Document:

Exhibit 4.1      

 

     AVON PRODUCTS, INC. 
 

  

    as Issuer
  

  

    AND

    

    

  

  

    JPMORGAN CHASE BANK

  

  

    as Trustee

  

  Indenture

  

    Dated as of May 13, 2003
  

  

  ..............................

  

     Certain Sections of this Indenture relating to 

    Sections 310 through 318 of the

    Trust Indenture Act of 1939: 
  

	Trust Indenture 

      Act Section 
      
 		Indenture Section
      
      
 
	§ 310(a)(1)	 	6.09
	 (a)(2)	 	6.09
	 (a)(3)	 	Not Applicable
	 (a)(4)	 	Not Applicable
	 (b)	 	6.08

      6.10
	§ 311(a)	 	6.13
	 (b)	 	6.13
	§ 312(a)	 	7.01
			7.02(a)
	 (b)	 	7.02(b)
	 (c)	 	7.02(c)
	§ 313(a)	 	7.03(a)
	 (b)	 	7.03(a)
	 (c)	 	7.03(a)
	 (d)	 	7.03(b)
	§ 314(a)	 	7.04
	 (b)	 	Not Applicable
	 (c)(1)	 	1.02
	 (c)(2)	 	1.02
	 (c)(3)	 	Not Applicable
	 (d)	 	Not Applicable
	 (e)	 	1.02
	§ 315(a)	 	6.01
	 (b)	 	6.02
	 (c)	 	6.01
	 (d)	 	6.01
	 (e)	 	5.14
	§ 316(a)(1)(A)	 	5.12
	 (a)(1)(B)	 	5.13
	 (a)(2)	 	Not Applicable
	 (b)	 	5.08
	 (c)	 	1.04(c)
	§ 317(a)(1)	 	5.03
	 (a)(2)	 	5.04
	 (b)	 	10.03
	§ 318(a)	 	1.07
	 		 

_____________

  Note: This reconciliation and tie shall not, for any purpose, be deemed
  to be a part of this indenture

  i

  

   

 

  

    TABLE OF CONTENTS

    
  

 

	 	 Page
	 	ARTICLE
      1

      DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

	 	 	 
	SECTION
      1.01. 	Definitions	
      2

  	 	 	 
	SECTION
      1.02. 	Compliance
          Certificates and Opinions	
          12

    	 	 	 
	 
      SECTION 1.03.	Form
      of Documents Delivered to Trustee 	13

	 	 	 
	
      SECTION 1.04. 	Acts
      of Holders; Record Dates 	14

	 	 	 
	
      SECTION 1.05. 	Notices,
      Etc., to Trustee and Company 	15

	 	 	 
	SECTION
      1.06.	Notice
      to Holders; Waiver 	15

	 	 	 
	SECTION
      1.07. 	Conflict
      with Trust Indenture Act	
      16

	 	 	 
	
      SECTION 1.08. 	Effect
      of Headings and Table of Contents 	16

	 	 	 
	
      SECTION 1.09. 	Successors
      and Assigns 	16

	 	 	 
	SECTION
      1.10. 	Separability
      Clause	
      16

	 	 	 
	
      SECTION 1.11. 	Benefits
      of Indenture 	16

	 	 	 
	SECTION
      1.12. 	Governing
      Law	
      16

	 	 	 
	SECTION
      1.13.	Legal
      Holidays	
      16

	

      	 	 
	 
     ARTICLE
      2

      SECURITY FORMS

	 	 	 
	
      SECTION 2.01. 	
      Forms Generally	 17

	 	 	 
	
      SECTION 2.02. 	Form
      of Face of Security 	17

	 	 	 
	
      SECTION 2.03. 	Form
      of Reverse of Security 	19

	 	 	 
	 
      SECTION 2.04. 	Form
      of Trustee's Certificate of Authentication 	23

	 	 	 
	  
    ARTICLE
      3

      THE SECURITIES

	 	 	 
	SECTION
      3.01. 	Amount
      Unlimited; Issuable in Series	23

	 	 	 
	 
      SECTION 3.02. 	Denominations
      	26

	 	 	 
	 
      SECTION 3.03. 	Execution,
      Authentication, Delivery and Dating	26

	 	 	 
	 
      SECTION 3.04. 	Temporary
      Securities 	27

	 	 	 
	 
      SECTION 3.05. 	Registration;
      Registration of Transfer and Exchange	
      28

	 	 	Page 
	
      SECTION 3.06. 	 Mutilated,
      Destroyed, Lost and Stolen Securities 	29

	 	 	 
	SECTION
      3.07. 	Payment
      of Interest; Interest Rights Preserved 	30

	 	 	 
	SECTION
      3.08. 	Persons
      Deemed Owners 	31

	 	 	 
	SECTION
      3.09.	Book-entry
      Provisions for Global Securities 	31

	 	 	 
	SECTION
      3.10. 	Cancellation
      	
      33

	 	 	 
	SECTION
      3.11. 	Computation
      of Interest	
      33

	 	 	 
	 
    ARTICLE
      4

      SATISFACTION AND DISCHARGE

	 	 	 
	SECTION
      4.01. 	Satisfaction
      and Discharge of Indenture 	33

	 	 	 
	SECTION
      4.02. 	Application
      of Trust Money	
      34

	 	 	 
	

        ARTICLE 5

        REMEDIES

	 	 	 
	SECTION
      5.01. 	 Events
      of Default 	35

	 	 	 
	SECTION
      5.02. 	 Acceleration
      of Maturity; Rescission and Annulment 	37

