ii) die Nachfolgeschuldnerin eine Einlage in Hohe eines Betrages, der dem
     Gesamtnennbetrag der Schuldverschreibungen entspricht, bei der Emittentin
     vornimmt und zwar zu Bedingungen, die den Emissionsbedingungen
     (einschliesslich hinsichtlich der Nachrangigkeit) entsprechen, und
     (iii) die Emittentin unwiderruflich und unbedingt gegenuber den Glaubigern
     die Zahlung aller von der Nachfolgeschuldnerin auf die
     Schuldverschreibungen zahlbaren Betrage zu Bedingungen garantiert, die den
     Bedingungen der im Agency Agreement vom 22 Marz 2005 zwischen der
     Emittentin, der Registerstelle und den Zahlstellen, auf deren Grundlage die
     Schuldverschreibungen begeben werden, enthaltenen Garantie hinsichtlich
     nachrangiger Schuldverschreibungen der Emittentin entsprechen;]

(d)  die Glaubiger als Folge der Ersetzung nicht den Schutz der
     Gewahrtragerhaftung nach Artikel 5 Absatz 2 des Gesetzes uber die
     Landeskreditbank Baden-Wurttemberg - Forderbank (das "Gesetz"), der
     Anstaltslast des Landes Baden-Wurttemberg gemass Artikel 5 Absatz 1 des
     Gesetzes und der ausdrucklichen Garantie des Landes Baden-Wurttemberg
     gemass Artikel 5 Absatz 3 des Gesetzes, in der zum Zeitpunkt des

                                       55
<PAGE>

     Wirksamwerdens der Ersetzung jeweils gultigen Fassung, oder einer
     gleichwertigen Verpflichtung des Landes Baden-Wurttemberg oder der
     Bundesrepublik Deutschland, die eine solche Gewahrtragerhaftung,
     Anstaltslast oder Garantie ersetzt, verlieren; und

(e)  der Hauptzahlstelle jeweils ein Rechtsgutachten bezuglich der betroffenen
     Rechtsordnungen von anerkannten Rechtsanwalten vorgelegt wird, das
     bestatigt, dass die Bestimmungen in den vorstehenden Unterabsatzen (a)-(d)
     erfullt wurden.

(2) Anderung von Bezugnahmen. Im Fall einer Ersetzung gilt jede Bezugnahme in
diesen Emissionsbedingungen auf die Emittentin ab dem Zeitpunkt der Ersetzung
als Bezugnahme auf die Nachfolgeschuldnerin.

(3) Bekanntmachung. Jede Ersetzung der Emittentin ist gemass ss. 11 bekannt
zu machen. Die Ersetzung tritt durch eine derartige Bekanntmachung in Kraft. Die
Emittentin (und im Falle einer wiederholten Anwendung dieses ss. 9, jede
vorherige Nachfolgeschuldnerin) ist mit dem Datum der Veroffentlichung der
Ersetzung von allen Verpflichtungen aus den Schuldverschreibungen befreit.

                                     ss. 10
                    BEGEBUNG WEITERER SCHULDVERSCHREIBUNGEN,
                              ANKAUF UND ENTWERTUNG

(1) Begebung weiterer Schuldverschreibungen. Die Emittentin ist berechtigt,
jederzeit ohne Zustimmung der Glaubiger weitere Schuldverschreibungen mit
gleicher Ausstattung (gegebenenfalls mit Ausnahme des Tags der Begebung, des
Verzinsungsbeginns und/oder des Ausgabepreises) in der Weise zu begeben, dass
sie mit diesen Schuldverschreibungen eine einheitliche Serie bilden und den
Gesamtnennbetrag der Schuldverschreibungen erhohen.

(2) Ankauf. Die Emittentin ist berechtigt, jederzeit Schuldverschreibungen im
Markt oder anderweitig zu jedem beliebigen Preis anzukaufen. Die von der
Emittentin erworbenen Schuldverschreibungen konnen nach Wahl der Emittentin von
ihr gehalten, weiterverkauft oder bei der Hauptzahlstelle zwecks Entwertung
eingereicht werden. Sofern diese Kaufe durch offentliches Angebot erfolgen, muss
dieses Angebot allen Glaubigern gemacht werden.

(3) Entwertung. Samtliche vollstandig zuruckgezahlten oder gemass Absatz (2)
zwecks Entwertung eingereichten Schuldverschreibungen sind unverzuglich zu
entwerten und konnen nicht wiederbegeben oder wiederverkauft werden.

                                     ss. 11
                                  MITTEILUNGEN

(1) Bekanntmachung. Alle Bekanntmachungen, die die Schuldverschreibungen
betreffen, werden in folgenden Zeitungen veroffentlicht: (a) in mindestens einer
fuhrenden Tageszeitung mit allgemeiner Verbreitung in der Bundesrepublik
Deutschland[,] [und] [Luxemburg] [und] [andere Staaten einfugen]]
(voraussichtlich die Borsen-Zeitung [,] [und] [das Luxemburger Wort] [das
Tageblatt] [und [andere Tageszeitungen mit allgemeiner Verbreitung hier
einfugen]]) und (b) in einer in englischer Sprache erscheinenden und in New York
allgemein verbreiteten fuhrenden Tageszeitung (voraussichtlich das Wall Street
Journal). Samtliche Bekanntmachungen werden wirksam am dritten Tag, der auf die
Veroffentlichung folgt oder, sofern die Veroffentlichung mehr als einmal oder an
verschiedenen Tagen erfolgt, am dritten Tag, der auf die erste Veroffentlichung
folgt.

                                       56
<PAGE>

(2) Mitteilungen an das Clearing-System. Die Emittentin ist berechtigt, eine
Zeitungsveroffentlichung nach vorstehendem Absatz (1) durch eine Mitteilung an
das Euro-Clearing System und DTC zur Weiterleitung an die Glaubiger, die die
Schuldverschreibungen durch das jeweilige Clearing System halten, zu ersetzen,
vorausgesetzt, dass in Fallen, in denen die Schuldverschreibungen an einer Borse
notiert sind, die Regeln dieser Borse diese Form der Mitteilung zulassen. Jede
derartige Mitteilung gilt am vierten Tag nach dem Tag der Mitteilung an das
Euro-Clearing System und DTC als den Glaubigern mitgeteilt.

(3) Sollte eine Mitteilung durch Zeitungsveroffentlichung nach vorstehendem
Absatz (1) und auch durch Mitteilung gemaess vorstehendem Absatz (2) erfolgen,
so wird jede derartige Mitteilung am dritten Tag, der auf die Veroffentlichung
folgt wirksam oder, sofern die Veroffentlichung mehr als einmal oder an
verschiedenen Tagen erfolgt, am dritten Tag, der auf die erste Veroffentlichung
folgt.

                                     ss. 12
                               ANWENDBARES RECHT,
                  GERICHTSSTAND UND GERICHTLICHE GELTENDMACHUNG

(1) Anwendbares Recht. Form und Inhalt der Schuldverschreibungen sowie die
Rechte und Pflichten der Emittentin, der Glaubiger und der Erfullungsgehilfen
bestimmen sich in jeder Hinsicht nach deutschem Recht. Ubertragungen und
Verpfandungen von bei DTC verwahrten Schuldverschreibungen, die zwischen
DTC-Teilnehmern und zwischen der DTC und DTC-Teilnehmern durchgefuhrt werden,
unterliegen dem Recht des Staates New York.

(2) Gerichtsstand. Zustandig fur samtliche Klagen oder sonstige Verfahren
("Rechtsstreitigkeiten") aus oder im Zusammenhang mit den Schuldverschreibungen
sind die Gerichte in Frankfurt am Main, Deutschland. Fur Rechtsstreitigkeiten
unter ausschliesslicher Beteiligung von Kaufleuten, juristischen Personen
des offentlichen Rechts, offentlich-rechtlichen Sondervermogen und Personen ohne
allgemeinen Gerichtsstand in Deutschland ist dieser Gerichtsstand
ausschliesslich gemass ss. 38 ZPO; im Ubrigen ist der Gerichtsstand
nicht ausschliesslich.

(3) Gerichtliche Geltendmachung. Jeder Anleiheglaubiger kann in
Rechtsstreitigkeiten gegen die Emittentin oder in Rechtsstreitigkeiten, an denen
der Anleiheglaubiger und die Emittentin beteiligt sind, im eigenen Namen seine
Rechte aus den ihm zustehenden Schuldverschreibungen unter Vorlage folgender
Unterlagen wahrnehmen und durchsetzen: (a) einer Bescheinigung seiner Depotbank,
die (i) den vollen Namen und die volle Anschrift des Anleiheglaubigers
bezeichnet, (ii) einen Gesamtnennbetrag von Schuldverschreibungen angibt, die am
Ausstellungstag dieser Bescheinigung dem bei dieser Depotbank bestehenden Depot
des Anleiheglaubigers gutgeschrieben sind, und (iii) bestatigt, dass die
Depotbank dem Euro-Clearing System oder der DTC sowie der Hauptzahlstelle eine
schriftliche Mitteilung gemacht hat, die die Angaben gemass (i) und (ii)
enthalt, und Bestatigungsvermerke dem Euro-Clearing System oder der DTC sowie
des Euro-Clearing System-Kontoinhabers oder DTC-Teilnehmers tragt, sowie (b)
einer von einem Vertretungsberechtigen des Euro-Clearing Systems oder der DTC
oder der Hauptzahlstelle beglaubigten Ablichtung der Euro-Globalurkunde oder der
DTC-Globalurkunde. Im Sinne der vorstehenden Bestimmungen ist "Depotbank" eine
Bank- oder sonstiges Finanzinstitut (einschliesslich des Euro-Clearing
Systems, DTC und jedes anderen Clearing Systems, das eine Kontenverbindung mit
dem Euro-Clearing System unterhalt) von allgemein anerkanntem Ansehen, das eine
Genehmigung fur das Wertpapier-Depotgeschaft hat und bei dem der
Anleiheglaubiger Schuldverschreibungen im Depot verwahren lasst.

                                       57
<PAGE>

                                     ss. 13
                                     SPRACHE

[Falls die Emissionsbedingungen in deutscher Sprache mit einer Ubersetzung in
die englische Sprache abgefasst sind, einfugen: Diese Emissionsbedingungen sind
in deutscher Sprache abgefasst. Eine Ubersetzung in die englische Sprache ist
beigefugt. Der deutsche Text ist bindend und massgeblich. Die Ubersetzung in
die englische Sprache ist unverbindlich.]

[Falls die Emissionsbedingungen in englischer Sprache mit einer Ubersetzung in
die deutsche Sprache abgefasst sind, einfugen: Diese Emissionsbedingungen sind
in englischer Sprache abgefasst. Eine Ubersetzung in die deutsche Sprache ist
beigefugt. Der englische Text ist bindend und massgeblich. Die Ubersetzung
in die deutsche Sprache ist unverbindlich.]

[Falls die Emissionsbedingungen ausschliesslich in deutscher Sprache
abgefasst sind, einfugen: Diese Emissionsbedingungen sind ausschliesslich in
deutscher Sprache abgefasst.]

                                       58
<PAGE>

                                                                     SCHEDULE 1B
                                                                     -----------
                                                                          PART I
                                                                          ------

                             English Version of the
              MASTER CONDITIONS OF THE SINGLE NOTE STRUCTURE NOTES

<PAGE>

                             ENGLISH VERSION OF THE
                          TERMS AND CONDITIONS OF NOTES

                                     ss. 1
            PRINCIPAL AMOUNT, DENOMINATION, FORM, CERTAIN DEFINITIONS

(1) Principal; Denomination. This Series of Notes (the "Notes") of
Landeskreditbank Baden-Wurttemberg - Forderbank (the "Issuer") is issued in
[insert Designated Currency] (the "Designated Currency") in the aggregate
principal amount of [insert Designated Currency] [insert aggregate principal
amount] (in words: [insert aggregate principal amount in words] [insert
Designated Currency]]) and is divided into [insert number of Notes] Notes in the
principal amount of [insert amount and Designated Currency] [insert Designated
Denominations] (the "Designated Denominations") each.

(2) Global Note; Form. The Notes are represented by one or more permanent global
notes without interest coupons (the "Global Notes"). The Global Notes are kept
in custody by Deutsche Bank Trust Company Americas, or any successor, as
custodian for The Depository Trust Company, New York ("DTC") until all
obligations of the Issuer under the Notes have been satisfied. The Global Notes
are in registered form in the name of Cede & Co., as nominee of DTC recorded in
a register kept by DTC. Each Global Note is manually signed by two authorized
representatives of the Issuer and manually authenticated by or on behalf of the
Principal Paying Agent (ss. 6). Copies of the Global Notes are available free of
charge at the Principal Paying Agent.

(3) Transfer. Transfers of Notes shall require appropriate entries in securities
accounts.

(4) Holder of Notes. "Holder" means any holder of a proportionate co-ownership
or other beneficial interest or right in the Notes.

                                     ss. 2
                                     STATUS

[In the case of unsubordinated Notes insert: The Notes constitute unsecured and
unsubordinated obligations of the Issuer and rank pari passu with all other
unsecured and unsubordinated obligations of the Issuer except as otherwise
determined by mandatory rules of law.]

[In the case of subordinated Notes insert: The Notes constitute unsecured and
subordinated obligations of the Issuer and rank pari passu with all other
subordinated obligations of the Issuer, except as otherwise determined by
mandatory rules of law. In the event of insolvency proceedings over the
assets(1) of the Issuer or the liquidation of the Issuer, such obligations will
be subordinated to the claims of all unsubordinated creditors of the Issuer so
that in any such event no amounts shall be payable under such obligations until
the claims of all unsubordinated creditors of the Issuer shall have been
satisfied in full. No Holder may set off his claims arising under the Notes
against any claims of the Issuer. No security of whatever kind is, or shall at
any time be, provided by the Issuer or any other person securing rights of the
Holders under such Notes. No subsequent agreement may limit the subordination
pursuant to the provisions set out in this ss. 2 or amend the Maturity Date (ss.
5(1)) in respect of the Notes to any earlier date or shorten any applicable
notice

                                       59

<PAGE>

period (Kundigungsfrist). If the Notes are redeemed before the Maturity Date
otherwise than in the circumstances described in this ss. 2 or repurchased by
the Issuer otherwise than in accordance with the provisions of ss. 10(5a)
sentence 6 Kreditwesengesetz (German Banking Act), then the amounts redeemed or
paid must be returned to the Issuer irrespective of any agreement to the
contrary unless the amounts paid have been replaced by other liable capital
(haftendes Eigenkapital) of at least equal status within the meaning of the
German Banking Act, or the Federal Supervisory Authority for Financial Services
(Bundesanstalt fur Finanzdienstleistungsaufsicht) has consented to such
redemption or repurchase.]

                                   ss. 3
                                    INTEREST

[In the case of Fixed Rate Notes insert:

(1) Rate of Interest and Interest Payment Dates. The Notes shall bear interest
on their principal amount at the rate of [insert Rate of Interest] per cent. per
annum from (and including) [insert Interest Commencement Date] to (but
excluding) the Maturity Date (as defined in ss. 5[(1)]). Interest shall be
payable in arrears on [insert Fixed Interest Date or Dates] in each year (each
such date, an "Interest Payment Date"). The first payment of interest shall be
made on [insert First Interest Payment Date] [if First Interest Payment Date is
not first anniversary of Interest Commencement Date insert: and will amount to
[insert Initial Broken Amount per first Designated Denomination] per Note in a
denomination of [insert first Designated Denomination] [and] [insert further
Initial Broken Amount(s) per further Designated Denominations] per Note in a
denomination of [insert further Designated Denominations].] [If Maturity Date is
not a Fixed Interest Date insert: Interest in respect of the period from [insert
Fixed Interest Date preceding the Maturity Date] (inclusive) to the Maturity
Date (exclusive) will amount to [insert Final Broken Amount per first Designated
Denomination] per Note in a denomination of [insert first Designated
Denomination] and [insert further Final Broken Amount(s) per further Designated
Denominations] per Note in a denomination of [insert further Designated
Denominations].

[If Actual/Actual (ISMA Rule 251) is the applicable Day Count Fraction insert:
The number of Interest Payment Dates per calendar year (each a "Determination
Date") is [insert number of regular interest payment dates per calendar year].

(2) Accrual of Interest. The Notes shall cease to bear interest from the expiry
of the day preceding their due date for redemption. If the Issuer shall fail to
redeem the Notes when due, interest shall continue to accrue on the outstanding
principal amount of the Notes beyond the due date until the expiry of the day
preceding the actual redemption of the Notes at the default rate of interest
established by law(2).

(3) Calculation of Interest for Partial Periods. If interest is required to be
calculated for a period of less than a full year, such interest shall be
calculated on the basis of the Day Count Fraction (as defined below).]

[In the case of Floating Rate Notes insert:

(1) Rate of Interest and Interest Payment Dates.

___________________________

1    Pursuant to ss. 12 Insolvenzordnung (Insolvency Act) and ss. 45
     Baden-Wurttembergisches Ausfuhrungsgesetz zum Gerichtsverfassungsgesetz
     (Implementing Law of the State of Baden-Wurttemberg relating to the Federal
     Judicature Act), insolvency proceedings may not be instituted against
     L-Bank.

2    The default rate of interest established by law is five percentage points
     above the basic rate of interest published by Deutsche Bundesbank for the
     periods as of January 1 and July 1, respectively, of each year, ss.ss.
     288(1), 247(1) German Civil Code.

                                       61
<PAGE>

(a) The Notes bear interest on their principal amount from [insert Interest
Commencement Date] (inclusive) (the "Interest Commencement Date") to the first
Interest Payment Date (exclusive) and thereafter from each Interest Payment Date
(inclusive) to the next following Interest Payment Date (exclusive). Interest on
the Notes shall be payable on each Interest Payment Date.

(b) "Interest Payment Date" means

[in the case of Specified Interest Payment Dates insert: each [insert Specified
Interest Payment Dates].]

[in the case of Specified Interest Periods insert: each date which (except as
otherwise provided in these Terms and Conditions) falls [insert number] [weeks]
[months] [insert other specified periods] after the preceding Interest Payment
Date or, in the case of the first Interest Payment Date, after the Interest
Commencement Date.]

(c) If any Interest Payment Date (other than the Interest Payment Date falling
on the Maturity Date) would otherwise fall on a day which is not a Business Day
(as defined below), it shall be:

[if Modified Following Business Day Convention insert: postponed to the next day
which is a Business Day unless it would thereby fall into the next calendar
month, in which event the Interest Payment Date shall be the immediately
preceding Business Day.]

[if FRN Convention insert: postponed to the next day which is a Business Day
unless it would thereby fall into the next calendar month, in which event the
payment date shall be the immediately preceding Business Day, and in the event
of interest, each subsequent Interest Payment Date shall be the day that
numerically corresponds to the preceding Interest Payment Date in the calendar
month that falls [insert number] [months] [insert other specified periods] after
the preceding Interest Payment Date or, in the case of the first Interest
Payment Date for the Notes, the Issue Date, except that (a) if there is not any
such numerically corresponding day in the calendar month in which the relevant
Interest Payment Date should occur, then the Interest Payment Date will be the
last day that is a Business Day in that month, (b) if the relevant Interest
Payment Date would otherwise fall on a day that is not a Business Day, then the
Interest Payment Date will be the first following day that is a Business Day
unless that day falls in the next calendar month, in which case the Interest
Payment Date will be the first preceding day that is a Business Day, and (c) if
the preceding applicable Interest Payment Date occurred on the last day in a
calendar month that was a Business Day, then all subsequent applicable Interest
Payment Dates prior to the Maturity Date (as defined in ss. 5[(1)]) will be the
last day that is a Business Day in the month that falls [insert number] [months]
[insert other specified periods] after the preceding applicable Interest Payment
Date.]

[if Following Business Day Convention insert: postponed to the next day which is
a Business Day.]

[if Preceding Business Day Convention insert: the immediately preceding Business
Day.]

(d) "Business Day" means [in the case of Notes for which the Designated Currency
is not the U.S. dollar insert: (i) in respect of any payment that would have to
be made on such Business Day in respect of any Notes in the Designated Currency,
[a [insert relevant location] Business Day] [and] [a TARGET Business Day], and
(ii) in respect of any payment that would have to be made on such Business Day
in respect of any Notes in U.S. dollar to

                                       62
<PAGE>

the registered holder of the Global Notes,] a New York Business Day [and] [,] [a
[insert relevant location] Business Day] [and a TARGET Business Day].] "New York
Business Day" means any day on which banking institutions in New York City are
not obliged and not authorized to close. ["[Insert relevant location] Business
Day" means any day (other than a Saturday or Sunday) on which commercial banks
are open for business (including dealings in foreign exchange and foreign
currency) in [insert relevant location].] ["TARGET Business Day" means any day
on which the Trans-European Automated Real-time Gross Settlement Express
Transfer System (TARGET) is operating.]

(2) Rate of Interest. [if Screen Rate Determination insert: The rate of interest
(the "Rate of Interest") for each Interest Period (as defined below) will,
except as provided below, be the offered quotation (expressed as a percentage
rate per annum) for deposits in the Designated Currency for that Interest Period
which appears on the Screen Page as of 11:00 a.m. ([insert relevant location]
time) on the Interest Determination Date (as defined below) [if Margin insert:
[plus] [minus] the Margin (as defined below)], all as determined by the
Calculation Agent.

"Interest Period" means each period from (and including) the Interest
Commencement Date to (but excluding) the first Interest Payment Date and from
(and including) each Interest Payment Date to (but excluding) the following
Interest Payment Date.

"Interest Determination Date" means the [insert applicable number of days]
[TARGET] [insert relevant location] Business Day prior to the commencement of
the relevant Interest Period. [in case of a Business Day not defined in ss.
3(1)(d) above, insert: "[insert relevant location] Business Day" means any day
which is a day (other than a Saturday or Sunday) on which commercial banks are
open for business (including dealings in foreign exchange and foreign currency)
in [insert relevant location].

[If Margin insert:  "Margin" means [   ] per cent. per annum.]

"Screen Page" means [insert relevant Screen Page].

If the Screen Page is not available or if no such quotation appears as at such
time, the Calculation Agent shall request the Reference Banks (as defined below)
to provide the Calculation Agent with their offered quotation (expressed as a
percentage rate per annum) for deposits in the Designated Currency for the
relevant Interest Period to leading banks in the [insert relevant location]
interbank market [in the Euro-Zone] at approximately 11.00 a.m. ([insert
relevant location] time) on the Interest Determination Date. If two or more of
the Reference Banks provide the Calculation Agent with such offered quotations,
the Rate of Interest for such Interest Period shall be the arithmetic mean
(rounded if necessary to the nearest one [if the Reference Rate is EURIBOR
insert: thousandth of a percentage point, with 0.0005] [if the Reference Rate is
not EURIBOR insert: hundred-thousandth of a percentage point, with 0.000005]
being rounded upwards) of such offered quotations [if Margin insert: [plus]
[minus] the Margin], all as determined by the Calculation Agent.

If on any Interest Determination Date only one or none of the Reference Banks
provides the Calculation Agent with such offered quotations as provided in the
preceding paragraph, the Rate of Interest for the relevant Interest Period shall
be the rate per annum which the Calculation Agent determines as being the
arithmetic mean (rounded if necessary to the nearest one [if the Reference Rate
is EURIBOR insert: thousandth of a percentage point, with 0.0005] [if the
Reference Rate is not EURIBOR insert: hundred-thousandth of a percentage point,
with 0.000005] being rounded upwards) of the rates, as communicated to (and at
the request of) the Calculation Agent by the Reference Banks or any two or more
of

                                       63
<PAGE>

them, at which such banks were offered, as at 11.00 a.m. ([insert relevant
location] time) on the relevant Interest Determination Date, deposits in the
Designated Currency for the relevant Interest Period by leading banks in the
[insert relevant location] interbank market [in the Euro-Zone] [if Margin
insert: [plus] [minus] the Margin] or, if fewer than two of the Reference Banks
provide the Calculation Agent with such offered rates, the offered rate for
deposits in the Designated Currency for the relevant Interest Period, or the
arithmetic mean (rounded as provided above) of the offered rates for deposits in
the Designated Currency for the relevant Interest Period, at which, on the
relevant Interest Determination Date, any one or more banks (which bank or banks
is or are in the opinion of the Calculation Agent and the Issuer suitable for
such purpose) inform(s) the Calculation Agent it is or they are quoting to
leading banks in the [insert relevant location] interbank market [in the
Euro-Zone] (or, as the case may be, the quotations of such bank or banks to the
Calculation Agent) [if Margin insert: [plus] [minus] the Margin]. If the Rate of
Interest cannot be determined in accordance with the foregoing provisions of
this paragraph, the Rate of Interest shall be the offered quotation or the
arithmetic mean of the offered quotations on the Screen Page, as described
above, on the last day preceding the Interest Determination Date on which such
quotations were offered [if Margin insert: [plus] [minus] the Margin (though
substituting, where a different Margin is to be applied to the relevant Interest
Period from that which applied to the last preceding Interest Period, the Margin
relating to the relevant Interest Period in place of the Margin relating to that
last preceding Interest Period)].

As used herein, "Reference Banks" means [those offices of four of such banks
whose offered rates were used to determine such quotation when such quotation
last appeared on the Screen Page] [insert any other Reference Banks here].

[In the case of the interbank market in the Euro-Zone insert: "Euro-Zone" means
the region comprised of those member states of the European Union that have
adopted, or will have adopted from time to time, the single currency in
accordance with the Treaty establishing the European Community (signed in Rome
on March 25, 1957), as amended by the Treaty on European Union (signed in
Maastricht on February 7, 1992) and the Amsterdam Treaty of October 2, 1997, as
further amended from time to time.]

[If Reference Rate is other than LIBOR or EURIBOR, insert relevant details in
lieu of the provisions of this subparagraph (2)]

[If ISDA Determination applies insert the relevant provisions and attach the
2000 ISDA Definitions published by the International Swaps and Derivatives
Association, Inc. ("ISDA").]

[If other method of determination applies insert relevant details in lieu of the
provisions of this subparagraph (2)]

[If Minimum and/or Maximum Rate of Interest applies insert:

(3) [Minimum] [and] [Maximum] Rate of Interest.

[If Minimum Rate of Interest applies insert: If the Rate of Interest in respect
of any Interest Period determined in accordance with the above provisions is
less than [insert Minimum Rate of Interest], the Rate of Interest for such
Interest Period shall be [insert Minimum Rate of Interest].]

[If Maximum Rate of Interest applies insert: If the Rate of Interest in respect
of any Interest Period determined in accordance with the above provisions is
greater than [insert

                                       64
<PAGE>

Maximum Rate of Interest], the Rate of Interest for such Interest Period shall
be [insert Maximum Rate of Interest].]]

[(4)] Interest Amount. The Calculation Agent will, at or as soon as practicable
after each time at which the Rate of Interest is to be determined, determine the
Rate of Interest and calculate the amount of interest (the "Interest Amount")
payable on the Notes for the relevant Interest Period. Each Interest Amount
shall be calculated by applying the Rate of Interest and the Day Count Fraction
(as defined below) and rounding the resultant figure to the nearest [insert
Designated Currency unit], with 0.5 of such unit being rounded upwards.

[(5)] Notification of Rate of Interest and Interest Amount. The Calculation
Agent will cause the Rate of Interest, each Interest Amount for each Interest
Period, each Interest Period and the relevant Interest Payment Date to be
notified to the Issuer, the Principal Paying Agent and the Holders in accordance
with ss. 11 as soon as possible after their determination, but in no event later
than the fourth [TARGET] [insert relevant reference] Business Day (as defined in
ss. 3[(1)] [and] [(2))] thereafter and, if required by the rules of any stock
exchange on which the Notes are from time to time listed, to such stock
exchange, as soon as possible after their determination, but in no event later
than the first day of the relevant Interest Period. Each Interest Amount and
Interest Payment Date so notified may subsequently be amended (or appropriate
alternative arrangements made by way of adjustment) without notice in the event
of an extension or shortening of the Interest Period. Any such amendment will be
promptly notified to any stock exchange on which the Notes are then listed and
to the Holders in accordance with ss. 11.

[(6)] Determinations Binding. All certificates, communications, opinions,
determinations, calculations, quotations and decisions given, expressed, made or
obtained for the purposes of the provisions of this ss. 3 by the Calculation
Agent shall (in the absence of manifest error) be binding on the Issuer, the
Principal Paying Agent and the Holders.

[(7)] Accrual of Interest. If the Issuer shall fail to redeem the Notes when
due, interest shall continue to accrue on the outstanding principal amount of
the Notes beyond the due date until the expiry of the day preceding the actual
redemption of the Notes. The applicable Rate of Interest will be the default
rate of interest established by law.]

[In the case of Zero Coupon Notes Insert:

(1) No Periodic Payments of Interest. There will not be any periodic payments of
interest on the Notes.

(2) Accrual of Interest. If the Issuer shall fail to redeem the Notes when due,
interest shall accrue on the outstanding principal amount of the Notes as from,
and including, the due date to, but excluding, the date of actual redemption at
the default rate of interest established by law(3).]

[In the case of Dual Currency Notes, Index Linked Notes, Instalment Notes or
Notes with another kind of interest determination, set forth applicable
provisions regarding interest herein.]

______________________________

3    The default rate of interest established by law is five percentage points
     above the basic rate of interest published by Deutsche Bundesbank for the
     periods as of January 1 and July 1, respectively, of each year, ss.ss.
     288(1), 247(1) German Civil Code.

                                       65
<PAGE>

[(o)] Day Count Fraction. "Day Count Fraction" means, in respect of the
calculation of an amount of interest on any Note for any period of time (the
"Calculation Period"):

[if Actual/Actual (ISMA Rule 251) insert:
(a) if the Calculation Period (from and including the first day of such period
but excluding the last) is equal or shorter than the Determination Period (as
defined below) during which the Calculation Period ends, the number of days in
such Calculation Period (from and including the first day of such period but
excluding the last) divided by the product of (i) the number of days in such
Determination Period and (ii) the number of Determination Dates (as defined in
ss. 3(1)) that would occur in one calendar year; or

(b) if the Calculation Period is longer than the Determination Period during
which the Calculation Period ends, the sum of: (A) the number of days in such
Calculation Period falling in the Determination Period in which the Calculation
Period begins divided by the product of (i) the number of days in such
Determination Period and (ii) the number of Determination Dates (as defined in
ss. 3(1)) that would occur in one calendar year, and (B) the number of days in
such Calculation Period falling in the next Determination Period divided by the
product of (i) the number of days in such Determination Period and (ii) the
number of Determination Dates that would occur in one calendar year.

"Determination Period" means the period from (and including) a Determination
Date to, but excluding, the next Determination Date.]

[insert other relevant Actual/Actual methodology pursuant to ISMA]

[if Actual/Actual (ISDA) insert: the actual number of days in the Calculation
Period divided by 365 (or, if any portion of that Calculation Period falls in a
leap year, the sum of (A) the actual number of days in that portion of the
Calculation Period falling in a leap year divided by 366 and (B) the actual
number of days in that portion of the Calculation Period falling in a non-leap
year divided by 365).]

[if Actual/365 (Fixed) insert: the actual number of days in the Calculation
Period divided by 365.]

[if Actual/360 insert: the actual number of days in the Calculation Period
divided by 360.]

[if 30/360, 360/360 or Bond Basis insert: the number of days in the Calculation
Period divided by 360, the number of days to be calculated on the basis of a
year of 360 days with 12 30-day months (unless (A) the last day of the
Calculation Period is the 31st day of a month, but the first day of the
Calculation Period is a day other than the 30th or 31st day of a month, in which
case the month that includes that last day shall not be considered to be
shortened to a 30-day month, or (B) the last day of the Calculation Period is
the last day of the month of February in which case the month of February shall
not be considered to be lengthened to a 30-day month).]

[if 30E/360 or Eurobond Basis insert: the number of days in the Calculation
Period divided by 360 (the number of days to be calculated on the basis of a
year of 360 days with 12 30-day months, without regard to the date of the first
day or last day of the Calculation Period, unless, in the case of the final
Calculation Period, the last day of that Calculation Period is the last day of
the month of February, in which case the month of February shall not be
considered to be lengthened to a 30-day month).]

                                       66
<PAGE>

                                     ss. 4
                                    PAYMENTS

(1) Payments.

(a) Payments of principal of [in the case of Notes other than Zero Coupon Notes
insert: and interest on,] the Notes shall be made to the registered holder of
the Global Notes in U.S. dollars [in the case of Notes for which the Designated
Currency is not the U.S. dollar insert: or the Designated Currency as set forth
below]. Payments of principal shall be made upon surrender of the Global Notes
to the Principal Paying Agent (ss. 6).

[In the case of Notes for which the Designated Currency is not the U.S. dollar
insert: (b) Any Holder shall receive payments of principal and interest in
respect of the Notes in U.S. dollars, unless such Holder elects to receive
payments in the Designated Currency in accordance with the procedures set out
below. To the extent that Holders shall not have made such election in respect
of any payment of principal or interest, the aggregate amount designated for all
such Holders in respect of such payment (the "Designated Currency Conversion
Amount") shall be converted by or on behalf of the Principal Paying Agent into
U.S. dollars and paid by wire transfer of same day funds to the registered
holder of the Global Notes for payment through DTC's settlement system to the
relevant DTC participants. All costs of any such conversion shall be deducted
from such payments. Any such conversion shall be based on the bid quotation of
or on behalf of the Principal Paying Agent, at or prior to 11:00 a.m. Frankfurt
time time, on the second Conversion Business Day preceding the relevant payment
date, for the purchase by or on behalf of the Principal Paying Agent of the
Designated Currency Conversion Amount with U.S. dollars for settlement on such
payment date. "Conversion Business Day" means a day which is a New York Business
Day, [a [insert relevant location] Business Day] [and][,] [a Frankfurt Business
Day] [and a TARGET Business Day] (subparagraph (3)). If such bid quotation is
not available, the Principal Paying Agent shall obtain or cause to be obtained a
bid quotation from a leading foreign exchange bank in New York City selected by
or on behalf of the Principal Paying Agent for such purpose. If no bid quotation
from a leading foreign exchange bank is available, payment of the Designated
Currency Conversion Amount will be made in the Designated Currency to the
account or accounts specified by DTC to the Principal Paying Agent. Until such
account or accounts are so specified, the funds still held by the Principal
Paying Agent shall bear interest at the rate of interest quoted by the Principal
Paying Agent for deposits with it on an overnight basis, to the extent that the
Principal Paying Agent is reasonably able to reinvest such funds.

(c) Any Holder may elect to receive payment of principal and interest with
respect to the Notes in the Designated Currency by causing DTC, through the
relevant DTC participant, to notify the Principal Paying Agent by the time
specified below of (i) such Holder's election to receive all or a portion of
such payment in the Designated Currency and (ii) wire transfer instructions to a
Designated Currency account. Such election in respect of any payment shall be
made by the Holder at the time and in the manner required by the DTC procedures
applicable from time to time and shall, in accordance with such procedures, be
irrevocable. DTC's notification of such election, wire transfer instructions and
of the amount payable in the Designated Currency pursuant to this subparagraph
(1)(c) must be received by the Principal Paying Agent prior to 5:00 p.m., New
York time on the fifth New York Business Day (subparagraph (3)) following the
relevant Record Date (subparagraph (2)) in the case of interest and prior to
5:00 p.m. New York time on the eighth New York Business Day prior to the payment
date (subparagraph (4)) for the payment of principal. Any payments under this
subparagraph (1)(c) in the Designated Currency shall be made by wire transfer of
same day funds to the Designated Currency accounts designated by DTC.]

                                       67
<PAGE>

[(b)] [(d)] All payments made by the Issuer to, or to the order of, the
registered holder of the Global Notes shall discharge the liability of the
Issuer under the Notes to the extent of the sums so paid.

(2) Record Date. The record date (the "Record Date") for purposes of payments
(subsection (1)) of principal and interest shall be, in respect of each such
payment, the tenth New York Business Day preceding the relevant due date.

(3) Business Days. [[In the case of Notes for which the Designated Currency is
not the U.S. dollar insert: If any due date for payment of principal [in the
case of Notes other than Zero Coupon Notes insert: or interest] in the
Designated Currency in respect of any Notes is not [a [insert relevant location]
Business Day] [or not] [a TARGET Business Day], such payment will not be made
until the next day which is [a [insert relevant location] Business Day] [and] [a
TARGET Business Day], and no further interest shall be paid in respect of the
delay in such payment.] If any date for payment of principal [in the case of
Notes other than Zero Coupon Notes insert: or interest] in U.S. dollars is not a
New York Business Day [or] [,] [not a [insert other relevant location] Business
Day] [or not a TARGET Business Day], such payment will not be made until the
next day which is a New York Business Day [and] [,] [a [insert other relevant
location] Business Day] [and a TARGET Business Day], and no further interest
shall be paid in respect of the delay in such payment. "New York Business Day"
means any day on which banking institutions in New York City are not obliged and
not authorized to close. ["[Insert relevant location] Business Day" means any
day (other than a Saturday or Sunday) on which commercial banks are open for
business (including dealings in foreign exchange and foreign currency) in
[insert relevant location].] ["TARGET Business Day" means any day on which the
Trans-European Automated Real-time Gross Settlement Express Transfer System
(TARGET) is operating.] [insert other applicable Business Day convention]

(4) Payment Date and Due Date. For the purposes of these Terms and Conditions
"payment date" means the day on which the payment is actually to be made, where
applicable as adjusted in accordance with subsection (3), and "due date" means
the payment date provided for herein, without taking account of any such
adjustment.

(5) References to Principal. Reference in these Terms and Conditions to
principal in respect of the Notes shall be deemed to include, as applicable: the
Final Redemption Amount of the Notes; [if redeemable at the option of the Issuer
insert: the Call Redemption Amount of the Notes;] [if redeemable at option of
the Holder insert: the Put Redemption Amount of the Notes;] [in the case of Zero
Coupon Notes insert: the Amortized Face Amount of the Notes;] [in the case of
Instalment Notes insert: the Instalment Amount(s) of the Notes;] and any premium
and any other amounts which may be payable under or in respect of the Notes.

(6) Deposit of Principal and Interest. The Issuer may deposit with the
Amtsgericht in Frankfurt am Main principal or interest not claimed by Holders
within twelve months after the Maturity Date, even though such Holders may not
be in default of acceptance of payment. If and to the extent that the deposit is
effected and the right of withdrawal is waived, the respective claims of such
Holders against the Issuer shall cease.

                                     ss. 5
                                   REDEMPTION

[(1) Redemption at Maturity.]

                                       68
<PAGE>

[In the case of Notes other than Instalment Notes insert: Unless previously
redeemed in whole or in part or purchased and cancelled, the Notes shall be
redeemed at their Final Redemption Amount on [in the case of a specified
Maturity Date insert such Maturity Date] [in the case of a Redemption Month
insert: the Interest Payment Date falling in [insert Redemption Month]] (the
"Maturity Date"). The Final Redemption Amount in respect of each Note shall be
[if the Notes are redeemed at their principal amount insert: its principal
amount] [otherwise insert Final Redemption Amount per Designated
Denomination/index and/or formula by reference to which the Final Redemption
Amount is to be calculated]].]

[In the case of Instalment Notes insert: Unless previously redeemed in whole or
in part or purchased and cancelled, the Notes shall be redeemed at the
Instalment Date(s) and in the Instalment Amount(s) set forth below:

             Instalment Date(s)                   Instalment Amount(s)
         [insert Instalment Date(s)]         [insert Instalment Amount(s)]
                [        ]                           [        ]
                [        ]                           [        ]

[If the Notes are subject to Early Redemption at the Option of the Issuer
insert: [(2)] Early Redemption at the Option of the Issuer.

(a) The Issuer may, upon notice given in accordance with clause (b), redeem all
or some only of the Notes on the Call Redemption Date(s) at the Call Redemption
Amount(s) set forth below together with accrued interest, if any, to (but
excluding) the Call Redemption Date. [if Minimum Redemption Amount or Higher
Redemption Amount applies insert: Any such redemption must be of a principal
amount equal to [at least [insert Minimum Redemption Amount]] [Higher Redemption
Amount].

       Call Redemption Date(s)                   Call Redemption Amount(s)
   [insert Call Redemption Date(s)]         [insert Call Redemption Amount(s)]
                [        ]                           [        ]
                [        ]                           [        ]

[If Notes are subject to Early Redemption at the Option of the Holder insert:
The Issuer may not exercise such option in respect of any Note which is the
subject of the prior exercise by the Holder thereof of its option to require the
redemption of such Note under subparagraph (3) of this ss. 5.]

(b) Notice of redemption shall be given by the Issuer to the Holders of the
Notes in accordance with ss. 11. Such notice shall specify:

(i)   the Series of Notes subject to redemption;

(ii)  whether such Series is to be redeemed in whole or in part only and, if in
part only, the aggregate principal amount of the Notes which are to be redeemed;

(iii) the Call Redemption Date, which shall be not less than [insert Minimum
Notice to Holders] nor more than [insert Maximum Notice to Holders] days after
the date on which notice is given by the Issuer to the Holders; and

(iv)  the Call Redemption Amount at which such Notes are to be redeemed.

                                       69
<PAGE>

(c) In the case of a partial redemption of Notes, Notes to be redeemed shall be
selected in accordance with the rules of DTC.]

[If the Notes are subject to Early Redemption at the Option of a Holder insert:
[(3)] Early Redemption at the Option of a Holder.

(a) The Issuer shall, at the option of the Holder of any Note, redeem such Note
on the Put Redemption Date(s) at the Put Redemption Amount(s) set forth below
together with accrued interest, if any, to (but excluding) the Put Redemption
Date.

       Put Redemption Date(s)                   Put Redemption Amount(s)
   [insert Put Redemption Date(s)]         [insert Put Redemption Amount(s)]
                [        ]                           [        ]
                [        ]                           [        ]

The Holder may not exercise such option in respect of any Note which is the
subject of the prior exercise by the Issuer of any of its options to redeem such
Note under this ss. 5.

(b) In order to exercise such option, the Holder must, not less than [insert
Minimum Notice to Issuer] nor more than [insert Maximum Notice to Issuer] days
before the Put Redemption Date on which such redemption is required to be made
as specified in the Put Notice (as defined below), submit during normal business
hours at the specified office of the Principal Paying Agent a duly completed
early redemption notice ("Put Notice"). No option so exercised may be revoked or
withdrawn.]

[In the case of Notes other than Zero Coupon Notes insert: [(4)] Early
Redemption Amount.

For purposes of subparagraph (2) and (3) of this ss. 5, the Early Redemption
Amount of a Note shall be its Final Redemption Amount.]

[In the case of Zero Coupon Notes insert: [(4)]  Early Redemption Amount.

For purposes of subparagraph (2) of this ss. 5, the Early Redemption Amount of a
Note shall be calculated as follows:

(a) The Early Redemption Amount of a Note shall be an amount equal to the sum
of:

(i)  [insert Reference Price] (the "Reference Price"), and

(ii) the product of [insert Amortization Yield in per cent.] (the "Amortization
Yield") and the Reference Price from (and including) [insert Issue Date] to (but
excluding) the date fixed for redemption or (as the case may be) the date upon
which the Notes become due and payable, whereby the Amortization Yield shall be
compounded annually.

Where such calculation is to be made for a period which is not a whole number of
years, the calculation in respect of the period of less than a full year (the
"Calculation Period") shall be made on the basis of the Day Count Fraction (as
defined in ss. 3).

(b) If the Issuer fails to pay the Early Redemption Amount when due, such amount
shall be calculated as provided herein, except that references in subparagraph
(a)(ii) above to the date fixed for redemption or the date on which such Note
becomes due and repayable shall refer to the date on which payment is made].

                                       70
<PAGE>

[Instead of the above, a Redemption Schedule specifying the Early Redemption
Amounts may be inserted]

[In the case of Dual Currency Notes, Index Linked Notes or Instalment Notes, set
forth applicable provisions regarding principal herein.]

                                     ss. 6
                                   THE AGENTS

(1) Appointment; Specified Offices. The initial Principal Paying Agent [,] [and]
[the initial Additional Paying Agent[s] (together with the Principal Paying
Agent, the "Paying Agents")] [and] [the initial Calculation Agent] and [its]
[their] respective initial specified office[s] [is] [are]:

         Principal Paying Agent:       Deutsche Bank Trust Company Americas
                                       Trust & Securities Services
                                       Global Debt Service
                                       60 Wall Street
                                       27th Floor - MS NY C60-2710
                                       New York, NY 10005, USA

         [Insert any  Additional Paying Agent[s] and specified office[s]]

[If the Principal Paying Agent is to be appointed as Calculation Agent insert:
The Principal Paying Agent shall also act as Calculation Agent.]

[If a Calculation Agent other than the Principal Paying Agent is to be appointed
insert: The Calculation Agent and its initial specified office shall be:

                  Calculation Agent:         o
                                             o
                                             o
                                             o
                                             o]

The Principal Paying Agent [,] [and] [the Additional Paying Agent[s]] [andthe
Calculation Agent] reserve[s] the right at any time to change, with the approval
of the Issuer, [its] [their] respective specified office[s] to some other
specified office in the same city upon giving notice thereof in accordance with
ss. 11.

(2) Variation or Termination of Appointment. The Issuer reserves the right at
any time to vary or terminate the appointment of the Principal Paying Agent [,]
[or] [any Additional Paying Agent] [or] [the Calculation Agent] and to appoint
another Principal Paying Agent or additional or other Paying Agent[s] [or]
[another Calculation Agent]. The Issuer shall at all times maintain (i) a
Principal Paying Agent with a specified office in New York City [in the case of
Notes listed on a stock exchange[s] insert: [,] [and] (ii) so long as the Notes
are listed on the [name of Stock Exchange[s]], a Paying Agent (which may be the
Principal Paying Agent) with a specified office in [location of Stock Exchange]
and/or in such other place as may be required by the rules of such stock
exchange] [if any Calculation Agent is to be appointed insert: [and [(iii)] a
Calculation Agent. The Issuer undertakes that, when European Union Council
Directive 2003/48/EC of June 3, 2003 on the taxation of savings income in the
form of interest payments or any European Union Directive otherwise

                                       71
<PAGE>

implementing the conclusions of the ECOFIN Council meeting of November 26-27,
2000 is brought into force, it will ensure that it maintains a paying agent in
an EU Member State that will not be obliged to withhold or deduct tax pursuant
to the such Directive to the extent this is possible and legally permitted in
any member state of the European Union. Any variation, termination, appointment
or change shall only take effect (other than in the case of insolvency, when it
shall be of immediate effect) after not less than 30 nor more than 45 days'
prior notice thereof shall have been given to the Holders in accordance with ss.
11.

(3) Agents of the Issuer. The Principal Paying Agent[,] [and] [the Additional
Paying Agent[s]] [and the Calculation Agent] act[s] solely as agent[s] of the
Issuer and do[es] not have any obligations towards or relationship of agency or
trust to any Holder.

                                     ss. 7
                                    TAXATION

All payments by the Issuer in respect of the Notes shall be made with
withholding or deduction of taxes or other duties, if such withholding or
deduction is required by law. In the event of such deduction or withholding, the
Issuer shall not be required to pay any additional amounts in respect of the
Notes.

                                      ss. 8
                               PRESENTATION PERIOD

The presentation period provided in ss. 801 paragraph 1, sentence 1 BGB (German
Civil Code) is reduced to ten years for the Notes.

                                     ss. 9
                                  SUBSTITUTION

(1) Substitution. The Issuer may at any time without the consent of the Holders
substitute in its stead any other company as principal debtor (the "Substituted
Issuer") in respect of all obligations arising from the Notes, if:

(a) the Substituted Issuer assumes any and all obligations, and succeeds to any
and all rights, of the Issuer arising from or in connection with the Notes;

(b) the Issuer and the Substituted Issuer have obtained all necessary
authorizations and may transfer to the Principal Paying Agent in the currency
required under the Notes and without being obliged to deduct or withhold any
amount of taxes or other duties of whatever nature levied by the country or
countries in which the Substituted Issuer has its domicile or tax residence
which exceeds at the time of the effectiveness of such substitution the amount
of taxes or duties, if any, levied by withholding or deduction by the country or
countries in which the Issuer has its domicile or tax residence, all amounts
required for the performance of the payment obligations arising from or in
connection with the Notes;

[In the case of unsubordinated Notes insert: (c) the Issuer irrevocably and
unconditionally guarantees in favor of each Holder the payment of all sums
payable by the Substituted Issuer in respect of the Notes on terms equivalent to
the terms of the form of the guarantee in respect of unsubordinated Notes of the
Issuer set out in the Agency Agreement dated March 22, 2005 among the Issuer,
Deutsche Bank Aktiengesellschaft and the Principal Paying Agent, pursuant to
which the Notes are issued;]

                                       72
<PAGE>

[In the case of subordinated Notes insert: (c) the obligations assumed by the
Substituted Issuer in respect of the Notes are subordinated on terms identical
to the terms of the Notes and (i) the Substituted Issuer is a subsidiary
(Tochterunternehmen) of the Issuer within the meaning of ss.ss. 1(7) and 10(5a)
sentence 11 Kreditwesengesetz (German Banking Act), (ii) the Substituted Issuer
deposits an amount which is equal to the aggregate principal amount of the Notes
with the Issuer on terms equivalent, including in respect of subordination, to
the terms and conditions of the Notes, and (iii) the Issuer irrevocably and
unconditionally guarantees in favor of each Holder the payment of all sums
payable by the Substituted Issuer in respect of the Notes on terms equivalent to
the terms of the form of guarantee in respect of subordinated Notes of the
Issuer set out in the Agency Agreement dated March 22, 2005 among the
Issuer, Deutsche Bank Aktiengesellschaft and the Principal Paying Agent,
pursuant to which the Notes are issued;]

(d) the Holders will not lose as a result of such substitution the benefit of
the guarantee obligation pursuant to Article 5 Section 2 of the Act Concerning
Landeskreditbank Baden-Wurttemberg - Forderbank (the "Act"), the maintenance
obligation of the State of Baden-Wurttemberg pursuant to Article 5 Section 1 of
the Act and the explicit guarantee of the State of Baden-Wurttemberg pursuant to
Article 5 Section 3 of the Act, in each case with such contents as are
prevailing at the time of the effectiveness of such substitution, or of an
obligation of the State of Baden-Wurttemberg or the Federal Republic of Germany
which is equivalent thereto and which may have replaced such guarantee
obligation, maintenance obligation or guarantee; and

(e) there shall have been delivered to the Principal Paying Agent an opinion of
lawyers of recognized standing to the effect that subparagraphs (a) - (d) above
have been satisfied.

(2) References. In the event of any substitution, any reference in these Terms
and Conditions to the Issuer shall from then on be a reference to the
Substituted Issuer.

(3) Notice. Any substitution of the Issuer shall be published in accordance with
ss. 11. Upon such publication, the substitution shall become effective, and the
Issuer (and in the event of a repeated application of this ss. 9, any previous
Substituted Issuer) shall be discharged from any and all obligations under the
Notes, on the date on which such substitution is published.

                                     ss. 10
                   FURTHER ISSUES, PURCHASES AND CANCELLATION

(1) Further Issues. The Issuer may from time to time, without the consent of the
Holders, issue further Notes having the same terms and conditions as the Notes
in all respects (or in all respects except for the issue date, interest
commencement date and/or issue price) so as to form a single Series with and
increase the aggregate principal amount of, the Notes.