	 	 	 
	SECTION
      5.03. 	Collection
      of Indebtedness and Suits for Enforcement by Trustee	38

	 	 	 
	SECTION
      5.04. 	Trustee
      May File Proofs of Claim 	
      38

	 	 	 
	SECTION
      5.05. 	
      Trustee May Enforce Claims Without Possession of Securities	39

	 	 	 
	SECTION
      5.06. 	 Application
      of Money Collected 	39

	 	 	 
	SECTION
      5.07. 	Limitation
      on Suits	
      39

	 	 	 
	SECTION
      5.08. 	Unconditional
      Right of Holders to Receive Principal and Interest	40

	 	 	 
	SECTION
      5.09. 	Restoration
      of Rights and Remedies	
      40

	 	 	 
	SECTION
      5.10. 	Rights
      and Remedies Cumulative 	
      41

	 	 	 
	SECTION
      5.11. 	Delay
      or Omission Not Waiver 	41

	 	 	 
	SECTION
      5.12. 	Control
      by Holders 	41

	 	 	 
	SECTION
      5.13. 	Waiver
      of Past Defaults 	41

 
	 	 	 
	SECTION
      5.14. 	Undertaking
      for Costs	
      42

 
	 	 	 
	SECTION
      5.15. 	Waiver
      of Stay or Extension Laws 	42

	 	 	 
	
    ARTICLE
      6

      THE TRUSTEE

 
	 	 	 
	SECTION
      6.01. 	Certain
      Duties and Responsibilities 	42

ii

  

	 	 	Page 
	 SECTION
      6.02. 	Notice
      of Defaults 	43

	 	 	 
	SECTION
      6.03. 	Certain
      Rights of Trustee 	
      43

 
	 	 	 
	SECTION
      6.04.	Not
      Responsible for Recitals 	44

 
	 	 	 
	SECTION
      6.05.	May
      Hold Securities 	44

 
	 	 	 
	SECTION
      6.06. 	Money
      Held in Trust 	44

 
	 	 	 
	SECTION
      6.07. 	Compensation
      and Reimbursement 	44

 
	 	 	 
	SECTION
      6.08. 	Disqualification;
      Conflicting Interests	
      45

 
	 	 	 
	SECTION
      6.09. 	Corporate
      Trustee Required; Eligibility 	
      45

 
	 	 	 
	SECTION
      6.10. 	Resignation
      and Removal; Appointment of Successor 	46

 
	 	 	 
	SECTION
      6.11. 	Acceptance
      of Appointment by Successor 	47

 
	 	 	 
	SECTION
      6.12. 	Merger,
      Conversion, Consolidation or Succession to Business	48

 
	 	 	 
	SECTION
      6.13. 	Preferential
      Collection of Claims Against	
      49

 
	 	 	 
	
      ARTICLE 7

      HOLDERS' LISTS AND REPORTS BY TRUSTEE

	 	 	 
	SECTION
      7.01.	Company
      to Furnish Trustee Names and Addresses of Holders	
      49

 
	 	 	 
	SECTION
      7.02. 	Preservation
      of Information; Communications to Holders 	49

 
	 	 	 
	SECTION
      7.03. 	Reports
      by Trustee 	50

 
	 	 	 
	SECTION
      7.04. 	Reports
      by Company 	50

 
	 	 	 
	  
    ARTICLE
      8

      CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

 
	 	 	 
	SECTION
      8.01. 	Company
      May Consolidate, Etc., Only on Certain Terms 	50

 
	 	 	 
	SECTION
      8.02. 	Successor
      Substituted 	51

 
	 	 	 
	  
    ARTICLE
      9

      SUPPLEMENTAL INDENTURES

 
	 	 	 
	SECTION
      9.01. 	Supplemental
      Indentures Without Consent of Holders 	52

 
	 	 	 
	SECTION
      9.02. 	Supplemental
      Indentures with Consent of Holders	
      53

 
	 	 	 
	SECTION
      9.03. 	Execution
      of Supplemental Indentures	
      53

 
	 	 	 
	SECTION
      9.04. 	Effect
      of Supplemental Indentures 	54

 
	 	 	 
	SECTION
      9.05. 	Conformity
      with Trust Indenture Act 	54

 
	 	 	 
	SECTION
      9.06. 	Reference
      in Securities to Supplemental Indentures 	54

iii

	 	 	Page
	
    ARTICLE
      10

      COVENANTS 

 
	 	 	 
	SECTION
      10.01.	Payment
      of Principal and Interest 	
      54

 
	 	 	 
	SECTION
      10.02.	Maintenance
      of Office or Agency	54

 
	 	 	 
	SECTION
      10.03. 	Money
      for Security Payments to Be Held in Trust 	55

	 	 	 
	SECTION
      10.04.	Statement
      by Officers as to Default 	56

 
	 	 	 
	SECTION
      10.05. 	Existence	
      56 

 
	 	 	 
	SECTION
      10.06. 	Liens
      	56

 
	 	 	 
	SECTION
      10.07. 	Limitation
      on Restricted Sale/Leaseback Transactions	
      57

 
	 	 	 
	SECTION
      10.08.	Reports
      and Delivery of Certain Information 	57

 
	 	 	 
	SECTION
      10.09. 	Resale
      of Certain Securities 	57

 
	 	 	 
	SECTION
      10.10. 	Book-Entry
      System 	57

 
	 	 	 
	SECTION
      10.11. 	Waiver
      of Certain Covenants 	58

 
	 	 	 
	
    ARTICLE
      11

      OPTIONAL REDEMPTION OF SECURITIES

 
	 	 	 