(2) Purchases. The Issuer may at any time purchase Notes in the open market or
otherwise and at any price. Notes purchased by the Issuer may, at the option of
the Issuer, be held, resold or surrendered to the Principal Paying Agent for
cancellation. If purchases are made by tender, tenders for such Notes must be
made available to all Holders of such Notes alike.

(3) Cancellation. All Notes redeemed in full or surrendered for cancellation
pursuant to subparagraph (2) above shall be cancelled forthwith and may not be
reissued or resold.

                                     ss. 11
                                     NOTICES

                                       73
<PAGE>

(1) All notices regarding the Notes shall be published in the following
journals: (a) at least one leading daily newspaper of general circulation in the
Federal Republic of Germany [,] [and] [Luxembourg] [and [specify other
location]] (expected to be the Borsen-Zeitung [,] [and] [the Luxemburger Wort]
[the Tageblatt] [and [insert other applicable newspaper having general
circulation]]) and (b) a leading daily newspaper printed in the English language
and of general circulation in New York City (expected to be the Wall Street
Journal). Any notice will become effective for all purposes on the third day
following the date of its publication, or, if published more than once or on
different dates, on the third day following the first date of any such
publication.

(2) Notification to DTC. The Issuer may, in lieu of publication in the
newspapers set forth in subparagraph (1) above, deliver the relevant notice to
DTC, for communication by DTC to the Holders holding the Notes through DTC,
provided that, so long as any Notes are listed on any stock exchange, the rules
of such stock exchange permit such form of notice. Any such notice shall be
deemed to have been given to the Holders on the fourth day after the day on
which the said notice was given to DTC.

(3) In case a notice is published according to subparagraph (1) and also
delivered according to subparagraph (2), such notice will become effective for
all purposes on the third day following the date of its publication, or, if
published more than once or on different dates, on the third day following the
first date of any such publication.

                                     ss. 12
                                 GOVERNING LAW,
                      PLACE OF JURISDICTION AND ENFORCEMENT

(1) Governing Law. The Notes, both as to form and content, and all rights and
obligations of the Issuer, the Holders and the Agents shall be governed by
German law. Transfers and pledges of Notes executed between DTC participants and
between DTC and DTC participants shall be governed by the laws of the State of
New York.

(2) Submission to Jurisdiction. The courts in Frankfurt am Main, Germany shall
have jurisdiction for any action or other legal proceedings ("Proceedings")
arising out of or in connection with the Notes. The jurisdiction of such courts
shall be exclusive according to Section 38 of the German Code of Civil Procedure
(Zivilprozessordnung) for Proceedings solely involving merchants (Kaufleute),
legal persons under public law (juristische Personen des offentlichen Rechts),
special funds under public law (offentlich-rechtliche Sondervermogen) or persons
not subject to the general jurisdiction of the courts of Germany (Personen ohne
allgemeinen Gerichtsstand), otherwise it shall be nonexclusive.

(3) Enforcement. Any Holder may in any proceedings against the Issuer or to
which the Holder and the Issuer are parties protect and enforce in its own name
its rights arising under its Notes on the basis of (a) a certificate issued by
its Custodian (i) stating the full name and address of the Holder, (ii)
specifying an aggregate principal amount of Notes credited on the date of such
statement to such Holder's securities account maintained with such Custodian and
(iii) confirming that the Custodian has given a written notice of the DTC and
the Principal Paying Agent containing the information pursuant to (i) and (ii)
and bearing acknowledgements of DTC and the relevant DTC participant and (b) a
copy of the Global Note certified as being a true copy of a duly authorized
officer of DTC or the Principal Paying Agent. For purposes of the foregoing,
"Custodian" means any bank or other financial institution of recognized standing
authorized to engage in securities custody business with

                                       74
<PAGE>

which the Holder maintains a securities account in respect of any Notes and
includes DTC and any other clearing system which maintains an account with DTC.

                                     ss. 13
                                    LANGUAGE

[If the Conditions shall be in the German language with an English language
translation insert: These Terms and Conditions are written in the German
language and provided with an English language translation. The German text
shall be controlling and binding. The English language translation is provided
for convenience only.]

[If the Conditions shall be in the English language with a German language
translation insert: These Terms and Conditions are written in the English
language and provided with a German language translation. The English text shall
be controlling and binding. The German language translation is provided for
convenience only.]

[If the Conditions shall be in the English language only insert: These Terms and
Conditions are written in the English language only.]

[In the case of Notes that are publicly offered, in whole or in part, in Germany
or distributed, in whole or in part, to non-professional investors in Germany
with English language Conditions insert: Eine deutsche Ubersetzung der
Emissionsbedingungen wird bei der Landeskreditbank Baden-Wurttemberg -
Forderbank, Schlossplatz 10, 76131 Karlsruhe, Deutschland, zur kostenlosen
Ausgabe bereitgehalten.]

                                       75
<PAGE>

                                                                     SCHEDULE 1B
                                                                     -----------
                                                                         PART II
                                                                         -------

                              German Version of the
               MASTER CONDITIONS OF THE SINGLE NOTE STRUCTURE NOTE

<PAGE>

                                GERMAN VERSION OF
                          TERMS AND CONDITIONS OF NOTES

                                      ss. 1
           GESAMTNENNBETRAG, STUCKELUNG, FORM, BESTIMMTE DEFINITIONEN

(1) Gesamtnennbetrag; Stuckelung. Diese Serie von Schuldverschreibungen (die
"Schuldverschreibungen") der Landeskreditbank Baden-Wurttemberg - Forderbank
(die "Emittentin") wird in [designierte Wahrung einfugen] (die "Designierte
Wahrung") in einem Gesamtnennbetrag von [Designierte Wahrung einfugen]
[Gesamtnennbetrag einfugen] (in Worten: [Gesamtnennbetrag in Worten einfugen]
[Designierte Wahrung einfugen]) in [Anzahl der Teilschuldverschreibungen
einfugen] Stuckelungen von [festgelegte Stuckelungen einfugen] [Designierte
Wahrung einfugen](die "festgelegten Stuckelungen") begeben.

(2) Verbriefung und Verwahrung. Die Schuldverschreibungen werden durch eine oder
mehrere Globalurkunden ohne Zinsscheine verbrieft (die "Globalurkunden"). Die
Globalurkunden werden von der Deutsche Bank Trust Company Americas ("DBTCA")
oder einem etwaigen Rechtsnachfolger als Verwahrer fur The Depository Trust
Company, New York ("DTC") verwahrt, bis samtliche Verpflichtungen der Emittentin
aus den Schuldverschreibungen erfullt sind. Die Globalurkunden sind als
Namenspapiere auf den Namen der Cede & Co. als dem Beauftragten von DTC
ausgestellt und in ein Register (das "Register") eingetragen, welches von DTC
gefuhrt wird. Die Globalurkunden tragen jeweils die eigenhandigen Unterschriften
zweier ordnungsgemass bevollmachtigter Vertreter der Emittentin und sind
jeweils von der Hauptzahlstelle oder in deren Namen mit einer handschriftlichen
Kontrollunterschrift versehen. Kopien der Globalurkunden sind bei der
Hauptzahlstelle (ss. 6) kostenlos erhaltlich.

(3) Ubertragung. Ubertragungen von Schuldverschreibungen setzen entsprechende
Depotbuchungen voraus.

(4) Glaubiger von Schuldverschreibungen. "Glaubiger" bedeutet jeder Inhaber
eines Miteigentumsanteils oder anderen vergleichbaren Eigentumsanspruchs oder
Rechts an den Schuldverschreibungen.

                                      ss. 2
                                     STATUS

[Im Falle von nicht nachrangigen Schuldverschreibungen einfugen: Die
Schuldverschreibungen begrunden nicht besicherte und nicht nachrangige
Verbindlichkeiten der Emittentin, die mit allen anderen nicht besicherten und
nicht nachrangigen Verbindlichkeiten der Emittentin gleichrangig sind, es sei
denn, etwas anderes ist durch zwingende gesetzliche Regelungen vorgeschrieben.]

[Im Falle von nachrangigen Schuldverschreibungen einfugen: Die
Schuldverschreibungen begrunden nicht besicherte, nachrangige Verbindlichkeiten
der Emittentin, die mit allen anderen nachrangigen Verbindlichkeiten der
Emittentin gleichrangig sind, es sei denn, etwas anderes ist durch zwingende
gesetzliche Regelungen vorgeschrieben. Im Fall der Liquidation oder des
Insolvenzverfahrens uber das Vermogen

<PAGE>

der Emittentin(1) gehen die Verbindlichkeiten aus den Schuldverschreibungen den
Anspruchen aller Glaubiger der Emittentin aus nicht nachrangigen
Verbindlichkeiten im Range nach, so dass Zahlungen auf die Schuldverschreibungen
so lange nicht erfolgen, wie die Anspruche aller Glaubiger der Emittentin aus
nicht nachrangigen Verbindlichkeiten nicht vollstandig befriedigt sind. Kein
Glaubiger ist berechtigt, mit Anspruchen aus den Schuldverschreibungen gegen
Anspruche der Emittentin aufzurechnen. Den Glaubigern wird fur ihre Rechte aus
den Schuldverschreibungen weder durch die Emittentin noch durch Dritte
irgendeine Sicherheit gestellt; eine solche Sicherheit wird auch zu keinem
spateren Zeitpunkt gestellt werden. Nachtraglich konnen der Nachrang gemass
diesem ss. 2 nicht beschrankt sowie die Laufzeit der Schuldverschreibungen und
jede anwendbare Kundigungsfrist nicht verkurzt werden. Werden die
Schuldverschreibungen vor dem Falligkeitstag unter anderen als den in diesem ss.
2 beschriebenen Umstanden zuruckgezahlt oder von der Emittentin (ausser in
den Fallen des ss. 10 Absatz 5a Satz 6 Kreditwesengesetz) zuruckerworben, so ist
der zuruckgezahlte oder gezahlte Betrag der Emittentin ohne Rucksicht auf
entgegenstehende Vereinbarungen zuruckzugewahren, sofern nicht der gezahlte
Betrag durch die Einzahlung anderen, zumindest gleichwertigen haftenden
Eigenkapitals im Sinne des Kreditwesengesetzes ersetzt worden ist oder die
Bundesanstalt fur Finanzdienstleistungsaufsicht der vorzeitigen Ruckzahlung oder
dem Ruckkauf zugestimmt hat.]

                                      ss. 3
                                     ZINSEN

[Im Falle von festverzinslichen Schuldverschreibungen einfugen:

(1) Zinssatz und Zinszahlungstage. Die Schuldverschreibungen werden in Hohe
ihres Nennbetrages verzinst, und zwar vom [Verzinsungsbeginn einfugen]
(einschliesslich) bis zum Falligkeitstag (wie in ss. 5 [Absatz (1)]
definiert) (ausschliesslich) mit [Zinssatz einfugen] % per annum. Die Zinsen
sind nachtraglich am [Festzinstermin(e) einfugen] eines jeden Jahres zahlbar
(jeweils ein "Zinszahlungstag"). Die erste Zinszahlung erfolgt am [ersten
Zinszahlungstag einfugen] [sofern der erste Zinszahlungstag nicht der erste
Jahrestag des Verzinsungsbeginns ist, einfugen: und belauft sich auf
[anfanglichen Bruchteilszinsbetrag pro kleinste festgelegte Stuckelung einfugen]
je Schuldverschreibung im Nennbetrag von [kleinste festgelegte Stuckelung
einfugen] [und [weitere anfangliche Bruchteilszinsbetrage fur jede weitere
festgelegte Stuckelung einfugen] je Schuldverschreibung im Nennbetrag von
[weitere festgelegte Stuckelungen einfugen]]. [Sofern der Falligkeitstag kein
Festzinstermin ist, einfugen: Die Zinsen fur den Zeitraum vom [den letzten dem
Falligkeitstag vorausgehenden Festzinstermin einfugen] (einschliesslich) bis
zum Falligkeitstag (ausschliesslich) belaufen sich auf [abschliessenden
Bruchteilszinsbetrag pro kleinste festgelegte Stuckelung einfugen] je
Schuldverschreibung im Nennbetrag von [kleinste festgelegte Stuckelung einfugen]
und [weitere abschliessende Bruchteilszinsbetrage fur jede weitere
festgelegte Stuckelung einfugen] je Schuldverschreibung im Nennbetrag von
[weitere festgelegte Stuckelungen einfugen].] [Falls als Zinstagequotient
Actual/Actual (ISMA Regelung 251) anwendbar ist, einfugen: Die Anzahl der
Zinszahlungstage im Kalenderjahr (jeweils ein "Feststellungstermin") betragt
[Anzahl der regularen Zinszahlungstage im Kalenderjahr einfugen].]

____________________________

1    Gemass ss. 12 Insolvenzordnung und ss. 45 Baden-Wurttembergisches
     Ausfuhrungsgesetz zum Gerichtsverfassungsgesetz kann ein Insolvenzverfahren
     uber das Vermogen der L-Bank nicht eroffnet werden.

                                       78
<PAGE>

(2) Auflaufende Zinsen. Der Zinslauf der Schuldverschreibungen endet mit Ablauf
des Tages, der dem Tag vorangeht, an dem sie zur Ruckzahlung fallig werden.
Falls die Emittentin die Schuldverschreibungen bei Falligkeit nicht einlost,
erfolgt die Verzinsung des ausstehenden Nennbetrages der Schuldverschreibungen
vom Tag der Falligkeit (einschliesslich) bis zum Tag der tatsachlichen
Ruckzahlung der Schuldverschreibungen (ausschliesslich) in Hohe des
gesetzlich festgelegten Satzes fur Verzugszinsen(2).

(3) Berechnung der Zinsen fur Teile von Zeitraumen. Sofern Zinsen fur einen
Zeitraum von weniger als einem Jahr zu berechnen sind, erfolgt die Berechnung
auf der Grundlage des Zinstagequotienten (wie nachstehend definiert).]

[Im Falle von variabel verzinslichen Schuldverschreibungen einfugen:

(1) Zinssatz und Zinszahlungstage.

(a) Die Schuldverschreibungen werden in Hohe ihres Nennbetrages ab dem
[Verzinsungsbeginn einfugen] (der "Verzinsungsbeginn") (einschliesslich) bis
zum ersten Zinszahlungstag (ausschliesslich) und danach von jedem
Zinszahlungstag (einschliesslich) bis zum nachstfolgenden Zinszahlungstag
(ausschliesslich) verzinst. Zinsen auf die Schuldverschreibungen sind an
jedem Zinszahlungstag zahlbar.

(b) "Zinszahlungstag" bedeutet

[im Falle von festgelegten Zinszahlungstagen einfugen: jeder [festgelegte
Zinszahlungstage einfugen].]

[im Falle von festgelegten Zinsperioden einfugen: (soweit diese
Emissionsbedingungen keine abweichende Bestimmungen vorsehen) jeweils der Tag,
der [Zahl einfugen] [Wochen] [Monate] [andere festgelegte Zeitraume einfugen]
nach dem vorausgehenden Zinszahlungstag oder, im Fall des ersten
Zinszahlungstages, nach dem Verzinsungsbeginn liegt.]

(c) Fallt ein Zinszahlungstag (ausgenommen der Zinszahlungstag am Falligkeitstag
des Kapitals) auf einen Tag, der kein Geschaftstag (wie nachstehend definiert)
ist, so wird der Zinszahlungstag.

[bei Anwendung der Modifizierter folgender Geschaftstag-Konvention einfugen: auf
den nachstfolgenden Geschaftstag verschoben, es sei denn, jener wurde dadurch in
den nachsten Kalendermonat fallen; in diesem Fall wird der Zinszahlungstag auf
den unmittelbar vorausgehenden Geschaftstag vorgezogen.]

[bei Anwendung der FRN-Konvention einfugen: auf den nachstfolgenden Geschaftstag
verschoben, es sei denn, jener wurde dadurch in den nachsten Kalendermonat
fallen; in diesem Fall wird der Zahlungstag auf den unmittelbar vorausgehenden
Geschaftstag vorgezogen. Im Falle einer Zinszahlung ist jeder nachfolgende
Zinszahlungstag der Tag, der numerisch dem vorausgehenden Zinszahlungstag in
demjenigen Kalendermonat entspricht, der [Zahl einfugen] [Monate] [andere
festgelegte Zeitraume einfugen] nach dem vorausgehenden Zinszahlungstag oder, im
Fall des ersten Zinszahlungstages, dem Begebungstag liegt, es sei denn, dass (a)
kein derartiger numerisch korrespondierender Tag in dem Kalendermonat existiert,
in den der Zinszahlungstag fallt, in welchem Fall der

__________________________

2    Der gesetzliche Verzugszinssatz betragt fur das Jahr funf Prozentpunkte
     uber dem von der Deutschen Bundesbank fur die Zeitraume ab dem 1. Januar
     bzw. ab dem 1. Juli eines jeden Jahres veroffentlichten Basiszinssatz,
     ss.ss. 288 Absatz 1, 247 Absatz 1 BGB.

                                       79
<PAGE>

Zinszahlungstag der letzte Geschaftstag in diesem Kalendermonat ist; (b) der
betreffende Zinszahlungstag auf einen Tag fallen wurde, der kein Geschaftstag
ist, in welchem Fall der Zinszahlungstag der erste darauf folgende Geschaftstag
ist, es sei denn, dieser Tag fiele in den nachsten Kalendermonat; in diesem Fall
wird der Zinszahlungstag auf den ersten vorausgehenden Geschaftstag verschoben;
oder (c) der vorausgehende anwendbare Zinszahlungstag auf den letzten
Geschaftstag in einem Kalendermonat fallen wurde, dann sind alle folgenden
anwendbaren Zinszahlungstage vor dem Falligkeitstag (wie in ss. 5 (1) definiert)
der jeweils letzte Geschaftstag des Monats, der [Zahl einfugen] [Monate] [andere
festgelegte Zeitraume einfugen] nach dem vorausgehenden anwendbaren
Zinszahlungstag liegt.]

[bei Anwendung der Folgender Geschaftstag-Konvention einfugen: auf den
nachstfolgenden Geschaftstag verschoben.]

[bei Anwendung der Vorhergegangener Geschaftstag-Konvention einfugen: auf den
unmittelbar vorausgehenden Geschaftstag vorgezogen.]

(d) "Geschaftstag" bedeutet [im Falle von nicht in US-Dollar denominierten
Schuldverschreibungen einfugen: (i) mit Bezug auf eine Zahlung, die an einem
solchen Geschaftstag auf die Schuldverschreibungen in der Designierten Wahrung
zu leisten ware, [ein [Ort einfugen] Geschaftstag] [und ein TARGET
Geschaftstag], und (ii) mit Bezug auf eine Zahlung, die an einem solchen
Geschaftstag auf die Schuldverschreibungen in US-Dollar an den registrierten
Glaubiger zu leisten ware,] ein New Yorker Geschaftstag [und][,] [[ein [Ort
einfugen] Geschaftstag] [und ein TARGET Geschaftstag].] Ein "New Yorker
Geschaftstag" ist jeder Tag, an dem Geschaftsbanken in New York nicht zur
Schliessung des Geschafts verpflichtet oder ermachtigt sind. ["[anderen Ort
einfugen] Geschaftstag" ist jeder Tag (der nicht ein Samstag oder Sonntag ist),
an dem Geschaftsbanken in [anderen Ort einfugen] fur Geschafte
(einschliesslich Devisen- und Sortengeschafte) geoffnet sind.] ["TARGET
Geschaftstag" ist jeder Tag an dem das Trans-European Automated Real-time Gross
Settlement Express Transfer System (TARGET) in Betrieb ist.]

(2) Zinssatz. [Bei Bildschirmfeststellung einfugen: Der Zinssatz (der
"Zinssatz") fur jede Zinsperiode (wie nachstehend definiert) ist, sofern
nachstehend nichts Abweichendes bestimmt wird, der Angebotssatz (ausgedruckt als
Prozentsatz per annum) fur Einlagen in der Designierten Wahrung fur die
jeweilige Zinsperiode, der auf der Bildschirmseite am Zinsfestlegungstag (wie
nachstehend definiert) gegen 11.00 Uhr ([zutreffenden Ort einfugen] Ortszeit)
angezeigt wird [im Falle einer Marge einfugen: [zuzuglich] [abzuglich] der Marge
(wie nachstehend definiert)], wobei alle Festlegungen durch die
Berechnungsstelle erfolgen.

"Zinsperiode" bezeichnet jeweils den Zeitraum vom Verzinsungsbeginn
(einschliesslich) bis zum ersten Zinszahlungstag (ausschliesslich) bzw.
von jedem Zinszahlungstag (einschliesslich) bis zum jeweils darauf folgenden
Zinszahlungstag (ausschliesslich).

"Zinsfestlegungstag" bezeichnet den [zutreffende Zahl von Tagen einfugen]
[TARGET] [zutreffende Bezugnahmen einfugen] Geschaftstag vor Beginn der
jeweiligen Zinsperiode. [Im Falle von anderen als den in ss. 3(1)(d) definierten
Geschaftstagen einfugen: "[zutreffenden Ort einfugen] Geschaftstag" bezeichnet
jeden Tag (ausser einem Samstag oder Sonntag), an dem Geschaftsbanken in
[zutreffenden Ort einfugen] fur Geschafte (einschliesslich Devisen- und
Sortengeschafte) geoffnet sind.]

[Im Falle einer Marge einfugen: Die "Marge" betragt [o] % per annum.]

                                       80
<PAGE>

"Bildschirmseite" bedeutet [Bildschirmseite einfugen].

Sollte zu der genannten Zeit die massgebliche Bildschirmseite nicht zur
Verfugung stehen oder wird kein Angebotssatz angezeigt, wird die
Berechnungsstelle von den Referenzbanken (wie nachstehend definiert) deren
jeweilige Angebotssatze (jeweils als Prozentsatz per annum ausgedruckt) fur
Einlagen in der Designierten Wahrung fur die betreffende Zinsperiode gegenuber
fuhrenden Banken im [zutreffenden Ort einfugen] Interbanken-Markt [in der
Euro-Zone] um ca. 11.00 Uhr ([zutreffenden Ort einfugen] Ortszeit) am
Zinsfestlegungstag anfordern. Falls zwei oder mehr Referenzbanken der
Berechnungsstelle solche Angebotssatze nennen, ist der Zinssatz fur die
betreffende Zinsperiode das arithmetische Mittel (falls erforderlich, auf- oder
abgerundet auf das nachste [falls der Referenzsatz EURIBOR ist, einfugen:
Tausendstel Prozent, wobei 0,0005] [falls der Referenzsatz nicht EURIBOR ist,
einfugen: Hunderttausendstel Prozent, wobei 0,000005] aufgerundet wird) dieser
Angebotssatze [im Falle einer Marge einfugen: [zuzuglich] [abzuglich] der
Marge], wobei alle Festlegungen durch die Berechnungsstelle erfolgen.

Falls an einem Zinsfestlegungstag nur eine oder keine der Referenzbanken der
Berechnungsstelle solche im vorstehenden Absatz beschriebenen Angebotssatze
nennt, ist der Zinssatz fur die betreffende Zinsperiode der Satz per annum, den
die Berechnungsstelle als das arithmetische Mittel (falls erforderlich, auf-
oder abgerundet auf das nachste [falls der Referenzsatz EURIBOR ist, einfugen:
Tausendstel Prozent, wobei 0,0005] [falls der Referenzsatz nicht EURIBOR ist,
einfugen: Hunderttausendstel Prozent, wobei 0,000005] aufgerundet wird) der
Angebotssatze ermittelt, die die Referenzbanken bzw. zwei oder mehrere von ihnen
der Berechnungsstelle auf ihre Anfrage als den jeweiligen Satz nennen, zu dem
ihnen um ca. 11.00 Uhr ([zutreffenden Ort einfugen] Ortszeit) am betreffenden
Zinsfestlegungstag Einlagen in der Designierten Wahrung fur die betreffende
Zinsperiode von fuhrenden Banken im [zutreffenden Ort einfugen]
Interbanken-Markt [in der Euro-Zone] angeboten werden [im Falle einer Marge
einfugen: [zuzuglich] [abzuglich] der Marge]; falls weniger als zwei der
Referenzbanken der Berechnungsstelle solche Angebotssatze nennen, soll der
Zinssatz fur die betreffende Zinsperiode der Angebotssatz fur Einlagen in der
Designierten Wahrung fur die betreffende Zinsperiode oder das arithmetische
Mittel (gerundet wie oben beschrieben) der Angebotssatze fur Einlagen in der
Designierten Wahrung fur die betreffende Zinsperiode sein, den bzw. die eine
oder mehrere Banken (die nach Ansicht der Berechnungsstelle und der Emittentin
fur diesen Zweck geeignet sind) der Berechnungsstelle als Satze bekannt geben,
die sie an dem betreffenden Zinsfestlegungstag gegenuber fuhrenden Banken im
[zutreffenden Ort einfugen] Interbanken-Markt [in der Euro-Zone] nennen (bzw.
den diese Banken gegenuber der Berechnungsstelle nennen) [im Falle einer Marge
einfugen: [zuzuglich] [abzuglich] der Marge]. Fur den Fall, dass der Zinssatz
nicht gemass den vorstehenden Bestimmungen dieses Absatzes ermittelt werden
kann, ist der Zinssatz der Angebotssatz oder das arithmetische Mittel der
Angebotssatze auf der Bildschirmseite, wie vorstehend beschrieben, an dem
letzten Tag vor dem Zinsfestlegungstag, an dem diese Angebotssatze angezeigt
wurden [im Falle einer Marge einfugen: [zuzuglich] [abzuglich] der Marge (wobei
jedoch, falls fur die betreffende Zinsperiode eine andere Marge als fur die
unmittelbar vorausgehende Zinsperiode gilt, die Marge der betreffenden
Zinsperiode an die Stelle der Marge fur die vorausgehende Zinsperiode tritt).]

"Referenzbanken" bezeichnet [diejenigen Niederlassungen von vier derjenigen
Banken, deren Angebotssatze zur Ermittlung des massgeblichen Angebotssatzes
zu dem Zeitpunkt benutzt wurden, als solch ein Angebot letztmals auf der
massgeblichen Bildschirmseite angezeigt wurde] [andere Referenzbanken hier
einfugen].

                                       81
<PAGE>

[Im Falle des Interbanken-Marktes in der Euro-Zone einfugen: "Euro-Zone"
bezeichnet das Gebiet derjenigen Mitgliedstaaten der Europaischen Union, die
gemass dem Vertrag uber die Grundung der Europaischen Gemeinschaft
(unterzeichnet in Rom am 25. Marz 1957), geandert durch den Vertrag uber die
Europaische Union (unterzeichnet in Maastricht am 7. Februar 1992) und den
Amsterdamer Vertrag vom 2. Oktober 1997, in seiner jeweiligen Fassung, eine
einheitliche Wahrung eingefuhrt haben oder jeweils eingefuhrt haben werden.]

[Wenn der Referenzsatz ein anderer als LIBOR oder EURIBOR ist, sind die
entsprechenden Einzelheiten anstelle der Bestimmungen dieses Absatzes (2)
einzufugen]

[Sofern ISDA-Feststellung gelten soll, sind die entsprechenden Bestimmungen
einzufugen und die von der International Swaps and Derivatives Association, Inc.
("ISDA") veroffentlichten 2000 ISDA-Definitions diesen Emissionsbedingungen als
Anlage beizufugen] [Sofern eine andere Methode der Feststellung/Indexierung
anwendbar ist, sind die entsprechenden Einzelheiten anstelle der Bestimmungen
dieses Absatzes (2) einzufugen]

[Falls ein Mindest- und/oder Hochstzinssatz gilt, einfugen:

(3) [Mindest-] [und] [Hochst-] Zinssatz.

[Falls ein Mindestzinssatz gilt einfugen: Wenn der gemass den obigen
Bestimmungen fur eine Zinsperiode ermittelte Zinssatz niedriger ist als
[Mindestzinssatz einfugen], so ist der Zinssatz fur diese Zinsperiode
[Mindestzinssatz einfugen].]

[Falls ein Hochstzinssatz gilt: Wenn der gemass den obigen Bestimmungen fur
eine Zinsperiode ermittelte Zinssatz hoher ist als [Hochstzinssatz einfugen], so
ist der Zinssatz fur diese Zinsperiode [Hochstzinssatz einfugen].]]

[(4)] Zinsbetrag. Die Berechnungsstelle wird zu oder baldmoglichst nach jedem
Zeitpunkt, an dem der Zinssatz zu bestimmen ist, den auf die
Schuldverschreibungen zahlbaren Zinsbetrag in Bezug auf jede festgelegte
Stuckelung (der "Zinsbetrag") fur die entsprechende Zinsperiode berechnen. Der
Zinsbetrag wird ermittelt, indem der Zinssatz und der Zinstagequotient (wie
nachstehend definiert) auf jede festgelegte Stuckelung angewendet werden, wobei
der resultierende Betrag auf die kleinste Einheit in der Designierten Wahrung
auf- oder abgerundet wird, wobei 0,5 solcher Einheiten aufgerundet werden.

[(5)] Mitteilung von Zinssatz und Zinsbetrag. Die Berechnungsstelle wird
veranlassen, dass der Zinssatz, der Zinsbetrag fur die jeweilige Zinsperiode,
die jeweilige Zinsperiode und der betreffende Zinszahlungstag der Emittentin,
der Hauptzahlstelle sowie den Glaubigern gemass ss. 11 baldmoglichst, aber
keinesfalls spater als am vierten auf die jeweilige Berechnung folgenden
[TARGET] [zutreffende Bezugnahme einfugen] Geschaftstag (wie in ss. 3 Absatz
[(1)] [und] [(2)] definiert) sowie jeder Borse, an der die betreffenden
Schuldverschreibungen zu diesem Zeitpunkt notiert sind und deren Regeln eine
Mitteilung an die Borse verlangen, baldmoglichst nach der Bestimmung, aber
keinesfalls spater als am ersten Tag der jeweiligen Zinsperiode mitgeteilt
werden. Im Fall einer Verlangerung oder Verkurzung der Zinsperiode konnen der
mitgeteilte Zinsbetrag und Zinszahlungstag ohne Vorankundigung nachtraglich
abgeandert (oder andere geeignete Anpassungsregelungen getroffen) werden. Jede
solche Anderung wird umgehend allen Borsen, an denen die Schuldverschreibungen
zu diesem Zeitpunkt notiert sind, sowie den Glaubigern gemass ss. 11
mitgeteilt.

                                       82
<PAGE>

[(6)] Verbindlichkeit der Festsetzungen. Alle Bescheinigungen, Mitteilungen,
Gutachten, Festsetzungen, Berechnungen, Quotierungen und Entscheidungen, die von
der Berechnungsstelle fur die Zwecke dieses ss. 3 gemacht, abgegeben, getroffen
oder eingeholt werden, sind (sofern nicht ein offensichtlicher Irrtum vorliegt)
fur die Emittentin, die Registerstelle, die Zahlstellen und die Glaubiger
bindend.

[(7)] Auflaufende Zinsen. Sollte die Emittentin die Schuldverschreibungen bei
Falligkeit nicht einlosen, endet die Verzinsung des ausstehenden Nennbetrags der
Schuldverschreibungen nicht am Falligkeitstag, sondern erst mit Ablauf des
Tages, der dem Tag der tatsachlichen Ruckzahlung der Schuldverschreibungen
vorangeht. Der jeweils geltende Zinssatz ist der gesetzlich festgelegte Satz fur
Verzugszinsen.]

[Im Falle von Nullkupon-Schuldverschreibungen einfugen:

(1) Keine periodischen Zinszahlungen. Es erfolgen wahrend der Laufzeit keine
periodischen Zinszahlungen auf die Schuldverschreibungen.

(2) Auflaufende Zinsen. Sollte die Emittentin die Schuldverschreibungen bei
Falligkeit nicht einlosen, fallen auf den ausstehenden Nennbetrag der
Schuldverschreibungen ab dem Falligkeitstag (einschliesslich) bis zum Tag
der tatsachlichen Ruckzahlung (ausschliesslich) Zinsen in Hohe des
gesetzlich festgelegten Satzes fur Verzugszinsen(3) an.]

[Im Falle von Doppelwahrungs-Schuldverschreibungen, indexierten
Schuldverschreibungen, Raten-Schuldverschreibungen oder Schuldverschreibungen
mit anderen Zinsberechnungsmethoden anwendbare Bestimmungen hinsichtlich Zinsen
hier einfugen.]

[(o)] Zinstagequotient. "Zinstagequotient" bezeichnet im Hinblick auf die
Berechnung eines Zinsbetrages auf eine Schuldverschreibung fur einen beliebigen
Zeitraum (der "Zinsberechnungszeitraum"):

[im Falle von Actual/Actual (ISMA Regelung 251) einfugen: (a) wenn der
Zinsberechnungszeitraum (einschliesslich des ersten, aber
ausschliesslich des letzten Tages dieser Periode) kurzer ist als die
Feststellungsperiode (wie nachstehend definiert), in die das Ende des
Zinsberechnungszeitraumes fallt, oder ihr entspricht, die Anzahl der Tage in dem
betreffenden Zinsberechnungszeitraum (einschliesslich des ersten, aber
ausschliesslich des letzten Tages dieser Periode), geteilt durch das Produkt
(i) der Anzahl der Tage in der Feststellungsperiode und (ii) der Anzahl der
Feststellungstermine (wie in ss. 3 (1) definiert) in einem Kalenderjahr; oder

(b) wenn der Zinsberechnungszeitraum (einschliesslich des ersten, aber
ausschliesslich des letzten Tages dieser Periode) langer ist als die
Feststellungsperiode, in die das Ende des Zinsberechnungszeitraumes fallt, die
Summe (A) der Anzahl der Tage in dem Zinsberechnungszeitraum, die in die
Feststellungsperiode fallen, in welcher der Zinsberechnungszeitraum beginnt,
geteilt durch das Produkt (i) der Anzahl der Tage in dieser Feststellungsperiode
und (ii) der Anzahl der Feststellungstermine (wie in ss. 3 (1) definiert) in
einem Kalenderjahr und (B) der Anzahl der Tage in dem Zinsberechnungszeitraum,
die in die nachste Feststellungsperiode fallen, geteilt durch das Produkt (i)
der Anzahl der Tage in dieser Feststellungsperiode und (ii) der Anzahl der
Feststellungstermine (wie in ss. 3 (1) definiert) in einem Kalenderjahr.

_____________________________

3    Der gesetzliche Verzugszinssatz betragt fur das Jahr funf Prozentpunkte
     uber dem von der Deutschen Bundesbank fur die Zeitraume ab dem 1. Januar
     bzw. ab dem 1. Juli eines jeden Jahres veroffentlichten Basiszinssatz,
     ss.ss. 288 Absatz 1, 247 Absatz 1 BGB.

                                       83
<PAGE>

"Feststellungsperiode" ist die Periode ab einem Feststellungstermin
(einschliesslich desselben) bis zum nachsten Feststellungstermin
(ausschliesslich desselben).]

[andere relevante Actual/Actual-Methode nach ISMA einfugen]

[Im Falle von Actual/Actual (ISDA) einfugen: die tatsachliche Anzahl von Tagen
im Zinsberechnungszeitraum, dividiert durch 365 (oder, falls ein Teil dieses
Zinsberechnungszeitraumes in ein Schaltjahr fallt, die Summe aus (A) der
tatsachlichen Anzahl der in das Schaltjahr fallenden Tage des
Zinsberechnungszeitraumes, dividiert durch 366, und (B) die tatsachliche Anzahl
der nicht in das Schaltjahr fallenden Tage des Zinsberechnungszeitraumes,
dividiert durch 365).]

[im Falle von Actual/365 (Fixed) einfugen: die tatsachliche Anzahl von Tagen im
Zinsberechnungszeitraum, dividiert durch 365.]

[im Falle von Actual/360 einfugen: die tatsachliche Anzahl von Tagen im
Zinsberechnungszeitraum, dividiert durch 360.]

[im Falle von 30/360, 360/360 oder Bond Basis einfugen: die Anzahl von Tagen im
Zinsberechnungszeitraum, dividiert durch 360, wobei die Anzahl der Tage auf der
Grundlage eines Jahres von 360 Tagen mit zwolf Monaten zu je 30 Tagen zu
ermitteln ist (es sei denn, (A) der letzte Tag des Zinsberechnungszeitraums
fallt auf den 31. Tag eines Monats, wahrend der erste Tag des
Zinsberechnungszeitraumes weder auf den 30. noch auf den 31. Tag eines Monats
fallt, in welchem Fall der diesen Tag enthaltende Monat nicht als ein auf 30
Tage gekurzter Monat zu behandeln ist, oder (B) der letzte Tag des
Zinsberechnungszeitraumes fallt auf den letzten Tag des Monats Februar, in
welchem Fall der Monat Februar nicht als ein auf 30 Tage verlangerter Monat zu
behandeln ist).]

[im Falle von 30E/360 oder Eurobond Basis einfugen: die Anzahl der Tage im
Zinsberechnungszeitraum, dividiert durch 360 (wobei die Anzahl der Tage auf der
Grundlage eines Jahres von 360 Tagen mit 12 Monaten zu 30 Tagen zu ermitteln
ist, und zwar ohne Berucksichtigung des Datums des ersten oder letzten Tages des
Zinsberechnungszeitraumes, es sei denn, dass im Falle des letzten
Zinsberechnungszeitraumes der letzte Tag dieses Zinsberechnungszeitraumes der
letzte Tag des Monats Februar ist, in welchem Fall der Monat Februar nicht als
ein auf 30 Tageverlangerter Monat zu behandeln ist.]

                                      ss. 4
                                    ZAHLUNGEN

(1) Zahlungen. (a) Zahlungen von Kapital [im Falle von Schuldverschreibungen,
die keine Nullkupon Schuldverschreibungen sind, einfugen: und Zinsen] auf die
Schuldverschreibungen erfolgen an den eingetragenen Inhaber der Globalurkunden
in US-Dollar [im Falle von nicht in US-Dollar denominierten
Schuldverschreibungen einfugen: oder der Designierten Wahrung nach Massgabe
der nachfolgenden Bestimmungen]. Zahlungen von Kapital erfolgen gegen
Einreichung der Globalurkunden bei der Zahlstelle (ss. 6).

[Im Falle von nicht in US-Dollar denominierten Schuldverschreibungen einfugen:

(b) Glaubiger erhalten Zahlungen von Kapital und Zinsen auf die
Schuldverschreibungen in US-Dollar, soweit sie nicht gemass den nachfolgend
beschriebenen Verfahren Zahlungen in der Designierten Wahrung wahlen. Soweit
Glaubiger fur eine Zahlung von Kapital oder Zinsen keine derartige Wahl
getroffen haben, wird der fur alle diese Glaubiger bei dieser Zahlung bestimmte
Gesamtbetrag (der "Designierte Wahrungs-Umtauschbetrag") von oder im Auftrag der
Hauptzahlstelle

                                       84
<PAGE>

in US-Dollar umgetauscht und durch Uberweisung in gleichtagig verfugbaren
Mitteln an den eingetragenen Inhaber der Globalurkunden zur Auszahlung uber das
Abrechnungssystem der DTC an die betreffenden DTC-Teilnehmer gezahlt. Alle
Kosten eines derartigen Umtauschs werden von diesen Zahlungen abgezogen. Jeder
derartige Umtausch basiert auf dem Ankaufskurs der Zahlstelle oder in ihrem
Auftrag vor oder um 11.00 Uhr Frankfurter Zeit am zweiten Umtauschgeschaftstag
vor dem jeweiligen Zahlungstag fur den Kauf des Designierten
Wahrungs-Umtauschbetrages durch die Hauptzahlstelle oder in ihrem Auftrag gegen
US-Dollar zur Abrechnung an diesem Zahlungstag. "Umtauschgeschaftstag" ist jeder
Tag, der ein New Yorker, [ein [anderen Ort einfugen] Geschaftstag] [und][,] [ein
Frankfurter Geschaftstag] [und ein TARGET Geschaftstag] ist (Absatz (3)). Falls
es einen derartigen Ankaufskurs nicht gibt, wird die Hauptzahlstelle oder ihr
Beauftragter von einer im Devisenhandel fuhrenden Bank in New York, die von der
Hauptzahlstelle oder ihrem Beauftragter zu diesem Zweck ausgewahlt wird, einen
Ankaufskurs einholen. Falls kein Ankaufskurs einer im Devisenhandel fuhrenden
Bank erhaltlich ist, erfolgt die Zahlung des [Designierte Wahrung
einfugen]-Umtauschbetrages in der Designierten Wahrung auf das Konto oder die
Konten, die der Hauptzahlstelle oder ihrem Beauftragter von der DTC bezeichnet
werden. Bis dieses Konto oder diese Konten derart bezeichnet sind, werden die
noch von der Hauptzahlstelle gehaltenen Mittel mit einem Zinssatz, der von der
Hauptzahlstelle fur bei ihr als Tagesgeld angelegte Einlagen gestellt wird,
verzinst, soweit die Hauptzahlstelle vernunftigerweise in der Lage ist, diese
Mittel wieder anzulegen.

(c) Ein Glaubiger kann Zahlung von Kapital und Zinsen auf die
Schuldverschreibungen in der Designierten Wahrung wahlen, indem er die DTC durch
den betreffenden DTC-Teilnehmer dazu veranlasst, die Hauptzahlstelle zu dem
nachfolgend bestimmten Zeitpunkt uber (i) die Wahl dieses Glaubigers, diese
Zahlung ganz oder zum Teil in der Designierten Wahrung zu empfangen, und (ii)
den Auftrag zur Uberweisung auf ein Designiertes Wahrungs-Konto zu
benachrichtigen. Eine derartige Wahl hat fur die jeweilige Zahlung durch den
DTC-Glaubiger zu dem Zeitpunkt und in der Art und Weise zu erfolgen, wie sie von
den jeweils anwendbaren Verfahrensregeln der DTC gefordert wird und welche nach
solchen Verfahrensregeln unwiderruflich ist. Die Benachrichtigung seitens der
DTC uber diese Wahl, den Uberweisungsauftrag und den in der Designierten Wahrung
gemass diesem Absatz (1)(c) zahlbaren Betrag muss bei der Hauptzahlstelle vor
17.00 Uhr (New Yorker Zeit) am funften New Yorker Geschaftstag (Absatz (3)) nach
dem jeweiligen Stichtag (Absatz (2)) fur Zinsen und vor 17.00 Uhr (New Yorker
Zeit) am achten New Yorker Geschaftstag vor dem Zahlungstag (Absatz (4)) fur die
Zahlung von Kapital eingegangen sein. Zahlungen in der Designierten Wahrung
gemass diesem Absatz (1)(c) erfolgen durch Uberweisung von gleichtagig
verfugbaren Mitteln auf die von der DTC bezeichneten Designierten
Wahrungs-Konten.]

[(b)][(d)] Zahlungen der Emittentin an den eingetragenen Inhaber der
Globalurkunden oder nach dessen Weisung befreien die Emittentin in Hohe der
geleisteten Zahlungen von ihren Verbindlichkeiten aus den Schuldverschreibungen.

(2) Stichtag. Der Stichtag (der "Stichtag") fur die Zwecke von Zahlungen (Absatz
(1)) von Kapital und Zinsen ist der der zehnte New Yorker Geschaftstag (Absatz
(3)) vor dem jeweiligen Falligkeitstag.

(3) Geschaftstage. [[Im Falle von nicht in US-Dollar denominierten
Schuldverschreibungen einfugen: Ist ein Falligkeitstag fur die Zahlung von
Kapital [im Falle von Schuldverschreibungen, die keine
Nullkupon-Schuldverschreibungen sind, einfugen: oder Zinsen] in [Designierte
Wahrung einfugen] bezuglich einer Schuldverschreibung [kein [Ort einfugen]
Geschaftstag][oder] [kein TARGET Geschaftstag], so wird die betreffende Zahlung
erst am nachfolgenden [Ort einfugen] Geschaftstag] [und] [TARGET Geschaftstag]
geleistet, ohne dass wegen dieser Zahlungsverzogerung zusatzliche Zinsen gezahlt
werden.] Ist ein Falligkeitstag fur die

                                       85
<PAGE>

Zahlung von Kapital [im Falle von Schuldverschreibungen, die keine
Nullkupon-Anleihen sind, einfugen: oder Zinsen] in US-Dollar kein New Yorker
Geschaftstag [oder][,] [kein [anderen Ort einfugen] Geschaftstag][oder kein
TARGET Geschaftstag], so wird die betreffende Zahlung erst am nachfolgenden New
Yorker [und][,] [anderen Ort einfugen] Geschaftstag][und TARGET Geschaftstag]
geleistet, ohne dass wegen dieser Zahlungsverzogerung zusatzliche Zinsen gezahlt
werden.] Ein "New Yorker Geschaftstag" ist jeder Tag, an dem Geschaftsbanken in
New York nicht zur Schliessung des Geschafts verpflichtet oder ermachtigt sind.
["[anderen Ort hier einfugen] Geschaftstag" ist jeder Tag (der nicht ein Samstag
oder Sonntag ist), an dem Geschaftsbanken in [anderen Ort einfugen] fur
Geschafte (einschliesslich Devisen- und Sortengeschafte) geoffnet sind.]
["TARGET Geschaftstag" ist jeder Tag an dem das Trans-European Automated
Real-time Gross Settlement Express Transfer System (TARGET) in Betrieb ist.]
[andere relevante "Geschaftstagskonvention" einfugen]

(4) Zahlungstag und Falligkeitstag. Im Sinne dieser Anleihebedingungen ist
"Zahlungstag" der Tag, an dem, gegebenenfalls aufgrund einer Anpassung
gemass Absatz (3), die Zahlung tatsachlich zu leisten ist, und
"Falligkeitstag" der vorgesehene Zahlungstermin ohne Berucksichtigung einer
solchen Anpassung.

(5) Bezugnahmen auf Kapital. Bezugnahmen in diesen Emissionsbedingungen auf
Kapital der Schuldverschreibungen schliessen, soweit anwendbar, die
folgenden Betrage ein: den Ruckzahlungsbetrag der Schuldverschreibungen[,]
[falls die Emittentin das Wahlrecht hat, die Schuldverschreibungen vorzeitig
zuruckzuzahlen, einfugen: den Wahl-Ruckzahlungsbetrag (Call) der
Schuldverschreibungen[,]] [falls der Glaubiger ein Wahlrecht hat, die
Schuldverschreibungen vorzeitig zu kundigen, einfugen: den
Wahl-Ruckzahlungsbetrag (Put) der Schuldverschreibungen[,]] [im Falle von
Nullkupon-Schuldverschreibungen einfugen: den Amortisationsbetrag der
Schuldverschreibungen[,]] [im Falle von Raten-Schuldverschreibungen einfugen:
die auf die Schuldverschreibungen anwendbare(n) Rate(n)] sowie jeden Aufschlag
sowie sonstige auf oder in Bezug auf die Schuldverschreibungen zahlbaren
Betrage.

(6) Hinterlegung von Kapital und Zinsen. Die Emittentin ist berechtigt, beim
Amtsgericht Frankfurt am Main Zins- oder Kapitalbetrage zu hinterlegen, die von
den Glaubigern nicht innerhalb von zwolf Monaten nach dem Falligkeitstag
beansprucht worden sind, auch wenn die Glaubiger sich nicht in Annahmeverzug
befinden. Soweit eine solche Hinterlegung erfolgt und auf das Recht der
Rucknahme verzichtet wird, erloschen die diesbezuglichen Anspruche der Glaubiger
gegen die Emittentin.

                                      ss. 5
                                   RUCKZAHLUNG

[(1) Ruckzahlung bei Endfalligkeit.]

[Im Falle von Schuldverschreibungen, die keine Raten-Schuldverschreibungen sind,
einfugen: Soweit nicht zuvor bereits ganz oder teilweise zuruckgezahlt oder
angekauft und entwertet, werden die Schuldverschreibungen zu ihrem
Ruckzahlungsbetrag am [im Falle eines festgelegten Falligkeitstages,
Falligkeitstag einfugen] [im Falle eines Ruckzahlungsmonats einfugen: in den
[Ruckzahlungsmonat einfugen] fallenden Zinszahlungstag] (der "Falligkeitstag")
zuruckgezahlt. Der Ruckzahlungsbetrag in Bezug auf

                                       86
<PAGE>

jede Schuldverschreibung entspricht [falls die Schuldverschreibungen zu ihrem
Nennbetrag zuruckgezahlt werden einfugen: dem Nennbetrag der
Schuldverschreibungen] [ansonsten den Ruckzahlungsbetrag sind, einfugen: fur die
jeweilige Stuckelung/Index und/oder Formel, wonach der Ruckzahlungsbetrag zu
berechnen ist, einfugen].]

[Im Falle von Raten-Schuldverschreibungen einfugen: Soweit nicht zuvor bereits
ganz oder teilweise zuruckgezahlt oder angekauft und entwertet, werden die
Schuldverschreibungen an dem/den nachstehenden Ratenzahlungstermin(en) zu
der/den folgenden Rate(n) zuruckgezahlt:

               Ratenzahlungstermin(e)                  Rate(n)
         [Ratenzahlungstermin(e) einfugen]         [Rate(n) einfugen]
         [_______________________________]      [________________________]
         [_______________________________]      [________________________]

[Falls die Emittentin das Wahlrecht hat, die Schuldverschreibungen vorzeitig
zuruckzuzahlen, einfugen:

[(2)] Vorzeitige Ruckzahlung nach Wahl der Emittentin.

(a) Die Emittentin kann, nachdem sie gemass Absatz (b) gekundigt hat, die
Schuldverschreibungen insgesamt oder teilweise am/an den
Wahl-Ruckzahlungstag(en) (Call) zum/zu den Wahl-Ruckzahlungsbetrag/betragen
(Call), wie nachstehend angegeben, nebst etwaigen bis zum Wahl-Ruckzahlungstag
(Call) (ausschliesslich) aufgelaufenen Zinsen zuruckzahlen. [Bei Geltung
eines Mindestruckzahlungsbetrages oder eines erhohten Ruckzahlungsbetrages
einfugen: Eine solche Ruckzahlung muss in Hohe eines Nennbetrages von
[mindestens [Mindestruckzahlungsbetrag einfugen]] [erhohter Ruckzahlungsbetrag]
erfolgen.]

     Wahl-Ruckzahlungstag(e) (Call)      Wahl-Ruckzahlungsbetrag/betrage (Call)
 [Wahl-Ruckzahlungstag(e) einfugen]   [Wahl-Ruckzahlungsbetrag/betrage einfugen]
           [________]                              [________]
           [________]                              [________]

[Falls der Glaubiger ein Wahlrecht hat, die Schuldverschreibungen vorzeitig zu
kundigen, einfugen: Der Emittentin steht dieses Wahlrecht nicht in Bezug auf
eine Schuldverschreibung zu, deren Ruckzahlung bereits der Glaubiger in Ausubung
seines Wahlrechts nach Absatz (3) dieses ss. 5 verlangt hat.]

(b) Die Kundigung ist den Glaubigern der Schuldverschreibungen durch die
Emittentin gemass ss. 11 bekannt zu geben. Sie beinhaltet die folgenden
Angaben:

      (i)  die zuruckzuzahlende Serie von Schuldverschreibungen;

      (ii) eine Erklarung, ob diese Serie ganz oder teilweise zuruckgezahlt
      wird, und im letzteren Fall den Gesamtnennbetrag der zuruckzuzahlenden
      Schuldverschreibungen;

                                       87
<PAGE>

      (iii) den Wahl-Ruckzahlungstag (Call), der nicht weniger als
      [Mindestkundigungsfrist einfugen] und nicht mehr als
      [Hochstkundigungsfrist einfugen] Tage nach dem Tag der Kundigung durch die
      Emittentin gegenuber den Glaubigern liegen darf; und

      (iv) den Wahl-Ruckzahlungsbetrag (Call), zu dem die Schuldverschreibungen
      zuruck gezahlt werden.