	SECTION
      11.01. 	Applicability
      of Article 	58

 
	 	 	 
	SECTION
      11.02. 	Election
      to Redeem; Notice to Trustee 	58

 
	 	 	 
	SECTION
      11.03. 	Selection
      by Trustee of Securities to Be Redeemed 	58

 
	 	 	 
	SECTION
      11.04. 	Notice
      of Redemption 	59

 
	 	 	 
	SECTION
      11.05. 	Deposit
      of Redemption Price	60

 
	 	 	 
	SECTION
      11.06. 	Securities
      Payable on Redemption Date 	60

 
	 	 	 
	SECTION
      11.07. 	Securities
      Redeemed in Part 	61

 
	 	 	 
	
    ARTICLE
      12

      DEFEASANCE AND COVENANT DEFEASANCE

 
	 	 	 
	SECTION
      12.01. 	Company's
      Option to Effect Defeasance or Covenant Defeasance	61

 
	 	 	 
	SECTION
      12.02. 	Defeasance
      and Discharge 	61

 
	 	 	 
	SECTION
      12.03. 	Covenant
      Defeasance 	62

 
	 	 	 
	SECTION
      12.04. 	Conditions
      to Defeasance or Covenant Defeasance 	62

 
	 	 	 
	SECTION
      12.05. 	Deposited
      Money and U.S. Government Obligations to be Held in Trust; Miscellaneous
      Provisions	
      64

 
	 	 	 
	SECTION
      12.06. 	Reinstatement
      	
      65

iv

	 	 	Page 
	ARTICLE
      13

      SINKING FUNDS 

 
	 	 	 
	SECTION
      13.01. 	Applicability
      of Article	
      65

 
	 	 	 
	SECTION
      13.02. 	Satisfaction
      of Sinking Fund Payments with Securities 	65

 
	 	 	 
	SECTION
      13.03. 	Redemption
      of Securities for Sinking Fund	
      66

  

 

 INDENTURE,
  dated as of May 13, 2003, between AVON PRODUCTS, INC., a corporation duly
  organized and existing under the laws of the State of New York, as Issuer
  (herein called the “Company”), having its principal
  office at 1345 Avenue of the Americas, New York, New York 10105-0196,
  and JPMORGAN CHASE BANK, a banking corporation duly organized under the
  laws of the State of New York, as Trustee (herein called the “Trustee”).

      

        RECITALS OF THE COMPANY
      
    

 The
  Company has duly authorized the execution and delivery of this Indenture
  to provide for the issuance from time to time of its senior unsecured
  debentures, notes or other evidences of indebtedness (herein called the
  “Securities”), to be issued in one or more
  series as provided in this Indenture.

 All
  things necessary to make this Indenture a valid agreement of the Company,
  in accordance with its terms, have been done.

 NOW,
  THEREFORE, THIS INDENTURE WITNESSETH:

 For
  and in consideration of the premises and the purchases of the Securities
  by the Holders thereof, it is mutually agreed, for the equal and proportionate
  benefit of all Holders of the Securities or of series thereof, as follows:

  ARTICLE 1

  DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

 SECTION
  1.01. Definitions. For
  all purposes of this Indenture, except as otherwise expressly provided
  or unless the context otherwise requires:

 
 (i)
  the terms defined in this Article have the meanings assigned to them in
  this Article and include the plural as well as the singular;

 
 (ii)
  all other terms used herein which are defined in the Trust Indenture Act,
  either directly or by reference therein, have the meanings assigned to
  them therein; 

 
 (iii)
  all accounting terms not otherwise defined herein have the meanings assigned
  to them in accordance with GAAP; and

2

 (iv)
  the words “herein," “hereof" and “hereunder" and other
  words of similar import refer to this Indenture as a whole and not to
  any particular Article, Section or other subdivision.

 
 “Act,"
  when used with respect to any Holder, has the meaning specified in Section 1.04.

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

 
 "Attributable
  Debt," in respect to any Sale/Leaseback Transaction, means, as
  of any time of determination, the present value (discounted at the rate
  per annum equal to the rate of interest implicit in the lease involved
  in such Sale/Leaseback Transaction, as determined in good faith by the
  Company) of the obligation of the lessee thereunder for rental payments
  (excluding, however, any amounts required to be paid by such lessee, whether
  or not designated as rent or additional rent, on account of maintenance
  and repairs, insurance, taxes, assessments, water rates or similar charges
  or any amounts required to be paid by such lessee thereunder contingent
  upon the amount of sales or similar contingent awards) during the remaining
  term of such lease (including any period for which such lease has been
  extended or may, at the option of the lessor, be extended). In the case
  of any lease which is terminable by the lessee upon the payment of a penalty,
  such rental payments shall also include the amount of such penalty, but
  no rental payments shall be considered as required to be paid under such
  lease subsequent to the first date upon which it may be so terminated.

 
 "Board
  of Directors” means, with respect to any Person, either the board
  of directors of such Person or any duly authorized committee of that board.

 
 "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, or alternatively, in
  the case of the Company, by the Finance and Strategic Planning Committee
  of the Board of Directors of the Company pursuant to authority duly delegated
  to it by the Board of Directors of the Company, and to be in full force
  and effect on the date of such certification, and delivered to the Trustee.

 
 "Business
  Day”, when used with respect to any Place of Payment, means
  each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day
  on which banking institutions in that Place of Payment are authorized
  or obligated by law to close.

3

 "Capital
  Stock” means any and all shares, interests, participations, rights
  or other equivalents (however designated) of corporate stock, including,
  without limitation, with respect to partnerships, partnership interests
  (whether general or limited) and any other interest or participation that
  confers on a Person the right to receive a share of the profits and losses
  of, or distributions of assets of, such partnership.