(c) Wenn die Schuldverschreibungen nur teilweise zuruckgezahlt werden, werden
die zuruckzuzahlenden Schuldverschreibungen in Ubereinstimmung mit den Regeln
des Euro Clearing-Systems und DTC ausgewahlt.]

[Falls der Glaubiger ein Wahlrecht hat, die Schuldverschreibungen vorzeitig zu
kundigen, einfugen:[(3)] Vorzeitige Ruckzahlung nach Wahl des Glaubigers.

(a) Die Emittentin hat eine Schuldverschreibung nach Ausubung des entsprechenden
Wahlrechts durch den Glaubiger am/an den Wahl-Ruckzahlungstag(en) (Put) zum/zu
den Wahl-Ruckzahlungsbetrag/betragen (Put), wie nachstehend angegeben, nebst
etwaigen bis zum Wahl-Ruckzahlungstag (Put) (ausschliesslich) aufgelaufener
Zinsen zuruckzuzahlen.

     Wahl-Ruckzahlungstag(e) (Put)     Wahl-Ruckzahlungsbetrag/betrage (Put)
  [Wahl-Ruckzahlungstag(e) einfugen]    [Wahl-Ruckzahlungsbetrag/betrage
                                                   einfugen]
           [________]                              [________]
           [________]                              [________]

Dem Glaubiger steht dieses Wahlrecht nicht in Bezug auf eine Schuldverschreibung
zu, deren Ruckzahlung die Emittentin zuvor in Ausubung eines ihrer Wahlrechte
nach diesem ss. 5 verlangt hat.

(b) Um dieses Wahlrecht auszuuben, hat der Glaubiger nicht weniger als
[Mindestkundigungsfrist einfugen] Tage und nicht mehr als [Hochstkundigungsfrist
einfugen] Tage vor dem Wahl-Ruckzahlungstag (Put), an dem die Ruckzahlung
gemass der Ausubungserklarung (wie nachstehend definiert) erfolgen soll, bei
der bezeichneten Geschaftsstelle der Hauptzahlstelle wahrend der normalen
Geschaftszeiten eine ordnungsgemass ausgefullte Mitteilung zur vorzeitigen
Ruckzahlung ("Ausubungserklarung") zu hinterlegen. Die Ausubung des Wahlrechts
kann nicht widerrufen werden.]

[Im Falle von Schuldverschreibungen, die keine Nullkupon-Schuldverschreibungen
sind, einfugen: [(4)] Vorzeitiger Ruckzahlungsbetrag.

Fur die Zwecke der Absatze (2) und (3) dieses ss. 5 entspricht der vorzeitige
Ruckzahlungsbetrag einer Schuldverschreibung dem Ruckzahlungsbetrag.]

[Im Falle von Nullkupon-Schuldverschreibungen einfugen:[(4)] Vorzeitiger
Ruckzahlungsbetrag.

Fur die Zwecke des Absatzes (2) dieses ss. 5 berechnet sich der vorzeitige
Ruckzahlungsbetrag einer Schuldverschreibung wie folgt:

(a) Der vorzeitige Ruckzahlungsbetrag der Schuldverschreibung entspricht der
Summe aus:

                                       88
<PAGE>

     (i) [Referenzpreis einfugen] (der "Referenzpreis"), und

     (ii) dem Produkt aus [Emissionsrendite in Prozent einfugen] (die
     "Emissionsrendite") und dem Referenzpreis ab dem [Tag der Begebung
     einfugen] (einschliesslich) bis zum vorgesehenen Ruckzahlungstag
     (ausschliesslich) oder (je nachdem) dem Tag, an dem die
     Schuldverschreibungen fallig und ruckzahlbar werden, wobei die
     Emissionsrendite jahrlich kapitalisiert wird.

     Wenn diese Berechnung fur einen Zeitraum, der nicht vollen Kalenderjahren
     entspricht, durchzufuhren ist, hat sie im Fall des nicht vollstandigen
     Jahres (der "Zinsberechnungszeitraum") auf der Grundlage des
     Zinstagequotienten (wie vorstehend in ss. 3 definiert) zu erfolgen.

(b) Falls die Emittentin den vorzeitigen Ruckzahlungsbetrag bei Falligkeit nicht
zahlt, wird er wie vorstehend beschrieben berechnet, jedoch mit der
Massgabe, dass die Bezugnahmen in Unterabsatz (a)(ii) auf den fur die
Ruckzahlung vorgesehenen Ruckzahlungstag oder den Tag, an dem diese
Schuldverschreibungen fallig und ruckzahlbar werden, durch den Tag ersetzt
werden, an dem die Ruckzahlung erfolgt.]

[Anstelle des Vorstehenden kann ein Ruckzahlungsplan, der die
Ruckzahlungsbetrage beinhaltet, hier eingefugt werden]

[Im Falle von Doppelwahrungs-Schuldverschreibungen, indexierten
Schuldverschreibungen oder Raten-Schuldverschreibungen anwendbare Bestimmungen
hinsichtlich Kapital hier einfugen]

                                      ss. 6
                              VERRICHTUNGSGEHILFEN

(1) Bestellung; bezeichnete Geschaftsstelle. Die anfanglich bestellte
Hauptzahlstelle [,] [und] [die anfanglich bestellte[n] Zusatzliche[n]
Zahlstelle[n] (zusammen mit der Hauptzahlstelle, die "Zahlstellen")] [und die
anfanglich bestellte Berechnungsstelle] und ihre bezeichnete[n]
Geschaftsstelle[n] [lautet] [lauten] wie folgt:

Hauptzahlstelle:                            Deutsche Bank Trust Company Americas
                                            Trust & Securities Services
                                            Global Debt Service
                                            60 Wall Street
                                            27th Floor - MS NY C60-2710
                                            New York, NY 10005, USA

                                            [Zusatzliche Zahlstelle[n],
                                            soweit anwendbar, einfugen]

[Falls die Hauptzahlstelle als Berechnungsstelle bestellt werden soll, einfugen:
Die Hauptzahlstelle handelt auch als Berechnungsstelle.]

[Falls eine Berechnungsstelle bestellt werden soll, die nicht die
Hauptzahlstelle ist, einfugen: Die Berechnungsstelle und ihre anfanglich
bezeichnete Geschaftsstelle lauten:

                                       89
<PAGE>

Berechnungsstelle: [Namen und bezeichnete Geschaftsstelle einfugen]

Die Hauptzahlstelle [,] [und] [die Zusatzliche[n] Zahlstelle[n]] [und die
Berechnungsstelle] [behalt] [behalten] sich das Recht vor, jederzeit mit
Zustimmung der Emittentin ihre bezeichnete[n] Geschaftsstelle[n] durch eine
andere bezeichnete Geschaftsstelle in derselben Stadt zu ersetzen und dies
gemass ss. 11 bekannt zu machen.

(2) Anderung der Bestellung oder Abberufung. Die Emittentin behalt sich das
Recht vor, jederzeit die Bestellung der Registerstelle [,] [oder] einer
Zahlstelle [oder der Berechnungsstelle] zu andern oder zu beenden und eine
andere Registerstelle oder [eine] zusatzliche oder andere Zahlstelle[n] [oder
eine andere Berechnungsstelle] zu bestellen. Die Emittentin wird zu jedem
Zeitpunkt (i) eine Registerstelle unterhalten, (ii) eine Zahlstelle mit einer
Geschaftsstelle in einer kontinentaleuropaischen Stadt unterhalten[,] [und]
(iii) eine US-Zahlstelle mit einer Geschaftstelle in New York unterhalten [im
Falle von Schuldverschreibungen, die an einer Borse notiert sind, einfugen:[,]
[und] (iv) solange die Schuldverschreibungen an der [Name der Borse] notiert
sind, eine Zahlstelle (die die Registerstelle sein kann) mit bezeichneter
Geschaftsstelle in [Sitz der Borse] und/oder an solchen anderen Orten
unterhalten, wie es die Regeln dieser Borse verlangen] [falls eine
Berechnungsstelle bestellt werden soll, einfugen: und (v) eine Berechnungsstelle
unterhalten]. Die Emittentin versichert, dass sie, wenn die EU-Richtlinie vom 3.
Juni 2003 uber die Besteuerung von Zinsertragen oder irgend eine andere
EU-Richtlinie, die die Ergebnisse des ECOFIN Gruppentreffen vom 26.-27 November
2000 umsetzt, wirksam wird, sicherstellen wird, dass sie eine Zahlstelle in
einem EU-Mitgliedsstaat unterhalt, die nicht zum Einbehalt oder zum Abzug von
Steuern aufgrund genannter Richtlinien verplichtet ist, soweit dies in einem
Mitgliedsstaat der Europaischen Union moeglich und rechtlich zulaessig ist. Jede
Anderung, Abberufung, Bestellung oder ein sonstiger Wechsel wird nur wirksam
(ausser im Insolvenzfall, in dem eine solche Anderung sofort wirksam wird),
sofern die Glaubiger hieruber gemass ss. 11 vorab unter Einhaltung einer Frist
von mindestens 30 und nicht mehr als 45 Tagen informiert wurden.

(3) Erfullungsgehilfen der Emittentin. Die Hauptzahlstelle [,] [und] [die
Zusatzliche[n] Zahlstelle[n]] [und die Berechnungsstelle] [handelt] [handeln]
ausschliesslich als Erfullungsgehilfe[n] der Emittentin und [ubernimmt]
[ubernehmen] keinerlei Verpflichtungen gegenuber den Glaubigern und es wird kein
Auftrags- oder Treuhandverhaltnis zwischen [ihr] [ihnen] und den Glaubigern
begrundet.

                                      ss. 7
                                     STEUERN

Samtliche auf die Schuldverschreibungen zu zahlenden Betrage werden unter
Einbehalt oder Abzug von Steuern oder sonstigen Abgaben geleistet, falls ein
solcher Einbehalt oder Abzug gesetzlich vorgeschrieben ist. Im Falle eines
solchen Einbehalts oder Abzugs ist die Emittentin nicht verpflichtet,
irgendwelche zusatzlichen Betrage auf die Schuldverschreibungen zu leisten.

                                      ss. 8
              VORLEGUNGSFRIST, ERSETZUNG VON SCHULDVERSCHREIBUNGEN

Die in ss. 801 Absatz 1 Satz 1 BGB bestimmte Vorlegungsfrist wird fur die
Schuldverschreibungen auf zehn Jahre verkurzt.

                                       90
<PAGE>

                                      ss. 9
                                    ERSETZUNG

(1)      Ersetzung. Die Emittentin ist jederzeit berechtigt, ohne Zustimmung der
         Glaubiger jedes andere Unternehmen an ihrer Stelle als Hauptschuldnerin
         (die "Nachfolgeschuldnerin") fur alle Verpflichtungen aus und im
         Zusammenhang mit diesen Schuldverschreibungen einzusetzen,
         vorausgesetzt, dass:

(a)      die Nachfolgeschuldnerin alle Rechte und Verpflichtungen der Emittentin
         in Bezug auf die Schuldverschreibungen ubernimmt;

(b)      die Emittentin und die Nachfolgeschuldnerin alle erforderlichen
         Genehmigungen erlangt haben und berechtigt sind, an die Hauptzahlstelle
         die zur Erfullung der Zahlungsverpflichtungen aus den
         Schuldverschreibungen zahlbaren Betrage in der hierin festgelegten
         Wahrung zu zahlen, ohne verpflichtet zu sein, jeweils in dem Land oder
         in den Landern, in denen die Nachfolgeschuldnerin ihren Sitz oder
         Steuersitz hat, erhobene Steuern oder andere Abgaben jeder Art
         abzuziehen oder einzubehalten, die zum Zeitpunkt des Inkrafttretens der
         Ersetzung den Betrag an Steuern oder Abgaben ubersteigen, die in dem
         Land oder in den Landern, in denen die Emittentin ihren Sitz oder
         Steuersitz hat, einbehalten oder abgezogen werden;

[Im Falle von nicht nachrangigen Schuldverschreibungen einfugen: (c) die
         Emittentin unwiderruflich und unbedingt gegenuber den Glaubigern die
         Zahlung aller von der Nachfolgeschuldnerin auf die
         Schuldverschreibungen zahlbaren Betrage zu Bedingungen garantiert, die
         den Bedingungen der im Agency Agreement vom 22 Marz 2005 zwischen der
         Emittentin, der Deutsche Bank Aktiengesellschaft und der
         Hauptzahlstelle, auf deren Grundlage die Schuldverschreibungen begeben
         werden, enthaltenen Garantie hinsichtlich nicht nachrangiger
         Schuldverschreibungen der Emittentin entsprechen;]

[Im Falle von nachrangigen Schuldverschreibungen einfugen:(c) hinsichtlich
         der von der Nachfolgeschuldnerin bezuglich der Schuldverschreibungen
         ubernommenen Verpflichtungen der Nachrang zu mit den Bedingungen der
         Schuldverschreibungen ubereinstimmenden Bedingungen begrundet wird und
         (i) die Nachfolgeschuldnerin ein Tochterunternehmen der Emittentin im
         Sinne der ss.ss. 1 Absatz 7 und 10 Absatz 5a Satz 11 des
         Kreditwesengesetzes ist, (ii) die Nachfolgeschuldnerin eine Einlage in
         Hohe eines Betrages, der dem Gesamtnennbetrag der Schuldverschreibungen
         entspricht, bei der Emittentin vornimmt und zwar zu Bedingungen, die
         den Emissionsbedingungen (einschliesslich hinsichtlich der
         Nachrangigkeit) entsprechen, und (iii) die Emittentin unwiderruflich
         und unbedingt gegenuber den Glaubigern die Zahlung aller von der
         Nachfolgeschuldnerin auf die Schuldverschreibungen zahlbaren Betrage zu
         Bedingungen garantiert, die den Bedingungen der im Agency Agreement vom
         22 Marz 2005 zwischen der Emittentin, der Deutsche Bank
         Aktiengesellschaft und der Hauptzahlstelle, auf deren Grundlage die
         Schuldverschreibungen begeben werden, enthaltenen Garantie hinsichtlich
         nachrangiger Schuldverschreibungen der Emittentin entsprechen;]

(d)      die Glaubiger als Folge der Ersetzung nicht den Schutz der
         Gewahrtragerhaftung nach Artikel 5 Absatz 2 des Gesetzes uber die
         Landeskreditbank Baden-Wurttemberg - Forderbank (das "Gesetz"), der
         Anstaltslast des Landes Baden-Wurttemberg gemass Artikel 5 Absatz 1
         des Gesetzes und der ausdrucklichen Garantie des Landes
         Baden-Wurttemberg gemass Artikel 5 Absatz 3 des Gesetzes, in der
         zum Zeitpunkt des Wirksamwerdens der Ersetzung jeweils gultigen
         Fassung, oder einer gleichwertigen

                                       91
<PAGE>

         Verpflichtung des Landes Baden-Wurttemberg oder der Bundesrepublik
         Deutschland, die eine solche Gewahrtragerhaftung, Anstaltslast oder
         Garantie ersetzt, verlieren; und

(e)      der Hauptzahlstelle jeweils ein Rechtsgutachten bezuglich der
         betroffenen Rechtsordnungen von anerkannten Rechtsanwalten vorgelegt
         wird, das bestatigt, dass die Bestimmungen in den vorstehenden
         Unterabsatzen (a)-(d) erfullt wurden.

(2)      Anderung von Bezugnahmen. Im Fall einer Ersetzung gilt jede Bezugnahme
         in diesen Emissionsbedingungen auf die Emittentin ab dem Zeitpunkt der
         Ersetzung als Bezugnahme auf die Nachfolgeschuldnerin.

(3)      Bekanntmachung. Jede Ersetzung der Emittentin ist gemass ss. 10
         bekannt zu machen. Die Ersetzung tritt durch eine derartige
         Bekanntmachung in Kraft. Die Emittentin (und im Falle einer
         wiederholten Anwendung dieses ss. 9, jede vorherige
         Nachfolgeschuldnerin) ist mit dem Datum der Veroffentlichung der
         Ersetzung von allen Verpflichtungen aus den Schuldverschreibungen
         befreit.

                                     ss. 10
                    BEGEBUNG WEITERER SCHULDVERSCHREIBUNGEN,
                              ANKAUF UND ENTWERTUNG

(1) Begebung weiterer Schuldverschreibungen. Die Emittentin ist berechtigt,
jederzeit ohne Zustimmung der Glaubiger weitere Schuldverschreibungen mit
gleicher Ausstattung (gegebenenfalls mit Ausnahme des Tags der Begebung, des
Verzinsungsbeginns und/oder des Ausgabepreises) in der Weise zu begeben, dass
sie mit diesen Schuldverschreibungen eine einheitliche Serie bilden und den
Gesamtnennbetrag der Schuldverschreibungen erhohen.

(2) Ankauf. Die Emittentin ist berechtigt, jederzeit Schuldverschreibungen im
Markt oder anderweitig zu jedem beliebigen Preis anzukaufen. Die von der
Emittentin erworbenen Schuldverschreibungen konnen nach Wahl der Emittentin von
ihr gehalten, weiterverkauft oder bei der Hauptzahlstelle zwecks Entwertung
eingereicht werden. Sofern diese Kaufe durch offentliches Angebot erfolgen, muss
dieses Angebot allen Glaubigern gemacht werden.

(3) Entwertung. Samtliche vollstandig zuruckgezahlten oder gemass Absatz (2)
zwecks Entwertung eingereichten Schuldverschreibungen sind unverzuglich zu
entwerten und konnen nicht wiederbegeben oder wiederverkauft werden.

                                     ss. 11
                                  MITTEILUNGEN
(1) Bekanntmachung. Alle Bekanntmachungen, die die Schuldverschreibungen
betreffen, werden in folgenden Zeitungen veroffentlicht: (a) in mindestens einer
fuhrenden Tageszeitung mit allgemeiner Verbreitung in der Bundesrepublik
Deutschland [,] [und] [Luxemburg] [und] [andere Staaten einfugen]]
(voraussichtlich die Borsen-Zeitung [,] [und] [das Luxemburger Wort] [das
Tageblatt][und [andere Tageszeitungen mit allgemeiner Verbreitung hier
einfugen]]) und (b) in einer in englischer Sprache erscheinenden und in New York
allgemein verbreiteten fuhrenden Tageszeitung (voraussichtlich das Wall Street
Journal). Samtliche Bekanntmachungen werden wirksam am dritten Tag, der auf die
Veroffentlichung folgt oder, sofern die Veroffentlichung mehr als einmal oder an
verschiedenen Tagen erfolgt, am dritten Tag, der auf die erste Veroffentlichung
folgt.

                                       92
<PAGE>

(2) Mitteilungen an DTC. Die Emittentin ist berechtigt, eine
Zeitungsveroffentlichung nach vorstehendem Absatz 1 durch eine Mitteilung an DTC
zur Weiterleitung an die Glaubiger, die die Schuldverschreibungen durch DTC
halten, zu ersetzen, vorausgesetzt, dass in Fallen, in denen die
Schuldverschreibungen an einer Borse notiert sind, die Regeln dieser Borse diese
Form der Mitteilung zulassen. Jede derartige Mitteilung gilt am vierten Tag nach
dem Tag der Mitteilung an DTC als den Glaubigern mitgeteilt.

(3) Sollte eine Mitteilung durch Zeitungsveroffentlichung nach vorstehendem
Absatz (1) und auch durch Mitteilung gemaess Absatz 2 erfolgen, so wird jede
derartige Mitteilung am dritten Tag, der auf die Veroffentlichung folgt wirksam
oder, sofern die Veroffentlichung mehr als einmal oder an verschiedenen Tagen
erfolgt, am dritten Tag, der auf die erste Veroffentlichung folgt.

                                     ss. 12
                               ANWENDBARES RECHT,
                  GERICHTSSTAND UND GERICHTLICHE GELTENDMACHUNG

(1) Anwendbares Recht. Form und Inhalt der Schuldverschreibungen sowie die
Rechte und Pflichten der Emittentin, der Glaubiger und der Erfullungsgehilfen
bestimmen sich in jeder Hinsicht nach deutschem Recht. Ubertragungen und
Verpfandungen von bei DTC verwahrten Schuldverschreibungen, die zwischen
DTC-Teilnehmern und zwischen der DTC und DTC-Teilnehmern durchgefuhrt werden,
unterliegen dem Recht des Staates New York.

(2) Gerichtsstand. Zustandig fur samtliche Klagen oder sonstige Verfahren
("Rechtsstreitigkeiten") aus oder im Zusammenhang mit den Schuldverschreibungen
sind die Gerichte in Frankfurt am Main, Deutschland. Fur Rechtsstreitigkeiten
unter ausschliesslicher Beteiligung von Kaufleuten, juristischen Personen
des offentlichen Rechts, offentlich-rechtlichen Sondervermogen und Personen ohne
allgemeinen Gerichtsstand in Deutschland ist dieser Gerichtsstand
ausschliesslich gemass ss. 38 ZPO; im Ubrigen ist der Gerichtsstand
nicht ausschliesslich.

(3) Gerichtliche Geltendmachung. Jeder Glaubiger kann in Rechtsstreitigkeiten
gegen die Emittentin oder in Rechtsstreitigkeiten, an denen der Glaubiger und
die Emittentin beteiligt sind, im eigenen Namen seine Rechte aus den ihm
zustehenden Schuldverschreibungen unter Vorlage folgender Unterlagen wahrnehmen
und durchsetzen: (a) einer Bescheinigung seiner Depotbank, die (i) den vollen
Namen und die volle Anschrift des Glaubigers bezeichnet, (ii) einen
Gesamtnennbetrag von Schuldverschreibungen angibt, die am Ausstellungstag dieser
Bescheinigung dem bei dieser Depotbank bestehenden Depot des Glaubigers
gutgeschrieben sind, und (iii) bestatigt, dass die Depotbank der DTC sowie der
Hauptzahlstelle eine schriftliche Mitteilung gemacht hat, die die Angaben
gemass (i) und (ii) enthalt , und Bestatigungsvermerke der DTC sowie des
DTC-Teilnehmers tragt, sowie (b) einer von einem Vertretungsberechtigen der DTC
oder der Hauptzahlstelle beglaubigten Ablichtung der Globalurkunde. Im Sinne der
vorstehenden Bestimmungen ist "Depotbank" eine Bank- oder sonstiges
Finanzinstitut (einschliesslich DTC und jedes anderen Clearing Systems, das
eine Kontenverbindung DTC unterhalt) von allgemein anerkanntem Ansehen, das eine
Genehmigung fur das Wertpapier-Depotgeschaft hat und bei dem der Glaubiger
Schuldverschreibungen im Depot verwahren lasst.

                                     ss. 13
                                     SPRACHE

                                       93
<PAGE>

[Falls die Emissionsbedingungen in deutscher Sprache mit einer Ubersetzung in
die englische Sprache abgefasst sind, einfugen: Diese Emissionsbedingungen sind
in deutscher Sprache abgefasst. Eine Ubersetzung in die englische Sprache ist
beigefugt. Der deutsche Text ist bindend und massgeblich. Die Ubersetzung in
die englische Sprache ist unverbindlich.]

[Falls die Emissionsbedingungen in englischer Sprache mit einer Ubersetzung in
die deutsche Sprache abgefasst sind, einfugen: Diese Emissionsbedingungen sind
in englischer Sprache abgefasst. Eine Ubersetzung in die deutsche Sprache ist
beigefugt. Der englische Text ist bindend und massgeblich. Die Ubersetzung
in die deutsche Sprache ist unverbindlich.]

[Falls die Emissionsbedingungen ausschliesslich in deutscher Sprache
abgefasst sind, einfugen: Diese Emissionsbedingungen sind ausschliesslich in
deutscher Sprache abgefasst.]

                                       94
<PAGE>

                                                                     SCHEDULE 2A
                                                                     -----------
                                                                        PART 1-I
                                                                        --------
                             English Version of the
                  FORM OF THE EURO CLEARING SYSTEM GLOBAL NOTE
        [insert Designated Currency and principal amount of Global Note]

ISIN o                                             Common Code o
CUSIP o                                            WKN o

                 LANDESKREDITBANK BADEN-WURTTEMBERG - FORDERBANK
                     Karlsruhe, Federal Republic of Germany

                            o o o% Global Notes due o

THIS CERTIFICATE HAS BEEN CREATED IN ORDER TO BE HELD IN CUSTODY BY o (THE
"DEPOSITARY") AND TO SERVE AS THE BASIS FOR THE DELIVERY AND TRANSFER OF NOTES
TO BE HELD IN THE DEPOSITARY AND CLEARING SYSTEM OF THE DEPOSITARY THROUGHOUT
THE LIFE OF THE NOTES. THIS CERTIFICATE WILL BE KEPT IN CUSTODY BY o UNTIL ALL
OBLIGATIONS OF THE ISSUER UNDER THE NOTES HAVE BEEN SATISFIED. ALL PAYMENTS MADE
BY THE ISSUER TO o SHALL DISCHARGE THE LIABILITY OF THE ISSUER UNDER THE NOTES
TO THE EXTENT OF THE SUMS SO PAID.

                            GLOBAL BEARER CERTIFICATE
                       representing a principal amount of
                                 up to o o(o o)

of the o % Global Notes due o in the aggregate principal amount of o o (o o),
issued by Landeskreditbank Baden-Wurttemberg - Forderbank (the "Issuer").

This Global Note represents up to o notes in the principal amount of o each (the
"Notes"). It has been issued by the Issuer as a bearer instrument and has been
deposited with ? in order to permit delivery and transfer of Notes within the
depositary and clearing system of o. Definitive notes representing individual
Notes and interest coupons shall not be issued.

The actual number of Notes represented from time to time by this Global Note
shall be evidenced by the records of the Depositary, which in turn shall be
based on the register maintained by Deutsche Bank Aktiengesellschaft (the
"Register"), or any successor in such capacity appointed by the Issuer, acting
as registrar (the "Registrar") on behalf of the Issuer. In the case of any
inconsistency between the Register and the records of the Depositary, the
Register prevails, except in the case of manifest error.

The Issuer hereby undertakes to pay to the bearer hereof the amounts payable in
respect of the Notes represented by this Global Note in accordance with the
Terms and Conditions of the Notes (the "Conditions") attached hereto.

The Conditions form part of this Global Note.

<PAGE>

This Global Note is only valid if it has been provided with the manual
authentication signature on behalf of the Principal Paying Agent.

Karlsruhe, Federal Republic of Germany
o 200o

                            LANDESKREDITBANK BADEN-WURTTEMBERG - FORDERBANK

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

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

Authentication signature
for and on behalf of
Deutsche Bank Aktiengesellschaft
as Principal Paying Agent

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

                                       96
<PAGE>

                                                                     SCHEDULE 2A
                                                                     -----------
                                                                       PART 1-II
                                                                       ---------
                              German Version of the
                  FORM OF THE EURO CLEARING SYSTEM GLOBAL NOTE
        [insert Designated Currency and principal amount of Global Note]

ISIN o                                             Common Code o
CUSIP o                                            WKN o

                 LANDESKREDITBANK BADEN-WURTTEMBERG - FORDERBANK
                      Karlsruhe, Bundesrepublik Deutschland

                          o o o% Globalanleihe fallig o

DIESE SAMMELSCHULDVERSCHREIBUNG IST ERSTELLT WORDEN, UM WAHREND DER GESAMTEN
LAUFZEIT DER SCHULDVERSCHREIBUNGEN VON o ("VERWAHRER") VERWAHRT ZU WERDEN UND
ALS GRUNDLAGE FUR DIE LIEFERUNG UND UBERTRAGUNG VON SCHULDVERSCHREIBUNGEN IM
VERWAHR- UND EFFEKTENGIROSYSTEM DES VERWAHRERS ZU DIENEN. DIESE
SAMMELSCHULDVERSCHREIBUNG WIRD VON o VERWAHRT, BIS SAMTLICHE VERPFLICHTUNGEN DER
EMITTENTIN AUS DEN SCHULDVERSCHREIBUNGEN ERFULLT SIND. ZAHLUNGEN DER EMITTENTIN
AN o BEFREIEN DIE EMITTENTIN IN HOHE DER GELEISTETEN ZAHLUNGEN VON IHREN
VERBINDLICHKEITEN AUS DEN SCHULDVERSCHREIBUNGEN.

                        INHABER-SAMMELSCHULDVERSCHREIBUNG
                            uber einen Nennbetrag von
                                bis zu o o (o o)

der o % Globalanleihe fallig o im Gesamtnennbetrag von o o (o o) der
Landeskreditbank Baden-Wurttemberg - Forderbank (die "Emittentin").

Diese Sammelschuldverschreibung verbrieft bis zu o Teilschuldverschreibungen im
Nennbetrag von je o (die "Schuldverschreibungen"). Sie ist von der Emittentin
als Inhaberurkunde begeben und bei o zur Verwahrung eingeliefert worden, um die
Lieferung und Ubertragung von Schuldverschreibungen im Verwahr- und
Effektengirosystem der o zu ermoglichen. Effektive Urkunden uber einzelne
Schuldverschreibungen und Zinsscheine werden nicht ausgegeben.

Die tatsachliche Zahl der in dieser Sammelschuldverschreibung jeweils
verbrieften Schuldverschreibungen ergibt sich aus den Unterlagen des Verwahrers,
die ihrerseits beruhen auf dem Register der Deutsche Bank Aktiengesellschaft
(das "Register"), die als Registerstelle fur die Emittentin fungiert, oder eines
etwa von der Emittentin bestellten Nachfolgers in dieser Funktion (die
"Registerstelle"). Im Falle von Unstimmigkeiten zwischen dem Register und den
Unterlagen des Verwahrers ist das Register, ausser im Falle eines
offenkundigen Irrtums, massgeblich.

Die Emittentin verpflichtet sich hiermit, dem Inhaber dieser Urkunde die auf die
durch diese Urkunde verbrieften Schuldverschreibungen zahlbaren Betrage
gemass der beigefugten Anleihebedingungen (die "Anleihebedingungen") zu
zahlen.

<PAGE>

Die Anleihebedingungen sind Teil dieser Sammelschuldverschreibung.

Diese Sammelschuldverschreibung ist nur wirksam, wenn sie mit der im Namen der
Hauptzahlstelle geleisteten handschriftlichen Kontrollunterschrift versehen ist.

Karlsruhe, Bundesrepublik Deutschland
o 200o

         LANDESKREDITBANK BADEN-WURTTEMBERG - FORDERBANK

                        ------------------------
                        Name:
                        Position:

                        ------------------------
                        Name:
                        Position:

Kontrollunterschrift
(geleistet im Namen der
 Deutsche Bank Aktiengesellschaft
als Hauptzahlstelle)

----------------------------
Unterschriftsbefugte Person

                                       98
<PAGE>

                                                                     SCHEDULE 2A
                                                                     -----------
                                                                        PART 2-I
                                                                        --------
                             English Version of the
                           FORM OF THE DTC GLOBAL NOTE
        [insert Designated Currency and principal amount of Global Note]

ISIN o                                             Common Code o
CUSIP o                                            WKN o

                 LANDESKREDITBANK BADEN-WURTTEMBERG - FORDERBANK
                     Karlsruhe, Federal Republic of Germany

                            o o o% Global Notes due o

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN 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 IN AS MUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.

                          GLOBAL REGISTERED CERTIFICATE
                       representing a principal amount of
                                 up to o o (o o)

of the o % Global Notes due o in the aggregate principal amount of o o (o o),
issued by Landeskreditbank Baden-Wurttemberg - Forderbank (the "Issuer").

This Global Note represents up to o notes in the principal amount of o each (the
"Notes"). It has been issued by the Issuer as a registered global note to Cede &
Co., as nominee of DTC, and been deposited in the DTC depositary and clearing
system in order to permit delivery and transfer of Notes in book-entry form
without physical delivery of definitive notes within that system. DTC and its
successor, if any, as depositary for this Global Note shall herein also be
referred to as the "Depositary". Definitive notes representing individual Notes
and interest coupons shall not be issued.

The actual number of Notes represented from time to time by this Global Note
shall be evidenced by the records of the Depositary, which in turn shall be
based on the register maintained by Deutsche Bank Aktiengesellschaft (the
"Register"), or any successor in such capacity appointed by the Issuer, acting
as registrar (the "Registrar") on behalf of the Issuer. In the case of any
inconsistency between the Register and the records of the Depositary, the
Register prevails, except in the case of manifest error.

The Issuer hereby undertakes to pay to Cede & Co. the amounts payable in respect
of the Notes represented by this Global Note in accordance with the Terms and
Conditions of the Notes (the "Conditions") attached hereto.

                                       99
<PAGE>

This Global Note may not be transferred except as a whole by DTC to a nominee of
DTC or by a nominee of DTC to DTC or another nominee of DTC or by DTC or any
such nominee to a successor depositary or a nominee of such successor
depositary. Any transfer shall be effective only if registered upon the books
maintained for that purpose by the Registrar.

The Conditions form part of this Global Note.

This Global Note is only valid if it has been provided with the manual
authentication signature on behalf of the U.S.-Paying Agent.

Karlsruhe, Federal Republic of Germany
o, 200o

                         LANDESKREDITBANK BADEN-WURTTEMBERG - FORDERBANK

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

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

Authentication signature
for and on behalf of
Deutsche Bank Trust Company Americas
as U.S.-Paying Agent

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

                                      100
<PAGE>

                                                                     SCHEDULE 2A
                                                                     -----------
                                                                       PART 2-II
                                                                       ---------
                              German Version of the
                           FORM OF THE DTC GLOBAL NOTE
        [insert Designated Currency and principal amount of Global Note]

ISIN o                                                Common Code o
CUSIP o                                               WKN o
No. R-o

                 LANDESKREDITBANK BADEN-WURTTEMBERG - FORDERBANK
                      Karlsruhe, Bundesrepublik Deutschland

                          o o o% Globalanleihe fallig o

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN 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 IN AS MUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.

                        NAMENS-SAMMELSCHULDVERSCHREIBUNG
                            uber einen Nennbetrag von
                                bis zu o o (o o)

der o % Globalanleihe fallig o im Gesamtnennbetrag von o o (o o) der
Landeskreditbank Baden-Wurttemberg - Forderbank (die "Emittentin").

Diese Sammelschuldverschreibung verbrieft bis zu o Teilschuldverschreibungen im
Nennbetrag von je o (die "Schuldverschreibungen"). Sie ist von der Emittentin
als Namens-Sammelschuldverschreibung an Cede & Co. als Beauftragte von The
Depository Trust Company ("DTC") begeben und in das Verwahr- und Clearingsystem
der DTC zur Verwahrung eingeliefert worden, um die Lieferung und Ubertragung von
Schuldverschreibungen innerhalb des Systems im Buchungswege ohne Lieferung
effektiver Stucke zu ermoglichen. DTC und deren etwaiger Nachfolger als
Verwahrer dieser Sammelschuldverschreibung werden in dieser Urkunde auch als
"Verwahrer" bezeichnet. Effektive Urkunden uber einzelne Schuldverschreibungen
und Zinsscheine werden nicht ausgegeben.

Die tatsachliche Zahl der in dieser Sammelschuldverschreibung jeweils
verbrieften Schuldverschreibungen ergibt sich aus den Unterlagen des Verwahrers,
die ihrerseits beruhen auf dem Register der Deutsche Bank Aktiengesellschaft
(das "Register"), die als Registerstelle fur die Emittentin fungiert, oder eines
etwa von der Emittentin bestellten Nachfolgers in dieser Funktion (die
"Registerstelle"). Im Falle von Unstimmigkeiten zwischen dem Register und den
Unterlagen des Verwahrers ist das Register, ausser im Falle eines
offenkundigen Irrtums, massgeblich.

                                      101
<PAGE>

Die Emittentin verpflichtet sich hiermit, an Cede & Co. die auf die durch diese
Globalurkunde verbrieften Schuldverschreibungen zahlbaren Betrage gemass der
beigefugten Anleihebedingungen (die "Anleihebedingungen") zu zahlen.

Diese Sammelurkunde kann nur insgesamt ubertragen werden, und zwar nur entweder
von DTC auf einen Beauftragten der DTC, von einem Beauftragten der DTC auf DTC
oder auf einen anderen Beauftragten der DTC oder von DTC oder einem solchen
Beauftragten auf einen als Nachfolger der DTC fungierenden neuen Verwahrer oder
einen Beauftragten eines solchen neuen Verwahrers. Die Ubertragung ist nur
wirksam, wenn sie in den zu diesem Zweck von der Registerstelle gefuhrten
Unterlagen vermerkt wird.

Die Anleihebedingungen sind Teil dieser Sammelschuldverschreibung.

Diese Sammelschuldverschreibung ist nur wirksam, wenn sie mit der im Namen der
US-Zahlstelle geleisteten handschriftlichen Kontrollunterschrift versehen ist.

Karlsruhe, Bundesrepublik Deutschland
o 200o

         LANDESKREDITBANK BADEN-WURTTEMBERG - FORDERBANK

                        ------------------------
                        Name:
                        Position:

                        ------------------------
                        Name:
                        Position:

Kontrollunterschrift
(geleistet im Namen der
Deutsche Bank Trust Company Americas
als US-Zahlstelle)

---------------------------
Unterschriftsbefugte Person

                                      102
<PAGE>

                                                                     SCHEDULE 2B
                                                                     -----------
                                                                          PART I
                                                                          ------
                             English Version of the
                             FORM OF THE GLOBAL NOTE

        [insert Designated Currency and principal amount of Global Note]

ISIN o                                                 Common Code o
CUSIP o                                                WKN o
No. R-o

                 LANDESKREDITBANK BADEN-WURTTEMBERG - FORDERBANK
                     Karlsruhe, Federal Republic of Germany

                            o o o% Global Notes due o

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN 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 IN AS MUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.

                          GLOBAL REGISTERED CERTIFICATE
                       representing a principal amount of
                               (amount in words o)
                                       (o)

of the o % Global Notes due o in the aggregate principal amount of (amount in
words o (o)), issued by Landeskreditbank Baden-Wurttemberg - Forderbank (the
"Issuer").

This Global Note represents o notes in the principal amount of o each (the
"Notes"). It has been issued by the Issuer as a registered global note to Cede &
Co., as nominee of DTC, and been deposited in the DTC depositary and clearing
system in order to permit delivery and transfer of Notes in book-entry form
without physical delivery of definitive notes within that system. DTC and its
successor, if any, as depositary for this Global Note shall herein also be
referred to as the "Depositary".

The number of Notes represented by this Global Note shall be evidenced by the
records of the Depositary.

The Issuer hereby undertakes to pay to Cede & Co. the amounts payable in respect
of the Notes represented by this Global Note in accordance with the Terms and
Conditions of the Notes (the "Conditions") attached hereto.

This Global Note may not be transferred except as a whole by DTC to a nominee of
DTC or by a nominee of DTC to DTC or another nominee of DTC or by DTC or any
such nominee to

                                      103
<PAGE>

a successor depositary or a nominee of such successor depositary. Any transfer
shall be effective only if registered upon the books maintained for that purpose
by DTC.

The Conditions form part of this Global Note.

This Global Note is only valid if it has been provided with the manual
authentication signature on behalf of the Principal Paying Agent.

Karlsruhe, Federal Republic of Germany
o 200o

                           LANDESKREDITBANK BADEN-WURTTEMBERG - FORDERBANK

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

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

Authentication signature
for and on behalf of
Deutsche Bank Trust Company Americas
as Principal Paying Agent

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

                                      104
<PAGE>

                                                                     SCHEDULE 2B
                                                                     -----------
                                                                         PART II
                                                                         -------
                              German Version of the
                             FORM OF THE GLOBAL NOTE

        [insert Designated Currency and principal amount of Global Note]

ISIN o                                                     Common Code o
CUSIP o                                                    WKN o
No. R-o

                 LANDESKREDITBANK BADEN-WURTTEMBERG - FORDERBANK
                      Karlsruhe, Bundesrepublik Deutschland

                          o o o% Globalanleihe fallig o

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN 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 IN AS MUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.

                        NAMENS-SAMMELSCHULDVERSCHREIBUNG
                            uber einen Nennbetrag von
                              (Betrag in Worten o)
                                       (o)

der o % Globalanleihe fallig o im Gesamtnennbetrag von (Betrag in Worten o) (o)
der Landeskreditbank Baden-Wurttemberg - Forderbank (die "Emittentin").

Diese Sammelschuldverschreibung verbrieft o Teilschuldverschreibungen im
Nennbetrag von je o (die "Schuldverschreibungen"). Sie ist von der Emittentin
als Namens-Sammelschuldverschreibung an Cede & Co. als Beauftragte von The
Depository Trust Company ("DTC") begeben und in das Verwahr- und Clearingsystem
der DTC zur Verwahrung eingeliefert worden, um die Lieferung und Ubertragung von
Schuldverschreibungen innerhalb des Systems im Buchungswege ohne Lieferung
effektiver Stucke zu ermoglichen. DTC und deren etwaiger Nachfolger als
Verwahrer dieser Sammelschuldverschreibung werden in dieser Urkunde auch als
"Verwahrer" bezeichnet.

Die Zahl der in dieser Sammelschuldverschreibung verbrieften
Schuldverschreibungen ergibt sich aus den Unterlagen des Verwahrers.

Die Emittentin verpflichtet sich hiermit, an Cede & Co. die auf die durch diese
Globalurkunde verbrieften Schuldverschreibungen zahlbaren Betrage gemass der
beigefugten Anleihebedingungen (die "Anleihebedingungen") zu zahlen.

                                      105
<PAGE>

Diese Sammelurkunde kann nur insgesamt ubertragen werden, und zwar nur entweder
von DTC auf einen Beauftragten der DTC, von einem Beauftragten der DTC auf DTC
oder auf einen anderen Beauftragten der DTC oder von DTC oder einem solchen
Beauftragten auf einen als Nachfolger der DTC fungierenden neuen Verwahrer oder
einen Beauftragten eines solchen neuen Verwahrers. Die Ubertragung ist nur
wirksam, wenn sie in den zu diesem Zweck von DTC gefuhrten Unterlagen vermerkt
wird.

Die Anleihebedingungen sind Teil dieser Sammelschuldverschreibung.

Diese Sammelschuldverschreibung ist nur wirksam, wenn sie mit der im Namen der
Hauptzahlstelle geleisteten handschriftlichen Kontrollunterschrift versehen ist.

Karlsruhe, Bundesrepublik Deutschland
o, 200o

              LANDESKREDITBANK BADEN-WURTTEMBERG - FORDERBANK

                        ------------------------
                        Name:
                        Position:

                        ------------------------
                        Name:
                        Position:

Kontrollunterschrift
(geleistet im Namen von
Deutsche Bank Trust Company Americas
als Hauptzahlstelle)

---------------------------
Unterschriftsbefugte Person

                                      106
<PAGE>

                                                                      SCHEDULE 3
                                                                      ----------
                         SPECIFIED OFFICES OF THE AGENTS

                        DUAL NOTE STRUCTURE REGISTRAR AND
                   DUAL NOTE STRUCTURE PRINCIPAL PAYING AGENT

                        Deutsche Bank Aktiengesellschaft
                           Trust & Securities Services
                       Grosse Gallusstrasse 10-14
                             60272 Frankfurt am Main
                                     Germany

                SINGLE NOTE STRUCTURE PRINCIPAL PAYING AGENT AND
                      DUAL NOTE STRUCTURE U.S.-PAYING AGENT

                      Deutsche Bank Trust Company Americas
                           Trust & Securities Services
                              Global Debt Services
                                 60 Wall Street
                            New York, New York 10005
                            United States of America

                                      107
<PAGE>

                                                                      SCHEDULE 4
                                                                      ----------
                                                                          PART I
                                                                          ------
                             English Version of the
                                FORM OF GUARANTEE
                TO BE ISSUED IN CASE OF A SUBSTITUTION OF ISSUER

                        [SENIOR] [SUBORDINATED] GUARANTEE

                                       of

                 Landeskreditbank Baden-Wurttemberg - Forderbank
                     Karlsruhe, Federal Republic of Germany,

 for the benefit of the holders of [insert description of Notes] (the "[Senior]
                             [Subordinated] Notes")

WHEREAS:

(A) Landeskreditbank Baden-Wurttemberg - Forderbank has substituted for itself
[insert name of Substituted Debtor] (the "Substituted Debtor") as principal
debtor in respect of all obligations arising from or in connection with the
[Senior] [Subordinated] Notes under ss. 9 of the Terms and Conditions of the
Notes (the "Conditions").

(B) Landeskreditbank Baden-Wurttemberg - Forderbank (the "Guarantor") wishes to
guarantee the due payment of principal, interest and any other amounts payable
in respect of any and all [Senior] [Subordinated] Notes.

IT IS AGREED AS FOLLOWS:

(1)(a)   The Guarantor unconditionally and irrevocably guarantees to the holder
         of each [Senior] [Subordinated] Note (each a "Holder") the due and
         punctual payment of the principal of, and interest on, the [Senior]
         [Subordinated] Notes, and any other amounts which may be expressed to
         be payable under any [Senior] [Subordinated] Note, as and when the same
         shall become due, in accordance with the Conditions.

(b)      [In the case of Senior Notes, insert:
         This Senior Guarantee constitutes an unsecured and unsubordinated
         obligation of the Guarantor and ranks pari passu with all other
         unsecured and unsubordinated obligations of the Guarantor outstanding
         from time to time.]

         [In the case of Subordinated Notes, insert:
         The obligations of the Guarantor under this Subordinated Guarantee rank
         at least pari passu with all other subordinated obligations of the
         Guarantor. In the event of insolvency proceedings over the assets, or
         the liquidation, of the Guarantor(1), the obligations of the Guarantor
         under this Subordinated Guarantee will be subordinated to the claims of
         all unsubordinated creditors of the Guarantor until the claims of all
         unsubordinated creditors of the Guarantor shall have been satisfied in
         full. No Holder

____________________________

1        Pursuant to ss. 12 Insolvenzordnung (Insolvency Act) and ss. 45
         Baden-Wurttembergisches Ausfuhrungsgesetz zum Gerichtsverfassungsgesetz
         (Implementing Law of the State of Baden-Wurttemberg relating to the
         Federal Judicature Act), insolvency proceedings may not be instituted
         against L-Bank .

<PAGE>

         may set off his claims arising under the Subordinated Notes or under
         the Subordinated Guarantee against any claims of the Guarantor. No
         security of whatever kind is, or shall at any time be, provided by the
         Guarantor or any other person securing rights of the Holders under the
         Subordinated Notes or under the Subordinated Guarantee. No subsequent
         agreement may limit the subordination pursuant to the provisions set
         out in this Clause (1)(b) or shorten the term of this Subordinated
         Guarantee to a date prior to the maturity of the Subordinated Notes. If
         payments are made by the Guarantor under this Subordinated Guarantee
         otherwise than in circumstances described in this Clause (1)(b), then
         the amounts paid must be returned to the Guarantor irrespective of any
         agreement to the contrary unless the amounts paid have been replaced by
         other liable capital (haftendes Eigenkapital) of at least equal status
         within the meaning of the German Banking Act (Kreditwesengesetz) or the
         Federal Supervisory Authority for Financial Services (Bundesanstalt fur
         Finanzdienstleistungsaufsicht) has consented to such prepayment.]

(c)      All payments under this [Senior] [Subordinated] Guarantee shall be made
         with withholding or deduction of any present or future taxes or other
         duties if such withholding or deduction is required by law.

(d)      The obligations of the Guarantor under this [Senior] [Subordinated]
         Guarantee (i) shall be separate and independent from the obligations of
         the Substituted Debtor under the [Senior] [Subordinated] Notes, (ii)
         shall exist irrespective of the legality, validity and binding effect
         or enforceability of the [Senior] [Subordinated] Notes, and (iii) shall
         not be affected by any event, condition or circumstance of whatever
         nature, whether factual or legal, save the full, definitive and
         irrevocable satisfaction of any and all payment obligations expressed
         to be assumed under the [Senior] [Subordinated] Notes.

(2) This [Senior] [Subordinated] Guarantee and all undertakings contained herein
constitute a contract for the benefit of the Holders from time to time as third
party beneficiaries pursuant to ss. 328(1) BGB (German Civil Code)(2). They give
rise to the right of each such Holder to require performance of the obligations
undertaken herein directly from the Guarantor, and to enforce such obligations
directly against the Guarantor.

(3) The Principal Paying Agent does not act in a fiduciary or in any other
similar capacity for the Holders.

(4) Terms used in this [Senior] [Subordinated] Guarantee and not otherwise
defined herein shall have the meaning attributed to them in the Conditions, a
copy of which is attached hereto.

(5) This [Senior] [Subordinated] Guarantee shall be governed by, and construed
in accordance with, German law.

(6) This [Senior] [Subordinated] Guarantee is written in the German language and
attached hereto is a non-binding English translation.

____________________________

2        An English language translation of ss. 328 (1) BGB (German Civil Code)
         reads as follows: "A contract may stipulate performance for the benefit
         of a third party, to the effect that the third party acquires the right
         directly to demand performance."

                                      109
<PAGE>

(7) The original version of this [Senior] [Subordinated] Guarantee shall be
delivered to, and kept by, the Principal Paying Agent.

(8) Place of performance shall be Karlsruhe.

(9) The courts in Frankfurt am Main, Germany shall have jurisdiction for all
legal proceedings ("Proceedings") arising out of or in connection with this
[Senior] [Subordinated] Guarantee. The jurisdiction of such courts shall be
exclusive according to Section 38 of the German Code of Civil Procedure
(Zivilprozessordnung) for proceedings solely involving merchants (Kaufleute),
legal persons under public law (juristische Personen des offentlichen Rechts),
special funds under public law (offentlich-rechtliche Sondervermogen) or persons
not subject to the general jurisdiction of the courts of Germany (Personen ohne
allgemeinen Gerichtsstand), otherwise it shall be nonexclusive.

(10) On the basis of a copy of this [Senior] [Subordinated] Guarantee certified
as being a true copy by a duly authorized officer of the Principal Paying Agent,
each Holder may protect and enforce in his own name his rights arising under
this [Senior] [Subordinated] Guarantee in any legal proceedings against the
Guarantor or to which such Holder and the Guarantor are parties, without the
need for production of this [Senior] [Subordinated] Guarantee in such
proceedings.

Karlsruhe, [date]

Landeskreditbank Baden-Wurttemberg - Forderbank

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

We accept the terms of the above [Senior] [Subordinated] Guarantee without
recourse, warranty or liability.