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

 
 "Company”
  means the Person named as the “Company" in the first paragraph of
  this instrument until a successor Person shall have become such pursuant
  to the applicable provisions of this Indenture, and thereafter “Company"
  shall mean such successor Person.

 
 "Company
  Request” or “Company Order” means a written
  request or order signed in the name of the Company by both (i) any of
  its Chairman of the Board, its Vice Chairman of the Board, its Chief Executive
  Officer, its President or any Vice President, and (ii) any of its Treasurer,
  its Secretary, any Assistant Secretary or any Vice President (other than
  a Vice President signing pursuant to clause (i) above), and delivered
  to the Trustee.

 
 "Comparable
  Treasury Issue” means the United States Treasury security selected
  by an Independent Investment Banker as having a maturity comparable to
  the remaining term of the Securities that would be utilized, at the time
  of selection and in accordance with customary financial practice, in pricing
  new issues of corporate debt securities of comparable maturity to the
  remaining term of the Securities. “Independent Investment
  Banker” means one of the Reference Treasury Dealers appointed
  by the Trustee at the written direction of the Company.

 
 "Comparable
  Treasury Price” means, with respect to any Redemption Date,
  as determined by the Trustee (i) the average of the Reference Treasury
  Dealer Quotations for such Redemption Date, after excluding the highest
  and lowest such Reference Treasury Dealer Quotations, or (ii) if the Trustee
  obtains fewer than four such Reference Treasury Dealer Quotations, the
  average of all such quotations.

4

 "Consolidated
  Net Tangible Assets” means the total amount of assets (less applicable
  reserves and other properly deductible items) which under GAAP would be
  included on the most recent audited annual consolidated balance sheet
  of the Company and its consolidated Subsidiaries after deducting therefrom,
  without duplication, the sum of (i) all current liabilities and (ii) all
  goodwill, trade names, trademarks, patents, unamortized debt discount
  and expense and other like intangibles, which in each case under GAAP
  would be included on such consolidated balance sheet.

 
 "Corporate
  Trust Office” means the office of the Trustee at which the corporate
  trust business of the Trustee shall, at any particular time, be principally
  administered, which office is, at the date of this Indenture, located
  at 4 New York Plaza, New York, New York 10004, Attention: Institutional
  Trust Services.

 
 "corporation”
  means a corporation, association, company, joint-stock company or business
  trust.

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

 
 "Defaulted
  Interest” has the meaning specified in Section 3.07.

 
 "Defeasance”
  has the meaning specified in Section 12.02.

 
 "Depositary”
  means The Depository Trust Company until a successor Depositary shall
  have become such pursuant to the applicable provisions of this Indenture,
  and thereafter “Depositary" shall mean such successor Depositary.

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

 
 "Event
  of Default” has the meaning specified in Section 5.01.

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

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

5

 "Global
  Security” means a Security in global form registered in the Security
  Register in the name of a Depositary or a nominee thereof.

 
 "Holder”
  means a Person in whose name a Security is registered in the Security
  Register.

 
 "Indebtedness”
  means, with respect to any Person, any indebtedness of such Person, whether
  or not contingent, in respect of (i) borrowed money evidenced by bonds,
  notes, debentures or similar instruments, (ii) indebtedness secured by
  a mortgage, pledge, lien, charge, encumbrance of any security interest
  existing on property owned by such Person, (iii) the reimbursement obligations,
  contingent or otherwise, in connection with any letters of credit actually
  issued or amounts representing the balance that constitutes an accrued
  expense or trade payable or (iv) any lease of property by such Person
  as lessee which is reflected in such Person's consolidated balance sheet
  as a capitalized lease in accordance with GAAP, in the case of items of
  Indebtedness under (i) through (iii) above to the extent that any such
  items (other than letters of credit) would appear as a liability on such
  Person's consolidated balance sheet in accordance with GAAP, and also
  includes, to the extent not otherwise included, any obligation by such
  Person to be liable for, or to pay, as obligor, guarantor or otherwise
  (other than for purposes of collection in the ordinary course of business),
  Indebtedness of another Person.

 
 "Indenture”
  means this instrument as originally executed or as it may from time to
  time be supplemented or amended by one or more indentures supplemental
  hereto entered into pursuant to the applicable provisions hereof, including,
  the terms of a particular series of Securities established pursuant to
  the applicable provisions hereof, and for all purposes of this instrument
  and any such supplemental indenture or terms of a particular series, the
  provisions of the Trust Indenture Act that are deemed to be a part of
  and govern this instrument and any such supplemental indenture, respectively.

 
 "Interest”,
  when used with respect to an Original Issue Discount Security which by
  its terms bears interest only upon Maturity, means interest payable after
  Maturity.

 
 "Interest
  Payment Date” means, with respect to any Security, the Stated
  Maturity of an instalment of interest on such Security.

 

  6

"Investments”
  means, with respect to any Person, all investments by such Person in other
  Persons (including Affiliates) in the forms of loans, advances or capital
  contributions, purchases or other acquisitions for consideration of Indebtedness,
  Equity Interests or other securities and all other items that are or would
  be classified as investments on a balance sheet prepared in accordance
  with GAAP.

 
 "Investment
  Company Act” means the Investment Company Act of 1940 and any
  statute successor thereto, in each case as amended from time to time.

 
 "Issue
  Date” means, with respect to any series of Securities, the date
  such series of Securities is originally issued under this Indenture. 