[place], [date]

[Deutsche Bank Aktiengesellschaft] [Deutsche Bank Trust Company Americas]
as Principal Paying Agent

                                      110
<PAGE>

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

                       (Terms and Conditions of the Notes)

                                      111
<PAGE>

                                                                      SCHEDULE 4
                                                                      ----------
                                                                         PART II
                                                                         -------
                              German Version of the
                                FORM OF GUARANTEE
                TO BE ISSUED IN CASE OF A SUBSTITUTION OF ISSUER

                   [NICHT NACHRANGIGE] [NACHRANGIGE] GARANTIE

                                       der

                 Landeskreditbank Baden-Wurttemberg - Forderbank
                     Karlsruhe, Bundesrepublik Deutschland,

  zugunsten der Glaubiger der [Beschreibung der Anleihe einfugen] (die "[nicht
              nachrangigen] [nachrangigen] Schuldverschreibungen"),

IM HINBLICK DARAUF, DASS:

(A) die Landeskreditbank Baden-Wurttemberg - Forderbank gemass ss. 9 der
Emissionsbedingungen die [Namen der Nachfolgeschuldnerin einfugen] an ihre
Stelle als Hauptschuldnerin fur samtliche Verpflichtungen aus oder im
Zusammenhang mit den [nicht nachrangigen] [nachrangigen] Schuldverschreibungen
eingesetzt hat,

(B) die Landeskreditbank Baden-Wurttemberg - Forderbank (die "Garantin") die
ordnungsgemasse Zahlung von Kapital und Zinsen sowie von allen sonstigen
Betragen, die auf die [nicht nachrangigen] [nachrangigen] Schuldverschreibungen
zu zahlen sind, garantieren mochte,

WIRD FOLGENDES VEREINBART:

(1)(a)   Die Garantin ubernimmt gegenuber jedem Glaubiger der [nicht
         nachrangigen] [nachrangigen] Schuldverschreibungen die unbedingte und
         unwiderrufliche Garantie fur die ordnungsgemasse und punktliche
         Zahlung bei Falligkeit gemass den Emissionsbedingungen von Kapital
         und Zinsen auf die [nicht nachrangigen] [nachrangigen]
         Schuldverschreibungen sowie von allen sonstigen Betragen, die
         gemass den Emissionsbedingungen auf die [nicht nachrangigen]
         [nachrangigen] Schuldverschreibungen zahlbar sind.

(b)      [Im Fall von nicht nachrangigen Schuldverschreibungen, einfugen:
         Diese nicht nachrangige Garantie begrundet eine unbesicherte und nicht
         nachrangige Verbindlichkeit der Garantin, die mit allen anderen jeweils
         bestehenden, nicht besicherten und nicht nachrangigen Verbindlichkeiten
         der Garantin gleichrangig ist.]

         [Im Fall von nachrangigen Schuldverschreibungen, einfugen:
         Die Verpflichtungen der Garantin aus dieser nachrangigen Garantie sind
         mit allen anderen nachrangigen Verbindlichkeiten der Garantin zumindest
         gleichrangig. Im Fall der Liquidation oder des Insolvenzverfahrens uber
         das Vermogen der Garantin(1)

_____________________________

1    Gemass ss. 12 Insolvenzverordnung und ss. 45 Baden-Wurttembergisches
     Ausfuhrungsgesetz zum Gerichtsverfassungsgesetz kann ein Insolvenzverfahren
     uber das Vermogen der L-Bank nicht eroffnet werden.

<PAGE>

         gehen die Verbindlichkeiten der Garantin aus dieser nachrangigen
         Garantie den Anspruchen dritter Glaubiger der Garantin aus nicht
         nachrangigen Verbindlichkeiten im Range nach, so dass Zahlungen auf
         diese nachrangige Garantie solange nicht erfolgen, wie die Anspruche
         dieser dritten Glaubiger der Garantin aus nicht nachrangigen
         Verbindlichkeiten nicht vollstandig befriedigt sind. Kein Glaubiger ist
         berechtigt, mit Anspruchen aus den nachrangigen Schuldverschreibungen
         oder aus dieser nachrangigen Garantie gegen Anspruche der Garantin
         aufzurechnen. Fur die Rechte der Glaubiger aus den nachrangigen
         Schuldverschreibungen oder aus dieser nachrangigen Garantie ist diesen
         keine Sicherheit irgendwelcher Art durch die Garantin oder durch Dritte
         gestellt; eine solche Sicherheit wird auch zu keinem Zeitpunkt gestellt
         werden. Nachtraglich konnen der Nachrang gemass dieser Klausel
         (1)(b) nicht beschrankt sowie die Laufzeit der Garantie nicht auf ein
         Datum vor dem Falligkeitstag der nachrangigen Schuldverschreibungen
         verkurzt werden. Werden Zahlungen auf diese nachrangige Garantie von
         der Garantin unter anderen als in dieser Klausel (1)(b) Umstanden
         geleistet, so ist der gezahlte Betrag der Garantin ohne Rucksicht auf
         entgegenstehende Vereinbarungen zuruckzugewahren, sofern nicht der
         gezahlte Betrag durch die Einzahlung anderen, zumindest gleichwertigen
         haftenden Eigenkapitals im Sinne des Kreditwesengesetzes ersetzt worden
         ist oder die Bundesanstalt fur Finanzdienstleistungsaufsicht der
         vorzeitigen Zahlung zugestimmt hat.]

(c)      Samtliche aufgrund dieser [nicht nachrangigen] [nachrangigen] Garantie
         zu zahlenden Betrage werden unter Einbehalt oder Abzug von Steuern oder
         sonstigen Abgaben geleistet, falls ein solcher Einbehalt oder Abzug
         gesetzlich vorgeschrieben ist.

(d)      Die Verpflichtungen der Garantin aus dieser [nicht nachrangigen]
         [nachrangigen] Garantie (i) sind selbststandig und unabhangig von den
         Verpflichtungen der Nachfolgeschuldnerin aus den [nicht nachrangigen]
         [nachrangigen] Schuldverschreibungen, (ii) bestehen unabhangig von der
         Rechtmassigkeit, Gultigkeit, Verbindlichkeit oder Durchsetzbarkeit
         der [nicht nachrangigen] [nachrangigen] Schuldverschreibungen und (iii)
         werden nicht durch Ereignisse, Bedingungen oder Umstande tatsachlicher
         oder rechtlicher Art beruhrt, ausser durch die vollstandige,
         endgultige und unwiderrufliche Erfullung samtlicher in den [nicht
         nachrangigen] [nachrangigen] Schuldverschreibungen eingegangenen
         Zahlungsverpflichtungen.

(2) Diese [nicht nachrangige] [nachrangige] Garantie und alle darin enthaltenen
Vereinbarungen stellen einen Vertrag zugunsten der Glaubiger als begunstigte
Dritte gemass ss. 328 Absatz 1 BGB dar. Sie begrunden das Recht eines jeden
Glaubigers, die Erfullung der hierin eingegangenen Verpflichtungen unmittelbar
von der Garantin zu fordern und diese Verpflichtungen unmittelbar gegenuber der
Garantin durchzusetzen.

(3) Die Hauptzahlstelle handelt nicht als Treuhander oder in einer ahnlichen
Eigenschaft fur die Glaubiger.

(4) Die in dieser [nicht nachrangigen] [nachrangigen] Garantie verwendeten und
nicht anders definierten Begriffe haben die ihnen in den beigefugten
Emissionsbedingungen zugewiesene Bedeutung.

(5) Diese [nicht nachrangige] [nachrangige] Garantie unterliegt deutschem Recht.

                                      113
<PAGE>

(6) Diese [nicht nachrangige] [nachrangige] Garantie ist in deutscher Sprache
abgefasst. Eine unverbindliche Ubersetzung in die englische Sprache ist
beigefugt.

(7) Das Original dieser [nicht nachrangigen] [nachrangigen] Garantie wird der
Hauptzahlstelle ausgehandigt und von dieser verwahrt.

(8) Erfullungsort ist Karlsruhe.

(9) Nicht-ausschliesslicher Gerichtsstand fur alle Rechtsstreitigkeiten aus
oder im Zusammenhang mit dieser [nicht nachrangigen] [nachrangigen] Garantie ist
Frankfurt am Main, Deutschland. Dieser Gerichtsstand ist ausschliesslich
gemass ss. 38 ZPO unter ausschliesslicher Beteiligung von Kaufleuten,
juristischen Personen des offentlichen Rechts, offentlich-rechtlichen
Sondervermogen und Personen ohne allgemeinen Gerichtsstand in Deutschland; im
Ubrigen ist der Gerichtsstand nicht ausschliesslich.

(10) Jeder Glaubiger kann in jedem Rechtsstreit gegen die Garantin und in jedem
Rechtsstreit, in dem er und die Garantin Partei sind, seine Rechte aus dieser
[nicht nachrangigen] [nachrangigen] Garantie auf der Grundlage einer von einer
vertretungsberechtigten Person der Hauptzahlstelle beglaubigten Kopie dieser
[nicht nachrangigen] [nachrangigen] Garantie ohne Vorlage des Originals im
eigenen Namen wahrnehmen und durchsetzen.

Karlsruhe, den [Datum]

Landeskreditbank Baden-Wurttemberg - Forderbank

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

Wir nehmen die Bedingungen der vorstehenden [nicht nachrangigen] [nachrangigen]
Garantie ohne Obligo, Gewahrleistung oder Haftung an.

[Ort], den [Datum]

                                      114
<PAGE>

[Deutsche Bank Aktiengesellschaft] [Deutsche Bank Trust Company Americas]
als Hauptzahlstelle

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

                              (Anleihebedingungen)

                                      115
<PAGE>

                                   Schedule 5
                                   ----------

                      FORM OF SUPPLEMENTAL AGENCY AGREEMENT
                      -------------------------------------

                             Supplement No.:o to the
                                Agency Agreement
                          dated March 22 , 2005 between
         Landeskreditbank Baden-Wurttemberg - Forderbank (the "Issuer"),
               Deutsche Bank Aktiengesellschaft ("Deutsche Bank"),
               and Deutsche Bank Trust Company Americas ("DBTCA")
                          as amended from time to time

This Agreement between the Issuer and [Deutsche Bank][and] [DBTCA] (the
"Agent[s]") is in relation to the issue of debt securities (the "Issue")
identified below and supplemental to the above-referenced Agency Agreement (the
"Agency Agreement"). The parties hereby reconfirm the terms and conditions of
the Agency Agreement and agree that the Issue shall be subject in all respects
to such terms and conditions.

The term "Issue" means the [Designated Currency] oo% Global [Bonds] [Notes] due
o to be issued on o, 200o which will be evidenced by the Global Notes attached
hereto in Annexes 1 and 2 and governed by the Terms and Conditions of the
[Bonds] [Notes] attached hereto in Annex[es] 3 [and 4].

This Agreement constitutes an authorization of the Agent[s] to authenticate the
Global Notes.

LANDESKREDITBANK BADEN-WURTTEMBERG - FORDERBANK

By:                                         By:

[DEUTSCHE BANK AKTIENGESELLSCHAFT]

By:                                         By:

[DEUTSCHE BANK TRUST COMPANY AMERICAS

By:                                         By:

Dated o, 200o

                                      116
<PAGE>

                                     Annex I
                                     -------

            [ATTACH [EURO GLOBAL NOTE AND DTC] GLOBAL NOTE - ENGLISH]

                                      117
<PAGE>

                                     Annex 2
                                     -------

             [ATTACH EURO GLOBAL NOTE AND DTC] GLOBAL NOTE - GERMAN]

                                      118

<PAGE>

                                    Annex 3
                                    -------

          [ATTACH TERMS AND CONDITIONS OF THE [BONDS] [NOTES] IN THEIR
                   LEGALLY BINDING [ENGLISH] [GERMAN] VERSION

                                      119

<PAGE>
                                    [Annex 4
                                    --------

    ATTACH TERMS AND CONDITIONS OF THE [BONDS] [NOTES] IN THEIR NON-BINDING
                         [ENGLISH] [GERMAN] TRANSLATION

                                      120<PAGE>
                                                                  Exhibit 4.1(a)

                                                                [EXECUTION COPY]

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

                            PAHC HOLDINGS CORPORATION

                                    AS ISSUER

                                       AND

                       HSBC BANK USA, NATIONAL ASSOCIATION

                       AS TRUSTEE AND AS COLLATERAL AGENT

                                    INDENTURE

                          DATED AS OF FEBRUARY 10, 2005

        $29,000,000 PRINCIPAL AMOUNT OF 15% SENIOR SECURED NOTES DUE 2010
                          OF PAHC HOLDINGS CORPORATION

================================================================================
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                   ARTICLE ONE
                   DEFINITIONS AND INCORPORATION BY REFERENCE
                                                                            PAGE
                                                                            ----
<S>              <C>                                                        <C>
SECTION 1.01.    Definitions.............................................     1
SECTION 1.02.    Other Definitions.......................................    17
SECTION 1.03.    TIA.....................................................    18
SECTION 1.04.    Rules of Construction...................................    19

                                   ARTICLE TWO
                                 THE SECURITIES

SECTION 2.01.    Form and Dating.........................................    19
SECTION 2.02.    Execution and Authentication; Aggregate Principal
                    Amount...............................................    20
SECTION 2.03.    Registrar and Paying Agent..............................    21
SECTION 2.04.    Paying Agent to Hold Assets in Trust....................    21
SECTION 2.05.    Holder Lists............................................    21
SECTION 2.06.    Transfer and Exchange...................................    22
SECTION 2.07.    Replacement Notes.......................................    22
SECTION 2.08.    Outstanding Notes.......................................    22
SECTION 2.09.    Treasury Notes..........................................    23
SECTION 2.10.    Temporary Notes.........................................    23
SECTION 2.11.    Cancellation............................................    23
SECTION 2.12.    Defaulted Interest......................................    23
SECTION 2.13.    CUSIP Number............................................    24
SECTION 2.14.    Deposit of Monies.......................................    24
SECTION 2.15.    Restrictive Legends.....................................    24
SECTION 2.16.    Book-Entry Provisions for Global Notes..................    24
SECTION 2.17.    Registration of Transfers and Exchanges.................    25
SECTION 2.18.    Additional Interest Under Registration Rights
                    Agreement............................................    29
SECTION 2.19.    Issuance of PIK Notes...................................    29

                                  ARTICLE THREE
                                   REDEMPTION

SECTION 3.01.    Notices to Trustee......................................    30
SECTION 3.02.    Selection of Notes To Be Redeemed.......................    30
SECTION 3.03.    Redemptions.............................................    30
SECTION 3.04.    Notice of Redemption....................................    31
SECTION 3.05.    Effect of Notice of Redemption..........................    32
SECTION 3.06.    Deposit of Redemption Price.............................    32
SECTION 3.07.    Notes Redeemed in Part..................................    32

                                  ARTICLE FOUR
                                    COVENANTS

SECTION 4.01.    Payment of Notes........................................    32
SECTION 4.02.    Maintenance of Office or Agency.........................    33
SECTION 4.03.    Corporate Existence.....................................    33
SECTION 4.04.    Payment of Taxes and Other Claims.......................    33
SECTION 4.05.    Maintenance of Properties and Insurance.................    33
SECTION 4.06.    Compliance Certificate; Notice of Default...............    34
</TABLE>

                                       -i-
<PAGE>
                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>              <C>                                                        <C>
SECTION 4.07.    Compliance with Laws....................................    34
SECTION 4.08.    Provision of Financial Statements and Information.......    34
SECTION 4.09.    Waiver of Stay, Extension or Usury Laws.................    35
SECTION 4.10.    Limitation on Restricted Payments.......................    35
SECTION 4.11.    Limitation on Transactions with Affiliates..............    37
SECTION 4.12.    Limitation on Incurrence of Indebtedness................    38
SECTION 4.13.    Limitation on Dividends and Other Payment Restrictions
                    Affecting Restricted Subsidiaries....................    41
SECTION 4.14.    Limitation on Designation of Unrestricted Subsidiaries..    42
SECTION 4.15.    Change of Control.......................................    43
SECTION 4.16.    Limitation on Asset Sales...............................    44
SECTION 4.17.    Impairment of Security Interest.........................    46
SECTION 4.18.    Limitation on Liens.....................................    46
SECTION 4.19.    Business Activities.....................................    46
SECTION 4.20.    Payments for Consent....................................    46
SECTION 4.21.    Limitation on Issuances and Sales of Capital Stock of
                    Subsidiaries.........................................    46

                                  ARTICLE FIVE
                              SUCCESSOR CORPORATION

SECTION 5.01.    Merger, Consolidation and Sale of Assets................    47
SECTION 5.02.    Successor Corporation Substituted.......................    48

                                   ARTICLE SIX
                                    REMEDIES

SECTION 6.01.    Events of Default.......................................    48
SECTION 6.02.    Acceleration............................................    49
SECTION 6.03.    Other Remedies..........................................    50
SECTION 6.04.    Waiver of Past Defaults.................................    50
SECTION 6.05.    Control by Majority.....................................    50
SECTION 6.06.    Limitation on Suits.....................................    50
SECTION 6.07.    Right of Holders to Receive Payment.....................    51
SECTION 6.08.    Collection Suit by Trustee..............................    51
SECTION 6.09.    Trustee May File Proofs of Claim........................    51
SECTION 6.10.    Priorities..............................................    51
SECTION 6.11.    Undertaking for Costs...................................    52
SECTION 6.12.    Restoration of Rights and Remedies......................    52

                                  ARTICLE SEVEN
                                     TRUSTEE

SECTION 7.01.    Duties of Trustee.......................................    52
SECTION 7.02.    Rights of Trustee.......................................    53
SECTION 7.03.    Individual Rights of Trustee............................    54
SECTION 7.04.    Trustee's Disclaimer....................................    54
SECTION 7.05.    Notice of Default.......................................    54
SECTION 7.06.    Reports by Trustee to Holders...........................    55
SECTION 7.07.    Compensation and Indemnity..............................    55
SECTION 7.08.    Replacement of Trustee..................................    56
SECTION 7.09.    Successor Trustee by Merger, Etc........................    56
</TABLE>

                                      -ii-
<PAGE>
                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>              <C>                                                        <C>
SECTION 7.10.    Eligibility; Disqualification...........................    57
SECTION 7.11.    Preferential Collection of Claims Against the Issuer....    57
SECTION 7.12.    Trustee as Collateral Agent.............................    57
SECTION 7.13.    Co-Trustees, Co-Collateral Agents, Sub-Collateral
                    Agent, Separate Trustees and Separate Collateral
                    Agents...............................................    57

                                  ARTICLE EIGHT
                     SATISFACTION AND DISCHARGE; DEFEASANCE

SECTION 8.01.    Satisfaction and Discharge of Indenture.................    59
SECTION 8.02.    Defeasance or Covenant Defeasance.......................    59
SECTION 8.03.    Application of Trust Money..............................    60
SECTION 8.04.    Repayment to the Issuer.................................    61
SECTION 8.05.    Reinstatement...........................................    61
SECTION 8.06.    Acknowledgment of Discharge by Trustee..................    61

                                  ARTICLE NINE
                       AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION 9.01.    Without Consent of Holders..............................    61
SECTION 9.02.    With Consent of Holders.................................    62
SECTION 9.03.    Compliance with TIA.....................................    63
SECTION 9.04.    Revocation and Effect of Consents.......................    63
SECTION 9.05.    Notation on or Exchange of Notes........................    63
SECTION 9.06.    Trustee To Sign Amendments, Etc.........................    63

                                   ARTICLE TEN
                                    SECURITY

SECTION 10.01.   Grant of Security Interest..............................    64
SECTION 10.02.   Recording and Opinions..................................    64
SECTION 10.03.   Release of Collateral...................................    65
SECTION 10.04.   Specified Releases of Collateral........................    66
SECTION 10.05.   Form and Sufficiency of Release.........................    67
SECTION 10.06.   Purchaser Protected.....................................    67
SECTION 10.07.   Authorization of Actions To Be Taken by the Collateral
                    Agent Under the Collateral Agreements................    67
SECTION 10.08.   Authorization of Receipt of Funds by the Collateral
                    Agent Under the Collateral Agreements................    68
SECTION 10.09.   Limitation on Duty of Collateral Agent in Respect of
                    Collateral; Indemnification..........................    68
SECTION 10.10.   Rights of the Issuer....................................    68

                                 ARTICLE ELEVEN
                                  MISCELLANEOUS

SECTION 11.01.   TIA Controls............................................    69
SECTION 11.02.   Notices.................................................    69
SECTION 11.03.   Communications by Holders with Other Holders............    70
SECTION 11.04.   Certificate and Opinion as to Conditions Precedent......    70
SECTION 11.05.   Statements Required in Certificate or Opinion...........    70
SECTION 11.06.   Rules by Trustee, Paying Agent, Registrar...............    70
SECTION 11.07.   Legal Holidays..........................................    71
</TABLE>

                                      -iii-
<PAGE>
                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>              <C>                                                        <C>
SECTION 11.08.   Governing Law...........................................    71
SECTION 11.09.   No Adverse Interpretation of Other Agreements...........    71
SECTION 11.10.   No Personal Liability...................................    71
SECTION 11.11.   Successors..............................................    71
SECTION 11.12.   Duplicate Originals.....................................    71
SECTION 11.13.   Severability............................................    71
SECTION 11.14.   Jurisdiction; Waiver of Jury Trial......................    71
SECTION 11.15.   English Language........................................    71
</TABLE>

<TABLE>
<CAPTION>
Exhibits
--------
<S>         <C>
Exhibit A - Form of Note
Exhibit B - Form of Exchange Note
Exhibit C - Form of Certificate To Be Delivered in Connection with Transfers to
               Non-QIB Accredited Investors
Exhibit D - Form of Certificate To Be Delivered in Connection with Transfers
               Pursuant to Regulation S
Exhibit E - Form of Certificate to be Delivered upon Exchange or Registration of
               Transfer of Securities
</TABLE>

                                      -iv-
<PAGE>
                              CROSS-REFERENCE TABLE

<TABLE>
<CAPTION>
TIA Section                                                    Indenture Section
-----------                                                    -----------------
<S>                                                            <C>
310   (a)(1)................................................   7.10
      (a)(2)................................................   7.10
      (a)(3)................................................   N.A.
      (a)(4)................................................   N.A.
      (a)(5)................................................   7.10; 7.11
      (b)...................................................   7.08; 7.10; 11.02
      (c)...................................................   N.A.
311   (a)...................................................   7.11
      (b)...................................................   7.11
      (c)...................................................   N.A.
312   (a)...................................................   2.05
      (b)...................................................   11.03
      (c)...................................................   11.03
313   (a)...................................................   7.06
      (b)(1)................................................   7.06
      (b)(2)................................................   7.06
      (c)...................................................   7.06; 11.02
      (d)...................................................   7.06
314   (a)...................................................   4.06; 4.08; 10.02
      (b)...................................................   N.A.
      (c)(1)................................................   7.02; 11.04
      (c)(2)................................................   7.02; 11.04
      (c)(3)................................................   N.A.
      (d)...................................................   10.03
      (e)...................................................   11.05
      (f)...................................................   N.A.
315   (a)...................................................   7.01(b)
      (b)...................................................   7.05; 11.02
      (c)...................................................   7.01(a)
      (d)...................................................   6.05; 7.01(c)
      (e)...................................................   6.11
316   (a)(last sentence)....................................   2.09
      (a)(1)(A).............................................   6.05
      (a)(1)(B).............................................   6.04
      (a)(2)................................................   N.A.
      (b)...................................................   6.07
      (c)...................................................   9.04
317   (a)(1)................................................   6.08
      (a)(2)................................................   6.09
      (b)...................................................   2.04
318   (a)...................................................   11.01
      (c)...................................................   11.01
</TABLE>

----------
N.A. means Not Applicable

NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.

                                       -i-
<PAGE>
     INDENTURE, dated as of February 10, 2005, between PAHC Holdings
Corporation, a Delaware corporation (the "Company" or "Issuer"), as the issuer,
and HSBC Bank USA, National Association, as trustee (in such capacity as the
"Trustee") and collateral agent (in such capacity, the "Collateral Agent").

     WHEREAS, the Issuer has duly authorized the creation of its 15% Senior
Secured Notes due 2010 (the "Initial Notes"), the 15% Senior Secured Notes due
2010 (the "PIK Notes") to be issued in lieu of the payment of interest in cash
on any Note, the 15% Senior Secured Exchange Notes due 2010 (the "Exchange
Notes"). The Exchange Notes, the Initial Notes, any PIK Notes and any Additional
Notes shall collectively be referred to herein as the "Notes";

     Each party hereto agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders (as defined):

                                   ARTICLE ONE

                   DEFINITIONS AND INCORPORATION BY REFERENCE

     SECTION 1.01. Definitions.

     "2007 Indenture" means the Indenture dated as of October 21, 2003 between
Phibro Animal Health, Philipp Brothers Netherlands III B.V., the guarantors
named therein, and HSBC Bank USA, National Association, as trustee and
collateral agent, as the same may be amended, modified, renewed, refunded or
refinanced from time to time.

     "2008 Indenture" means the Indenture dated as of June 11, 1998 between
Phibro Animal Health, the guarantors named therein, and The Chase Manhattan
Bank, as trustee, as the same may be amended, modified, renewed, refunded or
refinanced from time to time.

     "2007 Notes" means the outstanding 13% Senior Secured notes due 2007 of
Phibro Animal Health and Philipp Brothers Netherlands III B.V., as the same may
be amended, modified, renewed, refunded, refinanced or replaced from time to
time.

     "2008 Notes" means Phibro Animal Health's outstanding 9.875% senior
subordinated notes due 2008 as the same may be amended, modified, renewed,
refunded, refinanced or replaced from time to time.

     "Acquired Debt" means, with respect to any specified Person, Indebtedness
of any other Person (the "Acquired Person") existing at the time the Acquired
Person merges with or into, or becomes a Restricted Subsidiary of, such
specified Person, including Indebtedness incurred in connection with, or in
contemplation of, the Acquired Person merging with or into, or becoming a
Restricted Subsidiary of, such specified Person; provided, however, that
Indebtedness of such Acquired Person which is redeemed, defeased, retired or
otherwise repaid at the time of or immediately upon consummation of the
transactions by which such Acquired Person merges with or into or becomes a
Restricted Subsidiary of such specified Person shall not be Acquired Debt.

     "Additional Interest" has the meaning set forth in the Registration Rights
Agreement.
<PAGE>
     "Administrative Agent" has the meaning set forth in the definition of the
term "Credit Agreement."

     "Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with") of any Person means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.

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

     "Asset Sale" means (i) any sale, lease, conveyance or other disposition by
the Company or any Restricted Subsidiary of any assets (including by way of a
sale-and-leaseback) other than in the ordinary course of business or (ii) the
issuance or sale of Capital Stock of any Restricted Subsidiary, in the case of
each of (i) and (ii), whether in a single transaction or a series of related
transactions, to any Person (other than (A) to the Company or any Restricted
Subsidiary, (B) directors' qualifying shares and (C) sales or grants of licenses
to use the patents, trade secrets, know-how and other intellectual property of
the Company or any of its Restricted Subsidiaries to the extent that such
license does not prohibit the Company and its Restricted Subsidiaries from using
the intellectual property so licensed or require the Company or any of its
Restricted Subsidiaries to pay any fees for such use) for Net Proceeds in excess
of $250,000.

     "Bankruptcy Law" means Title 11, U.S. Code or any similar federal, state or
foreign law for the relief of debtors.

     "Belgium Plant" means the plant owned by Phibro Belgium in Rixensart,
Belgium.

     "Belgium Plant Sale and Virginiamycin Production Transactions" means the
following transactions and payments, including payments required pursuant to the
documents to evidence such transactions, each of which is subject to entering
into definitive documentation containing customary representations, warranties,
covenants and indemnities for a transaction of that type, and changes in the
definitive economic terms which are not, individually or in the aggregate,
material to the Company: (i) the transfer of substantially all of the land and
buildings and certain equipment of Phibro Belgium at the Belgium Plant, as well
as the industrial activities and intellectual property relating to certain
solvent technology of Phibro Belgium, for a purchase price of EUR 6.2 million,
payable at closing; (ii) the transfer to GSK of a majority of the employees of
Phibro Belgium and the corresponding responsibility for statutory severance
obligations; (iii) GSK agreeing to be responsible for costs of cleaning-up, by
demolition or otherwise, certain buildings not to be used by it, but for Phibro
Belgium to reimburse GSK up to a maximum of EUR 0.7 million for such clean-up
costs; (iv) in recognition of the benefits to the Company from the proposed
transaction, Phibro Belgium agreeing to pay to GSK EUR 1.5 million within six
months from the closing date, EUR 1.5 million within eighteen months from the
closing date, EUR 1.5 million within thirty months from the closing date, and
EUR 0.5 million within forty-two months from the closing date; (v) Phibro
Belgium retaining certain excess land (valued at approximately EUR 0.4 million)
and being able to sell such land for its own account; (vi) Phibro Belgium being
responsible for certain plant closure costs and legally required severance
indemnities in connection with workforce reductions, estimated in total to be
EUR 7.7 million, of which an amount estimated to be approximately EUR 4.1
million would be payable at or around the closing and an aggregate amount so
estimated to be approximately EUR 3.6 million would be payable over periods up
to thirteen years; and (vii) Phibro Belgium retaining any or all equipment at
the Belgium Plant, and being able to sell such equipment for the account of
Phibro Belgium or transfer such equipment, together with other assets and rights
related to

                                        2
<PAGE>
the production of virginiamycin, to the Company's Restricted Subsidiary in
Brazil that owns the facility in Guarulhos or in connection with alternative
production arrangements.

     "Belgium Purchase Agreement" means a Purchase Agreement between Phibro
Belgium and GSK relating to the Belgium Plant Sale and Virginiamycin Production
Transactions, and any related or ancillary agreements or instruments entered
into by Phibro Belgium, GSK, their respective Affiliates and/or other persons in
connection with the Belgium Plant Sale and Virginiamycin Production
Transactions, in each case, as such agreements may be amended, modified or
supplemented (so long as such amendments, modifications or supplements are not,
individually or in the aggregate, materially adverse to the Company or the
Holders).

     "Board of Directors" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.

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

     "Business Day" means any day other than a Saturday, Sunday or any other day
on which banking institutions in the city of New York are required or authorized
by law or other governmental action to be closed.

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

     "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) corporate stock or other equity
participations, including partnership interests, whether general or limited, of
such Person, including any Preferred Stock.

     "Cash Equivalents" means:

          (i) marketable direct obligations issued by, or unconditionally
     guaranteed by, the United States Government or issued by any agency or
     instrumentality thereof and backed by the full faith and credit of the
     United States, in each case maturing within one year from the date of
     acquisition thereof;

          (ii) marketable direct obligations issued by any state of the United
     States of America or any political subdivision of any such state or any
     public instrumentality thereof maturing within one year from the date of
     acquisition thereof and, at the time of acquisition, having one of the two
     highest ratings obtainable from either Standard & Poor's Rating Services or
     Moody's Investors Service, Inc.;

          (iii) commercial paper maturing no more than one year from the date of
     creation thereof and, at the time of acquisition, having a rating of at
     least A-1 from Standard & Poor's Rating Services or at least P-1 from
     Moody's Investors Service, Inc.;

                                        3
<PAGE>
          (iv) certificates of deposit, time deposits or bankers' acceptances
     (or, with respect to foreign banks, similar instruments) maturing within
     one year from the date of acquisition thereof issued by any bank organized
     under the laws of the United States of America or any state thereof or the
     District of Columbia or any member of the European Union or any U.S. branch
     of a foreign bank or (with respect to any Restricted Subsidiary) any
     foreign country in which such Restricted Subsidiary is located, having at
     the date of acquisition thereof combined capital and surplus of not less
     than $250.0 million and a Thompson or Keefe Bank Watch Rating of "B" or
     better (including bank accounts in such banks);

          (v) repurchase obligations with a term of not more than seven days for
     underlying securities of the types described in clause (i) above entered
     into with any bank meeting the qualifications specified in clause (iv)
     above;

          (vi) in the case of any Foreign Restricted Subsidiary, Investments:
     (a) in direct obligations of the sovereign nation (or any agency or
     instrumentality thereof) in which such Foreign Restricted Subsidiary is
     organized or is conducting business or in obligations fully and
     unconditionally guaranteed by such sovereign nation (or any agency or
     instrumentality thereof), (b) of the type and maturity described in clauses
     (i) through (v) above of foreign obligors, which Investments or obligors
     (or the parents of such obligors) have ratings described in such clauses or
     equivalent ratings from comparable foreign rating agencies or (c) of the
     type and maturity described in clauses (i) through (v) above of foreign
     obligors (or the parents of such obligors), which Investments or obligors
     (or the parents of such obligors), are not rated as provided in such
     clauses or in clause (vi)(b) but which are, in the reasonable judgment of
     the Company, comparable in investment quality to such Investments and
     obligors (or the parents of such obligors); and

          (vii) investments in money market funds, including money market funds
     administered by the Trustee, which invest substantially all their assets in
     securities of the types described in clauses (i) through (vi) above.

     "Cash Flow" means, with respect to any period, Consolidated Net Income for
such period, plus, to the extent deducted in computing such Consolidated Net
Income: (i) extraordinary net losses, plus (ii) provision for taxes based on
income or profits and any provision for taxes utilized in computing the
extraordinary net losses under clause (i) hereof, plus (iii) Consolidated
Interest Expense, plus (iv) depreciation, amortization and all other non-cash
charges (including amortization of goodwill and other intangibles but excluding
any items that will require cash payments in the future for which an accrual or
reserve is made), plus (v) any non-recurring fees, charges or other expenses
made or incurred by the Company in connection with the Transactions.

     "Change of Control" means:

          (a) with respect to the Company, the occurrence of any of the
     following events after the Issue Date:

               (i) any "person" or "group" (as such terms are used in Sections
          13(d) and 14(d) of the Exchange Act) (other than one or more Permitted
          Holders) is or becomes (including by merger, consolidation or
          otherwise) the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
          under the Exchange Act, except that a Person shall be deemed to have
          beneficial ownership of all shares that such Person has the right to
          acquire, whether such right is exercisable immediately or only after
          the passage of time), directly or

                                        4
<PAGE>
          indirectly, of 50% or more of the voting power of the total
          outstanding Voting Stock of the Company;

               (ii) during any period of two consecutive years, individuals who
          at the beginning of such period constituted the Board of Directors of
          the Company (together with any new directors whose election to such
          Board of Directors, or whose nomination for election by the
          stockholders of the Company, was approved by a vote of 66-2/3% of the
          directors then still in office who were either directors at the
          beginning of such period or whose election or nomination for election
          was previously so approved) cease for any reason to constitute a
          majority of such Board of Directors of the Company then in office; or

               (iii) the approval by the holders of Capital Stock of the Company
          of any plan or proposal for the liquidation or dissolution of the
          Company (whether or not otherwise in compliance with the terms of this
          Indenture); or

          (b) the sale or other disposition (other than by way of merger or
     consolidation) of all or substantially all of the Capital Stock or assets
     of the Company and its Restricted Subsidiaries taken as a whole to any
     Person or group (as defined in Rule 13d-5 of the Exchange Act) (other than
     to one or more of the Permitted Holders) as an entirety or substantially as
     an entirety in one transaction or a series of related transactions, unless
     the "beneficial owners" of the Voting Stock of such Person immediately
     prior to such transaction own, directly or indirectly, more than 50% of the
     total voting power of such Person immediately after such transaction.

     "Collateral" means Collateral as defined in the Collateral Agreements.

     "Collateral Agent" means HSBC Bank USA, National Association, as collateral
agent, and any successor thereto in accordance with the terms of this Indenture.

     "Collateral Agreements" means, collectively, the Security Agreement and the
Pledge Agreement.

     "Commission" means the Securities and Exchange Commission.

     "Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common stock, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.

     "Consolidated Cash Flow Coverage Ratio" means, for any period, the ratio of
(i) the aggregate amount of Cash Flow for such period, to (ii) Consolidated
Interest Expense for such period, determined on a pro forma basis after giving
pro forma effect to (a) the incurrence of the Indebtedness giving rise to the
calculation of the Consolidated Cash Flow Coverage Ratio and (if applicable) the
application of the net proceeds therefrom, including to refinance other
Indebtedness, as if such Indebtedness was incurred, and the application of such
proceeds occurred, at the beginning of such period; (b) the incurrence,
repayment or retirement of any other Indebtedness by the Company and its
Restricted Subsidiaries since the first day of such period as if such
Indebtedness was incurred, repaid or retired at the beginning of such period
(except that, in making such computation, the amount of Indebtedness under any
revolving credit facility shall be computed based upon the average balance of
such Indebtedness at the end of each month during such period); (c) in the case
of Acquired Debt, the related acquisition as if such acquisition had occurred at
the beginning of such period; and (d) any acquisition or disposition by the
Company and its Restricted Subsidiaries of any company or any business or any
assets out of the ordinary course of

                                        5
<PAGE>
business, or any related repayment of Indebtedness, in each case since the first
day of such period, assuming such acquisition or disposition had been
consummated on the first day of such period.

     "Consolidated Interest Expense" means, with respect to any period, the sum
of (i) the interest expense of the Company and its Restricted Subsidiaries for
such period, including, without limitation, (a) amortization of debt discount,
(b) the net payments, if any, under interest rate contracts (including
amortization of discounts), (c) the interest portion of any deferred payment
obligation and (d) accrued interest, plus (ii) the interest component of the
Capital Lease Obligations paid, accrued and/or scheduled to be paid or accrued
by the Company and its Restricted Subsidiaries during such period, and all
capitalized interest of the Company and its Restricted Subsidiaries, plus (iii)
all dividends paid during such period by the Company and its Restricted
Subsidiaries with respect to any Disqualified Stock (other than by any
Restricted Subsidiary to the Company or any other Restricted Subsidiary and
other than any dividend paid in Capital Stock (other than Disqualified Stock)),
in each case, as determined on a consolidated basis in accordance with GAAP
consistently applied.

     "Consolidated Net Income" means, with respect to any period, the net income
(or loss) of the Company and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP consistently applied,
adjusted to the extent included in calculating such net income (or loss), by
excluding, without duplication:

          (i) all extraordinary gains (less all fees and expenses relating
     thereto);

          (ii) the portion of net income (or loss) of the Company and its
     Restricted Subsidiaries allocable to interests in unconsolidated Persons or
     Unrestricted Subsidiaries, except to the extent of the amount of dividends
     or distributions actually paid to the Company or its Restricted
     Subsidiaries by such other Person during such period;

          (iii) for purposes of Section 4.10, net income (or loss) of any Person
     combined with the Company or any of its Restricted Subsidiaries on a
     "pooling-of-interests" basis attributable to any period prior to the date
     of combination;

          (iv) net gains and losses (less all fees and expenses relating
     thereto) in respect of disposition of assets (including, without
     limitation, pursuant to sale and leaseback transactions) other than in the
     ordinary course of business;

          (v) the net income of any Restricted Subsidiary to the extent that the
     declaration of dividends or similar distributions by that Restricted
     Subsidiary of that income to the Company is not at the time permitted,
     directly or indirectly, by operation of the terms of its charter or any
     agreement, instrument, judgment, decree, order, statute, rule or
     governmental regulation applicable to that Restricted Subsidiary or its
     stockholders;

          (vi) the cumulative non-cash effect of any change in accounting
     principles; provided that any net gain referred to in clause (iv) above
     that relates to a Restricted Investment and which is received in or
     converted into cash by the Company or a Restricted Subsidiary during such
     period shall be included in the consolidated net income of the Company; and

          (vii) the amount of accretions on preferred stock not paid in cash and
     dividends paid in kind on preferred stock reducing Consolidated Net Income
     in accordance with FASB 150.

     "Consolidated Net Worth" means, with respect to any Person at any date, the
sum of (i) the consolidated stockholders' equity of such Person less the amount
of such stockholders' equity attributable

                                        6
<PAGE>
to Disqualified Stock of such Person and its Restricted Subsidiaries, as
determined on a consolidated basis in accordance with GAAP consistently applied
and (ii) the amount of any Preferred Stock of such Person not included in the
stockholders' equity of such Person in accordance with GAAP, which Preferred
Stock does not constitute Disqualified Stock.

     "Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of execution of this Indenture is located at 452 Fifth
Avenue, New York, New York 10018.

     "Credit Agreement" means the Loan and Security Agreement, dated as of
October 21, 2003, among Phibro Animal Health, each of its Subsidiaries parties
thereto, lenders parties thereto as such (together with their successors and
assigns, the "Lenders") and Wells Fargo Foothill, Inc., as administrative agent
(in such capacity, together with its successors and assigns, the "Administrative
Agent"), or any other agreement providing for revolving credit loans, term
loans, receivables financing or letters of credit, as the same may be further
amended, modified, renewed, refunded, replaced or refinanced from time to time
(including extending the maturity of, increasing the amount of available
borrowings under, extending the purpose to include acquisition, working capital
and other facilities of, changing the conditions and basis of borrowing of,
combining the seniority of, changing the covenants and other provisions of, and
adding Subsidiaries of the Company as additional borrowers or guarantors, or
otherwise restructuring all or any portion of the Indebtedness under such
agreement or any successor or replacement and whether with the same or any other
agent, lender or group of lenders), including (i) any related notes, letters of
credit, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced from time to time, and (ii) any notes, guarantees,
collateral documents, instruments and agreements executed in connection with any
such amendment, modification, renewal, refunding, replacement or refinancing.

     "Currency Agreement Obligations" means the obligations of any person under
a foreign exchange contract, currency swap agreement or other similar agreement
or arrangement to protect such person against fluctuations in currency values.

     "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator
or similar official under any Bankruptcy Law.

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

     "Depository" means The Depository Trust Company, its nominees and
successors.

     "Disposition" means, with respect to any Person, any merger, consolidation
or other business combination involving such Person (whether or not such Person
is the Surviving Person) or the sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of such Person's assets.

     "Disqualified Stock" means (i) any Preferred Stock of any Restricted
Subsidiary (other than Preferred Stock owned by the Company or any Wholly Owned
Restricted Subsidiary) and (ii) that portion of any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof (other than upon a Change of
Control of the Company in circumstances where the Holders would have similar
rights), in whole or in part on or prior to the stated maturity of the Notes.

                                        7
<PAGE>
     "Escrow Account" has the meaning provided therefor in the Escrow Agreement.

     "Escrow Agent" is defined in the definition of the term Escrow Agreement.

     "Escrow Agreement" means the Escrow and Security Agreement, dated as of the
Issue Date, among the Company, the Trustee and HSBC Bank USA, National
Association, as Escrow Agent (in such capacity, the "Escrow Agent"), as amended
or supplemented from time to time in accordance with its terms.

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

     "Exchange Offer" has the meaning provided in the Registration Rights
Agreement.

     "Exchange Offer Registration Statement" has the meaning provided for the
term "Exchange Registration Statement" (as defined in the Registration Rights
Agreement).

     "Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's-length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing buyer
under no compulsion to buy.

     "Foreign Restricted Subsidiary" means a Restricted Subsidiary of the
Company that is a Foreign Subsidiary.

     "Foreign Subsidiary" means a Subsidiary of the Company (1) which is
organized under the laws of any jurisdiction outside of the United States of
America, (2) which conducts the major portion of its business outside of the
United States of America and (3) all or substantially all of the property and
assets of which are located outside of the United States of America.

     "GAAP" means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession in the United States of America, which are applicable
as of the Issue Date and consistently applied.

     "GSK" means Glaxosmithkline Biologicals SA and/or Affiliates thereof.

     "guaranty" means a guarantee (other than by endorsement of negotiable
instruments for collection or deposit in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.

     "Holder" means the Person in whose name a Note is registered on the
Registrar's books.

     "Indebtedness" means, with respect to any Person, without duplication, and
whether or not contingent:

          (i) all indebtedness of such Person for borrowed money or which is
     evidenced by a note, bond, debenture or similar instrument;

                                        8
<PAGE>
          (ii) all obligations of such Person to pay the deferred or unpaid
     purchase price of property, which purchase price is due more than six
     months after the date of placing such property in service or taking
     delivery and title thereto;

          (iii) all Capital Lease Obligations of such Person;

          (iv) all obligations of such Person in respect of letters of credit or
     bankers' acceptances issued or created for the account of such Person;

          (v) to the extent not otherwise included in this definition, all net
     obligations of such Person under Interest Rate Agreement Obligations or
     Currency Agreement Obligations of such Person;

          (vi) all liabilities of others of the kind described in the preceding
     clause (i), (ii) or (iii) secured by any Lien on any property owned by such
     Person; provided, however, if the obligations secured by a Lien (other than
     a Permitted Lien not securing any liability that would itself constitute
     Indebtedness) on any assets or property have not been assumed by such
     Person in full or are not such Person's legal liability in full, the amount
     of such Indebtedness for purposes of this definition shall be limited to
     the lesser of the amount of Indebtedness secured by such Lien and the Fair
     Market Value of the property subject to such Lien;

          (vii) all Disqualified Stock issued by such Person and all Preferred
     Stock issued by a Subsidiary of such Person (other than Preferred Stock of
     a Restricted Subsidiary owned by the Company or a Wholly Owned Restricted
     Subsidiary); and

          (viii) to the extent not otherwise included, any guaranty by such
     Person of any other Person's indebtedness or other obligations described in
     clauses (i) through (vii) above. "Indebtedness" of the Company and the
     Restricted Subsidiaries shall not include current trade payables incurred
     in the ordinary course of business, and non-interest bearing installment
     obligations and accrued liabilities incurred in the ordinary course of
     business. The principal amount outstanding of any Indebtedness issued with
     original issue discount is the accreted value of such Indebtedness.
     Notwithstanding the foregoing, "Indebtedness" shall not include
     Indebtedness arising from the honoring by a bank or other financial
     institution of a check, draft or similar instrument inadvertently drawn
     against insufficient funds in the ordinary course of business; provided
     that such Indebtedness is extinguished within 3 Business Days of the
     incurrence thereof. In addition, "Indebtedness" shall not include a
     government grant and any guaranty of the Company or a Restricted Subsidiary
     required by such grant which obligates the Company or a Restricted
     Subsidiary to repay such grant at the discretion of such government or upon
     the failure of the conditions of such grant specified therein to be
     fulfilled, but which is forgiven solely by reason of the passage of time or
     the fulfillment of such grant conditions (other than repayment); provided
     that if the conditions for forgiveness of such government grant lapse for
     whatever reason and the Company or a Restricted Subsidiary becomes
     obligated to repay such grant, the grant shall be deemed Indebtedness which
     is incurred at the time such obligation to repay is triggered.

     "Indenture Documents" means, collectively, this Indenture, the Notes and
the Collateral Agreements.

     "Initial Purchaser" means Jefferies & Company, Inc.

                                        9
<PAGE>
     "Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.

     "interest" means, when used with respect to any Note, the amount of all
interest accruing on such Note, including any applicable defaulted interest
pursuant to Section 2.12 and any Additional Interest pursuant to the
Registration Rights Agreement.

     "Interest Payment Date" means the stated maturity of an installment of
interest on the Notes.

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

     "Investment" means, with respect to any Person, any direct or indirect loan
or other extension of credit (including, without limitation, any guaranty) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any other Person. "Investment" shall exclude (x) extensions of trade credit
by the Company and its Restricted Subsidiaries on commercially reasonable terms
in accordance with normal trade practices of the Company or such Restricted
Subsidiary, as the case may be, and (y) payments made by the Company and its
Restricted Subsidiaries in respect of liabilities of the type described in
clauses (ii)(b) and (e) of the definition of the term "Net Proceeds" in
connection with any Asset Sales by the Company or any of its Restricted
Subsidiaries (provided, however, that the aggregate amount of such payments
relating to any such Asset Sale shall at no time exceed the gross proceeds
actually received by the Company or such Restricted Subsidiary in connection
with such Asset Sale). For the purposes of Section 4.10, (i) "Investment" shall
include and be valued at the Fair Market Value of the net assets of any
Restricted Subsidiary (to the extent of the Company's equity interest in such
Restricted Subsidiary) at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary and shall exclude the Fair Market Value of the net
assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary and (ii) the amount of any
Investment shall be the original cost of such Investment plus the cost of all
additional Investments by the Company or any of its Restricted Subsidiaries,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment, reduced by the
payment of dividends or distributions in connection with such Investment or any
other amounts received in respect of such Investment; provided, however, that no
such payment of dividends or distributions or receipt of any such other amounts
shall reduce the amount of any Investment if such payment of dividends or
distributions or receipt of any such amounts would be included in Consolidated
Net Income. If the Company or any Restricted Subsidiary of the Company sells or
otherwise disposes of any Common Stock of any direct or indirect Restricted
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, the Company no longer owns, directly or indirectly, greater than
50% of the outstanding Common Stock of such Restricted Subsidiary, the Company
and/or such Restricted Subsidiary shall be deemed to have made an Investment on
the date of any such sale or disposition equal to the Fair Market Value of the
Common Stock of such Restricted Subsidiary not sold or disposed of.

     "Issue Date" means February 10, 2005, the date of the original issuance of
the Notes.

     "Lenders" has the meaning set forth in the definition of the term "Credit
Agreement."

                                       10
<PAGE>
     "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or similar encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to give a security
interest in any asset).

     "Maturity Date" means February 1, 2010.

     "MRT" means Mineral Resource Technologies, Inc., a Delaware corporation.

     "Net Proceeds" means, with respect to any Asset Sale by any Person, the
aggregate cash or Cash Equivalent proceeds received by such Person and/or its
Affiliates in respect of such Asset Sale, which amount is equal to the excess,
if any, of (i) the cash or Cash Equivalents received by such Person and/or its
Affiliates (including any cash payments received by way of deferred payment
pursuant to, or monetization of, a note or installment receivable or otherwise,
but only as and when received) in connection with such Asset Sale, over (ii) the
sum of (a) the amount of any Indebtedness that is secured by such asset and
which is required to be (and is in fact) repaid by such Person in connection
with such Asset Sale, plus (b) all fees, commissions and other expenses incurred
by such Person in connection with such Asset Sale, plus (c) provision for taxes,
including income taxes, directly attributable to the Asset Sale or to
prepayments or repayments of Indebtedness with the proceeds of such Asset Sale,
plus (d) if such Person is a Restricted Subsidiary, any dividends or
distributions payable to holders of minority interests in such Restricted
Subsidiary from the proceeds of such Asset Sale, plus (e) appropriate amounts to
be provided or established by the Company or any Restricted Subsidiary as a
reserve against any liabilities associated with such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale; provided that upon
the release of any such reserves, such amounts shall constitute "Net Proceeds"
hereunder.

     "Obligations" means any principal, premium, interest (including Additional
Interest), penalties, fees, indemnifications, reimbursement obligations, damages
and other liabilities and obligations payable under this Indenture, any Note or
any other Indenture Document.

     "Offering Circular" means the Final Offering Circular dated February 7,
2005 relating to the issuance of the Initial Notes.

     "Officer" means, with respect to any Person, the Chairman of the Board of
Directors, the Chief Executive Officer, the President, any Vice President, the
Chief Financial Officer, the Treasurer, the Controller or the Secretary of such
Person, or any other officer designated by the Board of Directors serving in a
similar capacity and, with respect to the Trustee or any agent of the Trustee, a
Trust Officer.

     "Officers' Certificate" means a certificate signed on behalf of a Person by
two Officers of such Person, one of whom must be the principal executive
officer, the principal financial officer or the principal accounting officer of
such Person, that meets the requirements set forth in Sections 11.04 and 11.05
of this Indenture.

     "Operating Company Refinancing Event" means the occurrence of one or more
Specified Refinancing Events since the Issue Date involving at least $20.0
million in aggregate principal amount of the 2007 Notes and/or the 2008 Notes.

     "Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee, or, where so specified, to the Issuer,
complying with the requirements of Sections 11.04 and 11.05, as they relate to
the giving of an Opinion of Counsel.

                                       11
<PAGE>
     "Palladium Investors" means Palladium Equity Partners II, LP and certain of
its Affiliates.

     "Permitted Holders" means (i) Jack Bendheim; (ii) each of his spouse,
siblings, ancestors, descendants (whether by blood, marriage or adoption, and
including stepchildren) and the spouses, siblings, ancestors and descendants
thereof (whether by blood, marriage or adoption, and including stepchildren) of
such natural persons, the beneficiaries, estates and legal representatives of
any of the foregoing, the trustee of any bona fide trust of which any of the
foregoing, individually or in the aggregate, are the majority in interest
beneficiaries or grantors, and any corporation, partnership, limited liability
company or other Person in which any of the foregoing, individually or in the
aggregate, own or control a majority in interest; and (iii) all Affiliates
controlled by the individual named in clause (i) above.

     "Permitted Investments" means:

          (i) Investments by the Company or any Restricted Subsidiary of the
     Company in any Person that is or will become immediately after such
     Investment a Restricted Subsidiary of the Company;

          (ii) any investment in cash or Cash Equivalents;

          (iii) Investments in the Company by any Restricted Subsidiary of the
     Company;

          (iv) Investments in accounts and notes receivable acquired in the
     ordinary course of business;

          (v) any notes, obligations or other securities received in connection
     with an Asset Sale that complies with Section 4.16 or any other disposition
     not constituting an Asset Sale;

          (vi) Interest Rate Agreement Obligations and Currency Agreement
     Obligations permitted pursuant to clause (d) of Section 4.12;

          (vii) investments in or acquisitions of Capital Stock or similar
     interests in Persons (other than Affiliates of the Company) received in the
     bankruptcy or reorganization of or by such Person or any exchange of such
     investment with the issuer thereof or taken in settlement of or other
     resolution of claims or disputes; and

          (viii) other Investments made after the Issue Date in an aggregate
     amount at any one time outstanding not to exceed $2.5 million.

     "Permitted Liens" means:

          (i) Liens securing the Notes;

          (ii) leases or subleases granted to others that do not materially
     interfere with the ordinary course of business of the Company and its
     Restricted Subsidiaries;

          (iii) Liens to secure obligations arising from statutory, regulatory,
     contractual or warranty requirements of the Company, including the
     performance of statutory obligations, surety or appeal bonds or performance
     bonds, or landlords', carriers', warehousemen's, mechanics', suppliers',
     materialmen's or other like Liens, in any case incurred in the ordinary
     course of business and rights to offset and set-off;

                                       12
<PAGE>
          (iv) Liens for taxes, assessments or governmental charges or claims
     that are not yet delinquent or that are being contested in good faith by
     appropriate proceedings promptly instituted and diligently concluded;
     provided that any reserve or other appropriate provision as shall be
     required in conformity with GAAP shall have been made therefor;

          (v) judgment Liens not giving rise to an Event of Default so long as
     such Lien is adequately bonded and any appropriate legal proceedings which
     may have been duly initiated for the review of such judgment shall not have
     been finally terminated or the period within which such proceedings may be
     initiated shall not have expired; and

          (vi) easements, rights-of-way, zoning restrictions, title
     irregularities and other similar charges or encumbrances in respect of real
     property not interfering in any material respect with the ordinary conduct
     of the business of the Company.

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

     "Phibro Animal Health" means Phibro Animal Health Corporation, a New York
Corporation, which (i) as of the Issue Date, is a Restricted Subsidiary of the
Company and (ii) upon consummation of the transaction described under the
caption "Use of Proceeds" in the Offering Circular pursuant to which the Initial
Notes are offered and sold, a Wholly Owned Restricted Subsidiary of the Company.

     "Phibro Belgium" means Phibro Animal Health SA (formerly Phibro Animal
Health (Belgium) SPRL).

     "Physical Note" means a Note issued in exchange for interests in a Global
Note in the form of a permanent certificated Note in registered form in
substantially the form set forth in Exhibit A.

     "Pledge Agreement" means the Pledge Agreement, dated as of the Issue Date,
made by the Company in favor of the Collateral Agent, as amended or supplemented
from time to time in accordance with its terms.

     "PMC Sale Transactions" means the following transactions and payments,
including payments required pursuant to the documents evidencing such
transactions: (i) the transfer of ownership to the Palladium Investors of The
Prince Manufacturing Company ("PMC") which would be valued at approximately $21
million; (ii) the reduction of the preferred stock of the Palladium Investors to
$15.2 million (as of September 30, 2003); (iii) the termination of any
obligation of the Company or any Restricted Subsidiary of the Company in respect
of the $2.25 million annual management advisory fee (subject to reinstatement if
these transactions are not consummated on or before December 31, 2003); (iv) a
separate cash payment to the Palladium Investors of $10 million from the recent
sale of MRT; (v) payments by PMC to the Company for central support services for
the three years ending June 30, 2006 of $1 million, $0.5 million and $0.2
million, respectively; (vi) supply arrangements between the Company and PMC with
respect to manganous oxide and red iron oxide; (vii) customary representations,
warranties and indemnities by the Company, and provisions for closing working
capital balance adjustments, settlement of intercompany accounts owed to PMC, a
closing fee payable to Palladium and the agreement of the Company to pay or
reimburse the Palladium Investors for their reasonable out-of-pocket expenses;
and (viii) the establishment by the Company of a $1 million escrow or other
credit support for two years to secure its net working capital and foregoing
indemnification obligations, and indemnification of the Palladium Investors,
payable after the maturity of the Notes, for a portion, at the rate of $0.65 for
every

                                       13
<PAGE>
dollar, of the amount they receive in respect of the disposition of PMC less
than $21 million, up to a maximum payment by the Company of $4 million.

     "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 Capital Stock of any other class of such Person.

     "Private Placement Legend" means the legend initially set forth on the
Initial Notes in the form set forth in Exhibit A as the same may be revised from
time to time to comply with applicable laws and regulations.

     "pro forma" means, with respect to any calculation made or required to be
made pursuant to the terms of this Indenture, a calculation in accordance with
Article 11 of Regulation S-X under the Securities Act.

     "Purchase Money Obligation" means any Indebtedness (as amended, modified,
renewed, refunded, replaced or refinanced) secured by a Lien on assets related
to the business of the Company or the Restricted Subsidiaries, and any additions
and accessions thereto, which are purchased, constructed or improved by the
Company or any Restricted Subsidiary at any time after the Issue Date; provided,
however, that (i) any security agreement or conditional sales or other title
retention contract pursuant to which the Lien on such assets is created
(collectively, a "Security Agreement") shall be entered into within 90 days
after the purchase or substantial completion of the construction or improvement
of such assets and shall at all times be confined solely to the assets so
purchased, constructed or improved, any additions and accessions thereto and any
proceeds therefrom, (ii) at no time shall the aggregate principal amount of the
outstanding Indebtedness secured thereby be increased, except in connection with
the purchase of additions and accessions thereto and except in respect of fees
and other obligations in respect of such Indebtedness and (iii) (A) the
aggregate outstanding principal amount of Indebtedness secured thereby
(determined on a per asset basis in the case of any additions and accessions)
shall not at the time such Security Agreement is entered into exceed 100% of the
purchase price or cost of construction or improvement to the Company or any
Restricted Subsidiary of the assets subject thereto or (B) the Indebtedness
secured thereby shall be with recourse solely to the assets so purchased,
constructed or improved, any additions and accessions thereto and any proceeds
therefrom.

     "Qualified Institutional Buyer" or "QIB" shall have the meaning specified
in Rule 144A.

     "Record Date" means the Record Dates specified in the Notes.

     "Redemption Date" means, when used with respect to any Note to be redeemed,
the date fixed for such redemption pursuant to this Indenture and the Notes.

     "Redemption Price" means, when used with respect to any Note to be
redeemed, the price fixed for such redemption, including principal and premium,
if any, pursuant to this Indenture and the Notes.

     "Registration Rights Agreement" means the Registration Rights Agreement
dated as of the Issue Date between the Issuer and the Initial Purchaser.

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

     "Related Business" means any business that is reasonably related to or
complementary to the businesses conducted by the Company, or the Restricted
Subsidiaries, on the Issue Date.

                                       14
<PAGE>
     "Restricted Investment" means an Investment other than a Permitted
Investment.

     "Restricted Payment" means, with respect to any Person (i) any dividend or
other distribution declared or paid on any Capital Stock of such Person (other
than (A) dividends or distributions payable solely in Capital Stock (other than
Disqualified Stock) of such Person, (B) dividends or distributions payable to
such Person or any Restricted Subsidiary of such Person and (C) dividends or
distributions payable to the Company); (ii) any payment to purchase, redeem or
otherwise acquire or retire for value any Capital Stock of such Person, other
than Capital Stock held by the Company or its Restricted Subsidiaries; (iii) any
payment to purchase, redeem, defease or otherwise acquire or retire for value,
prior to any scheduled maturity, repayment or sinking fund payment, any
Subordinated Indebtedness other than a purchase, redemption, defeasance or other
acquisition or retirement for value that is paid for with the proceeds of
Refinancing Indebtedness that is permitted under clause (b)(4) of Section 4.12;
or (iv) any Restricted Investment. A Permitted Investment is not a Restricted
Payment.

     "Restricted Security" has the meaning assigned to such term in
Rule144(a)(3) under the Securities Act; provided, however, that the Trustee
shall be entitled to request and conclusively rely on an Opinion of Counsel with
respect to whether any Note constitutes a Restricted Security.

     "Restricted Subsidiary" means each direct or indirect Subsidiary of the
Company other than an Unrestricted Subsidiary.

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

     "Secured Parties" means the Collateral Agent, the Trustee and the Holders.

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

     "Security Agreement" means the Security Agreement, dated as of the Issue
Date, made by the Company in favor of the Collateral Agent, as amended or
supplemented from time to time in accordance with its terms.

     "Security Interests" means the Liens on the Collateral created by this
Indenture and the Collateral Agreements in favor of the Collateral Agent for the
benefit of the Secured Parties.

     "Series C Preferred Stock" means the Series C Redeemable Participating
Preferred Stock of Phibro Animal Health.

     "Shareholders Agreements" means (i) the Shareholders Agreement dated
December 29, 1987 by and between Marvin S. Sussman and Phibro Animal Health;
(ii) the Shareholders Agreement dated February 21, 1995 among Phibro-Tech, Inc.,
I. David Paley, Nathan Z. Bistricer and James O. Herlands; (iii) the Severance
Agreement between Phibro-Tech, Inc. and James O. Herlands, dated February 21,
1995 and (iv) the Stockholders Agreement, dated as of November 30, 2000, among,
inter alia, Phibro Animal Health, Jack C. Bendheim and the Palladium Investors;
each as amended and in effect on the Issue Date, and as thereafter amended,
except for any amendment subsequent to the Issue Date which causes the terms of
such agreement to be less favorable to the Company or Phibro-Tech, as the case
may be.

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

                                       15
<PAGE>
     "Specified Refinancing Event" means:

          (i) any redemption, repayment, retirement or defeasance of;

          (ii) any acquisition or purchase by the Company, any of its
     Subsidiaries or any of their respective Affiliates of;

          (iii) any extension or waiver (or exchange that results in the
     extension) of any payment date in respect of interest on, or principal in
     respect of; or

          (iv) any other modification to the 2007 Notes, the 2008 Notes, the
     2007 Indenture and/or the 2008 Indenture that results in (A) the extension
     or waiver of any payment date in respect of interest on, or principal in
     respect of, or (B) the redemption, repayment, retirement or defeasance of,

in each case, any 2007 Notes or any 2008 Notes.

     "Subordinated Indebtedness" means Indebtedness of the Company that is
subordinated in right of payment to the Notes.

     "Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding voting power of the Voting Stock of which is owned or controlled,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person, or by such Person and one or more other Subsidiaries thereof, or
(ii) any limited partnership of which such Person or any Subsidiary of such
Person is a general partner, or (iii) any other Person (other than a corporation
or limited partnership) in which such Person or one or more other Subsidiaries
of such Person, or such Person and one or more other Subsidiaries thereof,
directly or indirectly, has more than 50% of the outstanding partnership or
similar interests or has the power, by contract or otherwise, to direct or cause
the direction of the policies, management and affairs thereof.

     "Subsidiary Permitted Lien" means:

          (i) Liens securing Indebtedness under the Credit Agreement to the
     extent such Indebtedness is permitted under clause (d)(i), (viii), (ix) or
     (xii) of Section 4.12;

          (ii) Liens securing the 2007 Notes and guarantees thereof; and

          (iii) Liens securing Indebtedness of Foreign Restricted Subsidiaries
     to the extent such Indebtedness is permitted under clause (d)(x) or (xii)
     of Section 4.12.

     "Surviving Person" means, with respect to any Person involved in or that
makes any Disposition, the Person formed by or surviving such Disposition or the
Person to which such Disposition is made.

     "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb), as amended, as in effect on the date of this Indenture, except as
otherwise provided in Section 9.03.

     "Transactions" means, collectively, the PMC Sale Transactions and the
Belgium Plant Sale and Virginiamycin Production Transactions.

     "Trustee" means HSBC Bank USA, National Association, as trustee, and any
successor thereto in accordance with the terms of this Indenture.

                                       16
<PAGE>
     "Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer this Indenture, or in the case of a
successor trustee, an officer assigned to the department, division or group
performing the corporation trust work of such successor and assigned to
administer this Indenture.

     "United States Dollars," "Dollar," "dollar" and the symbol "$" means lawful
money of the United States of America.

     "Unrestricted Subsidiary" means any Subsidiary of the Company designated as
such pursuant to and in compliance with Section 4.14 and not redesignated a
Restricted Subsidiary in compliance with such Section.

     "U.S. Government Obligations" means direct obligations of, and obligations
guaranteed by, the United States of America for the payment of which the full
faith and credit of the United States of America is pledged.

     "U.S. Legal Tender" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.

     "Voting Stock" of a Person means Capital Stock of such Person of the class
or classes pursuant to which the holders thereof have the general voting power
under ordinary circumstances to elect at least a majority of the board of
directors, managers or trustees of such Person (irrespective of whether or not
at the time stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).

     "Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment at final maturity, in respect thereof, with (b)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
aggregate principal amount of such Indebtedness.

     "Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary with
respect to which all of the outstanding voting securities (other than directors'
qualifying shares or nominee shares held by a third party to comply with local
law) of which are owned, directly or indirectly, by the Company or a Surviving
Person of any Disposition involving the Company, as the case may be.

     SECTION 1.02. Other Definitions.

<TABLE>
<CAPTION>
     Term                                Defined in Section
     ----                                ------------------
<S>                                      <C>
     "Additional Notes"                  2.02
     "Agent Members"                     2.16
     "Asset Sale Offer"                  4.16(c)
     "Asset Sale Offer Purchase Date"    4.16(d)
     "Asset Sale Offer Trigger Date"     4.16(c)
     "Authenticating Agent"              2.02
     "Change of Control Offer"           4.15(b)
     "Change of Control Purchase Date"   4.15(b)
     "Collateral Agent"                  Preamble
     "Company"                           Preamble
</TABLE>

                                       17
<PAGE>
<TABLE>
<CAPTION>
     Term                                 Defined in Section
     ----                                 ------------------
<S>                                       <C>
     "Company Refinancing Indebtedness"   4.12(b)(4)
     "covenant defeasance"                8.02(b)
     "Default Interest Payment Date"      2.12
     "defeasance"                         8.02(a)
     "Designation"                        4.14(a)
     "Designation Amount"                 4.14(a)(iii)
     "Escrow Redemption"                  3.03(b)
     "Events of Default"                  6.01
     "Excess Proceeds"                    4.16(b)
     "Exchange Notes"                     Preamble
     "Existing Indebtedness"              4.12(d)(ii)
     "Global Notes"                       2.01
     "IAI Global Note"                    2.01
     "incur"                              4.12(a)
     "independent"                        10.03(c)
     "Initial Notes"                      Preamble
     "Issuer"                             Preamble
     "Legal Holiday"                      11.07
     "Mandatory Redemption Date"          3.03(a)
     "Notes"                              Preamble
     "Paying Agent"                       2.03
     "Permitted Indebtedness"             4.12(d)
     "Permitted Payments"                 4.10(b)
     "PIK Notes"                          Preamble
     "Private Placement Legend"           2.15
     "QIB Global Note"                    2.01
     "Redesignation"                      4.14(b)
     "refinancing"                        4.12(b)(4)
     "Refinancing Indebtedness"           4.12(d)(v)
     "Registrar"                          2.03
     "Regulation S Global Note"           2.01
     "Released Interests"                 10.04(a)
     "Required Filing Dates"              4.08
     "Trustee"                            Preamble
     "Valuation Date"                     10.04(b)
</TABLE>

     SECTION 1.03. TIA. Whenever this Indenture refers to a provision of the
TIA, such provision is incorporated by reference in, and made a part of, this
Indenture. The following TIA terms used in this Indenture have the following
meanings:

          "indenture securities" means the Notes.

          "indenture security holder" means a Holder.

          "indenture to be qualified" means this Indenture.

          "indenture trustee" or "institutional trustee" means the Trustee.

                                       18
<PAGE>
          "obligor" on the indenture securities means the Company or any other
     obligor on the Notes.

     All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule and
not otherwise defined herein have the meanings assigned to them therein.

     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 of any date of determination;

     (3) "or" is not exclusive;

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

     (5) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision;

     (6) when the words "includes" or "including" are used herein, they shall be
deemed to be followed by the words "without limitation"; and

     (7) any reference to a statute, law or regulation means that statute, law
or regulation as amended and in effect from time to time and includes any
successor statute, law or regulation; provided, however, that any reference to
the Bankruptcy Law shall mean the Bankruptcy Law as applicable to the relevant
case.

                                   ARTICLE TWO

                                 THE SECURITIES

     SECTION 2.01. Form and Dating. The Initial Notes and the Trustee's
certificate of authentication relating thereto shall be substantially in the
form of Exhibit A hereto. The Exchange Notes and the Trustee's certificate of
authentication relating thereto shall be substantially in the form of Exhibit B
hereto. The Notes may have notations, legends or endorsements required by law,
stock exchange rule or depository rule or usage. The Issuer and the Trustee
shall approve the form of the Notes and any notation, legend or endorsement on
them. Each Note shall be dated the date of its issuance and shall show the date
of its authentication.

     The terms and provisions contained in the Notes annexed hereto as Exhibits
A and B shall constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, the Issuer and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.

     Notes offered and sold (i) in reliance on Rule 144A, (ii) to Institutional
Accredited Investors or (iii) in reliance on Regulation S, shall be issued
initially in the form of one or more permanent global Notes in registered form,
substantially in the form set forth in Exhibit A (the "Global Notes"), deposited
with the Trustee, as custodian for the Depository, duly executed by the Issuer
and authenticated by the

                                       19
<PAGE>
Trustee as hereinafter provided, and shall bear the legend set forth in Exhibit
A. One or more separate Global Notes shall be issued to represent Notes held by
(i) Qualified Institutional Buyers (a "QIB Global Note"), (ii) Institutional
Accredited Investors (an "IAI Global Note"), and (iii) Persons acquiring Notes
in reliance on Regulation S (a "Regulation S Global Note"). The aggregate
principal amount of any Global Note may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
the Depository, as hereinafter provided.

     All Notes offered and sold in reliance on Regulation S shall remain in the
form of Global Notes until the consummation of the Exchange Offer pursuant to
the Registration Rights Agreement; provided, however, that all of the time
periods specified in the Registration Rights Agreement to be complied with by
the Issuer have been so complied with.

     SECTION 2.02. Execution and Authentication; Aggregate Principal Amount. Two
Officers, or an Officer and an Assistant Secretary of the Issuer, shall sign, or
one Officer shall sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Notes for the Issuer by manual or facsimile
signature.

     If an Officer or Assistant Secretary whose signature is on a Note was an
Officer or Assistant Secretary at the time of such execution but no longer holds
that office or position at the time the Trustee authenticates the Note, the Note
shall nevertheless be valid.

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

     The Trustee shall authenticate (i) $29,000,000 principal amount of Initial
Notes, (ii) PIK Notes, from time to time after the Issue Date but prior to the
Maturity Date for issue only in lieu of the payment of interest in cash of
interest payable with respect to the Notes (including previously issued PIK
Notes) prior to the Maturity Date in an aggregate principal amount equal to the
amount of such interest (rounded to the nearest whole cent), (iii) Exchange
Notes, from time to time after the Issue Date for issue only in exchange for a
like principal amount of Initial Notes or PIK Notes, and (iv) subject to
compliance with Section 4.12, additional Notes (together with PIK Notes,
"Additional Notes") for original issue after the Issue Date in an unlimited
amount in each case upon written orders of the Issuer in the form of an
Officers' Certificate. Each such written order shall specify the amount of Notes
to be authenticated and the date on which the Notes are to be authenticated,
whether the Notes are to be Initial Notes, Exchange Notes or Additional Notes
and whether the Notes are to be issued as Physical Notes or Global Notes or such
other information as the Trustee may reasonably request.

     In the event that the Issuer shall issue and the Trustee shall authenticate
any Additional Notes, the Issuer shall use its reasonable efforts to obtain the
same "CUSIP" number for such Notes as is printed on the Notes outstanding at
such time; provided, however, that if any series of Notes issued under this
Indenture subsequent to the Issue Date is determined, pursuant to an Opinion of
Counsel of the Issuer in a form reasonably satisfactory to the Trustee, to be a
different class of security than the Notes outstanding at such time for federal
income tax purposes, the Issuer may obtain a "CUSIP" number for such Notes that
is different than the "CUSIP" number printed on the Notes then outstanding.
Notwithstanding the foregoing, all Notes issued under this Indenture shall vote
and consent together on all matters as one class and no series of Notes will
have the right to vote or consent as a separate class on any matter.

     The Trustee may appoint an authenticating agent (the "Authenticating
Agent") reasonably acceptable to the Issuer to authenticate Notes. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this

                                       20
<PAGE>
Indenture to authentication by the Trustee includes authentication by such
Authenticating Agent. An Authenticating Agent has the same rights as an Agent to
deal with the Issuer or with any Affiliate of the Issuer.

     The Notes shall be issuable in fully registered form only, without coupons;
provided, that the Notes (other than PIK Notes or Exchange Notes issued in
exchange for PIK Notes) shall be issued in denominations of $1,000 or any
integral multiple thereof.

     The Trustee is authorized to enter into a letter of representation with the
Depository in the form provided to the Trustee by the Issuer and to act in
accordance with such letter.

     SECTION 2.03. Registrar and Paying Agent. The Issuer shall maintain (or
appoint any Person (that satisfies the requirements of being the "Trustee"
hereunder as set forth in Section 7.10) to so maintain on its behalf) an office
or agency (which shall be located in the Borough of Manhattan in the City of New
York, State of New York) where (a) Notes may be presented or surrendered for
registration of transfer or for exchange ("Registrar"), (b) Notes may be
presented or surrendered for payment ("Paying Agent") and (c) notices and
demands to or upon the Issuer in respect of the Notes and this Indenture may be
served. The Registrar shall keep a register of the Notes and of their transfer
and exchange. The Issuer may have one or more Co-Registrars and one or more
additional Paying Agents reasonably acceptable to the Trustee. The term "Paying
Agent" or "Registrar" includes any additional Paying Agent or Registrar, as the
case may be. The Issuer and any of its Subsidiaries may act as the Paying Agent
or Registrar.

     The Issuer shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture, which agreement shall incorporate the provisions
of the TIA and implement the provisions of this Indenture that relate to such
Agent. The Issuer shall notify the Trustee of the name and address of any such
Agent. If the Issuer shall fail to maintain a Registrar or Paying Agent the
Trustee shall act as such.

     The Issuer initially appoints the Trustee as Registrar, Paying Agent, agent
for service of demands and notices in connection with the Notes and agent to so
maintain the office or agency described under the first paragraph of this
Section 2.03, until such time as the Trustee has resigned or a successor has
been appointed. Any of the Registrar, the Paying Agent or any other agent may
resign upon 30 days' notice to the Issuer. The Issuer may change any Paying
Agent and Registrar without notice to the Holders.

     SECTION 2.04. Paying Agent to Hold Assets in Trust. The Issuer shall
require each Paying Agent other than the Trustee to agree in writing that such
Paying Agent shall hold in trust for the benefit of the Holders or the Trustee
all assets held by the Paying Agent for the payment of principal of, premium, if
any, or interest on, the Notes (whether such assets have been distributed to it
by the Issuer or any other obligor on the Notes), and the Issuer and the Paying
Agent shall notify the Trustee of any Default by the Issuer (or any other
obligor on the Notes) in making any such payment. The Issuer at any time may
require a Paying Agent to distribute all assets held by it to the Trustee and
account for any assets disbursed and the Trustee may at any time during the
continuance of any payment Default, upon written request to a Paying Agent,
require such Paying Agent to distribute all assets held by it to the Trustee and
to account for any assets distributed. Upon distribution to the Trustee of all
assets that shall have been delivered by the Issuer to the Paying Agent, the
Paying Agent shall have no further liability for such assets. If the Issuer 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.

     SECTION 2.05. Holder Lists. The Trustee shall preserve in as current a form
as is reasonably practicable the most recent list available to it of the names
and addresses of the Holders and shall

                                       21
<PAGE>
otherwise comply with TIA ss. 312(a). If the Trustee is not the Registrar, the
Issuer shall furnish or cause the Registrar to furnish to the Trustee three (3)
Business Days (or such shorter period as the Trustee may expressly agree to)
before each Record Date and at such other times as the Trustee may request in
writing a list as of such date and in such form as the Trustee may reasonably
require of the names and addresses of the Holders, which list may be
conclusively relied upon by the Trustee, and the Issuer shall otherwise comply
with TIA ss. 312(a).

     SECTION 2.06. Transfer and Exchange. Subject to Sections 2.16 and 2.17,
when Notes are presented to the Registrar or a Co-Registrar with a request to
register a transfer or to exchange such Notes for an equal principal amount of
Notes or other authorized denominations, the Registrar or Co-Registrar shall
register the transfer or make the exchange as requested if its requirements for
such transaction are met; provided, however, that the Notes presented or
surrendered for registration of transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Registrar or Co-Registrar, duly executed by the Holder thereof
or his attorney duly authorized in writing. To permit registration of transfers
and exchanges, the Issuer shall execute and the Trustee shall authenticate Notes
at the Registrar's or Co-Registrar's request. No service charge shall be made
for any registration of transfer or exchange, but the Issuer may require payment
of a sum sufficient to cover any transfer tax, fee or similar governmental
charge payable in connection therewith (other than any such transfer taxes or
similar governmental charge payable upon exchanges or transfers pursuant to
Section 2.10, 3.07, 4.15, 4.16 or 9.05, in which event the Issuer shall be
responsible for the payment of such taxes).

     The Registrar or Co-Registrar shall not be required to register the
transfer of or exchange of any Note (i) during a period beginning at the opening
of business on the day which is 15 days before the mailing of a notice of
redemption of Notes and ending at the close of business on the day of such
mailing and (ii) selected for redemption in whole or in part pursuant to Article
Three, except the unredeemed portion of any Note being redeemed in part.

     Any Holder of a beneficial interest in a Global Note shall, by acceptance
of such Global Note, agree that transfers of beneficial interests in such Global
Note may be effected only through a book entry system maintained by the Holder
of such Global Note (or its agent), and that ownership of a beneficial interest
in the Note shall be required to be reflected in a book entry system.

     SECTION 2.07. Replacement Notes. If a mutilated Note is surrendered to the
Trustee or if the Holder of a Note claims that the Note has been lost, destroyed
or wrongfully taken, the Issuer shall issue and the Trustee shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Issuer, such Holder must provide an indemnity bond or other
indemnity of reasonable tenor, sufficient in the reasonable judgment of the
Issuer and the Trustee, to protect the Issuer, the Trustee or any Agent from any
loss which any of them may suffer if a Note is replaced. Every replacement Note
shall constitute an obligation of the Issuer.

     SECTION 2.08. Outstanding Notes. Notes outstanding at any time are all the
Notes that have been authenticated by the Trustee except those canceled by it,
those delivered to it for cancellation and those described in this Section as
not outstanding. Subject to the provisions of Section 2.09, a Note does not
cease to be outstanding because the Issuer or any of its Affiliates holds the
Note.

     If a Note is replaced pursuant to Section 2.07 (other than a mutilated Note
surrendered for replacement), it ceases to be outstanding unless the Trustee
receives proof satisfactory to it that the replaced Note is held by a bona fide
purchaser. A mutilated Note ceases to be outstanding upon surrender of such Note
and replacement thereof pursuant to Section 2.07.

                                       22
<PAGE>
     If on a Redemption Date or the Maturity Date the Paying Agent holds U.S.
Legal Tender sufficient to pay all of the principal, premium, if any, and
interest due on the Notes payable on that date and is not prohibited from paying
such money to the Holders thereof pursuant to the terms of this Indenture, then
on and after that date such Notes shall be deemed not to be outstanding and
interest on them shall cease to accrue.

     SECTION 2.09. Treasury Notes. In determining whether the Holders of the
required principal amount of Notes have concurred in any direction, waiver,
consent or notice, Notes owned by the Issuer or an Affiliate of the Issuer shall
be considered as though they are not outstanding, except that for the purposes
of determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes which a Trust Officer of the Trustee
actually knows are so owned shall be so considered. The Issuer shall notify the
Trustee, in writing, when either it or, to its knowledge, any of its Affiliates
repurchases or otherwise acquires Notes, of the aggregate principal amount of
such Notes so repurchased or otherwise acquired and such other information as
the Trustee may reasonably request and the Trustee shall be entitled to rely
thereon.

     SECTION 2.10. Temporary Notes. Until definitive Notes are ready for
delivery, the Issuer may prepare and the Trustee shall authenticate temporary
Notes upon receipt of a written order of the Issuer in the form of an Officers'
Certificate. The Officers' Certificate shall specify the amount of temporary
Notes to be authenticated and the date on which the temporary Notes are to be
authenticated. Temporary Notes shall be substantially in the form of definitive
Notes but may have variations that the Issuer considers appropriate for
temporary Notes and so indicate in the Officers' Certificate. Without
unreasonable delay, the Issuer shall prepare, and the Trustee shall
authenticate, upon receipt of a written order of the Issuer pursuant to Section
2.02, definitive Notes in exchange for temporary Notes.

     SECTION 2.11. Cancellation. The Issuer at any time may deliver Notes to the
Trustee for cancellation. The Registrar and the Paying Agent shall forward to
the Trustee any Notes surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent,
and no one else, shall cancel and, at the written direction of the Issuer, shall
dispose, in its customary manner, of all Notes surrendered for transfer,
exchange, payment or cancellation. Subject to Section 2.07, the Issuer may not
issue new Notes to replace Notes that it has paid for or delivered to the
Trustee for cancellation. If the Issuer shall acquire any of the Notes, such
acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Notes unless and until the same are surrendered
to the Trustee for cancellation pursuant to this Section 2.11.

     SECTION 2.12. Defaulted Interest. The Issuer will pay interest on overdue
principal from time to time on demand at 1% per annum in excess of the rate of
interest then borne by the Notes. The Issuer shall, to the extent lawful, pay
interest on overdue installments of interest (without regard to any applicable
grace periods) from time to time on demand at 1% per annum in excess of the rate
of interest then borne by the Notes. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months, and, in the case of a partial
month, the actual number of days elapsed.

     If the Issuer defaults in a payment of interest on the Notes, it shall pay
the defaulted interest, plus (to the extent lawful) any interest payable on the
defaulted interest, to the Persons who are (i) Holders on a subsequent special
record date, if it so elects, which special record date shall be the fifteenth
day next preceding the date fixed by the Issuer for the payment of defaulted
interest or the next succeeding Business Day if such date is not a Business Day,
or (ii) if the Issuer does not elect a special record date, Holders on the next
Record Date, which payment shall be made on the next regular Interest Payment
Date. The Issuer shall notify the Trustee in writing of the amount of defaulted
interest proposed to be paid on each Note and the date of the proposed payment
(a "Default Interest Payment Date"), and at the same time the Issuer shall
deposit with the Trustee an amount of money equal to the aggregate amount

                                       23
<PAGE>
proposed to be paid in respect of such defaulted interest or shall make
arrangements satisfactory to the Trustee for such deposit on or prior to the
date of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such defaulted interest as provided in
this Section; provided, however, that in no event shall the Issuer deposit
monies proposed to be paid in respect of defaulted interest later than 10:30
a.m. New York City time on the proposed Default Interest Payment Date. At least
15 days before the subsequent special record date, the Issuer shall mail (or
cause to be mailed) to each Holder, as of a recent date selected by the Issuer,
with a copy to the Trustee, a notice that states the subsequent special record
date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid. Notwithstanding the
foregoing, any interest which is paid prior to the expiration of the 30-day
period set forth in Section 6.01(a) shall be paid to Holders as of the regular
record date for the Interest Payment Date for which interest has not been paid.
Notwithstanding the foregoing, the Issuer may make payment of any defaulted
interest in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange.

     SECTION 2.13. CUSIP Number. The Issuer in issuing the Notes shall use
"CUSIP" numbers. The Trustee shall use the CUSIP number in notices of redemption
or exchange as a convenience to Holders; provided, however, that no
representation is hereby deemed to be made by the Trustee as to the correctness
or accuracy of the CUSIP number printed in the notice or on the Notes, and that
reliance may be placed only on the other identification numbers printed on the
Notes. The Issuer shall promptly notify the Trustee of any change in the CUSIP
numbers.

     SECTION 2.14. Deposit of Monies. Prior to 10:30 a.m. New York City time on
each Interest Payment Date, Maturity Date, Redemption Date, Change of Control
Purchase Date and Asset Sale Offer Purchase Date, the Issuer shall have
deposited with the Paying Agent in immediately available funds money sufficient
to make cash payments, if any, due on such Interest Payment Date, Maturity Date,
Redemption Date, Change of Control Purchase Date and Asset Sale Offer Purchase
Date, as the case may be, in a timely manner which permits the Paying Agent to
remit payment to the Holders on such Interest Payment Date, Maturity Date,
Redemption Date, Change of Control Purchase Date and Asset Sale Offer Purchase
Date, as the case may be.

     SECTION 2.15. Restrictive Legends. Each Global Note and Physical Note that
constitutes a Restricted Security shall bear the legend (the "Private Placement
Legend") as set forth in Exhibit A (as the same may be revised from time to time
to comply with applicable laws and regulations) on the face thereof until after
the second anniversary of the later of the Issue Date and the last date on which
the Issuer or any Affiliate of the Issuer was the owner of such Note (or any
predecessor security) (or such shorter period of time as permitted by Rule 144
under the Securities Act or any successor provision thereunder, unless otherwise
agreed by the Issuer and the Holder thereof) (or such longer period of time as
may be required under the Securities Act or applicable state securities laws in
the opinion of counsel for the Issuer).

     Each Global Note shall also bear the legend as set forth in Exhibit A.

     SECTION 2.16. Book-Entry Provisions for Global Notes. (a) The Global Notes
initially shall (i) be registered in the name of the Depository or the nominee
of such Depository, (ii) be delivered to the Trustee as custodian for such
Depository, and (iii) bear the legends as set forth in Exhibit A.

     Members of, or participants in, the Depository ("Agent Members") shall have
no rights under this Indenture with respect to any Global Note held on their
behalf by the Depository, or the Trustee as its custodian, or under the Global
Notes, and the Depository may be treated by the Issuer, the Trustee and any
Agent of the Issuer or the Trustee as the absolute owner of such Global Note for
all purposes

                                       24
<PAGE>
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Issuer, the Trustee or any Agent of the Issuer or the Trustee from giving effect
to any written certification, proxy or other authorization furnished by the
Depository or impair, as between the Depository and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
Holder of any Note.

     (b) Transfers of a Global Note shall be limited to transfers in whole, but
not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in a Global Note may be transferred or exchanged
for Physical Notes in accordance with the rules and procedures of the Depository
and the provisions of Section 2.17. In addition, Physical Notes shall be
transferred to all beneficial owners in exchange for their beneficial interests
in a Global Note if (i) the Depository notifies the Issuer that it is unwilling
or unable to continue as Depository for the Global Notes and a successor
depository is not appointed by the Issuer within 90 days of such notice or (ii)
an Event of Default has occurred and is continuing and the Registrar has
received a written request from the Depository to issue Physical Notes.

     (c) In connection with any transfer or exchange of a portion of the
beneficial interest in a Global Note to beneficial owners pursuant to paragraph
(b) of this Section 2.16, the Registrar shall (if one or more Physical Notes are
to be issued) reflect on its books and records the date and a decrease in the
principal amount of such Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Issuer
shall execute, and the Trustee shall authenticate and deliver, one or more
Physical Notes of like tenor and amount.

     (d) In connection with the transfer of an entire Global Note to beneficial
owners pursuant to paragraph (b) of this Section 2.16, such Global Note shall be
deemed to be surrendered to the Trustee for cancellation, and the Issuer shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depository in exchange for its beneficial interest in
the Global Note, an equal aggregate principal amount of Physical Notes of
authorized denominations.

     (e) Any Physical Note constituting a Restricted Security delivered in
exchange for an interest in a Global Note pursuant to paragraph (b) or (c) of
this Section 2.16 shall, except as otherwise provided by paragraphs (d) and (f)
of Section 2.17, bear the Private Placement Legend.

     (f) The Holder of a Global Note may grant proxies and otherwise authorize
any Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture, the Notes.

     SECTION 2.17. Registration of Transfers and Exchanges. (a) Transfer and
Exchange of Physical Notes. When Physical Notes are presented to the Registrar
or Co-Registrar with a request:

          (i) to register the transfer of the Physical Notes; or

          (ii) to exchange such Physical Notes for an equal number of Physical
     Notes of other authorized denominations,

the Registrar or Co-Registrar shall register the transfer or make the exchange
as requested if the requirements under this Indenture as set forth in this
Section 2.17 for such transactions are met; provided, however, that the Physical
Notes presented or surrendered for registration of transfer or exchange:

          (i) shall be duly endorsed or accompanied by a written instrument of
     transfer in form satisfactory to the Registrar or Co-Registrar, duly
     executed by the Holder thereof or his attorney-in-fact duly authorized in
     writing; and

                                       25
<PAGE>
          (ii) in the case of Physical Notes the offer and sale of which have
     not been registered under the Securities Act, Physical Notes shall be
     accompanied, in the sole discretion of the Issuer, by the following
     additional information and documents, as applicable:

          (1)  if such Physical Note is being delivered to the Registrar or
               Co-Registrar by a Holder for registration in the name of such
               Holder, without transfer, a certification from such Holder to
               that effect (substantially in the form of Exhibit E hereto); or

          (2)  if such Physical Note is being transferred to a Qualified
               Institutional Buyer in accordance with Rule 144A, a certification
               to that effect (substantially in the form of Exhibit E hereto);
               or

          (3)  if such Physical Note is being transferred to an Institutional
               Accredited Investor, delivery of a certification to that effect
               (substantially in the form of Exhibit E hereto) and a Transferee
               Certificate for Institutional Accredited Investors substantially
               in the form of Exhibit C hereto and an Opinion of Counsel
               reasonably satisfactory to the Issuer to the effect that such
               transfer is in compliance with the Securities Act; or

          (4)  if such Physical Note is being transferred in reliance on
               Regulation S, delivery of a certification to that effect
               (substantially in the form of Exhibit E hereto) and a Transferee
               Certificate for Regulation S Transfers substantially in the form
               of Exhibit D hereto and an Opinion of Counsel reasonably
               satisfactory to the Issuer to the effect that such transfer is in
               compliance with the Securities Act; or

          (5)  if such Physical Note is being transferred in reliance on Rule
               144 under the Securities Act, delivery of a certification to that
               effect (substantially in the form of Exhibit E hereto) and an
               Opinion of Counsel reasonably satisfactory to the Issuer to the
               effect that such transfer is in compliance with the Securities
               Act; or

          (6)  if such Physical Note is being transferred in reliance on another
               exemption from the registration requirements of the Securities
               Act, a certification to that effect (substantially in the form of
               Exhibit E hereto) and an Opinion of Counsel reasonably acceptable
               to the Issuer to the effect that such transfer is in compliance
               with the Securities Act.

     (b) Restrictions on Transfer of a Physical Note for a Beneficial Interest
in a Global Note. Unless otherwise agreed to by the Issuer, a Physical Note may
not be exchanged for a beneficial interest in a Global Note except upon
satisfaction of the requirements set forth below. Upon receipt by the Registrar
or Co-Registrar of a Physical Note, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Registrar or Co-Registrar,
together with:

          (i) certification, substantially in the form of Exhibit E hereto, that
     such Physical Note is being transferred (A) to a Qualified Institutional
     Buyer, (B) to an Institutional Accredited Investor or (C) in reliance on
     Regulation S and, in the case of (II), a Transferee Certificate for
     Institutional Accredited Investors substantially in the form of Exhibit C
     hereto and, in the case of (C), a Transferee Certificate for Regulation S
     Transfers substantially in the form of Exhibit D hereto and in each case an
     Opinion of Counsel reasonably satisfactory to the Issuer to the effect that
     such transfer is in compliance with the Securities Act; and

                                       26
<PAGE>
          (ii) written instructions from the Issuer directing the Registrar or
     Co-Registrar to make, or to direct the Depository to make, an endorsement
     on the applicable Global Note to reflect an increase in the aggregate
     amount of the Notes represented by the Global Note, then the Registrar or
     Co-Registrar shall cancel such Physical Note and cause, or direct the
     Depository to cause, in accordance with the standing instructions and
     procedures existing between the Depository and the Registrar or
     Co-Registrar, the principal amount of Notes represented by the applicable
     Global Note to be increased accordingly. If no Global Note representing
     Notes held by Qualified Institutional Buyers, Institutional Accredited
     Investors or Persons acquiring Notes in reliance on Regulation S, as the
     case may be, is then outstanding, the Issuer shall issue and the Trustee
     shall, upon written instructions from the Issuer in accordance with Section
     2.02, authenticate such Global Note in the appropriate principal amount.

     (c) Transfer and Exchange of Global Notes. The transfer and exchange of
Global Notes or beneficial interests therein shall be effected through the
Depository in accordance with this Indenture (including the restrictions on
transfer set forth herein) and the procedures of the Depository therefor. Upon
receipt by the Registrar or Co-Registrar of written instructions, or such other
instruction as is customary for the Depository, from the Depository or its
nominee, requesting the registration of transfer of an interest in a QIB Global
Note, an IAI Global Note or a Regulation S Global Note, as the case may be, to
another type of Global Note, together with the applicable Global Notes (or, if
the applicable type of Global Note required to represent the interest as
requested to be transferred is not then outstanding, only the Global Note
representing the interest being transferred), the Registrar or Co-Registrar
shall cause, or direct the Depository to cause, in accordance with the standing
instructions and procedures existing between the Depository and the Registrar or
Co-Registrar, the principal amount of Notes represented by the applicable Global
Notes involved in such transfer or exchange to be adjusted accordingly to
reflect the applicable increase and decrease of the principal amount of Notes
represented by such types of Global Notes, giving effect to such transfer. If
the applicable type of Global Note required to represent the interest as
requested to be transferred is not outstanding at the time of such request, the
Issuer shall issue and the Trustee shall, upon written instructions from the
Issuer in accordance with Section 2.02, authenticate a new Global Note of such
type in principal amount equal to the principal amount of the interest requested
to be transferred. Any such transfer or exchange of Global Notes or beneficial
interests therein shall be effected through the Depository in accordance with
this Indenture (including the restrictions on transfer as contemplated herein)
and the procedure of the Depository therefor. Unless otherwise agreed to by the
Issuer, any request for the registration of the transfer of an interest in a QIB
Global Note, an IAI Global Note or a Regulation S Global Note to another type of
Global Note, must be accompanied by a certificate from the transferor,
substantially in the form of Exhibit E hereto, that the transferee is either (i)
a Qualified Institutional Buyer in accordance with Rule 144A, (ii) an
Institutional Accredited Investor, or (iii) relying on Regulation S, and in the
case of (ii), a Transferee Certificate for Institutional Accredited Investors
substantially in the form of Exhibit C hereto and, in the case of (iii), a
Transferee Certificate for Regulation S Transfers substantially in the form of
Exhibit D hereto and in each case an Opinion of Counsel reasonably satisfactory
to the Issuer to the effect that such transfer is in compliance with the
Securities Act.

     (d) Transfer of a Beneficial Interest in a Global Note for a Physical Note.

          (i) Any Person having a beneficial interest in a Global Note may upon
     request exchange such beneficial interest for a Physical Note. Upon receipt
     by the Registrar or Co-Registrar of written instructions, or such other
     form of instructions as is customary for the Depository, from the
     Depository or its nominee on behalf of any Person having a beneficial
     interest in a Global Note and upon receipt by the Trustee of a written
     order or such other form of instructions as is customary for the Depository
     or the Person designated by the Depository as having such a beneficial
     interest containing registration instructions and, in the case of any such

                                       27
<PAGE>
     transfer or exchange of a beneficial interest in Notes the offer and sale
     of which have not been registered under the Securities Act, the following
     additional information and documents:

          (1)  if such beneficial interest is being transferred to the Person
               designated by the Depository as being the beneficial owner, a
               certification from such Person to that effect (substantially in
               the form of Exhibit E hereto); or

          (2)  if such beneficial interest is being transferred to a Qualified
               Institutional Buyer in accordance with Rule l44A, a certification
               to that effect (substantially in the form of Exhibit E hereto);
               or

          (3)  if such beneficial interest is being transferred to an
               Institutional Accredited Investor, delivery of a certification to
               that effect (substantially in the form of Exhibit E hereto) and a
               Certificate for Institutional Accredited Investors substantially
               in the form of Exhibit C hereto and an Opinion of Counsel
               reasonably satisfactory to the Issuer to the effect that such
               transfer is in compliance with the Securities Act; or

          (4)  if such beneficial interest is being transferred in reliance on
               Regulation S, delivery of a certification to that effect
               (substantially in the form of Exhibit E hereto) and a Transferee
               Certificate for Regulation S Transfers substantially in the form
               of Exhibit D hereto and an Opinion of Counsel reasonably
               satisfactory to the Issuer to the effect that such transfer is in
               compliance with the Securities Act; or

          (5)  if such beneficial interest is being transferred in reliance on
               Rule 144 under the Securities Act, delivery of a certification to
               that effect (substantially in the form of Exhibit E hereto) and
               an Opinion of Counsel reasonably satisfactory to the Issuer to
               the effect that such transfer is in compliance with the
               Securities Act; or

          (6)  if such beneficial interest is being transferred in reliance on
               another exemption from the registration requirements of the
               Securities Act, a certification to that effect (substantially in
               the form of Exhibit E hereto) and an Opinion of Counsel
               reasonably satisfactory to the Issuer to the effect that such
               transfer is in compliance with the Securities Act,

     then the Registrar or Co-Registrar will cause, in accordance with the
     standing instructions and procedures existing between the Depository and
     the Registrar or Co-Registrar, the aggregate principal amount of the
     applicable Global Note to be reduced and, following such reduction, the
     Issuer will execute and, upon receipt of an authentication order in the
     form of an Officers' Certificate in accordance with Section 2.02, the
     Trustee will authenticate and deliver to the transferee a Physical Note.

          (ii) Notes issued in exchange for a beneficial interest in a Global
     Note pursuant to this Section 2.17(d) shall be registered in such names and
     in such authorized denominations as the Depository, pursuant to
     instructions from its direct or indirect participants or otherwise, shall
     instruct the Registrar or Co-Registrar in writing. The Registrar or
     Co-Registrar shall deliver such Physical Notes to the Persons in whose
     names such Physical Notes are so registered.

     (e) Restrictions on Transfer and Exchange of Global Notes. Notwithstanding
any other provisions of this Indenture, a Global Note may not be transferred as
a whole except by the Depository to

                                       28
<PAGE>
a nominee of the Depository or by a nominee of the Depository to the Depository
or by any such nominee to a successor Depository or a nominee of such successor
Depository.

     (f) Private Placement Legend. Upon the transfer, exchange or replacement of
Notes not bearing the Private Placement Legend, the Registrar or Co-Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar or Co-Registrar shall deliver only Notes that bear the Private
Placement Legend unless (i) the requested transfer is after the second
anniversary of the Issue Date (provided, however, that neither the Issuer nor
any Affiliate of the Issuer has held any beneficial interest in such Note, or
portion thereof, at any time prior to or on the second anniversary of the Issue
Date unless otherwise agreed by the Issuer) and (ii) there is delivered to the
Registrar or Co-Registrar a certificate and/or, if requested, an Opinion of
Counsel, each reasonably satisfactory to the Issuer and the Trustee to the
effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act.

     (g) General. By its acceptance of any Note bearing the Private Placement
Legend, each Holder of such a Note acknowledges the restrictions on transfer of
such Note set forth in this Indenture and in the Private Placement Legend and
agrees that it will transfer such Note only as provided in this Indenture.

     The Registrar shall retain copies of all letters, notices and other written
communications received pursuant to Section 2.16 or this Section 2.17. The
Issuer shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time during the
Registrar's normal business hours upon the giving of reasonable written notice
to the Registrar.

     (h) Transfers of Notes Held by Affiliates. Any certificate (i) evidencing a
Note that has been transferred to an Affiliate of the Issuer within two years
after the Issue Date, as evidenced by a notation on the Assignment Form for such
transfer or in the representation letter delivered in respect thereof or (ii)
evidencing a Note that has been acquired from an Affiliate (other than by an
Affiliate) in a transaction or a chain of transactions not involving any public
offering, shall, until two years after the last date on which the Issuer or any
Affiliate of the Issuer was an owner of such Note, in each case, bear the
Private Placement Legend, unless otherwise agreed by the Issuer (with written
notice thereof to the Trustee).

     SECTION 2.18. Additional Interest Under Registration Rights Agreement.
Under certain circumstances, the Issuer shall be obligated to pay certain
Additional Interest to the Holders, all as set forth in Section 4 of the
Registration Rights Agreement. The terms thereof are hereby incorporated herein
by reference.

     SECTION 2.19. Issuance of PIK Notes. (a) The Company shall be entitled to
issue PIK Notes under this Indenture, which PIK Notes shall have identical terms
as the Notes in respect of which such PIK Notes are being issued in lieu of the
payment of interest in cash on any Note (including a PIK Note); provided that
the aggregate principal amount thereof shall be equal to the amount of such
interest (rounded to the nearest whole cent).

     (b) With respect to any PIK Notes, the Company shall deliver to the
Trustee:

          (i) no later than the Record Date for the relevant Interest Payment
     Date (which Interest Payment Date shall be prior to the Maturity Date), a
     written notice setting forth the extent to which such interest payment will
     be made in the form of a PIK Note; and

          (ii) no later than one Business Day prior to the relevant interest
     payment date, an order to authenticate and deliver such PIK Notes.

                                       29
<PAGE>
     (c) Any PIK Notes shall, after being executed and authenticated pursuant to
Section 2.02, be (i) delivered by the Trustee to the Holders as of the relevant
Record Date at such Holders' registered address if the Notes are then held in
the form of certificated Notes or (ii) deposited with or on behalf of the
Depository for the benefit of the beneficial owners of the Notes as of the
relevant Record Date if the Notes are held in global form.

                                 ARTICLE THREE

                                   REDEMPTION

     SECTION 3.01. Notices to Trustee. If the Issuer elects to redeem Notes
pursuant to the terms of the Notes, it shall notify the Trustee and the Paying
Agent in writing of the Redemption Date and the principal amount of the Notes to
be redeemed.

     The Issuer shall give each notice to the Trustee provided for in this
Section 3.01 at least 45 days before the Redemption Date (unless a shorter
notice period shall be satisfactory to the Trustee), together with an Officers'
Certificate stating that such redemption shall comply with the conditions
contained herein and in the Notes. Any such notice may be canceled at any time
prior to notice of such redemption being mailed to any Holder and shall thereby
be void and of no effect.