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

 
 "Maturity”,
  when used with respect to any Security, means the date on which the principal
  of such Security becomes due and payable as therein or herein provided,
  whether at the Stated Maturity, on a Redemption Date or by declaration
  of acceleration or otherwise.

 
 "Officers'
  Certificate” means a certificate signed by both (i) any of the
  Chairman of the Board, a Vice Chairman of the Board, the Chief Executive
  Officer, the President or any Vice President, and (ii) any of the Treasurer,
  the Secretary, any Assistant Secretary, or any Vice President (other than
  a Vice President signing pursuant to clause (i) above), of the Company,
  and delivered to the Trustee. One of the officers signing an Officers'
  Certificate given pursuant to Section 10.04
  shall be the principal executive, financial or accounting officer of the
  Company.

 
 "Opinion
  of Counsel” means a written opinion of counsel, who may be external
  or in-house counsel for the Company, and who shall be acceptable to the
  Trustee.

 
 "Original
  Issue Discount Security” means any Security which provides
  for an amount less than the principal amount thereof to be due and payable
  upon a declaration of acceleration of the Maturity thereof pursuant to
  Section 5.02.

  7

  

 "Outstanding,"
  when used with respect to any Securities, means, as of the date of determination,
  all Securities theretofore authenticated and delivered under this Indenture,
  except:

   
    
    (i) Securities theretofore cancelled by the Trustee or delivered to
    the Trustee for cancellation;

   
    (ii) Securities, or portions thereof, for whose payment or redemption
    money in the necessary amount has been theretofore deposited with the
    Trustee or any Paying Agent (other than the Company) in trust or set
    aside and segregated in trust by the Company (if the Company shall act
    as its own Paying Agent) for the Holders of such Securities; provided
    that if such Securities are to be redeemed prior to the maturity thereof,
    notice of such redemption shall have been given to the Holders as herein
    provided, or provision satisfactory to a Responsible Officer of the
    Trustee shall have been made for giving such notice; and 

   
    (iii) Securities which have been paid or in exchange for or in lieu
    of which other Securities have been authenticated and delivered pursuant
    to this Indenture, other than any such Securities in respect of which
    there shall have been presented to the Trustee proof satisfactory to
    it that such Securities are held by a protected purchaser in whose hands
    such Securities are valid obligations of the Company;

 provided, however, that, in determining
  whether the Holders of the requisite principal amount of the Outstanding
  Securities have given any request, demand, authorization, direction, notice,
  consent or waiver hereunder, (i) the principal amount of an Original Issue
  Discount Security which shall be deemed to be Outstanding shall be the
  amount of the principal thereof which would be due and payable as of such
  date upon acceleration of the Maturity thereof to such date pursuant to
  Section 5.02, (ii) the principal amount of a Security denominated in one
  or more foreign currencies or currency units which shall be deemed to
  be Outstanding shall be the U.S. dollar equivalent, determined as of such
  date in the manner provided as contemplated by Section 3.01,
  of the principal amount of such Security and (iii) Securities owned by
  the Company or any other obligor upon the Securities or any Affiliate
  of the Company or of such other obligor shall be disregarded and deemed
  not to be Outstanding, except that, in determining whether the Trustee
  shall be protected in relying upon any such request, demand, authorization,
  direction, notice, consent or waiver, only Securities which a Responsible
  Officer of the Trustee knows to be so owned shall be so disregarded. Securities
  so owned which have been pledged in good faith may be regarded as Outstanding
  if the pledgee establishes to the satisfaction of the Trustee the pledgee's
  right so to act with respect to such Securities and that the pledgee is
  not 

8

the Company or any other obligor upon the Securities or
  any Affiliate of the Company or of such other obligor.

 "Paying
  Agent” means any Person authorized by the Company to pay the
  principal of, interest on or Redemption Price of any Securities on behalf
  of the Company. The Trustee shall initially be the Paying Agent.

 "Permitted
  Liens” means any of the following: (a) Liens on any Principal
  Property acquired by the Company or a Subsidiary after the date of this
  Indenture to secure or provide for the payment or financing of all or
  any part of the purchase price thereof or construction of fixed improvements
  thereon (prior to, at the time of or within 180 days after the latest
  of the acquisition, completion of construction or commencement of commercial
  operation thereof); (b) Liens on any shares of stock or Principal Property
  acquired by the Company or a Subsidiary after the date of this Indenture
  existing at the time of such acquisition; (c) Liens on any shares of stock
  or Principal Property of a corporation which is merged into or consolidated
  with the Company or a Subsidiary or substantially all of the assets of
  which are acquired by the Company or a Subsidiary; (d) Liens securing
  Indebtedness of a Subsidiary owing to the Company or another Subsidiary;
  (e) Liens existing on the date of this Indenture; (f) Liens on any Principal
  Property being constructed or improved securing loans to finance such
  construction or improvements; (g) Liens in favor of governmental bodies
  of the United States or any State thereof or any other country or political
  subdivision thereof to secure partial, progress or advance payments pursuant
  to any contract or statute, or to secure any Indebtedness incurred or
  guaranteed for the purpose of financing all or any part of the cost of
  acquiring, constructing or improving the property subject to such Liens;
  (h) Liens securing taxes, assessments or governmental charges or levies
  not yet delinquent, or already delinquent but the validity of which is
  being contested in good faith; (i) Liens arising by reason of deposits
  necessary to qualify the Company or any Subsidiary to conduct business,
  maintain self-insurance, or obtain the benefit of, or comply with, any
  law; (j) liens arising out of judgments or awards against the Company
  or any Subsidiary with respect to which the Company or such Subsidiary
  shall in good faith be prosecuting an appeal or proceedings for review;
  provided that the Company or such Subsidiary shall have secured, within
  60 days after the creation thereof, an effective stay of execution pending
  such appeal or review; and (k) extensions, renewals or replacement of
  Liens referred to in the foregoing clauses provided that the Indebtedness
  secured is not increased nor the Lien extended to any additional assets.