     SECTION 3.02. Selection of Notes To Be Redeemed. If less than all of the
Notes are to be redeemed at any time, selection of the Notes to be redeemed will
be made by the Trustee in compliance with the requirements of the principal
national securities exchange, if any, on which the Notes are listed or, if the
Notes are not listed on a securities exchange, on a pro rata basis or by lot or
any other method as the Trustee shall deem fair and appropriate; provided, that
Notes redeemed in part shall only be redeemed in integral multiples of $1,000;
provided further, that any such redemption pursuant to the provisions relating
to a Public Equity Offering shall be made on a pro rata basis or on as nearly a
pro rata basis as practicable (subject to the procedures of The Depository Trust
Company or any other depositary), unless such method is otherwise prohibited.

     SECTION 3.03. Redemptions.

     (a) Mandatory Redemption due to Operating Company Refinancing Event. If an
Operating Company Refinancing Event shall occur, the Issuer will be required to
redeem all of the Notes on a date (the "Mandatory Redemption Date") that is not
later than the 60th day following the date of such occurrence at the redemption
price (expressed as a percentage of the aggregate principal amount of the Notes)
then applicable for optional redemptions on the Mandatory Redemption Date as set
forth under clause (d) below, plus accrued and unpaid interest to the Mandatory
Redemption Date; provided, that if the Mandatory Redemption Date is prior to
June 1, 2005, the then applicable redemption price shall be deemed to be 115.0%.

     (b) Mandatory Redemption due to the Failure to Escrow Release Conditions.
In the event that the Trustee has not received prior to 10:00 a.m. New York City
time on March 1, 2005 an Officers' Certificate from the Company certifying that
(1) it has satisfied the conditions under either clause (a)(i) or (ii) of
Section 1.3 of the Escrow Agreement and (2) it has made a demand on the Escrow
Agent pursuant to clause (a) of Section 1.3 of the Escrow Agreement for the
release of the funds from the Escrow Account, the Trustee shall give written
notice to the Escrow Agent pursuant to clause (b) of Section 1.3 of the Escrow
Agreement that a special redemption of the Notes (an "Escrow Redemption") will
be made on March 1, 2005. The Trustee shall direct the Paying Agent to redeem
the Notes at 100% of their aggregate

                                       30
<PAGE>
principal amount plus accrued and unpaid interest to such date upon receipt of
proceeds from the Escrow Account pursuant to clause (b) of Section 1.3 of the
Escrow Agreement.

     (c) Optional Redemption Prior to June 1, 2005. The Notes are not optionally
redeemable by the Issuer, in whole or in part, at any time prior to June 1,
2005.

     (d) Optional Redemption on or after June 1, 2005. The Notes are redeemable
at the option of the Issuer, in whole or in part, at any time on or after June
1, 2005 at the redemption prices (expressed as percentages of the principal
amount of the Notes) set forth below plus in each case accrued and unpaid
interest to the date of redemption, if redeemed during the periods beginning on
the dates indicated below:

<TABLE>
<CAPTION>
Period                               Percentage
------                               ----------
<S>                                  <C>
June 1, 2005......................     115.0%
February 1, 2007..................     110.0%
February 1, 2008..................     105.0%
February 1, 2009 and thereafter...     100.0%
</TABLE>

     SECTION 3.04. Notice of Redemption. Notices of any optional or mandatory
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the Redemption Date to each Holder to be redeemed at such Holder's
registered address, with a copy to the Trustee and any Paying Agent; provided,
that notice of an Escrow Redemption need not be given in advance but instead
shall be provided no later than March 1, 2005. At the Issuer's request, the
Trustee shall give the notice of redemption in the Issuer's names and at the
Issuer's expense. The Issuer shall provide such notices of redemption to the
Trustee at least five days (or in the case of a notice of an Escrow Redemption,
one day) before the intended mailing date (unless a shorter period shall be
satisfactory to the Trustee).

     Each notice of redemption shall identify (including the CUSIP number) the
Notes to be redeemed and shall state:

     (1)  the Redemption Date;

     (2)  the Redemption Price and the amount of accrued interest, if any, to be
          paid;

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

     (4) the subparagraph of the Notes pursuant to which such redemption is
being made;

     (5) that Notes called for redemption must be surrendered to the Paying
Agent to collect the Redemption Price plus accrued interest, if any;

     (6) that, unless the Issuer defaults in making the redemption payment,
interest on Notes or applicable portions thereof called for redemption ceases to
accrue on and after the Redemption Date, and the only remaining right of the
Holders of such Notes is to receive payment of the Redemption Price plus accrued
interest as of the Redemption Date, if any, upon surrender to the Paying Agent
of the Notes redeemed;

     (7) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed, and the Trustee shall authenticate and mail
to the Holder of the original Note a Note in principal amount equal to the
unredeemed portion of the original Note promptly after the original Note has
been canceled; and

                                       31
<PAGE>
     (8) if fewer than all the Notes are to be redeemed, the identification of
the particular Notes of such Holder (or portion thereof) to be redeemed, as well
as the aggregate principal amount of Notes to be redeemed and the aggregate
principal amount of Notes to be outstanding after such partial redemption.

     The Issuer will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the purchase
of Notes.

     SECTION 3.05. Effect of Notice of Redemption. Once notice of redemption is
mailed in accordance with Section 3.04, such notice of redemption shall be
irrevocable and Notes called for redemption become due and payable on the
Redemption Date and at the Redemption Price plus accrued interest as of such
date, if any. Upon surrender to the Trustee or Paying Agent, such Notes called
for redemption shall be paid at the Redemption Price plus accrued interest
thereon to the Redemption Date, but installments of interest, the maturity of
which is on or prior to the Redemption Date, shall be payable to Holders of
record at the close of business on the relevant record dates referred to in the
Notes. Interest shall accrue on or after the Redemption Date and shall be
payable only if the Issuer defaults in payment of the Redemption Price.

     SECTION 3.06. Deposit of Redemption Price. On or before the Redemption Date
and in accordance with Section 2.14, the Issuer shall deposit with the Paying
Agent U.S. Legal Tender sufficient to pay the Redemption Price plus accrued
interest, if any, of all Notes to be redeemed on that date. The Paying Agent
shall promptly return to the Issuer any U.S. Legal Tender so deposited which is
not required for that purpose, except with respect to monies owed as obligations
to the Trustee pursuant to Article Seven.

     Unless the Company fails to comply with the preceding paragraph and
defaults in the payment of such Redemption Price plus accrued interest, if any,
interest on the Notes to be redeemed will cease to accrue on and after the
applicable Redemption Date on Notes or portions thereof called for redemption,
whether or not such Notes are presented for payment.

     SECTION 3.07. Notes Redeemed in Part. Upon surrender of a Note that is to
be redeemed in part, the Trustee shall authenticate for the Holder a new Note or
Notes equal in principal amount to the unredeemed portion of the Note
surrendered.

                                  ARTICLE FOUR

                                    COVENANTS

     SECTION 4.01. Payment of Notes. (a) The Issuer shall pay the principal of,
premium, if any, and interest on the Notes issued by the Issuer on the dates and
in the manner provided in such Notes and in this Indenture.

     (b) An installment of principal of or interest on the Notes shall be
considered paid on the date it is due if the Trustee or Paying Agent (other than
the Issuer or any of its Affiliates) holds, prior to 10:30 a.m. New York City
time on that date, U.S. Legal Tender designated for and sufficient to pay the
installment in full and is not prohibited from paying such money to the Holders
pursuant to the terms of this Indenture or the Notes.

     (c) The Issuer shall pay, to the extent such payments are lawful, interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal and on overdue

                                       32
<PAGE>
installments of interest (without regard to any applicable grace periods) from
time to time on demand at 1% per annum in excess of the rate borne by the Notes
issued by the Issuer. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.

     (d) Notwithstanding anything to the contrary contained in this Indenture,
the Issuer may, to the extent it is required to do so by law, or shall cause the
Trustee to, deduct or withhold income or other similar taxes imposed by the
United States of America from principal or interest payments in respect of the
Notes issued by the Issuer that are made hereunder.

     SECTION 4.02. Maintenance of Office or Agency. The Issuer shall maintain
(or appoint any Person (that satisfies the requirements of being the "Trustee"
hereunder as set forth in Section 7.10) to so maintain on its behalf) the office
or agency required under Section 2.03. The Issuer shall give prior written
notice to the Trustee of the location, and any change in the location, of such
office or agency. If at any time the Issuer shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the address of the Trustee set forth in Section 11.02.

     SECTION 4.03. Corporate Existence. Except as otherwise permitted by Section
5.01, the Issuer shall do or cause to be done, at its own cost and expense, all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate existence of each of the Restricted Subsidiaries in
accordance with the respective organizational documents of each such Restricted
Subsidiary and the material rights (charter and statutory) and franchises of the
Issuer and each Restricted Subsidiary; provided, however, that the Issuer shall
not be required to preserve, with respect to itself, any material right or
franchise and, with respect to any Restricted Subsidiaries, any such existence,
material right or franchise, if the Board of Directors of the Issuer (or if such
existence is with respect to any Restricted Subsidiary which is not a
Significant Subsidiary, by the appropriate Officers of the Issuer) shall
determine in good faith that the preservation thereof is no longer desirable in
the conduct of the business of the Issuer and the Subsidiaries, taken as a
whole.

     SECTION 4.04. Payment of Taxes and Other Claims. The Issuer shall pay or
discharge or cause to be paid or discharged, before penalties attach, (i) all
material taxes, assessments and governmental charges (including withholding
taxes and any penalties, interest and additions to taxes) levied or imposed upon
it or any of the Restricted Subsidiaries or properties of it or any of its
Restricted Subsidiaries and (ii) all material lawful claims for labor, materials
and supplies that, if unpaid, might by law become a Lien upon the property of
the Issuer or any of the Restricted Subsidiaries; provided, however, that the
Issuer shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate negotiations or
proceedings properly instituted and conducted for which adequate reserves, to
the extent required under GAAP, have been taken.

     SECTION 4.05. Maintenance of Properties and Insurance. (a) The Issuer
shall, and shall cause each of the Restricted Subsidiaries to, maintain all
material properties used in the conduct of its business in working order and
condition (subject to ordinary wear and tear) and make all necessary repairs,
renewals, replacements, additions, betterments and improvements thereto and
actively conduct and carry on its business; provided, however, that nothing in
this Section 4.05 shall prevent the Issuer or any of the Restricted Subsidiaries
from discontinuing the operation and maintenance of any of its properties, if
such discontinuance is (i) in the ordinary course of business pursuant to
customary business terms or (ii) in the good faith judgment of the respective
Boards of Directors or other governing body of the Issuer or Restricted
Subsidiary, as the case may be, desirable in the conduct of their respective
businesses and would not be reasonably likely to cause a material adverse effect
upon the business, operations, assets, condition (financial or otherwise) or
prospects of the Issuer and the Subsidiaries, taken as a whole.

                                       33
<PAGE>
     (b) The Issuer shall provide or cause to be provided, for itself and each
of the Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the good faith judgment of the
Issuer, are customary for companies of a similar size in the conduct of the
business of the Issuer and the Restricted Subsidiaries, with reputable insurers
or with the Government of the United States of America or any agency or
instrumentality thereof (if not through self-insurance).

     SECTION 4.06. Compliance Certificate; Notice of Default. (a) The Issuer
shall deliver to the Trustee, within 90 days after the end of each of the
Issuer's fiscal years, an Officers' Certificate (provided, however, that one of
the signatories to each such Officers' Certificate shall be the Issuer's
principal executive officer, principal financial officer or principal accounting
officer), as to such Officers' knowledge, without independent investigation, of
the Issuer's compliance with all conditions and covenants under this Indenture
(without regard to any period of grace or requirement of notice provided
hereunder) and in the event any Default of the Issuer exists, such Officers'
Certificate shall specify the nature of such Default. Each such Officers'
Certificate shall also notify the Trustee should the Issuer elect to change the
manner in which it fixes its fiscal year-end.

     (b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the annual financial
statements delivered pursuant to Section 4.08 shall be accompanied by a written
report of the Issuer's independent certified public accountants (who shall be a
firm of established national reputation) stating whether, in connection with
their audit examination, any Default or Event of Default, as they relate to
accounting matters, has come to their attention specifying the nature and period
of existence thereof; provided, however, that, without any restriction as to the
scope of the audit examination, such independent certified public accountants
shall not be liable by reason of any failure to obtain knowledge of any such
Default or Event of Default that would not be disclosed in the course of an
audit examination conducted in accordance with generally accepted auditing
standards.

     (c) (i) If any Default or Event of Default has occurred and is continuing
or (ii) if any Holder seeks to exercise any remedy hereunder with respect to a
claimed Default under this Indenture or the Notes, the Issuer shall deliver to
the Trustee, at its address set forth in Section 11.02, by registered or
certified mail or by facsimile transmission followed by hard copy by registered
or certified mail an Officers' Certificate specifying such event, notice or
other action promptly upon its becoming aware of such occurrence.

     SECTION 4.07. Compliance with Laws. The Issuer shall comply, and shall
cause each of its Subsidiaries to comply, with all applicable statutes, rules,
regulations, orders and restrictions of the United States of America, all states
and municipalities thereof, and of any governmental department, commission,
board, regulatory authority, bureau, agency and instrumentality of the
foregoing, in respect of the conduct of their respective businesses and the
ownership of their respective properties, except for such noncompliances as
would not singly or in the aggregate reasonably be expected to have a material
adverse effect on the financial condition or results of operations of the Issuer
and its Subsidiaries taken as a whole.

     SECTION 4.08. Provision of Financial Statements and Information. Whether or
not the Issuer is then subject to Section 13(a) or 15(d) of the Exchange Act,
the Issuer will file with the Commission following the effectiveness of the
Exchange Offer Registration Statement, so long as any Notes are outstanding, the
annual reports, quarterly reports and other periodic reports which the Company
would have been required to file with the Commission pursuant to such Section
13(a) or 15(d) if the Company were so subject, and such documents shall be filed
with or furnished to the Commission on or prior to the respective dates (the
"Required Filing Dates") by which the Company would have been required to so
file or furnish such documents if the Company were so subject; provided the
Commission will accept such filings. The Company will also in any event (i)
within 15 days of each Required Filing Date following

                                       34
<PAGE>
the effectiveness of the Exchange Offer Registration Statement, file with the
Trustee, and supply the Trustee with copies for delivery to the Holders and
prospective purchasers of the Notes, the annual reports, quarterly reports and
other periodic reports which the Company would have been required to file with
the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act if the
Company were subject to such Sections and (ii) if the Commission will not accept
the filing of such documents promptly upon written request and payment of the
reasonable cost of duplication and delivery, supply copies of such documents to
any prospective Holder of the Notes. Prior to the effectiveness of the Exchange
Offer Registration Statement, the Company will provide upon request from Holders
or prospective Holders of Notes the information required by Rule 144A(d) (4)
under the Securities Act.

     SECTION 4.09. Waiver of Stay, Extension or Usury Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay or extension law or any usury law or other law that would prohibit
or forgive the Issuer from paying all or any portion of the principal of or
interest on the Notes as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this Indenture; and (to the extent that it may lawfully do so) the Issuer hereby
expressly waives all benefits or advantages of any such law, and covenants that
it will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.

     SECTION 4.10. Limitation on Restricted Payments. (a) The Company will not,
nor will it permit any Restricted Subsidiary to, directly or indirectly, make
any Restricted Payment ; provided, however, that Restricted Subsidiaries may
make Restricted Payments if, at the time of and immediately after giving effect
to the proposed Restricted Payment (with the value of any such Restricted
Payment, if other than cash, to be determined reasonably and in good faith by
the Board of Directors of the Company):

          (i) no Default or Event of Default shall have occurred and be
     continuing or would occur as a consequence thereof;

          (ii) Phibro Animal Health could incur at least $1.00 of additional
     Indebtedness pursuant to clause (c) of Section 4.12 and

          (iii) the aggregate amount of all Restricted Payments made by the
     Restricted Subsidiaries after October 21, 2003 shall not exceed the sum of:

               (1)  an amount equal to 50% of Phibro Animal Health's aggregate
                    cumulative Consolidated Net Income accrued on a cumulative
                    basis during the period (treated as one accounting period)
                    beginning on November 1, 2003 and ending on the date of such
                    proposed Restricted Payment (or, if such aggregate
                    cumulative Consolidated Net Income for such period shall be
                    a deficit, minus 100% of such deficit); plus

               (2)  the aggregate amount of all net cash proceeds received since
                    the Issue Date by the Company from the issuance and sale
                    (other than to a Restricted Subsidiary) of, or equity
                    contribution with respect to, Capital Stock (other than
                    Disqualified Stock) and the principal amount of Indebtedness
                    of the Company or any Restricted Subsidiary issued or
                    incurred on or after the Issue Date that has been converted
                    into or exchanged for Capital Stock (other than Disqualified
                    Stock), in any such case and solely for purposes of avoiding
                    duplication, to the extent that

                                       35
<PAGE>
                    such proceeds are not theretofore used (x) to redeem,
                    repurchase, retire or otherwise acquire Capital Stock or any
                    Indebtedness of the Company or any Restricted Subsidiary
                    pursuant to clause (b)(ii) below or (y) to make any
                    Restricted Investment pursuant to clause (b)(iv); plus

               (3)  the amount of the net reduction in Investments in
                    Unrestricted Subsidiaries resulting from (x) the payment of
                    dividends or the repayment in cash of the principal of loans
                    or the cash return on any Investment, in each case to the
                    extent received by the Company or any Restricted Subsidiary
                    from Unrestricted Subsidiaries, (y) the release or
                    extinguishment of any guaranty of Indebtedness of any
                    Unrestricted Subsidiary, and (z) the redesignation of
                    Unrestricted Subsidiaries as Restricted Subsidiaries (valued
                    as provided in the definition of the term "Investment"),
                    such aggregate amount of the net reduction in Investments
                    not to exceed in the case of any Unrestricted Subsidiary the
                    amount of Restricted Investments previously made by the
                    Company or any Restricted Subsidiary in such Unrestricted
                    Subsidiary, which amount was included in the calculation of
                    the amount of Restricted Payments; plus

               (4)  to the extent that any Restricted Investment that was made
                    after the Issue Date is sold for cash or the proceeds of
                    such sale are converted into cash or otherwise liquidated or
                    repaid for cash, the amount of cash proceeds received with
                    respect to such Restricted Investment, net of taxes and the
                    cost of disposition, not to exceed the amount of Restricted
                    Investments made after the Issue Date.

     (b) The foregoing provisions do not prohibit, so long as no Default or
Event of Default is continuing or would occur as a consequence thereof, the
following actions (collectively, "Permitted Payments"):

          (i) the payment of any dividend within 60 days after the date of
     declaration thereof, if at such declaration date such payment would have
     been permitted under this Indenture (which payment shall be deemed to have
     been paid on such date of declaration for purposes of clause (a)(iii)
     above);

          (ii) the redemption, repurchase, retirement or other acquisition of
     any Capital Stock or any Indebtedness of the Company or any Restricted
     Subsidiary in exchange for, or out of the proceeds of, the substantially
     concurrent sale (other than to a Restricted Subsidiary) of, or equity
     contribution with respect to, Capital Stock of the Company (other than any
     Disqualified Stock);

          (iii) any purchase or defeasance of Subordinated Indebtedness to the
     extent required upon a Change of Control by this Indenture or other
     agreement or instrument pursuant to which such Subordinated Indebtedness
     was issued or any refinancing of Subordinated Indebtedness permitted by
     this Indenture or other agreement or instrument pursuant to which such
     Subordinated Indebtedness was issued, but only if the Company has complied
     with its obligations under the provisions described under Section 4.15;

          (iv) any Restricted Investment to the extent the sole consideration
     for which consists of, or is made with the proceeds of the substantially
     concurrent sale (other than to a Restricted

                                       36
<PAGE>
     Subsidiary) of, or equity contribution with respect to, Capital Stock of
     the Company (other than any Disqualified Stock);

          (v) the repurchase of Capital Stock of the Company (including options,
     warrants or other rights to acquire such Capital Stock) from departing or
     deceased directors, officers and employees of the Company and its
     Subsidiaries pursuant to the terms of an employee benefit plan or employee
     agreement in an aggregate amount that shall not exceed $500,000 since the
     Issue Date plus the aggregate cash proceeds from any payments on insurance
     policies in which the Company or any of its Subsidiaries is the beneficiary
     with respect to any directors, officers or employees of the Company and its
     Subsidiaries which proceeds are used to purchase the Capital Stock of the
     Company or any Restricted Subsidiary of the Company held by any of such
     directors, officers or employees; and the repurchase of Capital Stock of
     the Company or a Restricted Subsidiary by the Company or such Restricted
     Subsidiary pursuant to the terms of any of the Shareholders Agreements;

          (vi) loans or advances to employees of the Company or any of its
     Subsidiaries which loans or advances exist on the Issue Date, and other
     loans or advances to employees of the Company or any Subsidiary to pay
     reasonable relocation expenses or otherwise entered into in the ordinary
     course of business not to exceed $500,000 in the aggregate principal amount
     at any one time outstanding;

          (vii) Restricted Payments by a Restricted Subsidiary in an amount such
     that the sum of the aggregate amount of Restricted Payments made pursuant
     to this clause (vii) after the Issue Date does not exceed $2.5 million at
     any one time outstanding; and

          (viii) payments pursuant to any of the Transactions.

     For purposes of clause (a)(iii) above, the Permitted Payments referred to
in clauses (b)(i) and (v) above shall be included in the aggregate amount of
Restricted Payments made since November 1, 2003, and any other Permitted
Payments described above shall be excluded.

     SECTION 4.11. Limitation on Transactions with Affiliates. (a) The Company
will not, nor will it permit any Restricted Subsidiary to, directly or
indirectly, enter into or suffer to exist any transaction or series of related
transactions (including, without limitation, the sale, purchase, exchange or
lease of assets, property or services) with any Affiliate of the Company unless:
(i) such transaction or series of transactions is on terms that are no less
favorable to the Company or such Restricted Subsidiary, as the case may be, than
those that could reasonably be obtainable at such time in a comparable
transaction in arm's-length dealings with an unrelated third party, and (ii) the
Company delivers to the Trustee (A) with respect to any transaction or series of
transactions involving aggregate payments in excess of $250,000, an Officers'
Certificate certifying that such transaction or series of related transactions
has been approved by a majority of the members of the Board of Directors of the
Company, and (B) with respect to any transaction or series of transactions
involving aggregate payments in excess of $5.0 million, an opinion as to the
fairness of the transaction to the Company from a financial point of view issued
by an accounting, appraisal or investment banking firm of national standing.

     (b) Notwithstanding the foregoing, the provisions of clause (a) above do
not apply to:

          (i) employment agreements or compensation or employee benefit
     arrangements with any officer, director or employee of the Company or any
     of its Restricted Subsidiaries entered into in the ordinary course of
     business (including customary benefits thereunder and including

                                       37
<PAGE>
     reimbursement or advancement of out-of-pocket expenses, and director's and
     officer's liability insurance);

          (ii) any transaction entered into by or among the Company or one of
     its Restricted Subsidiaries with one or more Restricted Subsidiaries of the
     Company;

          (iii) any transaction permitted by clause (b) of Section 4.10;

          (iv) transactions permitted by, and complying with, the provisions
     described under Section 5.01;

          (v) any Transaction or any transaction described under the caption
     "Use of Proceeds" in the Offering Circular pursuant to which the Initial
     Notes are offered and sold; and

          (vi) agreements to make the payments described in clause (y)(2) of the
     second sentence of the definition of the term "Investment" (as defined in
     the 2007 Indenture (as in effect on the Issue Date)).

     As of the Issue Date, the cash salary and bonus in the aggregate payable to
Jack Bendheim in respect of each fiscal year (i) for which Cash Flow of the
prior fiscal year is less than $25.0 million shall be capped at $750,000, (ii)
for which Cash Flow of the prior fiscal year is greater than or equal to $25.0
million but less than $36.0 million, shall not exceed the sum of (A) $750,000
plus (B) (1) $900,000 times (2) a ratio, the numerator of which is Cash Flow
with respect to such prior fiscal year less $25.0 million and the denominator of
which is $11.0 million and (iii) for which Cash Flow of the prior fiscal year is
greater than or equal to $36.0 million, shall be determined by the Compensation
Committee of the Board of Directors and shall not exceed $2.0 million.

     SECTION 4.12. Limitation on Incurrence of Indebtedness. (a) The Company
will not create, incur, assume or directly or indirectly guarantee or in any
other manner become directly or indirectly liable for ("incur") any Indebtedness
(including Acquired Debt), except that the Company may incur Indebtedness
(including Acquired Debt) if, immediately after giving pro forma effect to, such
incurrence of Indebtedness, the Consolidated Cash Flow Coverage Ratio of the
Company for the most recently ended four fiscal quarters would be at least 2.25
to 1.0 if incurred during the period from the Issue Date through October 21,
2005, and 2.50 to 1.0 if incurred thereafter.

     (b) The foregoing limitations do not apply to the incurrence of any of the
following, each of which shall be given independent effect:

          (1) the Notes issued on the Issue Date;

          (2) PIK Notes issued as PIK Interest in accordance with the terms of
     the Notes;

          (3) guarantees by the Company of Indebtedness incurred by Restricted
     Subsidiaries pursuant to the Credit Agreement or evidenced by the 2007
     Notes or the 2008 Notes;

          (4) any Indebtedness incurred in connection with or given in exchange
     for the renewal, extension, substitution, refunding, defeasance,
     refinancing or replacement, in whole or in part (a "refinancing"), of any
     Indebtedness incurred as permitted under clause (a) of this Section 4.12 or
     any Indebtedness described in any of subclauses (1) and (2) above, and this
     subclause (4) ("Company Refinancing Indebtedness"); provided, however, that
     (a) the principal amount of such Company Refinancing Indebtedness shall not
     exceed the principal amount (or accreted amount, if less, or in the case of
     a revolving credit facility the maximum amount of the facility, if more) of
     the Indebtedness so refinanced (plus accrued interest on the Indebtedness
     being refinanced plus

                                       38
<PAGE>
     the premiums, if any, on the Indebtedness being refinanced and reasonable
     expenses to be paid in connection therewith, which, with respect to such
     premiums, shall not exceed the stated amount of any premium or other
     payment required to be paid in connection with such a refinancing pursuant
     to the terms of the Indebtedness being refinanced); and (b) the final
     maturity of such Company Refinancing Indebtedness shall not be earlier than
     the final maturity of the Indebtedness being Refinanced; and

          (5) Indebtedness of the Company to a Restricted Subsidiary of the
     Company for so long as such Indebtedness is held by a Restricted Subsidiary
     of the Company or the holder of a Subsidiary Permitted Lien, in each case,
     subject to no Lien held by a Person other than the Company or a Restricted
     Subsidiary of the Company or the holder of a Subsidiary Permitted Lien;
     provided that (a) any such Indebtedness is subordinated, pursuant to a
     written agreement by the holder thereof, to the Company's Obligations
     hereunder and under the Notes and (b) if as of any date any Person other
     than a Restricted Subsidiary of the Company or the holder of a Subsidiary
     Permitted Lien, owns or holds any such Indebtedness or any Person holds a
     Lien in respect of such Indebtedness, such date shall be deemed the
     incurrence of Indebtedness not constituting Indebtedness permitted to be
     incurred under this subclause (5) by the Company.

     (c) The Company will not permit any Restricted Subsidiary to incur any
Indebtedness (including Acquired Debt), except that the Phibro Animal Health and
any Restricted Subsidiary may incur Indebtedness (including Acquired Debt) if,
immediately after giving pro forma effect to, such incurrence of Indebtedness,
the Consolidated Cash Flow Coverage Ratio of Phibro Animal Health for the most
recently ended four fiscal quarters would be at least 2.25 to 1.0 if incurred
during the period from the Issue Date through October 21, 2005, and 2.50 to 1.0
if incurred thereafter.

     (d) The foregoing limitations do not apply to the incurrence of any of the
following (collectively, "Permitted Indebtedness"), each of which shall be given
independent effect:

          (i) Indebtedness of Phibro Animal Health and its Restricted
     Subsidiaries arising under the Credit Agreement, in an aggregate principal
     amount not to exceed at any time outstanding an amount equal to $15.0
     million;

          (ii) Indebtedness of any Restricted Subsidiary in existence, and
     Indebtedness pursuant to any commitment in effect under any credit
     agreement or facility, in each case, on the Issue Date, other than
     Indebtedness described in clause (d)(i) above and Indebtedness incurred in
     compliance with clauses (xi), (xiv), (xv) or (xvii) of Section 4.12 of the
     2007 Indenture ("Existing Indebtedness");

          (iii) Indebtedness of a Restricted Subsidiary to another Restricted
     Subsidiary for so long as such Indebtedness is held by a Restricted
     Subsidiary; provided that if as of any date any Person other than a
     Restricted Subsidiary owns or holds any such Indebtedness, such date shall
     be deemed the incurrence of Indebtedness not constituting Permitted
     Indebtedness under this subclause (iii) by the issuer of such Indebtedness;

          (iv) Indebtedness represented by performance, completion, guarantee,
     surety and similar bonds and assurances provided by or for the Company or
     any Restricted Subsidiary in the ordinary course of business;

          (v) any Indebtedness incurred in connection with a refinancing of any
     Indebtedness incurred as permitted under clause (c) above or any
     Indebtedness described in subclause (ii) above, and this subclause (v)
     ("Refinancing Indebtedness"); provided, however, that (a) the principal
     amount of such Refinancing Indebtedness shall not exceed the principal
     amount (or accreted amount, if less, or in the case of a revolving credit
     facility the maximum amount of the facility, if more) of the Indebtedness
     so refinanced (plus accrued interest on the Indebtedness

                                       39
<PAGE>
     being refinanced plus the premiums, if any, on the Indebtedness being
     refinanced and reasonable expenses to be paid in connection therewith,
     which, with respect to such premiums, shall not exceed the stated amount of
     any premium or other payment required to be paid in connection with such a
     refinancing pursuant to the terms of the Indebtedness being refinanced);
     and (b) the final maturity of such Refinancing Indebtedness shall not be
     earlier than the final maturity of the Indebtedness being Refinanced;

          (vi) Indebtedness of any Restricted Subsidiary (a) representing
     Capital Lease Obligations and any amendments, modifications, renewals,
     refundings, replacements or refinancings thereof and/or (b) in respect of
     Purchase Money Obligations for property acquired, constructed or improved
     in the ordinary course of business and any refinancings thereof, which
     taken together in the aggregate principal amount do not exceed $5.0 million
     at any one time outstanding;

          (vii) (A) commodity agreements entered into in the ordinary course of
     business to protect against fluctuations in the prices of raw materials and
     not for speculative purposes and (B) foreign currency forward exchange
     contracts entered into in the ordinary course of business to protect
     against fluctuations in the relative values of currencies that could
     adversely affect the results of operations of the Issuer and its Restricted
     Subsidiaries, taken as a whole, and not for speculative purposes;

          (viii) Indebtedness incurred by any Restricted Subsidiary constituting
     reimbursement obligations with respect to letters of credit issued in the
     ordinary course of business (A) in respect of (1) workers' compensation
     claims or self-insurance or (2) other Indebtedness with respect to
     reimbursement type obligations regarding workers' compensation claims or
     self-insurance or (B) for regulatory or insurance purposes;

          (ix) Indebtedness incurred in respect of letters of credit issued for
     the account of any Restricted Subsidiary in an aggregate stated amount not
     to exceed $5.0 million (or the foreign currency equivalent thereof being
     determined as of the later of the date of the issuance thereof or any date
     on which the stated amount of such letter of credit is increased);

          (x) Indebtedness of Foreign Restricted Subsidiaries, in an aggregate
     principal amount at any time outstanding not to exceed $2.5 million,
     incurred to finance losses or costs relating to catastrophic occurrences or
     expenses occurring outside of the ordinary course of business; provided,
     that, in the case of losses or costs relating to catastrophic occurrences,
     the amount of any such losses or costs shall be deemed to be reduced by all
     insurance and condemnation proceeds on the thirtieth day following the
     receipt thereof by the any Restricted Subsidiary in connection with such
     catastrophic occurrence(s);

          (xi) Any guaranty by Restricted Subsidiaries of each other's
     Indebtedness or the Notes; provided that such other Indebtedness is
     permitted to be incurred hereunder;

          (xii) Indebtedness of any Restricted Subsidiary in addition to that
     described in subclauses (i) through (xi) above and subclauses (xiii) and
     (xiv) below, and any amendments, modifications, renewals, refundings,
     replacements or refinancings of such Indebtedness, so long as the aggregate
     principal amount of all such Indebtedness incurred pursuant to this
     subclause (xii) does not exceed $2.5 million at any one time outstanding;

          (xiii) Indebtedness arising from agreements of a Restricted Subsidiary
     providing for the guarantee, indemnification, adjustment of purchase price
     or similar obligations, in each case, incurred in connection with the
     disposition of any business, assets or Subsidiary, other than guarantees of
     Indebtedness incurred by any Person acquiring all or any portion of such
     business, assets or Subsidiary for the purpose of financing such
     acquisition; provided that the maximum aggregate liability in respect of
     such Indebtedness shall at no time exceed the gross proceeds or

                                       40
<PAGE>
     value of the consideration actually received by the Restricted Subsidiaries
     in connection with such transaction; and

          (xiv) Indebtedness of Restricted Subsidiaries arising under the
     Belgium Purchase Agreement.

     For purposes of determining any particular amount of Indebtedness under
this Section 4.12, any guaranty, Liens or obligations with respect to letters of
credit supporting Indebtedness otherwise included in the determination of such
particular amount shall not be included, except in the case of any such letter
of credit to the extent the stated amount thereof exceeds the principal amount
of such other Indebtedness so supported.

     Indebtedness of any Person which is outstanding at the time such Person
becomes a Restricted Subsidiary or is merged with or into or consolidated with
the Company or a Restricted Subsidiary shall be deemed to have been incurred at
the time such Person becomes a Restricted Subsidiary or is merged with or into
or consolidated with the Company or a Restricted Subsidiary, and Indebtedness
which is assumed at the time of the acquisition of any asset shall be deemed to
have been incurred at the time of such acquisition.

     SECTION 4.13. Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries. The Company will not, nor will it permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause to
become effective any consensual encumbrance or consensual restriction on the
ability of any Restricted Subsidiary to (i) pay dividends or make any other
distributions to the Company or any other Restricted Subsidiary on its Capital
Stock or with respect to any other interest or participation in, or measured by,
its profits, or pay any Indebtedness owed to the Company or any other Restricted
Subsidiary, (ii) make loans or advances to, or issue any guaranty for the
benefit of, the Company or any other Restricted Subsidiary or (iii) transfer any
of its properties or assets to the Company or any other Restricted Subsidiary,
except for such encumbrances or restrictions existing under or by reason of:

          (A) the Credit Agreement, the 2007 Indenture and the 2008 Indenture,
     in each case, as in effect on the Issue Date, and any amendments,
     modifications, renewals, refundings, replacements or refinancings thereof;
     provided that such amendments, modifications, renewals, refundings,
     replacements or refinancings are no more restrictive in the aggregate with
     respect to such dividend and other payment restrictions than those
     contained in such agreements (or, if more restrictive, than those contained
     in this Indenture) immediately prior to any such amendment, restatement,
     renewal, replacement or refinancing;

          (B) applicable law;

          (C) any instrument governing Indebtedness or Capital Stock of an
     Acquired Person acquired by the Company or any of its Restricted
     Subsidiaries as in effect at the time of such acquisition (except to the
     extent such Indebtedness was incurred in connection with or in
     contemplation of such acquisition); provided, however, that no such
     encumbrance or restriction is applicable to any Person, or the properties
     or assets of any Person, other than the Acquired Person;

          (D) customary non-assignment, subletting or net worth provisions in
     leases or other agreements entered into the ordinary course of business;

          (E) Purchase Money Obligations for property acquired in the ordinary
     course of business that impose restrictions only on the property so
     acquired;

                                       41
<PAGE>
          (F) an agreement for the sale or disposition of assets or the Capital
     Stock of a Restricted Subsidiary; provided, however, that such restriction
     or encumbrance is only applicable to such Restricted Subsidiary or assets,
     as applicable, and such sale or disposition otherwise is permitted by
     Section 4.16, provided further, however, that such restriction or
     encumbrance shall be effective only for a period from the execution and
     delivery of such agreement through a termination date not later than 270
     days after such execution and delivery (other than any such restriction or
     encumbrance contained in the Belgium Purchase Agreement);

          (G) Refinancing Indebtedness permitted under this Indenture; provided,
     however, that the restrictions contained in the agreements governing such
     Refinancing Indebtedness are no more restrictive in the aggregate than
     those contained in the agreements governing the Indebtedness being
     refinanced immediately prior to such refinancing;

          (H) this Indenture, the Notes, and the Collateral Agreements; and

          (I) encumbrances and restrictions imposed by amendments, restatements,
     renewals, replacements or refinancings of the contracts, instruments or
     obligations referred to in clauses (A) through (H) above; provided that
     such encumbrances and restrictions are, in the good faith judgment of the
     Company's Board of Directors, no more restrictive, in any material respect,
     than those contained in such contracts, instruments or obligations
     immediately prior to such amendment, restatement, renewal, replacement or
     refinancing.

     SECTION 4.14. Limitation on Designation of Unrestricted Subsidiaries. (a)
The Company will not designate any Subsidiary of the Company (other than a newly
created Subsidiary in which no Investment has previously been made) as an
"Unrestricted Subsidiary" under this Indenture (a "Designation") unless:

          (i) no Default shall have occurred and be continuing at the time of or
     after giving effect to such Designation;

          (ii) immediately after giving effect to such Designation, Phibro
     Animal Health would be able to incur $1.00 of additional Indebtedness
     pursuant to clause (c) of Section 4.12; and

          (iii) the Company would not be prohibited under this Indenture from
     making an Investment at the time of Designation in an amount (the
     "Designation Amount") equal to the greater of (x) the book value of such
     Restricted Subsidiary on such date and (y) the Fair Market Value of such
     Restricted Subsidiary on such date.

     In the event of any such Designation, the Company shall be deemed to have
made an Investment constituting a Restricted Payment pursuant to Section 4.10
for all purposes of this Indenture in an amount equal to the Designation Amount.

     (b) The Company will not designate an Unrestricted Subsidiary as a
Restricted Subsidiary (a "Redesignation"), unless:

          (i) no Default shall have occurred and be continuing at the time of
     and after giving effect to such Redesignation; and

          (ii) all Liens and Indebtedness of such Unrestricted Subsidiary
     outstanding immediately following such Redesignation shall be deemed to
     have been incurred at such time and shall have been permitted to be
     incurred for all purposes of this Indenture.

                                       42
<PAGE>
     An Unrestricted Subsidiary shall be deemed to be redesignated as a
Restricted Subsidiary at any time if (a) the Company or any other Restricted
Subsidiary (i) provides credit support for, or a guarantee of, any Indebtedness
of such Unrestricted Subsidiary (including any undertaking, agreement or
instrument evidencing such Indebtedness) or (ii) is directly or indirectly
liable for any Indebtedness of such Unrestricted Subsidiary or (b) a default
with respect to any Indebtedness of such Unrestricted Subsidiary (including any
right which the holders thereof may have to take enforcement action against it)
would permit (upon notice, lapse of time or both) any holder of any other
Indebtedness of the Company or any Restricted Subsidiary to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its final scheduled maturity, except in the case of clause (a)
to the extent permitted under Section 4.10.

     If any Unrestricted Subsidiary is (or is deemed to have been) redesignated
as a Restricted Subsidiary, each Subsidiary of the Company that owns all or any
portion of the Capital Stock of such Unrestricted Subsidiary shall be deemed to
have been redesignated as a Restricted Subsidiary as well.

     All Designations and Redesignations must be evidenced by Board Resolutions
delivered to the Trustee certifying compliance with the foregoing provisions.
Subsidiaries that are not designated by the Board of Directors as Restricted or
Unrestricted Subsidiaries will be deemed to be Restricted Subsidiaries. The
Designation of a Restricted Subsidiary as an Unrestricted Subsidiary shall be
deemed a Designation of all of the Subsidiaries of such Unrestricted Subsidiary
as Unrestricted Subsidiaries.

     SECTION 4.15. Change of Control. (a) In the event of a Change of Control of
the Issuer, each Holder will have the right, unless the Issuer has given a
notice of redemption, subject to the terms and conditions of this Indenture, to
require the Issuer to offer to purchase all or any portion (equal to $1,000 or
an integral multiple thereof) of such Holder's Notes at a purchase price in cash
equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest to the date of purchase, in accordance with the terms set forth below.

     (b) On or before the 30th day following the occurrence of any Change of
Control, the Company will mail an offer (a "Change of Control Offer") to each
Holder at such Holder's registered address a notice by first-class mail stating:
(i) that a Change of Control has occurred and that such Holder has the right to
require the Issuer to purchase all or a portion (equal to $1,000 or an integral
multiple thereof) of such Holder's Notes at a purchase price in cash equal to
101% of the aggregate principal amount thereof, plus accrued and unpaid interest
to the date of purchase (the "Change of Control Purchase Date"), which shall be
a Business Day, specified in such notice, that is not earlier than 30 days or
later than 60 days from the date such notice is mailed, (ii) the amount of
accrued and unpaid interest as of the Change of Control Purchase Date, (iii)
that any Note not tendered will continue to accrue interest, (iv) that, unless
the Company defaults in the payment of the purchase price for the Notes payable
pursuant to the Change of Control Offer, any Notes accepted for payment pursuant
to the Change of Control Offer shall cease to accrue interest on the Change of
Control Purchase Date, (v) the procedures, consistent with this Indenture, to be
followed by a Holder in order to accept a Change of Control Offer or to withdraw
such acceptance, and (vi) such other information as may be required by this
Indenture and applicable laws and regulations.

     (c) On the Change of Control Purchase Date, the Company will (i) accept for
payment all Notes or portions thereof tendered pursuant to the Change of Control
Offer, (ii) deposit with the Paying Agent the aggregate purchase price of all
Notes or portions thereof accepted for payment, and (iii) deliver or cause to be
delivered to the Trustee all Notes tendered pursuant to the Change of Control
Offer. The Paying Agent shall promptly mail to each Holder whose Notes or

                                       43
<PAGE>
portions thereof were accepted for payment an amount equal to the purchase price
for such Notes or portion thereof plus accrued and unpaid interest thereon, and
the Trustee shall promptly authenticate and mail to each Holder whose Notes or
portions thereof were accepted for payment in part a Note equal in principal
amount to any unpurchased portion of the Notes, and any Note not accepted for
payment in whole or in part shall be promptly returned to the Holder of such
Note. On and after a Change of Control Purchase Date, interest will cease to
accrue on the Notes or portions thereof accepted for payment, unless the Company
defaults in the payment of the purchase price therefor. The Issuer will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Purchase Date.

     (d) The Issuer will comply with the applicable tender offer rules,
including the requirements of Section 14(e) and Rule 14e-1 under the Exchange
Act, and all other applicable securities laws and regulations in connection with
any Change of Control Offer and will be deemed not to be in violation of any of
the covenants under this Indenture to the extent such compliance is in conflict
with such covenants.

     (e) The Issuer will not be required to make a Change of Control Offer upon
a Change of Control if a third party (i) makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth herein (including this Section 4.15) applicable to a Change of Control
Offer made by the Issuer and (ii) purchases all Notes validly tendered and not
withdrawn under such Change of Control Offer.

     SECTION 4.16. Limitation on Asset Sales. (a) The Company will not, nor will
it permit any Restricted Subsidiary to, make any Asset Sale unless:

          (i) the Company or such Restricted Subsidiary, as the case may be,
     receives consideration at the time of such Asset Sale at least equal to the
     Fair Market Value (as evidenced by a resolution of the Board of Directors
     set forth in an Officers' Certificate delivered to the Trustee) of the
     assets or other property sold or disposed of in the Asset Sale; and

          (ii) at least 75% of such consideration consists of either cash or
     Cash Equivalents.

For purposes of this Section 4.16, "cash" shall include (x) the amount of any
Indebtedness (other than any Indebtedness that is by its terms subordinated to
the Notes), accounts payable and accrued expenses of the Company or such
Restricted Subsidiary that is assumed by the transferee of any such assets or
other property in such Asset Sale (and excluding any liabilities that are
incurred in connection with or in anticipation of such Asset Sale), but only to
the extent that such assumption of Indebtedness is effected on a basis such that
there is no further recourse to the Company or any of the Restricted
Subsidiaries with respect to such liabilities (other than customary
indemnifications to the transferee and its Affiliates) and (y) any notes,
obligations or securities received by the Company or such Restricted Subsidiary
from such transferee that are due and payable within 60 days by the Company or
such Restricted Subsidiary into cash (to the extent of the cash received).

     (b) Within 270 days after receipt of Net Proceeds from any Asset Sale, the
Company may elect to apply the Net Proceeds from such Asset Sale:

          (i) to repay Indebtedness of a Restricted Subsidiary; and/or

          (ii) make an investment in, or acquire assets and properties that will
     be used in, the business of the Company or a Restricted Subsidiary,
     existing on the Issue Date or in a Related Business.

Pending the final application of any such Net Proceeds, the Company or any
Restricted Subsidiary may temporarily reduce Indebtedness of the Company under
the Credit Agreement or temporarily invest such Net Proceeds in cash or Cash
Equivalents. Any Net Proceeds from an Asset Sale not applied or invested

                                       44
<PAGE>
as provided in the first sentence of this clause (b) within 270 days of such
Asset Sale will be deemed to constitute "Excess Proceeds."

     (c) Each date that the aggregate amount of Excess Proceeds in respect of
which an Asset Sale Offer (as defined below) has not been made exceeds $5.0
million shall be deemed an "Asset Sale Offer Trigger Date." As soon as
practicable, but in no event later than 20 Business Days after each Asset Sale
Offer Trigger Date, the Company shall commence an offer (an "Asset Sale Offer")
to purchase the maximum principal amount of Notes that may be purchased out of
the Excess Proceeds. Any Notes to be purchased pursuant to an Asset Sale Offer
shall be purchased pro rata based on the aggregate principal amount of Notes
outstanding, and all Notes shall be purchased at an offer price in cash in an
amount equal to 100% of the principal amount thereof, plus accrued and unpaid
interest to the date of purchase. To the extent that any Excess Proceeds remain
after completion of an Asset Sale Offer, the Company may use the remaining
amount for general corporate purposes otherwise permitted by this Indenture.
Upon the consummation of any Asset Sale Offer, the amount of Excess Proceeds
shall be deemed to be reset to zero.

     (d) Notice of an Asset Sale Offer shall be mailed by the Company not later
than the 20th Business Day after the related Asset Sale Offer Trigger Date to
each Holder at such Holder's registered address, stating: (i) that an Asset Sale
Offer Trigger Date has occurred and that the Company is offering to purchase the
maximum principal amount of Notes that may be purchased out of the Excess
Proceeds (to the extent provided in the immediately preceding clause (c)), at an
offer price in cash in an amount equal to 100% of the principal amount thereof,
plus accrued and unpaid interest to the date of the purchase (the "Asset Sale
Offer Purchase Date"), which shall be a Business Day, specified in such notice,
that is not earlier than 30 days or later than 60 days from the date such notice
is mailed; (ii) the amount of accrued and unpaid interest as of the Asset Sale
Offer Purchase Date; (iii) that any Note not tendered will continue to accrue
interest; (iv) that, unless the Company defaults in the payment of the purchase
price for the Notes payable pursuant to the Asset Sale Offer, any Notes accepted
for payment pursuant to the Asset Sale Offer shall cease to accrue interest
after the Asset Sale Offer Purchase Date; (v) the procedures, consistent with
this Indenture, to be followed by a Holder in order to accept an Asset Sale
Offer or to withdraw such acceptance; and (vi) such other information as may be
required by this Indenture and applicable laws and regulations.

     (e) On the Asset Sale Offer Purchase Date, the Company will (i) accept for
payment the maximum principal amount of Notes or portions thereof tendered
pursuant to the Asset Sale Offer that can be purchased out of Excess Proceeds
from such Asset Sale that are to be applied to an Asset Sale Offer, (ii) deposit
with the Paying Agent the aggregate purchase price of all Notes or portions
thereof accepted for payment, and (iii) deliver or cause to be delivered to the
Trustee all Notes tendered pursuant to the Asset Sale Offer. If less than all
Notes tendered pursuant to the Asset Sale Offer are accepted for payment by the
Company for any reason consistent with this Indenture, selection of the Notes to
be purchased by the Company shall be in compliance with the requirements of the
principal national securities exchange, if any, on which the Notes are listed
or, if the Notes are not so listed, on a pro rata basis or by lot; provided,
however, that Notes accepted for payment in part shall only be purchased in
integral multiples of $1,000. The Paying Agent shall promptly mail to each
Holder or portions thereof accepted for payment an amount equal to the purchase
price for such Notes plus accrued and unpaid interest thereon, and the Trustee
shall promptly authenticate and mail to such Holder accepted for payment in part
a Note equal in principal amount to any unpurchased portion of the Notes, and
any Note not accepted for payment in whole or in part shall be promptly returned
to the Holder of such Note. On and after an Asset Sale Offer Purchase Date,
interest will cease to accrue on the Notes or portions thereof accepted for
payment, unless the Company defaults in the payment of the purchase price
therefor. The Company will publicly announce the results of the Asset Sale Offer
on or as soon as practicable after the Asset Sale Offer Purchase Date.

                                       45
<PAGE>
     (f) This Section 4.16 shall not apply to a transaction consummated in
compliance with Section 5.01.

     (g) The Company shall comply with the applicable tender offer rules,
including the requirements of Section 14(e) and Rule 14e-1 under the Exchange
Act, and all other applicable securities laws and regulations in connection with
any Asset Sale Offer and will be deemed not to be in violation of any of the
covenants under this Indenture to the extent such compliance is in conflict with
such covenants.

     SECTION 4.17. Impairment of Security Interest. The Company shall not take
or knowingly omit to take any action which would materially impair the Liens in
favor of the Collateral Agent, on behalf of itself, the Trustee and the Holders,
with respect to any material portion of the Collateral securing the Notes. The
Company shall not grant to any Person (other than the Collateral Agent), or
permit any Person (other than the Collateral Agent) to retain any interest
whatsoever in the Collateral other than Permitted Liens or as otherwise
permitted by this Indenture. The Company shall not enter into any agreement that
requires the proceeds received from any sale of Collateral to be applied to
repay, redeem, defease or otherwise acquire or retire any Indebtedness of any
Person, other than as permitted by this Indenture, the Notes and the Collateral
Agreements. The Company will, at its sole cost and expense, execute and deliver
all such agreements and instruments as the Collateral Agent or the Trustee shall
reasonably request to more fully or accurately describe the property intended to
be Collateral or the obligations intended to be secured by the Collateral
Agreements. The Company will, at its sole cost and expense, file any such notice
filings or other agreements or instruments as may be required under applicable
law to perfect the Liens created by the Collateral Agreements, subject to
Permitted Liens.

     SECTION 4.18. Limitation on Liens. The Company will not, directly or
indirectly, create, incur, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired, or any income or profits therefrom, or assign or
convey any right to receive income therefrom, in each case, other than Permitted
Liens.

     SECTION 4.19. Business Activities. The Company will not engage in any
business other than the ownership of the Capital Stock of Phibro Animal Health
and activities incidental thereto, nor will the Company permit any of its
Restricted Subsidiaries to engage in any business other than such business as
conducted by them on the Issue Date and any Related Business.