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

  9

"Physical
  Securities” has the meaning specified in Section 2.01.

 "Place
  of Payment”, when used with respect to the Securities of any
  series, means the place or places where the principal of and any premium
  or interest on the Securities of that series are payable specified as
  required by Section 3.01.

 "Predecessor
  Security” of any particular Security means every previous Security
  evidencing all or a portion of the same debt as that evidenced by such
  particular Security; and, for the purposes of this definition, any Security
  authenticated and delivered under Section 3.06
  in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
  shall be deemed to evidence the same debt as the mutilated, destroyed,
  lost or stolen Security.

 "Principal
  Property” means any manufacturing plant, testing or research
  and development facility, distribution facility, processing plant or warehouse
  (including, without limitation, land, fixtures and equipment), owned or
  leased by the Company or any Subsidiary (including any of the foregoing
  acquired or leased after the date of this Indenture) and located within
  the United States of America, its territories and possessions, unless
  the Board of Directors of the Company determines in good faith that such
  plant or facility is not of material importance to the total business
  conducted by the Company and its consolidated Subsidiaries.

 "Redemption
  Date” when used with respect to any Security to be redeemed,
  means any date which is a Business Day fixed for such redemption by the
  Company pursuant to Section 11.04 of this Indenture.

 "Redemption
  Price” when used with respect to any Security to be redeemed,
  means the price at which it is to be redeemed pursuant to this Indenture.

 "Reference
  Treasury Dealer Quotations” means, with respect to each Reference
  Treasury Dealer and any Redemption Date, the average, as determined by
  the Trustee, of the bid and asked prices for the Comparable Treasury Issue
  (expressed in each case as a percentage of its principal amount) quoted
  in writing to the Trustee by such Reference Treasury Dealer, at 5:00 p.m.,
  New York City time, on the third Business Day preceding such Redemption
  Date.

 "Reference
  Treasury Dealers” means any four nationally recognized investment
  banking firms, and their successors, selected by the Company that are
  each also a primary U.S. Government securities dealer (a “Primary
  Treasury Dealer”); provided, however, that if any
  Reference Treasury Dealer shall cease to be a primary U.S. Government
  securities dealer, the Company shall substitute 

10

another nationally
  recognized investment banking firm that is a Primary Treasury Dealer.

 "Remaining
  Scheduled Payments” means, with respect to each Security to be
  redeemed, the remaining scheduled payments of principal thereof and interest
  thereon that would be due after the related Redemption Date but for that
  redemption; provided, however, that if such Redemption Date is
  not an Interest Payment Date with respect to such Security, the amount
  of the next succeeding scheduled interest payment thereon shall be reduced
  by the amount of interest accrued thereon to such Redemption Date. 

 "Regular
  Record Date” for the interest payable on any Interest Payment
  Date with respect to any Security, means such date or dates specified
  in the Security (whether or not a Business Day), as the case may be, immediately
  preceding the relevant Interest Payment Date relating to such Security.

 "Responsible
  Officer” means any officer of the Trustee within the Corporate
  Trust Office of the Trustee with direct responsibility for the administration
  of this Indenture and also, with respect to a particular matter, any other
  officer of the Trustee to whom such matter is referred because of such
  officer's knowledge and familiarity with the particular subject.

 "Restricted
  Sale/Leaseback Transaction” means any Sale/Leaseback Transaction
  entered into by the Company or any Significant Subsidiary after the date
  of this Indenture, except: (i) Sale/Leaseback Transactions entered into
  by and between the Company or a Subsidiary and one or more Subsidiaries
  of the Company; (ii) Sale/Leaseback Transactions as to which, during the
  period commencing 60 days prior to and ending 120 days after entering
  into such Sale/Leaseback Transaction, the Company or a Subsidiary applies
  an amount equal to the Attributable Debt with respect to such Sale/Leaseback
  Transaction to the acquisition, directly or indirectly and in whole or
  in part, of one or more Principal Properties or to the retirement of long-term
  Indebtedness (other than mandatory prepayment or retirement) of the Company
  or any Subsidiary; and (iii) Sale/Leaseback Transactions involving the
  taking back of a lease for a period of three years or less.

 "Sale/Leaseback
  Transaction” means any arrangement, directly or indirectly,
  with any Person whereby the Company or any Subsidiary shall sell or transfer
  any Principal Property, whether now owned or hereafter acquired, and then
  or thereafter rent or lease as lessee such Principal Property or any part
  thereof which the Company or such Subsidiary, as the case may be, intends
  to use for substantially the same purpose as the Principal Property being
  sold or transferred.

11

 "Secured
  Debt” has the meaning specified in Section 10.06.

 "Securities”
  has the meaning specified in the first paragraph of the Recitals of the
  Company.

 "Securities
  Act” means the U.S. Securities Act of 1933, as amended, and the
  rules and regulations of the Commission promulgated thereunder.

 "Security
  Register” and “Security Registrar” have
  the respective meanings specified in Section 3.05.

 "Significant
  Subsidiary” means any direct or indirect Subsidiary of the Company
  that generates 5% ( five percent) or more of the Company's revenue or
  income or that holds 5% ( five percent) or more of the Company's assets.

 "Special
  Record Date” for the payment of Defaulted Interest means a date
  fixed by the Trustee pursuant to Section 3.07.

 "Stated
  Maturity," when used with respect to the Securities or any instalment
  of interest thereon, means the date specified in the Securities as the
  fixed date on which the principal thereof or such instalment of interest
  is due and payable.

 "Subsidiary”
  means a corporation more than 50% of the outstanding voting stock of which
  is owned, directly or indirectly, by the Company or by one or more other
  Subsidiaries, or by the Company and one or more other Subsidiaries. For
  the purposes of this definition, “voting stock”
  means stock which ordinarily has voting power for the election of directors,
  whether at all times
  or only so long as no senior class of stock has such voting power by reason
  of any contingency.

 "Treasury
  Rate” means, with respect to any Redemption Date, the rate
  per annum equal to the semiannual equivalent yield to maturity (computed
  as of the second Business Day immediately preceding that Redemption Date)
  of the Comparable Treasury Issue, assuming a price for the Comparable
  Treasury Issue (expressed as a percentage of its principal amount) equal
  to the Comparable Treasury Price for that Redemption Date.

 "Trust
  Indenture Act” means the Trust Indenture Act of 1939 as
  in force at the date as of which this instrument was executed; provided,
  however, that in the event the Trust Indenture Act of 1939 is
  amended after such date, “Trust Indenture Act”
  means, to the extent required by any such amendment, the Trust Indenture
  Act of 1939 as so amended.

12

 "Trustee”
  means the Person named as the “Trustee” in
  the first paragraph of this instrument until a successor Trustee shall
  have become such pursuant to the applicable provisions of this Indenture,
  and thereafter “Trustee” shall mean such successor
  Trustee; provided, however, that if at any time there is more
  than one such Person, “Trustee" as used with respect to the Securities
  of any series shall mean only the Trustee with respect to Securities of
  that series.

 "U.S.
  Government Obligation” has the meaning specified in Section
  12.04.

 "Vice
  President," when used with respect to the Company or the Trustee,
  means any vice president, whether or not designated by a number or a word
  or words added before or after the title “vice president”.

 SECTION
  1.02. Compliance Certificates
  and Opinions. Upon any application or request by the Company to the
  Trustee to take any action under any provision of this Indenture, the
  Company shall furnish to the Trustee such certificates and opinions as
  may be required under the Trust Indenture Act. Each such certificate or
  opinion shall be given in the form of an Officers' Certificate, if to
  be given by an officer of the Company, or an Opinion of Counsel, if to
  be given by counsel, and shall comply with the requirements of the Trust
  Indenture Act and any other requirement set forth in this Indenture.

 Every
  certificate or opinion with respect to compliance with a condition or
  covenant provided for in this Indenture shall include

   
    (i) a statement that each individual signing such certificate or opinion
    has read such covenant or condition and the definitions herein relating
    thereto;

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

   
    (iii) a statement that, in the opinion of each such individual, such
    individual has made such examination or investigation as is necessary
    to enable such individual to express an informed opinion as to whether
    or not such covenant or condition has been complied with; and

   
    (iv) a statement as to whether, in the opinion of each such individual,
    such condition or covenant has been complied with.

  13

 SECTION
  1.03. Form
  of Documents Delivered to Trustee. In any case where several matters
  are required to be certified by, or covered by an opinion of, any specified
  Person, it is not necessary that all such matters be certified by, or
  covered by the opinion of, only one such Person, or that they be so certified
  or covered by only one document, but one such Person may certify or give
  an opinion with respect to some matters and one or more other such Persons
  as to other matters, and any such Person may certify or give an opinion
  as to such matters in one or several documents.

 Any
  certificate or opinion of an officer of the Company may be based, insofar
  as it relates to legal matters, upon a certificate or opinion of, or representations
  by, counsel, unless such officer knows, or in the exercise of reasonable
  care should know, that the certificate or opinion or representations with
  respect to the matters upon which his certificate or opinion is based
  are erroneous. Any such certificate or Opinion of Counsel may be based,
  insofar as it relates to factual matters, upon a certificate or opinion
  of, or representations by, an officer or officers of the Company stating
  that the information with respect to such factual matters is in the possession
  of the Company, unless such counsel knows, or in the exercise of reasonable
  care should know, that the certificate or opinion or representations with
  respect to such matters are erroneous.

 Where
  any Person is required to make, give or execute two or more applications,
  requests, consents, certificates, statements, opinions or other instruments
  under this Indenture, they may, but need not, be consolidated and form
  one instrument.

 SECTION
  1.04. Acts
  of Holders; Record Dates. (a) Any request, demand, authorization,
  direction, notice, consent, waiver or other action provided by this Indenture
  to be given or taken by Holders may be embodied in and evidenced by one
  or more instruments of substantially similar tenor signed by such Holders
  in person or by agent duly appointed in writing; and, except as herein
  otherwise expressly provided, such action shall become effective when
  such instrument or instruments are delivered to the Trustee and, where
  it is hereby expressly required, to the Company. If any Securities are
  denominated in a currency other than that of the United States, then for
  the purposes of determining whether the Holders of the requisite principal
  amount of Securities have taken any action with respect to the Securities
  of more than one series as herein described, the principal amount of such
  Securities shall be deemed to be that amount of United States dollars
  that could be obtained for such principal amount on the basis of the spot
  rate of exchange into United States dollars for the currency in which
  such Securities are denominated (as evidenced to the Trustee by an Officers'
  Certificate) as of the date the taking of such action by the Holders of
  such requisite principal amount is evidenced to the Trustee as provided
  in the immediately preceding sentence. Such 

14

instrument or instruments (and the action embodied therein
  and evidenced thereby) are herein sometimes referred to as the “Act”
  of the Holders signing such instrument or instruments. Proof of execution
  of any such instrument or of a writing appointing any such agent shall
  be sufficient for any purpose of this Indenture and (subject to Section 6.01)
  conclusive in favor of the Trustee and the Company, if made in the manner
  provided in this Section.