     SECTION 4.20. Payments for Consent. The Company will not, nor will it
permit any of its Subsidiaries to, directly or indirectly, pay or cause to be
paid any consideration to or for the benefit of any Holder for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture, the Notes, the Registration Rights Agreement, the Collateral
Agreements or the Escrow Agreement unless such consideration is offered to be
paid or is paid to all Holders that consent, waive or agree to amend in the time
frame set forth in the solicitation documents relating to such consent, waiver
or agreement.

     SECTION 4.21. Limitation on Issuances and Sales of Capital Stock of
Subsidiaries. The Company will not permit or cause any of its Restricted
Subsidiaries to issue or sell any Capital Stock except:

          (i) to the Company or a Wholly Owned Restricted Subsidiary of the
     Company;

          (ii) issuances of director's qualifying shares or sales to foreign
     nationals of shares of Capital Stock of Foreign Restricted Subsidiaries to
     the extent required by applicable law;

                                       46
<PAGE>
          (iii) if, immediately after giving effect to such issuance or sale,
     such Restricted Subsidiary would no longer constitute a Restricted
     Subsidiary and any Investment in such Person remaining after giving effect
     to such issuance or sale would have been permitted to be made under Section
     4.10 if made on the date of such issuance or sale; or

          (iv) sales of (A) all of the Capital Stock of a Restricted Subsidiary
     of the Company or (B) Common Stock of a Foreign Subsidiary, in each case in
     compliance with the provisions of Section 4.16.

                                  ARTICLE FIVE

                              SUCCESSOR CORPORATION

     SECTION 5.01. Merger, Consolidation and Sale of Assets. The Company shall
not, in any single transaction or series of related transactions, consolidate or
merge with or into (whether or not the Company is the Surviving Person), or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets (determined on a consolidated
basis for the Company and its Restricted Subsidiaries) in one or more related
transactions to, another Person, nor shall the Company permit any Restricted
Subsidiary to enter into any such transaction or series of related transactions
if such transaction or series of related transactions, in the aggregate, would
result in a sale, assignment, transfer, lease, conveyance or other disposition
of all or substantially all of the properties and assets of the Company and the
Restricted Subsidiaries, taken as a whole, to another Person, unless:

          (i) the Surviving Person is a corporation organized or existing under
     the laws of the United States, any State thereof or the District of
     Columbia;

          (ii) the Surviving Person (if other than the Company) assumes (a) all
     the obligations of the Company hereunder and under the Notes and, if then
     in effect, the Registration Rights Agreement pursuant to a supplemental
     indenture or other written agreement, as the case may be, in a form
     reasonably satisfactory to the Trustee and (b) by amendment, supplement or
     other instrument (in form and substance satisfactory to the Trustee and the
     Collateral Agent), executed and delivered to the Trustee, all Obligations
     of the Company under the Collateral Agreements, and in connection therewith
     shall cause such instruments to be filed and recorded in such jurisdictions
     and take such other actions as may be required by applicable law to perfect
     or continue the perfection of the Lien created under the Collateral
     Agreements on the Collateral owned by or transferred to the surviving
     entity;

          (iii) immediately both before and after giving effect to such
     transaction, no Default or Event of Default shall have occurred and be
     continuing;

          (iv) after giving pro forma effect to such transaction, the Surviving
     Person (x) would have a Consolidated Net Worth equal to or greater than the
     Consolidated Net Worth of the Company immediately preceding such
     transaction and (y) would be permitted to incur at least $1.00 of
     additional Indebtedness pursuant to clause (a) of Section 4.12; and

          (v) the Company or the Surviving Person shall have delivered to the
     Trustee an Officers' Certificate and an Opinion of Counsel, each stating
     that such consolidation, merger, sale, assignment, transfer, lease,
     conveyance or other disposition and, if a supplemental indenture or any
     amendment or supplement to the Collateral Agreements is required in
     connection with such transaction, such supplemental indenture or such
     amendment or supplement comply with the

                                       47
<PAGE>
     applicable provisions of this Indenture and that all conditions precedent
     in this Indenture relating to such transaction have been satisfied to the
     extent such conditions are required to be satisfied thereunder either prior
     to or concurrent with the consummation of the applicable transaction.

     Notwithstanding clauses (iii) and (iv) above, any Restricted Subsidiary may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company.

     SECTION 5.02. Successor Corporation Substituted. In the event of any
transaction (other than a lease) described in and complying with the conditions
listed in Section 5.01 in which the Company is not the Surviving Person, such
Surviving Person shall succeed to, and be substituted for, and may exercise
every right and power of, the Company, and the Company shall be discharged from
its obligations under, this Indenture, the Notes, the Collateral Agreements and
the Registration Rights Agreement.

                                   ARTICLE SIX

                                    REMEDIES

     SECTION 6.01. Events of Default. "Events of Default", wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

          (a) a default for 30 days in the payment when due of premium, if any,
     or interest on or with respect to any Note;

          (b) a default in the payment when due of principal on any Note,
     whether upon maturity, acceleration, optional or mandatory redemption,
     required repurchase or otherwise;

          (c) failure to perform or comply with any covenant, agreement or
     warranty in this Indenture (other than the defaults specified in clauses
     (i) and (ii) above) or any Collateral Agreement which failure continues for
     30 days after written notice thereof has been given to the Company by the
     Trustee or to the Company and the Trustee by the Holders of at least 25% in
     aggregate principal amount of the then outstanding Notes;

          (d) the occurrence of one or more defaults under any agreements,
     indentures or instruments under which the Company or any Restricted
     Subsidiary then has outstanding Indebtedness in excess of $5.0 million in
     the aggregate and, if not already matured at its final maturity in
     accordance with its terms, such Indebtedness shall have been accelerated
     and such acceleration is not rescinded, annulled or cured within 10 days
     thereafter;

          (e) one or more judgments, orders or decrees for the payment of money
     in excess of $5.0 million, either individually or in the aggregate, shall
     be entered against the Company or any Restricted Subsidiary or any of their
     respective properties and which judgments, orders or decrees are not paid,
     discharged, bonded or stayed or stayed pending appeal for a period of 60
     days after their entry;

          (f) the Company or any Significant Subsidiary (A) commences a
     voluntary case or proceeding under any Bankruptcy Law with respect to
     itself, (B) consents to the entry of an order for relief against it in an
     involuntary case under any Bankruptcy Law, (C) consents to the appointment
     of a Custodian of it or for substantially all of its property, (D) makes a
     general

                                       48
<PAGE>
     assignment for the benefit of its creditors; or (E) takes any corporate
     action to authorize or effect any of the foregoing;

          (g) a court of competent jurisdiction enters an order or decree that
     (A) is an order for relief in respect of the Company or any Significant
     Subsidiary in an involuntary case under any Bankruptcy Law, (B) appoints a
     Custodian of the Company or any Significant Subsidiary or for substantially
     all of its property or (C) orders the winding-up or liquidation of its
     affairs; and such order or decree shall remain unstayed and in effect for a
     period of sixty (60) consecutive days; or

          (h) any Collateral Agreement at any time for any reason shall cease to
     be in full force and effect, or the Company denies that it has any further
     liability under any Collateral Agreement, or gives notice to such effect
     (other than by reason of the termination of this Indenture), or any
     Collateral Agreement at any time for any reason shall cease to be effective
     in all material respects to grant the Collateral Agent the Liens purported
     to be created thereby on a material portion of the Collateral thereunder,
     subject to Permitted Liens and no other Liens except as permitted by this
     Indenture or the Collateral Agreements, in each case for 30 days after the
     Company receives written notice thereof specifying such occurrence from the
     Trustee, the Collateral Agent or the Holders of at least 25% of the
     outstanding principal amount at maturity of the Notes.

     The Issuer shall provide an Officers' Certificate to the Trustee within
five days of the occurrence of any Default or Event of Default (provided,
however, that pursuant to Section 4.06 hereof the Company shall provide such
certification at least annually whether or not they know of any Default or Event
of Default) that has occurred and, if applicable, describe such Default or Event
of Default and the status thereof.

     SECTION 6.02. Acceleration. (a) If any Event of Default (other than as
specified in clause (f) or (g) of Section 6.01 with respect to the Issuer)
occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the then outstanding Notes may, and the Trustee at
the request of such Holders shall, declare all the Notes to be due and payable
immediately by notice in writing to the Issuer, and to the Issuer and the
Trustee if by the Holders, specifying the respective Event of Default and that
such notice is a "notice of acceleration," and the Notes shall become
immediately due and payable. Notwithstanding the foregoing, in the case of an
Event of Default arising from the events specified in clause (f) or (g) of
Section 6.01 with respect to the Issuer, the principal of, premium, if any, and
any accrued interest, if any, on all outstanding Notes of the Issuer shall ipso
facto become immediately due and payable without further action or notice.
Holders may not enforce this Indenture or the Notes except as provided in this
Indenture and under the Trust Indenture Act.

     (b) At any time after a declaration of acceleration, but before a judgment
or decree for payment of the money due has been obtained by the Trustee, the
Holders of a majority in principal amount of the Notes outstanding, by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if (i) the Company has paid or deposited with the Trustee a
sum sufficient to pay (A) all sums paid or advanced by the Trustee and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, (B) all overdue interest (including any interest accrued
subsequent to an Event of Default specified in clause (f) or (g) of Section 6.01
hereof) on all Notes, (C) the principal of and premium, if any, on any Notes
which have become due otherwise than by such declaration or occurrence of
acceleration and interest thereon at the rate borne by the Notes, and (D) to the
extent that payment of such interest is lawful, interest upon overdue interest
at the rate borne by the Notes; and (ii) all Events of Default, other than the
non-payment of principal of Notes which have become due solely by such
declaration or occurrence of acceleration, have been cured

                                       49
<PAGE>
or waived; and (iii) the rescission would not conflict with any judgment, order
or decree of any court of competent jurisdiction.

     (c) The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of all of the Holders
waive any existing Default or Event of Default and its consequences under this
Indenture except (i) a continuing Default or Event of Default in the payment of
the principal of, or premium, if any, or interest, if any, on, the Notes (which
may only be waived with the consent of each affected Holder), or (ii) in respect
of a covenant or provision which under this Indenture cannot be modified or
amended without the consent of each Holder. Subject to certain limitations, the
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from the Holders notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal,
premium or interest) if it determines that withholding notice is in their
interest.

     SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of the principal of, premium, if any, or
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.

     All rights of action and claims under this Indenture or the Notes may be
enforced by the Trustee even if it does not possess any of the Notes or does not
produce any of them in the proceeding. A delay or omission by the Trustee or any
Holder 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. Prior to the declaration of
acceleration of the Notes, the Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding by written notice to the Trustee
may, on behalf of the Holders of all the Notes, waive any existing Default or
Event of Default and its consequences under this Indenture, except a Default or
Event of Default specified in Section 6.01(a) or (b) or in respect of any
provision hereof which cannot be modified or amended without the consent of the
Holder so affected pursuant to Section 9.02. When a Default or Event of Default
is so waived, it shall be deemed cured and shall cease to exist. This Section
6.04 shall be in lieu of ss. 316(a)(1)(B) of the TIA and such ss. 316(a)(1)(B)
of the TIA is hereby expressly excluded from this Indenture and the Notes, as
permitted by the TIA.

     SECTION 6.05. Control by Majority. Subject to Section 2.09, the Holders of
the Notes may not enforce this Indenture or the Notes except as provided in this
Article Six and under the TIA. The Holders of not less than a majority in
aggregate principal amount of the outstanding Notes shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, provided, however, that the Trustee may refuse to follow any direction
(a) that conflicts with any rule of law or this Indenture, (b) that the Trustee
determines, in its sole discretion, may be unduly prejudicial to the rights of
another Holder, or (c) that may expose the Trustee to personal liability for
which reasonable indemnity provided to the Trustee against such liability shall
be inadequate; provided further, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such direction
or this Indenture. This Section 6.05 shall be in lieu of ss. 316(a)(1)(A) of the
TIA, and such ss. 316(a)(1)(A) of the TIA is hereby expressly excluded from this
Indenture and the Notes, as permitted by the TIA.

     SECTION 6.06. Limitation on Suits. No Holder of any Notes shall have any
right to institute any proceeding with respect to this Indenture or the Notes or
any remedy hereunder, unless the Holders of

                                       50
<PAGE>
at least 25% in aggregate principal amount of the outstanding Notes have made
written request, and offered reasonable indemnity satisfactory to the Trustee,
to the Trustee to institute such proceeding as Trustee under the Notes and this
Indenture, the Trustee has failed to institute such proceeding within 45 days
after receipt of such notice, request and offer of indemnity and the Trustee,
within such 45-day period, has not received directions inconsistent with such
written request by Holders of not less than a majority in aggregate principal
amount of the outstanding Notes.

     The foregoing limitations shall not apply to a suit instituted by a Holder
of a Note for the enforcement of the payment of the principal of, premium, if
any, or interest on, such Note on or after the respective due dates expressed or
provided for in such Note.

     A Holder may not use this Indenture to prejudice the rights of any other
Holders or to obtain priority or preference over such other Holders.

     SECTION 6.07. Right of Holders to Receive Payment. Notwithstanding any
other provision in this Indenture, the right of any Holder of a Note to receive
payment of the principal of, premium, if any, and interest on such Note, on or
after the respective due dates expressed or provided for in such Note, or to
bring suit for the enforcement of any such payment on or after the respective
due dates, is absolute and unconditional and shall not be impaired or affected
without the consent of the Holder.

     SECTION 6.08. Collection Suit by Trustee. If an Event of Default specified
in clause (a) or (b) of Section 6.01 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Issuer, or any other obligor on the Notes for the whole amount of the principal
of, premium, if any, and accrued interest remaining unpaid, together with
interest on overdue principal and, to the extent that payment of such interest
is lawful, interest on overdue installments of interest, in each case at the
rate per annum provided for by the Notes and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.

     SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents, counsel, accountants and experts) and the Holders allowed in any
judicial proceedings relative to the Issuer or Restricted Subsidiaries (or any
other obligor upon the Notes), their creditors or their property and shall be
entitled and empowered to participate as a member, voting or otherwise, of any
official committee of creditors appointed in such matter and to collect and
receive any monies or other property payable or deliverable on any such claims
and to distribute the same, and any Custodian in any such judicial proceedings
is hereby authorized by each Holder to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent and
counsel, and any other amounts due the Trustee under Section 7.07. The Issuer's
payment obligations under this Section 6.09 shall be secured in accordance with
the provisions of Section 7.07. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.

     SECTION 6.10. Priorities. If the Trustee collects any money pursuant to
this Article Six it shall pay out such money in the following order:

                                       51
<PAGE>
          First: to the Trustee for amounts due under Section 7.07 and to the
     Collateral Agent for amounts due under Section 7.12 as it relates to
     Section 7.07;

          Second: to Holders for interest accrued on the Notes, ratably, without
     preference or priority of any kind, according to the amounts due and
     payable on the Notes for interest;

          Third: to Holders for the principal amounts (including any premium)
     owing under the Notes, ratably, without preference or priority of any kind,
     according to the amounts due and payable on the Notes for the principal
     (including any premium); and

          Fourth: the balance, if any, to the Issuer or any other obligor on the
     Notes, as their interests may appear, or as a court of competent
     jurisdiction may direct.

     The Trustee, upon prior written notice to the Issuer, may fix a record date
and payment date for any payment to Holders pursuant to this Section 6.10.

     SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court may in its discretion require
the filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section 6.11 does not apply to any suit by the Trustee,
any suit by a Holder pursuant to Section 6.07, or a suit by a Holder or Holders
of more than 10% in aggregate principal amount of the outstanding Notes.

     SECTION 6.12. Restoration of Rights and Remedies. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture or any Note and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Trustee or to such Holder,
then and in every such case the Issuer, the Trustee and the Holders shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.

                                  ARTICLE SEVEN

                                     TRUSTEE

     SECTION 7.01. Duties of Trustee. (a) If an Event of Default has occurred
and is continuing, the Trustee may exercise such of the rights and powers vested
in it by this Indenture and shall use the same degree of care and skill in its
exercise thereof as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.

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

          (i) The Trustee need perform only those duties as are specifically set
     forth in this Indenture and no duties, covenants or obligations of the
     Trustee shall be implied in this Indenture.

          (ii) In the absence of bad faith on its part, the Trustee may
     conclusively rely, as to the truth of the statements and the correctness of
     the opinions expressed therein, upon certificates or opinions furnished to
     the Trustee and conforming to the requirements of this Indenture.

                                       52
<PAGE>
     However, in the case of any such certificates or opinions that by any
     provision hereof are specifically required to be furnished to the Trustee,
     the Trustee shall examine the certificates and opinions to determine
     whether or not they conform to the requirements of this Indenture (but need
     not confirm or investigate the accuracy or mathematical calculations or
     other facts stated therein or otherwise verify the contents thereof).

     (c) Notwithstanding anything to the contrary herein contained, the Trustee
may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:

          (i) This clause (c) does not limit the effect of clause (b) of this
     Section 7.01.

          (ii) 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.

          (iii) The Trustee shall not be liable with respect to any action it
     takes or omits to take in good faith in accordance with a direction
     received by it pursuant to Section 6.02, 6.04 or 6.05.

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

     (e) Every provision of this Indenture that in any way relates to the
Trustee is subject to clauses (a), (b), (c) and (d) of this Section 7.01 and
Section 7.02.

     (f) The Trustee shall not be liable for interest on any money or assets
received by it except as the Trustee may agree in writing with the Issuer.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.

     (g) The Trustee may refuse to perform any duty or exercise any right or
power hereunder unless (i) it is provided adequate funds to enable it to do so
and (ii) it receives indemnity satisfactory to it, in its sole discretion,
against any loss, liability, fee or expense.

     SECTION 7.02. Rights of Trustee. Subject to Section 7.01:

          (a) The Trustee may conclusively rely and shall be fully protected in
     acting or refraining from acting upon any document believed by it to be
     genuine and to have been signed or presented by the proper Person. The
     Trustee need not and shall not be required to investigate any fact or
     matter stated in the document.

          (b) Before the Trustee acts or refrains from acting, it may consult
     with counsel of its selection and may require an Officers' Certificate or
     an Opinion of Counsel, or both, which shall conform to Sections 11.04 and
     11.05. The Trustee shall not be liable for any action it takes or omits to
     take in good faith in reliance on such Officers' Certificate or Opinion of
     Counsel.

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

          (d) The Trustee shall not be liable for any action that it takes or
     omits to take in good faith which it reasonably believes to be authorized
     or within its rights or powers.

                                       53
<PAGE>
          (e) The Trustee shall not be bound to make any investigation into the
     facts or matters stated in any resolution, certificate, statement,
     instrument, opinion, notice, request, direction, consent, order, bond,
     debenture, or other paper or document, but the Trustee, in its discretion,
     may make such further inquiry or investigation into such facts or matters
     as it may see fit, and, if the Trustee shall determine to make such further
     inquiry or investigation, it shall be entitled, upon reasonable notice to
     the Issuer, to examine the books, records, and premises of the Issuer
     personally or by agent or attorney and to consult with the officers and
     representatives of the Issuer, including the Issuer's accountants and
     attorneys.

          (f) The Trustee shall be under no obligation to exercise any of the
     rights or powers vested in it by this Indenture at the request, order or
     direction of any of the Holders pursuant to the provisions of this
     Indenture, unless such Holders shall have offered to the Trustee security
     or indemnity satisfactory to the Trustee against the costs, expenses and
     liabilities which may be incurred by it in compliance with such request,
     order or direction.

          (g) The Trustee shall not be required to give any bond or surety in
     respect of the performance of its powers and duties hereunder.

          (h) Delivery of reports, information and documents to the Trustee
     under Section 4.08 is for informational purposes only and the Trustee's
     receipt of the foregoing shall not constitute constructive notice of any
     information contained therein or determinable from information contained
     therein, including the Issuer's compliance with any of its covenants
     hereunder (as to which the Trustee is entitled to rely exclusively on
     Officers' Certificates).

          (i) The permissive right of the Trustee to act hereunder shall not be
     construed as a duty.

     SECTION 7.03. Individual Rights of Trustee. The Trustee in its individual
or any other capacity may become the owner or pledgee of Notes and may otherwise
deal with the Issuer, any of its Subsidiaries, or its Affiliates with the same
rights it would have if it were not Trustee. Any 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 Notes, and it shall not be accountable for the Issuer's use of the
proceeds from the Notes, and it shall not be responsible for any statement of
the Company in this Indenture or any document entered into or issued in
connection with the issuance and sale of the Notes or any statement in the Notes
other than the Trustee's certificate of authentication.

     SECTION 7.05. Notice of Default. If a Default or an Event of Default occurs
and is continuing and if it is known to a Trust Officer, the Trustee shall mail
to each Holder notice of the uncured Default or Event of Default within 30 days
after obtaining knowledge thereof. Except in the case of a Default or an Event
of Default in payment of principal of, or interest on, any Note, including an
accelerated payment, a Default in payment on (i) the Change of Control Purchase
Date pursuant to a Change of Control Offer or (ii) on the Asset Sale Purchase
Date pursuant to a Asset Sale Offer and a Default in compliance with Section
5.01 hereof, the Trustee may withhold the notice if and so long as its Board of
Directors, the executive committee of its Board of Directors or a committee of
its directors and/or Trust Officers in good faith determines that withholding
the notice is in the interest of the Holders. The foregoing sentence of this
Section 7.05 shall be in lieu of the proviso to ss. 315(b) of the TIA and such
proviso to ss. 315(b) of the TIA is hereby expressly excluded from this
Indenture and the Notes, as permitted by the TIA.

                                       54
<PAGE>
     SECTION 7.06. Reports by Trustee to Holders. Within 60 days after January
15 of each year beginning with 2006, the Trustee shall, to the extent that any
of the events described in TIA ss. 313(a) occurred within the previous twelve
months, but not otherwise, mail to each Holder a brief report dated as of such
date that complies with TIA ss. 313(a). The Trustee also shall comply with TIA
ss.ss. 313(b), (c) and (d).

     A copy of each report at the time of its mailing to Holders shall be mailed
to the Issuer and filed with the Commission and each stock exchange, if any, on
which the Notes are listed.

     The Issuer shall promptly, and in any event within 10 days, notify the
Trustee if the Notes become listed on any stock exchange and the Trustee shall
comply with TIA ss. 313(d).

     SECTION 7.07. Compensation and Indemnity. The Issuer shall pay to the
Trustee from time to time such compensation for its services as has been agreed
to in writing signed by the Issuer and the Trustee. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Issuer shall reimburse the Trustee upon request for all reasonable
out-of-pocket disbursements, advances or expenses incurred or made by it in
connection with the performance of its duties under this Indenture, any
Collateral Agreement or the Escrow Agreement. Such expenses shall include the
reasonable fees and expenses of the Trustee's agents, counsel, accountants and
experts.

     The Issuer shall indemnify each of the Trustee (or any predecessor Trustee)
and its agents, employees, stockholders, Affiliates and directors and officers
for, and hold them each harmless against, any and all loss, liability, damage,
claim or expense (including reasonable fees and expenses of counsel), including
taxes (other than taxes based on the income of the Trustee) incurred by any of
them except for such actions to the extent caused by any gross negligence, bad
faith or willful misconduct on their part, arising out of or in connection with
the acceptance or administration of this trust including the reasonable costs
and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their rights, powers or
duties hereunder, under any Collateral Agreement or the Escrow Agreement. The
Trustee shall notify the Issuer promptly of any claim asserted against the
Trustee for which it may seek indemnity, provided, however, that failure to so
notify the Issuer shall not release the Issuer of its obligations hereunder or
under any Collateral Agreement or the Escrow Agreement unless and to the extent
such failure results in the forfeiture by the Issuer of any substantial rights
or defenses. At the Trustee's sole discretion, the Issuer shall defend the claim
and the Trustee shall cooperate and may participate in the defense; provided,
however, that any settlement of a claim shall be approved in writing by the
Trustee (such approval not to be unreasonably withheld) if such settlement would
result in an admission of liability by the Trustee or if such settlement would
not be accompanied by a full release of the Trustee for all liability arising
out of the events giving rise to such claim. Alternatively, the Trustee may at
its option have separate counsel of its own choosing and the Issuer shall pay
the reasonable fees and expenses of such counsel; provided that the Issuer will
not be required to pay such fees and expenses if the Issuer assumes the
Trustee's defense and there is no conflict of interest between the Issuer and
the Trustee in connection with such defense as reasonably determined by the
Trustee. The Issuer need not pay for any settlement made without its written
consent, which consent will not be unreasonably withheld. The Issuer need not
reimburse any expense or indemnify against any loss or liability to the extent
incurred by the Trustee through its negligence, bad faith or willful misconduct.

     To secure the Issuer's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Notes on all assets or money held or
collected by the Trustee, in its capacity as Trustee, except assets or money
held in trust to pay principal of or premium, if any, or interest on particular
Notes.

                                       55
<PAGE>
     When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(f) or (g) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.

     The provisions of this Section 7.07 shall survive the resignation or
removal of the Trustee and the discharge or termination of this Indenture or any
Collateral Agreement.

     SECTION 7.08. Replacement of Trustee. The Trustee may resign at any time by
so notifying the Issuer in writing at least 30 days in advance of such
resignation; provided, however, that no such resignation shall be effective
until a successor Trustee has accepted its appointment pursuant to this Section
7.08. The Holders of a majority in principal amount of the outstanding Notes may
remove the Trustee and appoint a successor Trustee with the Issuer's consent, by
so notifying the Issuer and the Trustee. The Issuer may remove the Trustee if:

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

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

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

     (4) the Trustee becomes incapable of acting.

     If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Issuer shall notify each Holder of such event and
shall promptly appoint a successor Trustee. Within one year after the successor
Trustee takes office, the Holders of a majority in aggregate principal amount of
the outstanding Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Issuer.

     A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Issuer. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee, subject to the lien provided in Section 7.07, 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 notice of such successor Trustee's
appointment to each Holder.

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

     Notwithstanding any resignation or replacement of the Trustee pursuant to
this Section 7.08, the Issuer's obligations under Section 7.07 shall continue
for the benefit of the retiring Trustee.

     SECTION 7.09. Successor Trustee by Merger, Etc. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all of its
corporate trust business to, another corporation, the resulting, surviving or
transferee corporation without any further act shall, if such resulting,
surviving or

                                       56
<PAGE>
transferee corporation is otherwise eligible hereunder, be the successor
Trustee; provided, however, that such corporation shall be otherwise qualified
and eligible under this Article Seven.

     SECTION 7.10. Eligibility; Disqualification. This Indenture shall always
have a Trustee who satisfies the requirement of TIA ss.ss. 310(a)(1), (2) and
(5). The Trustee (or, in the case of a Trustee that is a corporation included in
a bank holding company system, the related bank holding company) shall have a
combined capital and surplus of at least $100 million as set forth in its most
recent published annual report of condition, and have a Corporate Trust Office
in the City of New York. In addition, if the Trustee is a corporation included
in a bank holding company system, the Trustee, independently of such bank
holding company, shall meet the capital requirements of TIA ss. 310(a)(2). 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 Issuer are outstanding, if the requirements for such
exclusion set forth in TIA ss. 310(b)(1) are met. The provisions of TIA ss. 310
shall apply to the Issuer, as obligor of the Notes.

     SECTION 7.11. Preferential Collection of Claims Against the Issuer. 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 therein. The provisions
of TIA ss. 311 shall apply to the Issuer, as obligor of the Notes.

     SECTION 7.12. Trustee as Collateral Agent. References to the Trustee in
Sections 7.01(f), 7.02, 7.03, 7.04, 7.07 and 7.08 shall include the Trustee in
its role as Collateral Agent.

     SECTION 7.13. Co-Trustees, Co-Collateral Agents, Sub-Collateral Agent,
Separate Trustees and Separate Collateral Agents. At any time or times, for the
purpose of meeting the legal requirements of any jurisdiction in which any of
the Collateral may at the time be located, the Issuer, the Collateral Agent and
the Trustee shall have power to appoint, and, upon the written request of the
Trustee or of the Holders of at least 25% in principal amount of the Notes
outstanding, the Issuer shall for such purpose join with the Trustee in the
execution, delivery and performance of all instruments and agreements necessary
or proper to appoint, one or more Persons approved by the Trustee either to act
as co-trustee, jointly with the Trustee, of all or any part of the Collateral,
to act as co-collateral agent, jointly with the Collateral Agent, or to act as
separate trustees, separate collateral agents or sub-collateral agent of any
such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in the capacity
aforesaid, any property, title, right or power deemed necessary or desirable,
subject to the other provisions of this Section 7.13. If the Issuer does not
join in such appointment within 15 days after the receipt by it of a request so
to do, or in case an Event of Default has occurred and is continuing, the
Trustee alone shall have power to make such appointment.

     Should any written instrument from the Issuer be required by any
co-trustee, co-collateral agent, separate trustee, separate collateral agent or
sub-collateral agent so appointed for more fully confirming to such co-trustee,
co-collateral agent, separate trustee, separate collateral agent or
sub-collateral agent such property, title, right or power, any and all such
instruments shall, on request, be executed, acknowledged and delivered by the
Issuer.

     Every co-trustee, co-collateral agent, separate trustee, separate
collateral agent or sub-collateral agent shall, to the extent permitted by law,
but to such extent only, be appointed subject to the following terms, namely:

          (a) The Notes shall be authenticated and delivered, and all rights,
     powers, duties and obligations hereunder in respect of the custody of
     securities, cash and other personal property held

                                       57
<PAGE>
     by, or required to be deposited or pledged with, the Trustee hereunder,
     shall be exercised solely, by the Trustee.

          (b) The rights, powers, duties and obligations hereby conferred or
     imposed upon the Trustee in respect of any property covered by such
     appointment shall be conferred or imposed upon and exercised or performed
     by the Trustee or by the Trustee and such co-trustee or separate trustee
     jointly, or by the Collateral Agent and such co-collateral agent or
     separate collateral agent or sub-collateral agent, jointly as shall be
     provided in the instrument appointing such co-trustee, co-collateral agent,
     separate trustee, separate collateral agent or sub-collateral agent, except
     to the extent that under any law of any jurisdiction in which any
     particular act is to be performed, the Trustee or Collateral Agent shall be
     incompetent or unqualified to perform such act, in which event such rights,
     powers, duties and obligations (including the holding of title to the
     collateral or any portion thereof in any such jurisdiction) shall be
     exercised and performed singly by such co-trustee, co-collateral agent,
     separate trustee, separate collateral agent or sub-collateral agent, but
     solely at the discretion of the Trustee or Collateral Agent, as applicable.

          (c) The Trustee at any time, by an instrument in writing executed by
     it, with the concurrence of the Issuer evidenced by a Board Resolution, may
     accept the resignation of or remove any co-trustee, co-collateral agent,
     separate trustee, separate collateral agent or sub-collateral agent
     appointed under this Section 7.13, and, in case an Event of Default has
     occurred and is continuing, the Trustee shall have power to accept the
     resignation of, or remove, any such co-trustee, co-collateral agent,
     separate trustee, separate collateral agent or sub-collateral agent without
     the concurrence of the Issuer. Upon the written request of the Trustee, the
     Issuer shall join with the Trustee in the execution, delivery and
     performance of all instruments and agreements necessary or proper to
     effectuate such resignation or removal. A successor to any co-trustee,
     co-collateral agent, separate trustee, separate collateral agent or
     sub-collateral agent so resigned or removed may be appointed in the manner
     provided in this Section 7.13.

          (d) No co-trustee, co-collateral agent, separate trustee, separate
     collateral agent or sub-collateral agent hereunder shall be personally
     liable by reason of any act or omission of the Trustee, the Collateral
     Agent or any other such trustee or collateral agent hereunder.

     Any act of Holders delivered to the Trustee or Collateral Agent shall be
deemed to have been delivered to each such co-trustee, co-collateral agent,
separate trustee, separate collateral agent and sub-collateral agent.

     Any notice, request or other writing given to the Trustee or Collateral
Agent shall be deemed to have been given to each of the then separate trustees,
separate collateral agent, sub-collateral agent, co-trustees and co-collateral
agents, as effectively as if given to each of them. Every instrument appointing
any co-trustee, co-collateral agent, separate trustee, separate collateral agent
or sub-collateral agent shall refer to this Indenture and the conditions of this
Article 7. Each co-trustee, co-collateral agent, separate trustee, separate
collateral agent and sub-collateral agent, upon its acceptance of the trusts
conferred, shall be vested with the estates or property specified in its
instrument of appointment, either jointly with the Trustee or separately, as may
be provided therein, subject to all the provisions of this Indenture,
specifically including the benefit of every provision of this Indenture relating
to the conduct of, affecting the liability of, or affording protection or rights
(including the rights to compensation, reimbursement and indemnification
hereunder) to, the Trustee. Every such instrument shall be filed with the
Trustee.

                                       58
<PAGE>
                                 ARTICLE EIGHT

                     SATISFACTION AND DISCHARGE; DEFEASANCE

     SECTION 8.01. Satisfaction and Discharge of Indenture. This Indenture will
be discharged and will cease to be of further effect (except as to surviving
rights of registration of transfer or exchange of the Notes, as expressly
provided for in this Indenture) as to all outstanding Notes when:

          (i) either (A) all Notes theretofore authenticated and delivered
     (except lost, stolen or destroyed Notes which have been replaced or paid
     and Notes for whose payment money has theretofore been deposited in trust
     and thereafter repaid to the Issuer) have been delivered to the Trustee for
     cancellation or (B) all Notes not theretofore delivered to the Trustee for
     cancellation have become due and payable and the Issuer has irrevocably
     deposited or caused to be deposited with the Trustee an amount in United
     States Dollars sufficient to pay and discharge the entire indebtedness on
     the Notes not theretofore delivered to the Trustee for cancellation, for
     the principal of, premium, if any, interest, if any, to the date of
     deposit;

          (ii) the Issuer has paid or caused to be paid all other sums payable
     under this Indenture by the Company; and

          (iii) the Issuer has delivered to the Trustee an Officers' Certificate
     and an Opinion of Counsel each stating that all conditions precedent under
     this Indenture relating to the satisfaction and discharge of this Indenture
     have been complied with.

     SECTION 8.02. Defeasance or Covenant Defeasance. (a) Subject to the
satisfaction of the conditions in Section 8.02(c) hereof, the Issuer may, at its
option by Board Resolution, at any time, with respect to the Notes, elect to
have the obligations of the Issuer discharged with respect to the outstanding
Notes ("defeasance"). Upon such defeasance, the Issuer shall be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding
Notes, which shall thereafter be deemed to be "outstanding" only for the
purposes of Section 8.04 hereof and the other Sections of and matters under this
Indenture referred to in (i) and (ii) below, and to have satisfied all its other
obligations under such Notes and this Indenture, except for the following, which
shall survive until otherwise terminated or discharged hereunder: (i) the rights
of Holders of Notes to receive solely from the trust fund described in Section
8.02(c) and as more fully set forth in such Section, payments in respect of the
principal of, premium, if any, and interest, if any, on such Notes when such
payments are due, (ii) the Company's obligations under Sections 2.03, 2.05,
2.06, 2.07, 2.10 and 4.02, (iii) the rights, powers, trusts, duties and
immunities of the Trustee hereunder, including, without limitation, the
Trustee's rights under Section 7.07, and (iv) this Article Eight. Subject to
compliance with this Article Eight, the Company may exercise its option under
this Section 8.02(a) notwithstanding the prior exercise of its option under
Section 8.02(b) with respect to the Notes.

     (b) Subject to the satisfaction of the conditions in Section 8.02(c)
hereof, the Issuer may, at its option by Board Resolution, at any time, elect to
effect covenant defeasance ("covenant defeasance"). On and after the date such
conditions are satisfied, (i) the Issuer shall be released from its obligations
under any covenant or provision contained in Sections 4.03 (but only as to
Restricted Subsidiaries), 4.04, 4.05, 4.06, 4.07, 4.08 and 4.10 through 4.21,
(ii) clauses (c) and (d) of Section 6.01 hereof shall not apply, and (iii) the
provisions of Section 5.01 and the Notes shall thereafter be deemed to be not
"outstanding" for the purposes of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants and the provisions of Section 5.01, but shall continue to be deemed
"outstanding" for all other purposes hereunder and subject to any mandatory
requirements of the TIA. For this purpose, such covenant defeasance means that,
with respect to the Notes, the Issuer may

                                       59
<PAGE>
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such Section or Article, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
Section or Article or by reason of any reference in any such Section or Article
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under clauses (c)
and (d) of Section 6.01 hereof, but, except as specified above, the remainder of
this Indenture shall be unaffected thereby.

     (c) In order to effect defeasance or covenant defeasance, the following
conditions must be satisfied:

          (i) the Issuer shall irrevocably deposit with the Trustee, as trust
     funds in trust, for the benefit of the Holders, cash in United States
     Dollars, U.S. Government Obligations, or a combination thereof, in such
     amounts as will be sufficient, in the report of a nationally recognized
     firm of independent public accountants or a nationally recognized
     investment banking firm, to pay and discharge the principal of, premium, if
     any, and interest, if any, on the outstanding Notes to redemption or
     maturity;

          (ii) the Issuer shall have delivered to the Trustee an Opinion of
     Counsel in the United States to the effect that the Holders will not
     recognize income, gain or loss for Federal income tax purposes as a result
     of such defeasance or covenant defeasance, as the case may be, 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 or
     covenant defeasance, as the case may be, had not occurred (in the case of
     defeasance, such Opinion of Counsel must refer to and be based upon a
     ruling of the Internal Revenue Service or a change in applicable Federal
     income tax laws);

          (iii) no Default or Event of Default shall have occurred and be
     continuing on the date of such deposit or insofar as clause (f) or (g)
     under Section 6.01 is concerned, at any time during the period ending on
     the 91st day after the date of deposit;

          (iv) such defeasance or covenant defeasance shall not result in a
     breach or violation of, or constitute a Default under this Indenture or a
     default under any other agreement or instrument to which the Issuer is a
     party or by which it is bound;

          (v) the Issuer shall have delivered to the Trustee Opinions of Counsel
     to the effect that (A) the trust funds will not be subject to any rights of
     holders of Indebtedness (other than the Holders) and (B) after the 91st day
     following the deposit, the trust funds will not be subject to the effect of
     any applicable bankruptcy, insolvency, reorganization or similar laws
     affecting creditors' rights generally; and

          (vi) the Issuer shall have delivered to the Trustee an Officers'
     Certificate and Opinions of Counsel, each stating that all conditions
     precedent under this Indenture to either defeasance or covenant defeasance,
     as the case may be, have been complied with and that no violations under
     agreements governing any other outstanding Indebtedness would result
     therefrom.

     SECTION 8.03. Application of Trust Money. The Trustee or Paying Agent shall
hold in trust U.S. Legal Tender or U.S. Government Obligations deposited with it
pursuant to Section 8.01 or 8.02, and shall apply the deposited U.S. Legal
Tender and the money from U.S. Government Obligations in accordance with this
Indenture to the payment of the principal of and interest on the Notes. The
Trustee shall be under no obligation to invest said U.S. Legal Tender or U.S.
Government Obligations except as it may agree in writing with the Issuer.

                                       60
<PAGE>
     The Issuer shall pay, and indemnify the Trustee against, any tax, fee or
other charge imposed on or assessed against the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.01 or 8.02 or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of outstanding
Notes.

     SECTION 8.04. Repayment to the Issuer. Subject to Sections 8.01 and 8.02,
the Trustee and the Paying Agent shall promptly pay to the Issuer upon written
request any excess U.S. Legal Tender or U.S. Government Obligations held by them
at any time and thereupon shall be relieved from all liability with respect to
such money. The Trustee and the Paying Agent shall pay to the Issuer upon
request any money held by them for the payment of principal or interest that
remains unclaimed for one year; provided, however, that the Trustee or such
Paying Agent, before being required to make any payment, may at the expense of
the Issuer cause to be published once in a newspaper of general circulation in
the City of New York or mail to each Holder entitled to such money notice that
such money remains unclaimed and that after a date specified therein which shall
be at least 30 days from the date of such publication or mailing any unclaimed
balance of such money then remaining will be repaid to the Issuer. After payment
to the Issuer, Holders entitled to such money must look to the Issuer for
payment as general creditors unless an applicable law designates another Person.

     SECTION 8.05. Reinstatement. If the Trustee or Paying Agent is unable to
apply any U.S. Legal Tender or U.S. Government Obligations in accordance with
Section 8.01 or 8.02 by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Issuer's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.01 or 8.02, as the case may be, until such time
as the Trustee or Paying Agent is permitted to apply all such U.S. Legal Tender
or U.S. Government Obligations in accordance with Section 8.01 or 8.02, as the
case may be; provided, however, that if the Issuer has made any payment of
interest on or principal of any Notes because of the reinstatement of its
obligations, the Issuer shall be subrogated to the rights of the Holders of such
Notes to receive such payment from the U.S. Legal Tender or U.S. Government
Obligations held by the Trustee or Paying Agent.

     SECTION 8.06. Acknowledgment of Discharge by Trustee. After (i) the
conditions of Section 8.01 or 8.02(a) have been satisfied, (ii) the Issuer has
paid or caused to be paid all other sums payable hereunder by the Issuer and
(iii) the Issuer has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent referred to in
clause (i), above, relating to the satisfaction and discharge or defeasance of
this Indenture have been complied with, the Trustee upon request shall
acknowledge in writing the discharge of the Issuer's obligations under this
Indenture except for those surviving obligations specified in Section 8.01 or
8.02, as the case may be.

                                  ARTICLE NINE

                       AMENDMENTS, SUPPLEMENTS AND WAIVERS

     SECTION 9.01. Without Consent of Holders. The Issuer, when authorized by a
Board Resolution, and the Trustee, together, may amend or supplement this
Indenture, any Collateral Agreement, the Escrow Agreement or the Notes without
notice to or consent of any Holder:

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

          (ii) to provide for uncertificated Notes in addition to or in place of
     certificated Notes;

                                       61
<PAGE>
          (iii) to provide for the assumption of the Issuer's Obligations to
     Holders in the event of any Disposition involving the Issuer in which the
     Issuer is not the Surviving Person;

          (iv) to make any change that would provide any additional rights or
     benefits to the Holders or that does not adversely affect the rights of any
     such Holder; or

          (v) to comply with the requirements of the Commission in order to
     effect or maintain the qualification of this Indenture under the Trust
     Indenture Act.

     SECTION 9.02. With Consent of Holders. (a) Subject to Section 6.07, the
Issuer, when authorized by a Board Resolution, and the Trustee, together, with
the written consent of the Holder or Holders of at least a majority in aggregate
principal amount of the then outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for the Notes), may amend or
supplement this Indenture, any Collateral Agreement, the Escrow Agreement or the
Notes without notice to any other Holder. Subject to Section 6.02 and 6.07, the
Holder or Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes may waive compliance by the Issuer with any provision
of this Indenture, any Collateral Agreement, the Escrow Agreement or the Notes
without notice to any other Holder.

     (b) Notwithstanding Section 9.02(a) hereof, no amendment, supplement or
waiver, including a waiver pursuant to Section 6.04, shall, without the prior
written consent of each Holder of each Note affected thereby:

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

          (ii) reduce the principal of or change the fixed maturity of any Note,
     or alter or waive the provisions with respect to the redemption of the
     Notes in a manner adverse to the Holders other than with respect to a
     Change of Control Offer or an Asset Sale Offer;

          (iii) reduce the rate of or change the time for payment of interest on
     any Notes;

          (iv) waive a Default or Event of Default in the payment of principal
     of, premium, if any, or interest, if any, on the Notes (except that the
     Holders of at least a majority in aggregate principal amount of the then
     outstanding Notes may (a) rescind an acceleration of the Notes that
     resulted from a non-payment default, and (b) waive the payment default that
     resulted from such acceleration);

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

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

          (vii) following the occurrence of a Change of Control, amend, change
     or modify the Issuer's obligation to make and consummate a Change of
     Control Offer by reason of such a Change of Control or modify any of the
     provisions or definitions with respect thereto in a manner adverse to the
     Holders with respect to such Change of Control, or following the occurrence
     of an Asset Sale, amend, change or modify the Issuer's obligations to make
     and consummate an Asset Sale Offer with respect to such Asset Sale or
     modify any of the provisions or definitions with respect thereto in a
     manner adverse to the Holders with respect to such Asset Sale Offer; or

                                       62
<PAGE>
          (viii) release all or substantially all of the Collateral.

     SECTION 9.03. Compliance with TIA. Every amendment, waiver or supplement of
this Indenture, any Collateral Agreement, the Escrow Agreement or the Notes
shall comply with the TIA as then in effect; provided, however, that this
Section 9.03 shall not of itself require that this Indenture or the Trustee be
qualified under the TIA or constitute any admission or acknowledgment by any
party hereto that any such qualification is required prior to the time this
Indenture and the Trustee are required by the TIA to be so qualified.

     SECTION 9.04. Revocation and Effect of Consents. Until an amendment, waiver
or supplement becomes effective, a consent to it by a Holder is a continuing
consent by the Holder and every subsequent Holder of a Note or portion of a Note
that evidences the same debt as the consenting Holder's Note, even if notation
of the consent is not made on any Note. Subject to the following paragraph, any
such Holder or subsequent Holder may revoke the consent as to such Holder's Note
or portion of such Note by notice to the Trustee or the Issuer received before
the date on which the Trustee receives an Officers' Certificate certifying that
the Holders of the requisite principal amount of Notes have consented (and not
theretofore revoked such consent) to the amendment, supplement or waiver. An
amendment, supplement or waiver becomes effective upon receipt by the Trustee of
such Officers' Certificate and evidence of consent by the Holders of the
requisite percentage in principal amount of outstanding Notes.

     The Issuer may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be at least 30 days prior to the
first solicitation of such consent. If a record date is fixed, then
notwithstanding the second sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date (or their duly designated
proxies), and only those Persons, shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.

     After an amendment, supplement or waiver becomes effective, it shall bind
every Holder, unless it makes any change described in Section 9.02(b), in which
case, the amendment, supplement or waiver shall bind only each Holder of a Note
who has consented to it and every subsequent Holder of a Note or portion of a
Note that evidences the same debt as the consenting Holder's Note; provided,
however, that any such waiver shall not impair or affect the right of any Holder
to receive payment of principal of and interest on a Note, on or after the
respective due dates expressed in such Note, or to bring suit for the
enforcement of any such payment on or after such respective dates without the
consent of such Holder.

     SECTION 9.05. Notation on or Exchange of Notes. If an amendment, supplement
or waiver changes the terms of a Note, the Trustee may require the Holder of
such Note to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Note about the changed terms and return it to the Holder.
Alternatively, if the Issuer or the Trustee so determines, the Issuer in
exchange for the Note shall issue and the Trustee shall authenticate a new Note
that reflects the changed terms.

     SECTION 9.06. Trustee To Sign Amendments, Etc. The Trustee shall execute
any amendment, supplement or waiver authorized pursuant to this Article Nine;
provided, however, that the Trustee may, but shall not be obligated to, execute
any such amendment, supplement or waiver which affects the Trustee's own rights,
duties or immunities under this Indenture, any Collateral Agreement or the
Escrow Agreement. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel and an Officers' Certificate
each stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture. Such Opinion of Counsel shall not be an expense of the Trustee or the
Holders.

                                       63
<PAGE>
                                  ARTICLE TEN

                                    SECURITY

     SECTION 10.01. Grant of Security Interest. To secure the due and punctual
payment of the principal of, premium, if any, and interest on the Notes and
amounts due hereunder when and as the same shall be due and payable, whether on
an Interest Payment Date, at maturity, by acceleration, purchase, repurchase,
redemption or otherwise, and interest on the overdue principal of, premium, if
any, and interest (to the extent permitted by law), if any, on the Notes and the
performance of all other Obligations of the Issuer to the Holders, the
Collateral Agent or the Trustee under this Indenture and the Notes, as
applicable, the Company hereby covenants to execute and deliver the Collateral
Agreements concurrently with this Indenture. The Collateral Agreements shall
grant to the Collateral Agent for the benefit of each Secured Party Security
Interests in the Collateral and shall be deemed hereby incorporated by reference
herein to the same extent and as fully as if set forth in their entirety at this
place, and reference is made hereby to each Collateral Agreement for a more
complete description of the terms and provisions thereof.

     The Trustee and each Holder, by its acceptance of a Note, consents and
agrees to the terms of each Collateral Agreement, as the same may be in effect
or may be amended from time to time in accordance with its terms, and authorizes
and directs the Collateral Agent to enter into the Collateral Agreements and to
perform its obligations and exercise its rights thereunder in accordance
therewith. The Issuer shall, and shall cause each of its Subsidiaries to, do or
cause to be done, at its sole cost and expense, all such actions and things as
may be necessary or proper, or as may be required by the provisions of the
Collateral Agreements, to assure and confirm to the Trustee and the Collateral
Agent the Security Interests in the Collateral contemplated hereby and by the
Collateral Agreements, as from time to time constituted, so as to render the
same available for the security and benefit of this Indenture and of the Notes
secured hereby, according to the intent and purpose herein and therein
expressed. The Issuer shall, and shall cause each of its Subsidiaries to take
any and all actions required to cause the Collateral Agreements to create and
maintain, as security for the Obligations contained in this Indenture and the
Notes, valid and enforceable, perfected (except as expressly provided herein or
therein) Security Interests in and on all the Collateral, in favor of the
Collateral Agent, superior to and prior to the rights of all third Persons, and
subject to no other Liens, in each case, except as expressly provided herein or
therein.

     SECTION 10.02. Recording and Opinions. (a) The Issuer shall take or cause
to be taken all action required to perfect, maintain, preserve and protect the
Security Interests in the Collateral granted by the Collateral Agreements to the
extent set forth in such Collateral Agreement. The Issuer shall from time to
time promptly pay all financing and continuation statement recording and/or
filing fees, charges and taxes relating to this Indenture, the Collateral
Agreements, the Escrow Agreement and any amendments hereto or thereto and any
other instruments of further assurance required pursuant hereto or thereto.

     (b) The Issuer shall furnish to the Trustee and the Collateral Agent (if
other than the Trustee), on the Closing Date, at such time as required by
Section 314(b) of the TIA, and promptly after the execution and delivery of any
other instrument of further assurance or amendment granting, perfecting,
protecting, preserving or making effective a security interest pursuant to any
Collateral Agreement, an Opinion of Counsel either (i) stating that, in the
opinion of such counsel, this Indenture and the Collateral Agreements and
financing statements then executed and delivered, as applicable, and all other
instruments of further assurance or amendment then executed and delivered have
been properly recorded, registered and filed, and all certificates evidencing
capital stock pledged to the Trustee and the Holders under the Collateral
Agreements have been, subject to the terms of the Collateral Agreement,
delivered and duly endorsed in blank, to the extent necessary to perfect the
Security Interests created by this Indenture and the Collateral Agreements and
reciting the details of such action or referring to prior

                                       64
<PAGE>
Opinions of Counsel in which such details are given, and stating that as to such
Collateral Agreements and such other instruments, such recording, registering,
filing and delivery are the only recordings, registerings, filings and
deliveries necessary to perfect such security interest and that no
re-recordings, re-registerings, re-filings or re-deliveries are necessary to
maintain such perfection, and further stating that all financing statements and
continuation statements have been executed and filed, and all such certificates
have been delivered, that are necessary to perfect such security interests of
the Holders, the Trustee and the Collateral Agent hereunder and under the
Collateral Agreements or (ii) stating that, in the Opinion of such Counsel, no
such action is necessary to perfect any Security Interest created under this
Indenture, the Notes or any of the Collateral Agreements as intended by this
Indenture, the Notes and such Collateral Agreements.

     (c) Annually, within 30 days after August 1 and beginning with the year
2006, the Issuer shall furnish to the Trustee and the Collateral Agent (if other
than the Trustee), one or more Opinions of Counsel, dated as of such date,
either (i) stating that: (A) in the opinion of such counsel, action has been
taken with respect to the registering, recording, filing, re-recording,
re-registering and refiling of financing statements, continuation statements and
other documents, and delivery of all certificates, as are then necessary to
perfect or continue the perfection of the Security Interests created by the
Collateral Agreements, subject to the terms of the Collateral Agreements, and
reciting the details of such action or referring to prior Opinions of Counsel in
which such details are given; and (B) based on relevant laws as in effect on the
date of such Opinion of Counsel, all financing statements, continuation
statements and other documents have been executed (if necessary) and filed that
are necessary as of such date and during the succeeding 6 months fully to
maintain, perfect or continue the perfection of such Security Interests under
the Collateral Agreements with respect to the Collateral and to maintain,
preserve, and protect the rights of the Holders, the Collateral Agent and the
Trustee hereunder and under the Collateral Agreements or (ii) stating that, in
the opinion of such counsel, no such action is then necessary to perfect or
continue the perfection of such Security Interests.

     SECTION 10.03. Release of Collateral. (a) The Collateral Agent shall not at
any time release Collateral from the Security Interests created by this
Indenture and the Collateral Agreements unless such release is in accordance
with the provisions of this Indenture and the applicable Collateral Agreements.

     (b) At any time when a Default or an Event of Default shall have occurred
and be continuing, no release of Collateral pursuant to the provisions of this
Indenture and the Collateral Agreements shall be effective as against any
Secured Party.

     (c) The release of any Collateral from the terms of the Collateral
Agreements shall not be deemed to impair the security under this Indenture in
contravention of the provisions hereof if and to the extent the Collateral is
released pursuant to this Indenture and the Collateral Agreements. To the extent
applicable, the Issuer shall cause Section 314(d) of the TIA relating to the
release of property from the Security Interests created by this Indenture and
the Collateral Agreements to be complied with. Any certificate or opinion
required by Section 314(d) of the TIA may be made by an Officer of the Issuer,
except in cases where Section 314(d) of the TIA requires that such certificate
or opinion be made by an independent Person, which Person shall be an
independent engineer, appraiser or other expert selected or approved by the
Trustee in the exercise of reasonable care. A Person is "independent" if such
Person (a) is in fact independent, (b) does not have any direct financial
interest or any material indirect financial interest in the Issuer or in any
Affiliate of the Issuer and (c) is not an officer, employee, promoter,
underwriter, trustee, partner or director or person performing similar functions
to any of the foregoing for the Issuer. The Trustee and the Collateral Agent
shall be entitled to receive and conclusively rely upon a certificate provided
by any such Person confirming that such Person is independent within the
foregoing definition.

                                       65
<PAGE>
     SECTION 10.04. Specified Releases of Collateral. (a) The Issuer shall be
entitled to obtain a full release of items of Collateral (the "Released
Interests") from the Security Interests created by this Indenture and the
Collateral Agreements upon compliance with the conditions precedent set forth in
Sections 4.16, 8.01 or 8.02 of this Indenture and the applicable Collateral
Agreements. So long as no Default or Event of Default exists, upon the request
of the Issuer and the furnishing of each of the items required by Section
10.04(b), the Collateral Agent upon the direction of the Trustee (or the Trustee
if acting as Collateral Agent) shall forthwith take all necessary action (at the
request of and the expense of the Issuer, without recourse or warranty and
without any representation of any kind), including the delivery of appropriate
UCC-3 termination statements (and authorization to file such termination
statements) or any other filing required to be made, to release and reconvey to
the Issuer all of the Released Interests, and shall deliver such Released
Interests in its possession to the Issuer.

     (b) So long as no Default or Event of Default exists, the Issuer shall be
entitled to obtain a release of, and the Collateral Agent shall release, the
Released Interests upon compliance with the condition precedent that the Issuer
shall have satisfied all applicable conditions precedent to any such release set
forth in this Indenture, the applicable Collateral Agreements and shall have
delivered to the Trustee and the Collateral Agent the following, as applicable:

          (i) in connection with release of Collateral resulting from an Asset
     Sale under Section 4.16, written notice from the Company requesting the
     release of the Released Interests: (A) describing the proposed Released
     Interests; and (B) specifying the Fair Market Value of such Released
     Interests on a date within 60 days of such notice (the "Valuation Date");

          (ii) in connection with release of Collateral resulting from an Asset
     Sale under Section 4.16, an Officers' Certificate of the Company certifying
     that: (A) such Asset Sale complies with the terms and conditions of this
     Indenture with respect to such Asset Sale to the extent such terms and
     conditions are required to be satisfied hereunder either prior to or
     concurrent with the consummation of such Asset Sale; (B) there is no
     Default or Event of Default in effect or continuing on the date thereof or
     the date of such Asset Sale; (C) the release of the Collateral will not
     result in a Default or Event of Default under this Indenture; (D) the
     purchase price received is at least equal to the Fair Market Value of the
     Released Interests; (E) the release of such Released Interests would not be
     expected to interfere in any material respect with the Collateral Agent's
     ability to realize the value of the remaining Collateral and will not
     impair in any material respect the maintenance and operation of the
     remaining Collateral; and (F) all conditions precedent in this Indenture
     relating to the release in question have been or will be complied with; and

          (iii) in connection with release of Collateral resulting from an Asset
     Sale under Section 4.16, an Opinion of Counsel certifying that all
     conditions precedent to the release of the Released Interests have been met
     and that such release complies with the terms and conditions of this
     Indenture and the applicable Collateral Agreements.

          (iv) all applicable certificates, opinions and other documentation
     required by the TIA or this Indenture, if any.

     Upon compliance by the Issuer with the conditions precedent set forth
above, the Collateral Agent shall cause to be released and reconveyed, without
recourse and without representation or warranty of any kind, to the Issuer, the
Released Interests.

     (c) So long as no Default or Event of Default exists, the Issuer shall be
entitled to obtain a release of the Liens granted in favor of the Collateral
Agent for the benefit of itself, the Trustee and the

                                       66
<PAGE>
Holders on Collateral (including Collateral consisting of the Capital Stock of
any Restricted Subsidiary and any equipment that is obsolete or no longer useful
in the business of the Issuer) and proceeds thereof that is sold, conveyed or
otherwise disposed of by the Issuer (including by way of a sale-and-leaseback)
in the ordinary course of business, whether in a single transaction or a series
of related transactions, to any Person for Net Proceeds of $250,000 or less
shall be subject to termination and release upon the consummation of any such
sale, conveyance or disposition.

     (d) Upon compliance by the Issuer with the conditions precedent set forth
in clause (c) above, the Lien granted under the Collateral Agreements on such
items of Collateral shall terminate and be released automatically and without
any action by or on behalf of the Collateral Agent.

     SECTION 10.05. Form and Sufficiency of Release. In the event that the
Issuer has sold, exchanged, or otherwise disposed of or proposes to sell,
exchange or otherwise dispose of any portion of the Collateral that may be sold,
exchanged or otherwise disposed of by the Issuer, and the Issuer requests in
writing that the Collateral Agent furnish a written disclaimer, release or
quit-claim of any interest in such property under this Indenture and the
Collateral Agreements, the Collateral Agent shall execute, acknowledge and
deliver to the Issuer (in proper form) such an instrument promptly after
satisfaction of the conditions set forth herein for delivery of any such
release. Notwithstanding the preceding sentence, all purchasers and grantees of
any property or rights purporting to be released herefrom shall be entitled to
rely upon any release executed by the Collateral Agent hereunder as sufficient
for the purpose of this Indenture and as constituting a good and valid release
of the property therein described from the Lien of this Indenture or of the
Collateral Agreements.

     SECTION 10.06. Purchaser Protected. No purchaser or grantee of any property
or rights purporting to be released herefrom shall be bound to ascertain the
authority of the Collateral Agent to execute the release or to inquire as to the
existence of any conditions herein prescribed for the exercise of such
authority; nor shall any purchaser or grantee of any property or rights
permitted by this Indenture to be sold or otherwise disposed of by the Issuer be
under any obligation to ascertain or inquire into the authority of the Issuer to
make such sale or other disposition.

     SECTION 10.07. Authorization of Actions To Be Taken by the Collateral Agent
Under the Collateral Agreements. Subject to the provisions of the applicable
Collateral Agreements, the Trustee and each Holder, by acceptance of its
Note(s), agrees that (a) the Collateral Agent shall execute and deliver the
Collateral Agreements and act in accordance with the terms thereof, (b) the
Collateral Agent may, in its sole discretion and without the consent of the
Holders or the Trustee, take all actions they deem necessary or appropriate in
order to (i) enforce any of the terms of the Collateral Agreements and (ii)
collect and receive any and all amounts payable in respect of the Obligations of
the Issuer hereunder or under any Collateral Agreement or Note, and (c) the
Collateral Agent shall have power to institute and to maintain such suits and
proceedings as it may deem expedient to prevent any impairment of the Collateral
by any act that may be unlawful or in violation of the Collateral Agreements or
this Indenture, and suits and proceedings as the Collateral Agent may deem
expedient to preserve or protect its interests and the interests of the Trustee
and the Holders in the Collateral (including the power to institute and maintain
suits or proceedings to restrain the enforcement of or compliance with any
legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or compliance with,
such enactment, rule or order would impair the security interest thereunder or
be prejudicial to the interests of the Holders, the Trustee or the Collateral
Agent). Notwithstanding the foregoing, the Collateral Agent may, at the expense
of the Issuer, request the direction of the Holders with respect to any such
actions and upon receipt of the written consent of the Holders of at least a
majority in aggregate principal amount of the outstanding Notes, shall take such
actions.

                                       67
<PAGE>
     SECTION 10.08. Authorization of Receipt of Funds by the Collateral Agent
Under the Collateral Agreements. The Collateral Agent is authorized to receive
any funds for the benefit of the Holders distributed under the Collateral
Agreements for turnover to the Trustee to make further distributions of such
funds to any Secured Party in accordance with the provisions of Section 6.10 and
the other provisions of this Indenture.

     SECTION 10.09. Limitation on Duty of Collateral Agent in Respect of
Collateral; Indemnification. (a) Beyond the exercise of reasonable care in the
custody thereof, the Collateral Agent shall have no duty as to any Collateral in
its possession or control or in the possession or control of any agent or bailee
or any income thereon or as to preservation of rights against prior parties or
any other rights pertaining thereto and the Collateral Agent shall not be
responsible for filing any financing or continuation statements or recording any
documents or instruments in any public office at any time or times or otherwise
perfecting or maintaining the perfection of any security interest in the
Collateral. The Collateral Agent shall be deemed to have exercised reasonable
care in the custody of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which it accords its own property
and shall not be liable or responsible for any loss or diminution in the value
of any of the Collateral, by reason of the act or omission of any carrier,
forwarding agency or other agent or bailee selected by the Collateral Agent in
good faith.

     (b) The Collateral Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Liens in any of the Collateral, whether
impaired by operation of law or by reason of any action or omission to act on
its part hereunder, except to the extent such action or omission constitutes
gross negligence or willful misconduct on the part of the Collateral Agent, for
the validity or sufficiency of the Collateral or any agreement or assignment
contained therein, for the validity of the title of the Issuer to the
Collateral, for insuring the Collateral or for the payment of taxes, charges,
assessments or Liens upon the Collateral or otherwise as to the maintenance of
the Collateral. The Collateral Agent shall have no duty to ascertain or inquire
as to the performance or observance of any of the terms of this Indenture or any
Collateral Agreement.

     SECTION 10.10. Rights of the Issuer. So long as no Event of Default has
occurred and is continuing, and subject to certain terms and conditions in this
Indenture and the Collateral Agreements, the Issuer shall be entitled to receive
all cash dividends, interest and other payments made upon or with respect to the
Capital Stock of any of its Subsidiaries held as Collateral and to exercise any
voting, consensual and other rights pertaining to such Capital Stock. Upon the
occurrence and during the continuance of an Event of Default, upon notice from
the Collateral Agent, (a) all of the Issuer's rights to exercise such voting,
consensual or other rights shall cease and all such rights shall become vested
in the Collateral Agent, which, to the extent permitted by law, shall have the
sole right to exercise such voting, consensual or other rights, (b) all of the
Issuer's rights to receive all cash dividends, interest and other payments made
upon or with respect to the Collateral shall cease, and such cash dividends,
interest and other payments shall be paid to the Collateral Agent, and (c) the
Collateral Agent may sell the Collateral or any part thereof in accordance with
the applicable Collateral Agreement. All funds distributed under the Collateral
Agreement by the Collateral Agent shall be distributed by the Collateral Agent
in accordance with Section 6.11 this Indenture.

                                       68
<PAGE>
                                 ARTICLE ELEVEN

                                  MISCELLANEOUS

     SECTION 11.01. TIA Controls. If any provision of this Indenture limits,
qualifies, or conflicts with another provision which is required to be included
in this Indenture by the TIA, the required provision shall control; provided,
however, that this Section 11.01 shall not of itself require that this Indenture
or the Trustee be qualified under the TIA or constitute any admission or
acknowledgment by any party hereto that any such qualification is required prior
to the time this Indenture and the Trustee are required by the TIA to be so
qualified.

     SECTION 11.02. Notices. Any notices or other communications required or
permitted hereunder shall be in writing, and shall be sufficiently given if made
by hand delivery, by telex, by telecopier or overnight courier guaranteeing
next-day delivery or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:

     if to the Issuer:

          PAHC HOLDINGS CORPORATION
          c/o Phibro Animal Health Corporation
          65 Challenger Road
          Ridgefield Park, NJ 07660
          Facsimile: (201) 329-7399
          Attn: Chief Executive Officer

     with a copy to:

          Golenbock Eiseman Assor Bell & Peskoe LLP
          437 Madison Avenue
          35th Floor
          New York, NY 10022
          Facsimile: (212) 754-0330
          Attn: Laurence M. Bell, Esq.

     if to the Trustee or Collateral Agent:

          HSBC Bank USA, National Association
          452 5th Avenue
          New York, New York 10018
          Facsimile: 212 525-1300
          Attention: Issuer Services

     The Issuer, the Trustee or the Collateral Agent by written notice to the
other may designate additional or different addresses for notices to such
Person. Any notice or communication to the Issuer, the Trustee or the Collateral
Agent shall be deemed to have been given or made as of the date so delivered if
hand delivered; when answered back, if telexed; when receipt is acknowledged, if
faxed; and five (5) calendar days after mailing if sent by registered or
certified mail, postage prepaid (except that (i) the Trustee shall not be deemed
to have knowledge of such notice nor shall any time period within which the
Trustee is required to act as a result of such notice commence until the Trustee
actually receives the notice in question and (ii) a notice of change of address
shall not be deemed to have been given until actually received by the
addressee).

                                       69
<PAGE>
     Any notice or communication mailed to a Holder shall be mailed by first
class mail, certified or registered return receipt requested, or by overnight
courier guaranteeing next-day delivery to its address as it appears on the
registration books of the Registrar. Any notice or communication shall be mailed
to any Person as described in TIA ss. 313(c), to the extent required by the TIA.

     Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it.

     SECTION 11.03. Communications by Holders with Other Holders. Holders may
communicate pursuant to TIA ss. 312(b) with other Holders with respect to their
rights under this Indenture or the Notes. The Issuer, the Trustee, the Registrar
and any other Person shall have the protection of TIA ss. 312(c).

     SECTION 11.04. Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Issuer to the Trustee to take any action under
this Indenture, the Issuer shall if the Trustee shall so request furnish to the
Trustee:

     (1) an Officers' Certificate, in form and substance satisfactory to the
Trustee, stating that, in the opinion of the signers, all conditions precedent
to be performed by the Issuer, if any, provided for in this Indenture relating
to the proposed action have been complied with; and/or

     (2) an Opinion of Counsel stating that, in the opinion of such counsel, all
such conditions precedent to be performed by the Issuer, if any, provided for in
this Indenture relating to the proposed action have been complied with (which
counsel, as to factual matters, may rely on an Officers' Certificate).

     SECTION 11.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture, other than the Officers' Certificate required by
Section 4.06, shall include:

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

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

          (3) a statement that, in the opinion of such Person, he has made such
     examination or investigation as is reasonably 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 each such
     Person, such condition or covenant has been complied with; provided,
     however, that with respect to such matters of fact an Opinion of Counsel
     may rely on an Officers' Certificate or certificate of public officials,
     and provided, further, that an Opinion of Counsel may have qualifications
     for opinions of the type required.

     SECTION 11.06. Rules by Trustee, Paying Agent, Registrar. The Trustee may
make reasonable rules in accordance with the Trustee's customary practices for
action by or at a meeting of Holders. The Paying Agent or Registrar may make
reasonable rules for its functions.

                                       70
<PAGE>
     SECTION 11.07. Legal Holidays. A "Legal Holiday" used with respect to a
particular place of payment is a Saturday, a Sunday or a day on which banking
institutions in New York, New York or at such place of payment are not required
to be open. If a payment date is a Legal Holiday at such place, payment may be
made at such place on the next succeeding day that is not a Legal Holiday, and
no interest shall accrue for the intervening period.

     SECTION 11.08. Governing Law. THIS INDENTURE AND THE NOTES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT
THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

     SECTION 11.09. No Adverse Interpretation of Other Agreements. Indenture may
not be used to interpret another indenture, loan or debt agreement of the Issuer
or any of its Subsidiaries. Any such indenture, loan or debt agreement may not
be used to interpret this Indenture.

     SECTION 11.10. No Personal Liability. No recourse for the payment of the
principal of, premium, if any, interest on, if any, with respect to any of the
Notes or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Issuer in
this Indenture, the Registration Rights Agreement or in any of the Notes or
because of the creation of any Indebtedness represented thereby, shall be had
against any officer, employee, incorporator, direct or indirect controlling
person, shareholder, member, partner or Affiliate of the Issuer or of any
successor Person thereof. Each Holder, by accepting the Notes, and the
Collateral Agent and the Trustee, waive and release all such liability.

     SECTION 11.11. Successors. All agreements of the Issuer in this Indenture
and the Notes shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successors.

     SECTION 11.12. Duplicate Originals. All parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together shall represent the same agreement.

     SECTION 11.13. Severability. In case any one or more of the provisions in
this Indenture or in the Notes shall be held invalid, illegal or unenforceable,
in any respect for any reason, the validity, legality and enforceability of any
such provision in every other respect and of the remaining provisions shall not
in any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent permitted by law.

     SECTION 11.14. Jurisdiction; Waiver of Jury Trial. EACH PARTY HERETO HEREBY
EXPRESSLY AND IRREVOCABLY (I) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE
FEDERAL AND STATE COURTS SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK IN ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE; AND
(II) WAIVES (A) ITS RIGHT TO A TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS INDENTURE, AND (B) ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER
MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.

     SECTION 11.15. English Language. This Indenture has been negotiated and
executed in the English language. All certificates, reports, notices and other
documents and communications given or

                                       71
<PAGE>
delivered pursuant to this Indenture shall be in the English language, or
accompanied by a certified English translation thereof. Except in the case of
laws of, or official communications of, The Netherlands or Belgium, in the case
of any document originally issued in a language other than English, the English
language version of any such document shall for purposes of this Indenture and
absent manifest error, control the meaning of the matters set forth therein.

                                       72
<PAGE>
                                   SIGNATURES

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

                                      PAHC HOLDINGS CORPORATION

                                      By: /s/ Jack C. Bendheim
                                          --------------------------------------
                                          Name: Jack C. Bendheim
                                          Title President

Accepted and Agreed to:

HSBC BANK USA, NATIONAL ASSOCIATION,
as Trustee and Collateral Agent

By: /s/ Herawattee Alli
    -------------------------------
    Name: Herawattee Alli
    Title: Assistant Vice President
<PAGE>
                                                                       EXHIBIT A

                             [FACE OF INITIAL NOTE]

          THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.

          THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT), (B) IT IS A NON-U.S. PURCHASER AND IS ACQUIRING THIS
SECURITY IN AN OFFSHORE TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES
ACT, AND (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO
THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH PAHC
HOLDINGS CORPORATION OR ANY AFFILIATE OF PAHC HOLDINGS CORPORATION WAS THE OWNER
OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO PAHC
HOLDINGS CORPORATION OR ANY OF ITS SUBSIDIARIES, (B) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS 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 WHICH NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PURCHASERS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (E) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR (F)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO PAHC HOLDINGS CORPORATION'S AND THE TRUSTEE'S
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C), (D) OR
(F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FORGOING CASES, A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY
IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.

                                       A-1
<PAGE>
          UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, ITS NOMINEES AND THEIR
RESPECTIVE SUCCESSORS (THE "DEPOSITORY") TO A NOMINEE OF THE DEPOSITORY, OR BY
ANY SUCH NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH
SUCCESSOR DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TO AN ISSUER 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 DEPOSITORY (AND ANY PAYMENT HEREON IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY), 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 NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.16 OF THE INDENTURE.

                                       A-2
<PAGE>
                            PAHC HOLDINGS CORPORATION

                        15% Senior Secured Notes due 2010

No.                                                                   $

                                                                       CUSIP No.

          PAHC HOLDINGS CORPORATION, a Delaware corporation, promises to pay to
CEDE & CO., or registered assigns, the principal sum of [          ] DOLLARS on
February 1, 2010.

          Interest Rate: 15%

          Interest Payment Dates: February 1 and August 1, commencing August 1,
          2005.

          Record Dates: January 15 and July 15.

          Additional provisions of this Note are set forth on the reverse side
          of this Note.

          IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by one of its duly authorized officers.

                                      PAHC HOLDINGS CORPORATION

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

                                       A-3
<PAGE>
                              TRUSTEE'S CERTIFICATE
                                OF AUTHENTICATION

          HSBC Bank USA, National Association, as Trustee, certifies that this
is one of the Notes referred to in the within-mentioned Indenture.

                                         HSBC BANK USA, NATIONAL ASSOCIATION, as
                                         Trustee

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

Date of Authentication: February 10, 2005

                                       A-4
<PAGE>
                            [REVERSE OF INITIAL NOTE]

                        15% SENIOR SECURED NOTE DUE 2010

     1. Interest. PAHC HOLDINGS CORPORATION, a Delaware corporation (such
entity, and its successors and assigns under the Indenture hereinafter referred
to, and each other entity which is required to become the Company pursuant to
the Indenture, and its successors and assigns under the Indenture, being herein
called the "Company"), promises to pay interest on the principal amount of this
Note at the rate per annum shown above. The Company will pay interest
semi-annually on February 1 and August 1 of each year, commencing August 1,
2005. Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from February 10, 2005.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay, to the extent such payments are lawful, interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal and on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at 1% per annum in excess
of the rate borne by the Notes. The Company may, at its option, in lieu of
paying interest in cash on the Notes, pay interest on the Notes through the
issuance of PIK Notes in an aggregate principal amount equal to the amount of
interest (rounded to the nearest whole cent) that would be payable with respect
to the Notes if such interest were paid in cash; provided, however, that any
interest due and payable (i) on the Maturity Date or (ii) in connection with
redemptions or offers to purchase pursuant to Sections 3.03, 4.15 or 4.16 of the
Indenture (as defined below), in each case may only be paid by the Company in
cash. On each interest payment date on which the Company elects to pay interest
in the form of PIK Notes, the Trustee will, at the Company's request,
authenticate and deliver PIK Notes for original issuance to the holders of the
Notes on the relevant record date, as shown by the records of the Registrar, in
the aggregate principal amount required to pay such interest. Any PIK Notes so
issued will be dated the applicable interest payment date, will bear interest
from and after such date, will mature on February 1, 2010 and will be governed
by, and subject to the terms, provisions and conditions of, the Indenture (as
defined below) and will have the same rights and benefits as the Notes. Any PIK
Notes will be issued with the designation "PIK" on the face of such PIK Notes.

     2. Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) to the Persons who are registered Holders of Notes at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if Notes are canceled on registration of transfer or registration of
exchange (including pursuant to an Exchange Offer (as defined in the
Registration Rights Agreement)) after the Record Date. Holders must surrender
Notes 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 ("U.S. Legal Tender").
However, the Company may pay principal and interest by its check payable in such
U.S. Legal Tender. The Company may deliver any such interest payment to the
Paying Agent or to a Holder's registered address.

     3. Paying Agent and Registrar. Initially, HSBC Bank USA, National
Association, a New York banking corporation ("Trustee"), will act as Paying
Agent and Registrar. The Company may appoint and change any Paying Agent,
Registrar or co-Registrar without notice.

                                      A-5
<PAGE>
The Company and any of its Subsidiaries may act as Paying Agent, Registrar,
co-Registrar or transfer agent.

     4. Indenture. The Company issued the Notes under an Indenture dated as of
February 10, 2005 (the "Indenture"), among the Company, the Trustee and the
Collateral Agent. This Note is one of a duly authorized issue of Initial Notes
of the Company designated as its 15% Senior Secured Notes due 2010 (the "Initial
Notes"). The Notes include the Initial Notes, the PIK Notes, if any, and the
Exchange Notes issued in exchange for the Initial Notes and the PIK Notes, if
any, pursuant to the Registration Rights Agreement. The Initial Notes, the
Exchange Notes and the PIK Notes are treated as a single class of securities
under the Indenture. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect and amended,
on the date of the Indenture (the "TIA"). Terms defined in the Indenture and not
defined herein have the meanings ascribed thereto in the Indenture. The Notes
are subject to all such terms, and Holders are referred to the Indenture and the
TIA for a statement of those terms. Any conflict between this Note and the
Indenture will be governed by the Indenture.

     5. Mandatory Redemption.

          (a) Mandatory Redemption due to Operating Company Refinancing Event.
If an Operating Company Refinancing Event shall occur, the Company will be
required to redeem all of the Notes on a date (the "Mandatory Redemption Date")
that is not later than the 60th day following the date of such occurrence at the
redemption price (expressed as a percentage of the aggregate principal amount of
the Notes) then applicable for optional redemptions on the Mandatory Redemption
Date as set forth under Section 6(b) below, plus accrued and unpaid interest to
the Mandatory Redemption Date; provided, that if the Mandatory Redemption Date
is prior to June 1, 2005, the then applicable redemption price shall be deemed
to be 115.0%.

          (b) Mandatory Redemption due to the Failure to Escrow Release
Conditions. In the event that the Trustee has not received prior to 10:00 a.m.
(New York City time) on March 1, 2005 an Officers' Certificate from the Company
certifying that (1) it has satisfied the conditions under either clause (a)(i)
or (ii) of Section 1.3 of the Escrow Agreement and (2) it has made a demand on
the Escrow Agent pursuant to clause (a) of Section 1.3 of the Escrow Agreement
for the release of the funds from the Escrow Account, the Trustee shall give
written notice to the Escrow Agent pursuant to clause (b) of Section 1.3 of the
Escrow Agreement that a special redemption of the Notes will be made on March 1,
2005. The Trustee shall direct the Paying Agent to redeem the Notes at 100% of
their aggregate principal amount plus accrued and unpaid interest to such date
upon receipt of proceeds from the Escrow Account pursuant to clause (b) of
Section 1.3 of the Escrow Agreement.

     6. Optional Redemption.

          (a) No Optional Redemption Prior to June 1, 2005. The Notes are not
redeemable at the option of the Company, in whole or in part, at any time prior
to June 1, 2005.

          (b) Optional Redemption On or After June 1, 2005. The Notes are
redeemable at the option of the Company, in whole or in part, at any time on or
after June 1,

                                      A-6
<PAGE>
2005 at the redemption prices (expressed as percentages of the
principal amount of the Notes) set forth below plus in each case accrued and
unpaid interest and Additional Interest, if any, to the date of redemption, if
redeemed during the periods beginning on the dates indicated below:

<TABLE>
<CAPTION>
Period                               Percentage
------                               ----------
<S>                                  <C>
June 1, 2005......................     115.0%
February 1, 2007..................     110.0%
February 1, 2008..................     105.0%
February 1, 2009 and thereafter...     100.0%
</TABLE>

     7. Notice of Redemption. Notice of redemption will be mailed at least 30
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at its registered address. Notes in denominations larger than $1,000
may be redeemed in part.

          Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.

          Unless the Company fails to comply with the preceding paragraph and
defaults in the payment of such Redemption Price plus accrued interest, if any,
interest on the Notes to be redeemed will cease to accrue on and after the
applicable Redemption Date, whether or not such Notes are presented for payment.

     8. Offers to Purchase. Sections 4.15 and 4.16 of the Indenture provide that
upon the occurrence of a Change of Control of the Company and after certain
Asset Sales, and subject to further limitations contained therein, the Company
will make an offer to purchase certain amounts of the Notes in accordance with
the procedures set forth in the Indenture.

     9. The Registration Rights Agreement. Pursuant to the Registration Rights
Agreement between the Company and the Initial Purchaser named therein, the
Company has made certain covenants as set forth therein with respect to
consummation of an Exchange Offer (as defined in the Registration Rights
Agreement). Upon such exchange offering, the Holders of Notes shall have the
right, subject to compliance with securities laws, to exchange such Notes for
15% Senior Secured Notes due 2010, which have been registered under the
Securities Act (the "Exchange Notes"), identical in all material respects to the
Notes, except for restrictive legends and additional interest provisions. The
Holders of the Initial Notes shall be entitled to receive certain Additional
Interest in the event such exchange offer is not consummated and upon certain
other conditions, all pursuant to and in accordance with the terms of the
Registration Rights Agreement.

     10. Denominations. The Notes are in registered form, without coupons, and
in denominations of $1,000 and integral multiples thereof.

                                      A-7
<PAGE>
     11. Persons Deemed Owners. The registered Holder of this Note may be
treated as the owner of it for all purposes.

     12. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for one year, the Trustee or Paying Agent shall pay the money
back to the Company at its written 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 may terminate some or all of its obligations under the Notes 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 Notes to redemption
or maturity, as the case may be.

     14. Amendment, Waiver. Subject to Section 6.07 of the Indenture, the
Company, when authorized by a Board Resolution, and the Trustee, together, with
the written consent of the Holder or Holders of at least a majority in aggregate
principal amount of the then outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for the Notes), may amend or
supplement the Indenture or the Notes without notice to any other Holder.
Subject to Section 6.02 and 6.07 of the Indenture, the Holder or Holders of not
less than a majority in aggregate principal amount of the then outstanding Notes
may waive compliance by the Company with any provision of the Indenture or the
Notes without notice to any other Holder. Subject to certain exceptions set
forth in the Indenture, the Company, when authorized by a Board Resolution, and
the Trustee, together, may amend or supplement the Indenture or the Notes
without notice to or consent of any Holder in order to cure any ambiguity,
defect or inconsistency, provide for uncertificated Notes in addition to or in
place of certificated Notes; provide for the assumption of the Company's
Obligations to Holders in the event of any Disposition involving the Company in
which the Company is not the Surviving Person, make any change that would
provide any additional rights or benefits to the Holders or that does not
adversely affect the rights of any such Holder; or comply with the requirements
of the Commission in order to effect or maintain the qualification of this
Indenture under the Trust Indenture Act.

     15. Trustee Dealings with the Company. Subject to certain limitations
imposed by the TIA, the Trustee under the Indenture, in its individual or any
other capacity, may become the owner or pledgee of Notes and may otherwise deal
with and collect obligations owed to it by the Company or any of its Affiliates
and may otherwise deal with the Company or any of its Affiliates with the same
rights it would have if it were not Trustee.

     16. No Recourse Against Others. No recourse for the payment of the
principal of, premium, if any, interest on, if any, with respect to any of the
Notes or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
the Indenture, the Registration Rights Agreement or in any of the Notes or
because of the creation of any Indebtedness represented thereby, shall be had
against any officer, employee, incorporator, direct or indirect controlling
person, shareholder, member, partner or Affiliate of the Company or of any
successor Person thereof. Each Holder, by accepting the Notes, waives and
releases all such liability.

                                      A-8
<PAGE>
     17. Governing Law. THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

     18. Waiver of Jury Trial. EACH OF THE PARTIES HERETO AND THE HOLDERS (BY
THEIR ACCEPTANCE OF A NOTE) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR IN CONNECTION WITH THE INDENTURE, THIS NOTE, THE COLLATERAL
AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED BY THE INDENTURE.

     19. Authentication. This Note 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 Note.

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

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

          The Company will furnish to any Holder upon written request and
without charge to the Holder a copy of the Indenture. Requests may be made to:
PAHC Holdings Corporation, c/o Phibro Animal Health Corporation, 65 Challenger
Road, Ridgefield Park, NJ 07660, Tel: (201) 329-7300, Attention: Corporate Legal
Department.

                                      A-9
<PAGE>
                                 ASSIGNMENT FORM

          If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:

I or we assign and transfer this Note to:

________________________________________________________________________________

________________________________________________________________________________

                  (Print or type name, address and zip code and
                  social security or tax ID number of assignee)

and irrevocably appoint
                        ________________________________________________________

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

Dated: __________________________         Signed:
                                                  ------------------------------
                                                  (Sign exactly as your name
                                                  appears on the other side of
                                                  this Note)

Signature Guarantee:
                      -----------------

                                      A-10
<PAGE>
                       OPTION OF HOLDER TO ELECT PURCHASE

          If you want to elect to have this Note purchased by the Company
pursuant to Section 4.15 and 4.16 of the Indenture, check the box: [ ]

          If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.15 or 4.16 of the Indenture, state the amount:
$______________

Date: ___________________________         Your Signature:
                                                          ----------------------
                                                          (Sign exactly as your
                                                          name appears on the
                                                          other side of the
                                                          Note)

                                          Signature Guarantee:
                                                               -----------------
                                                               (Signature must
                                                               be guaranteed)

                                      A-11
<PAGE>
                                                                       EXHIBIT B

                             [FACE OF EXCHANGE NOTE]

                            PAHC HOLDINGS CORPORATION

                        15% Senior Secured Notes due 2010

No.                                                                   $

                                                                       CUSIP No.

          PAHC HOLDINGS CORPORATION, a Delaware corporation, promises to pay to
CEDE & CO., or registered assigns, the principal sum of [               ]
DOLLARS on February 1, 2010.

          Interest Rate: 15%

          Interest Payment Dates: February 1 and August 1, commencing August 1,
2005.

          Record Dates: January 15 and July 15.

          Additional provisions of this Note are set forth on the reverse side
of this Note.

          IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by one of its duly authorized officers.

                                          PAHC HOLDINGS CORPORATION

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

                                      B-1
<PAGE>
                              TRUSTEE'S CERTIFICATE
                                OF AUTHENTICATION

          The HSBC Bank USA, National Association, as Trustee, certifies that
this is one of the Notes referred to in the within-mentioned Indenture.

                                          HSBC BANK USA, NATIONAL ASSOCIATION,
                                          as Trustee

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

Date of Authentication: February 10, 2005

                                       B-2
<PAGE>
                           [REVERSE OF EXCHANGE NOTE]

                        15% SENIOR SECURED NOTE DUE 2010

     1. Interest. PAHC HOLDINGS CORPORATION, a Delaware corporation (such
entity, and its successors and assigns under the Indenture hereinafter referred
to, and each other entity which is required to become the Company pursuant to
the Indenture, and its successors and assigns under the Indenture, being herein
called the "Company"), promises to pay interest on the principal amount of this
Note at the rate per annum shown above. The Company will pay interest
semi-annually on February 1 and August 1 of each year, commencing August 1,
2005. Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from February 10, 2005.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay, to the extent such payments are lawful, interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal and on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at 1% per annum in excess
of the rate borne by the Notes. The Company may, at its option, in lieu of
paying interest in cash on the Notes, pay interest on the Notes through the
issuance of PIK Notes in an aggregate principal amount equal to the amount of
interest (rounded to the nearest whole cent) that would be payable with respect
to the Notes if such interest were paid in cash; provided, however, that any
interest due and payable (i) on the Maturity Date or (ii) in connection with
redemptions or offers to purchase pursuant to Sections 3.03, 4.15 or 4.16 of the
Indenture (as defined below), in each case may only be paid by the Company in
cash. On each interest payment date on which the Company elects to pay interest
in the form of PIK Notes, the Trustee will, at the Company's request,
authenticate and deliver PIK Notes for original issuance to the holders of the
Notes on the relevant record date, as shown by the records of the Registrar, in
the aggregate principal amount required to pay such interest. Any PIK Notes so
issued will be dated the applicable interest payment date, will bear interest
from and after such date, will mature on February 1, 2010 and will be governed
by, and subject to the terms, provisions and conditions of, the Indenture (as
defined below) and will have the same rights and benefits as the Notes. Any PIK
Notes will be issued with the designation "PIK" on the face of such PIK Notes.

     2. Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) to the Persons who are registered Holders of Notes at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if Notes are canceled on registration of transfer or registration of
exchange (including pursuant to an Exchange Offer (as defined in the
Registration Rights Agreement)) after the Record Date. Holders must surrender
Notes 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 ("U.S. Legal Tender").
However, the Company may pay principal and interest by its check payable in such
U.S. Legal Tender. The Company may deliver any such interest payment to the
Paying Agent or to a Holder's registered address.

     3. Paying Agent and Registrar. Initially, HSBC Bank USA, National
Association, a New York banking corporation ("Trustee"), will act as Paying
Agent and Registrar. The Company may appoint and change any Paying Agent,
Registrar or co-Registrar without notice.

                                      B-3
<PAGE>
The Company and any of its Subsidiaries may act as Paying Agent, Registrar,
co-Registrar or transfer agent.

     4. Indenture. The Company issued the Notes under an Indenture dated as of
February 10, 2005 (the "Indenture"), among the Company, the Trustee and the
Collateral Agent. This Note is one of a duly authorized issue of Initial Notes
of the Company designated as its 15% Senior Secured Notes due 2010 (the "Initial
Notes"). The Notes include the Initial Notes, the PIK Notes, if any, and the
Exchange Notes issued in exchange for the Initial Notes and the PIK Notes, if
any, pursuant to the Registration Rights Agreement. The Initial Notes, the
Exchange Notes and the PIK Notes are treated as a single class of securities
under the Indenture. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect and amended,
on the date of the Indenture (the "TIA"). Terms defined in the Indenture and not
defined herein have the meanings ascribed thereto in the Indenture. The Notes
are subject to all such terms, and Holders are referred to the Indenture and the
TIA for a statement of those terms. Any conflict between this Note and the
Indenture will be governed by the Indenture.

     5. Mandatory Redemption.

          (a) Mandatory Redemption due to Operating Company Refinancing Event.
If an Operating Company Refinancing Event shall occur, the Company will be
required to redeem all of the Notes on a date (the "Mandatory Redemption Date")
that is not later than the 60th day following the date of such occurrence at the
redemption price (expressed as a percentage of the aggregate principal amount of
the Notes) then applicable for optional redemptions on the Mandatory Redemption
Date as set forth under Section 6(b) below, plus accrued and unpaid interest to
the Mandatory Redemption Date; provided, that if the Mandatory Redemption Date
is prior to June 1, 2005, the then applicable redemption price shall be deemed
to be 115.0%.

          (b) Mandatory Redemption due to the Failure to Escrow Release
Conditions. In the event that the Trustee has not received prior to 10:00 a.m.
(New York City time) on March 1, 2005 an Officers' Certificate from the Company
certifying that (1) it has satisfied the conditions under either clause (a)(i)
or (ii) of Section 1.3 of the Escrow Agreement and (2) it has made a demand on
the Escrow Agent pursuant to clause (a) of Section 1.3 of the Escrow Agreement
for the release of the funds from the Escrow Account, the Trustee shall give
written notice to the Escrow Agent pursuant to clause (b) of Section 1.3 of the
Escrow Agreement that a special redemption of the Notes will be made on March 1,
2005. The Trustee shall direct the Paying Agent to redeem the Notes at 100% of
their aggregate principal amount plus accrued and unpaid interest to such date
upon receipt of proceeds from the Escrow Account pursuant to clause (b) of
Section 1.3 of the Escrow Agreement.

     6. Optional Redemption.

          (a) No Optional Redemption Prior to June 1, 2005. The Notes are not
redeemable at the option of the Company, in whole or in part, at any time prior
to June 1, 2005.

          (b) Optional Redemption On or After June 1, 2005. The Notes are
redeemable at the option of the Company, in whole or in part, at any time on or
after June 1,

                                      B-4
<PAGE>
2005 at the redemption prices (expressed as percentages of the principal amount
of the Notes) set forth below plus in each case accrued and unpaid interest and
Additional Interest, if any, to the date of redemption, if redeemed during the
periods beginning on the dates indicated below:

<TABLE>
<CAPTION>
Period                               Percentage
------                               ----------
<S>                                  <C>
June 1, 2005......................     115.0%
February 1, 2007..................     110.0%
February 1, 2008..................     105.0%
February 1, 2009 and thereafter...     100.0%
</TABLE>

     7. Notice of Redemption. Notice of redemption will be mailed at least 30
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at its registered address. Notes in denominations larger than $1,000
may be redeemed in part.

          Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.

          Unless the Company fails to comply with the preceding paragraph and
defaults in the payment of such Redemption Price plus accrued interest, if any,
interest on the Notes to be redeemed will cease to accrue on and after the
applicable Redemption Date, whether or not such Notes are presented for payment.

     8. Offers to Purchase. Sections 4.15 and 4.16 of the Indenture provide that
upon the occurrence of a Change of Control of the Company and after certain
Asset Sales, and subject to further limitations contained therein, the Company
will make an offer to purchase certain amounts of the Notes in accordance with
the procedures set forth in the Indenture.

     9. Denominations. The Notes are in registered form, without coupons, and in
denominations of $1,000 and integral multiples thereof.

     10. Persons Deemed Owners. The registered Holder of this Note may be
treated as the owner of it for all purposes.

     11. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for one year, the Trustee or Paying Agent shall pay the money
back to the Company at its written 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.

     12. Discharge and Defeasance. Subject to certain conditions, the Company at
any time may terminate some or all of its obligations under the Notes 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 Notes to redemption
or maturity, as the case may be.

                                      B-5
<PAGE>
     13. Amendment, Waiver. Subject to Section 6.07 of the Indenture, the
Company, when authorized by a Board Resolution, and the Trustee, together, with
the written consent of the Holder or Holders of at least a majority in aggregate
principal amount of the then outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for the Notes), may amend or
supplement the Indenture or the Notes without notice to any other Holder.
Subject to Section 6.02 and 6.07 of the Indenture, the Holder or Holders of not
less than a majority in aggregate principal amount of the then outstanding Notes
may waive compliance by the Company with any provision of the Indenture or the
Notes without notice to any other Holder. Subject to certain exceptions set
forth in the Indenture, the Company, when authorized by a Board Resolution, and
the Trustee, together, may amend or supplement the Indenture or the Notes
without notice to or consent of any Holder in order to cure any ambiguity,
defect or inconsistency, provide for uncertificated Notes in addition to or in
place of certificated Notes; provide for the assumption of the Company's
Obligations to Holders in the event of any Disposition involving the Company in
which the Company is not the Surviving Person, make any change that would
provide any additional rights or benefits to the Holders or that does not
adversely affect the rights of any such Holder; or comply with the requirements
of the Commission in order to effect or maintain the qualification of this
Indenture under the Trust Indenture Act.

     14. Trustee Dealings with the Company. Subject to certain limitations
imposed by the TIA, the Trustee under the Indenture, in its individual or any
other capacity, may become the owner or pledgee of Notes and may otherwise deal
with and collect obligations owed to it by the Company or any of its Affiliates
and may otherwise deal with the Company or any of its Affiliates with the same
rights it would have if it were not Trustee.

     15. No Recourse Against Others. No recourse for the payment of the
principal of, premium, if any, interest on, if any, with respect to any of the
Notes or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
the Indenture, the Registration Rights Agreement or in any of the Notes or
because of the creation of any Indebtedness represented thereby, shall be had
against any officer, employee, incorporator, direct or indirect controlling
person, shareholder, member, partner or Affiliate of the Company or of any
successor Person thereof. Each Holder, by accepting the Notes, waives and
releases all such liability.

     16. Governing Law. THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

     17. Waiver of Jury Trial. EACH OF THE PARTIES HERETO AND THE HOLDERS (BY
THEIR ACCEPTANCE OF A NOTE) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR IN CONNECTION WITH THE INDENTURE, THIS NOTE, THE COLLATERAL
AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED BY THE INDENTURE.

                                      B-6
<PAGE>
     18. Authentication. This Note 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 Note.

     19. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants
by the entireties), JT TEN (= joint tenants with 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 to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers either as
printed on the Notes or as contained in any notice of redemption and reliance
may be placed only on the other identification numbers placed thereon.

          The Company will furnish to any Holder upon written request and
without charge to the Holder a copy of the Indenture. Requests may be made to:
PAHC Holdings Corporation, c/o Phibro Animal Health Corporation, 65 Challenger
Road, Ridgefield Park, NJ 07660, Tel: (201) 329-7300, Attention: Corporate Legal
Department.

                                      B-7
<PAGE>
                                 ASSIGNMENT FORM

          If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:

I or we assign and transfer this Note to:

________________________________________________________________________________

________________________________________________________________________________
                  (Print or type name, address and zip code and
                  social security or tax ID number of assignee)

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

Dated:                                      Signed:
       --------------                               ----------------------------
                                                    (Sign exactly as your name
                                                    appears on the other side of
                                                    this Note)

Signature Guarantee:
                     --------------------

                                      B-8
<PAGE>
                       OPTION OF HOLDER TO ELECT PURCHASE

          If you want to elect to have this Note purchased by the Company
pursuant to Section 4.15 and 4.16 of the Indenture, check the box: [ ]

          If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.15 or 4.16 of the Indenture, state the amount:
$______________

Date:                       Your Signature:
     ----------------                       ------------------------------------
                                            (Sign exactly as your name appears
                                             on the other side of the Note)

                            Signature Guarantee:
                                                 -------------------------------
                                                (Signature must be guaranteed)

                                      B-9
<PAGE>
                                                                       EXHIBIT C

                            Form of Certificate To Be
                          Delivered in Connection with
                    Transfers to Non-QIB Accredited Investors

                                                               [________], [___]

[___________________________]

[___________________________]

[___________________________]

     Re: PAHC Holdings Corporation

Ladies and Gentlemen:

          In connection with our proposed purchase of 15% Senior Secured Notes
due 2010 (the "Notes") issued by PAHC Holdings Corporation (the "Company"), we
confirm that:

               (i) We have received a copy of the Offering Circular (the
"Offering Circular"), dated as of February 7, 2005, relating to the Notes and
such other information as we deem necessary in order to make our investment
decision. We acknowledge that we have read and agreed to the matters stated in
the section entitled "Notice to Investors" of such Offering Circular.

               (ii) We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture
relating to the Notes (the "Indenture") as described in the Offering Circular
and the undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Notes except in compliance with such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities Act"),
and all applicable state securities laws.

               (iii) We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes may not be offered
or sold within the United States or to, or for the account or benefit of, U.S.
persons except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell any Notes, we will do so only (i) to the Company
or any subsidiary thereof, (ii) inside the United States in accordance with Rule
144A under the Securities Act to a "qualified institutional buyer" (as defined
in Rule 144A promulgated under the Securities Act), (iii) inside the United
States to an institutional "accredited investor" (as defined below) that, prior
to such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to the Trustee (as defined in the Indenture) a signed letter
containing certain representations and agreements relating to the restrictions
on transfer of the Notes (the form of which letter can be obtained from the
Trustee), (iv) outside the United States in accordance with Rule 904 of
Regulation S promulgated under the Securities Act to non-U.S. persons, (v)
pursuant to the exemption from registration provided by Rule 144 under the
Securities Act (if available), or (vi) pursuant to an effective registration
statement under the

                                      C-1
<PAGE>
Securities Act, and we further agree to provide to any person purchasing any of
the Securities from us a notice advising such purchaser that resales of the
Notes are restricted as stated herein.

               (iv) We understand that, on any proposed resale of any Notes, we
will be required to furnish to the Trustee and the Company such certification,
legal opinions and other information as the Trustee and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will bear a
legend to the foregoing effect.

               (v) We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or their investment, as the case may be.

               (vi) We are acquiring the Notes purchased by us for our account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.

          You, the Company, the Trustee and others are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.

                                        Very truly yours,

                                        [Name of Transferor]

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

                                      C-2
<PAGE>
                                                                       EXHIBIT D

                       Form of Certificate To Be Delivered
                          in Connection with Transfers
                            Pursuant to Regulation S
                                                               [________], [___]

[___________________________]

[___________________________]

[___________________________]

     Re: PAHC Holdings Corporation (the "Company")

Ladies and Gentlemen:

          In connection with our proposed sale of $__________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:

          1. the offer of the Notes was not made to a person in the United
States;

          (a) 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 offshore securities market and neither we nor any person acting on
our behalf knows that the transaction has been prearranged with a buyer in the
United States;

          (b) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S,
as applicable;

          (c) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and

          (d) we have advised the transferee of the transfer restrictions
applicable to the Notes.

                                      D-1
<PAGE>
          You, the Company and counsel for the Company are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.

                                        Very truly yours,

                                        [Name of Transferor]

                                        By:
                                            ------------------------------------
                                            Authorized Signature

                                      D-2
<PAGE>
                                                                       EXHIBIT E

                    CERTIFICATE TO BE DELIVERED UPON EXCHANGE
                    OR REGISTRATION OF TRANSFER OF SECURITIES

     Re: 15% Senior Secured Notes due 2010 of PAHC Holdings Corporation

     This Certificate relates to $________ principal amount of Notes held in the
form of *_________ a beneficial interest in a Global Note or *_________ Physical
Note by ___________ (the "Transferor").

The Transferor:*

     [ ] has requested by written order that the Registrar deliver in exchange
for its beneficial interest in the Global Note held by the Depository a Physical
Note or Physical Notes in definitive, registered form of authorized
denominations and an aggregate number equal to its beneficial interest in such
Global Note (or the portion thereof indicated above); or

     [ ] has requested by written order that the Registrar exchange or register
the transfer of a Physical Note or Physical Notes.

     In connection with such request and in respect of each such Note, the
Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above-captioned Notes and the restrictions on
transfers thereof as provided in Section 2.17 of such Indenture, and that the
transfer of this Note does not require registration under the Securities Act of
1933, as amended (the "Act"), because*:

     [ ] Such Note is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.17(a)(ii)(1) or Section 2.17(d)(i)(1) of
the Indenture).

     [ ] Such Note is being transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Act), in reliance on Rule 144A.

     [ ] Such Note is being transferred to an institutional "accredited
investor" (within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Act).

     [ ] Such Note is being transferred in reliance on Regulation S under the
Act.

     [ ] Such Note is being transferred in reliance on Rule 144 under the Act.

----------
*    Check applicable box.

                                      E-1
<PAGE>
     [ ] Such Note is being transferred in reliance on and in compliance with an
exemption from the registration requirements of the Act other than Rule 144A or
Rule 144 or Regulation S under the Act to a person other than an institutional
"accredited investor."

                                        ----------------------------------------
                                        [INSERT NAME OF TRANSFEROR]

                                        By:
                                            ------------------------------------
                                            [Authorized Signatory]

Date:
      -------------------

                                      E-2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00081-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00081-of-00352.parquet"}]]