 
  (b) The fact and date of the execution by any Person of any such instrument
  or writing may be proved by the affidavit of a witness of such execution
  or by a certificate of a notary public or other officer authorized by
  law to take acknowledgments of deeds, certifying that the individual signing
  such instrument or writing acknowledged to him the execution thereof.
  Where such execution is by a signer acting in a capacity other than his
  individual capacity, such certificate or affidavit shall also constitute
  sufficient proof of his authority. The fact and date of the execution
  of any such instrument or writing, or the authority of the Person executing
  the same, may also be proved in any other manner which the Trustee deems
  sufficient.

 
  (c) The Company may fix any day as the record date for the purpose of
  determining the Holders entitled to give or take any request, demand,
  authorization, direction, notice, consent, waiver or other action, or
  to vote on any action, authorized or permitted to be given or taken by
  Holders. If not set by the Company prior to the first solicitation of
  a Holder made by any Person in respect of any such action, or, in the
  case of any such vote, prior to such vote, the record date for any such
  action or vote shall be the 30th day (or, if later, the date of the most
  recent list of Holders required to be provided pursuant to Section 7.01)
  prior to such first solicitation or vote, as the case may be. With regard
  to any record date, only the Holders on such date (or their duly designated
  proxies) shall be entitled to give or take, or vote on, the relevant action.

 
  (d) The ownership of Securities shall be proved by the Security Register.

 
  (e) Any request, demand, authorization, direction, notice, consent, waiver
  or other Act of the Holder of any Security shall bind every future Holder
  of the same Security and the Holder of every Security issued upon the
  registration of transfer thereof or in exchange therefor or in lieu thereof
  in respect of anything done, omitted or suffered to be done by the Trustee
  or the Company in reliance thereon, whether or not notation of such action
  is made upon such Security.

 SECTION
  1.05. Notices,
  Etc., to Trustee and Company. Any request, demand, authorization,
  direction, notice, consent, waiver or Act of Holders or other document
  provided or permitted by this Indenture to be made upon, given or furnished
  to, or filed with,

15

   
    (i) the Trustee by any Holder or by the Company shall be sufficient
    for every purpose hereunder if made, given, furnished or filed in writing
    to or with the Trustee at 4 New York Plaza, New York, New York 10004,
    Attention: Institutional Trust Services, or

   
    (ii) the Company by the Trustee or by any Holder shall be sufficient
    for every purpose hereunder (unless otherwise herein expressly provided)
    if in writing and mailed, first-class postage prepaid, to the Company
    addressed to it at the address of its principal office specified in
    the first paragraph of this instrument or at any other address previously
    furnished in writing to the Trustee by the Company, Attention: Treasurer.

 SECTION
  1.06. Notice
  to Holders; Waiver. Where this Indenture provides for notice to Holders
  of any event, such notice shall be sufficiently given (unless otherwise
  herein expressly provided) if in writing and mailed, first-class postage
  prepaid, to each Holder affected by such event, at his address as it appears
  in the Security Register, not later than the latest date (if any), and
  not earlier than the earliest date (if any), prescribed for the giving
  of such notice. In any case where notice to Holders is given by mail,
  neither the failure to mail such notice, nor any defect in any notice
  so mailed, to any particular Holder shall affect the sufficiency of such
  notice with respect to other Holders. Where this Indenture provides for
  notice in any manner, such notice may be waived in writing by the Person
  entitled to receive such notice, either before or after the event, and
  such waiver shall be the equivalent of such notice. Waivers of notice
  by Holders shall be filed with the Trustee, but such filing shall not
  be a condition precedent to the validity of any action taken in reliance
  upon such waiver.

 In
  case by reason of the suspension of regular mail service or by reason
  of any other cause it shall be impracticable to give such notice by mail,
  then such notification as shall be made with the approval of the Trustee
  shall constitute a sufficient notification for every purpose hereunder.

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

 SECTION
  1.08. Effect
  of Headings and Table of Contents. The Article and Section headings
  herein and the Table of Contents are for convenience only and shall not
  affect the construction hereof.

16

 SECTION
  1.09. Successors
  and Assigns. All covenants and agreements in this Indenture by the
  Company shall bind its successors and assigns, whether so expressed or
  not.

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

 SECTION
  1.11. Benefits
  of Indenture. Nothing in this Indenture or in the Securities, express
  or implied, shall give to any Person, other than the parties hereto and
  their respective successors hereunder and the Holders of Securities, any
  benefit or any legal or equitable right, remedy or claim under this Indenture.

 SECTION
  1.12. Governing Law.
  This Indenture and the Securities shall be governed by and construed
  in accordance with the laws of the State of New York.

 SECTION
  1.13. Legal Holidays.
  In any case where any Interest Payment Date or Stated Maturity of any
  Security shall not be a Business Day at any Place of Payment, then (notwithstanding
  any other provision of this Indenture or of the Securities) payment of
  interest or principal need not be made at such Place of Payment on such
  date, but may be made on the next succeeding Business Day at such Place
  of Payment with the same force and effect as if made on the Interest Payment
  Date or at the Stated Maturity, provided that no interest shall
  accrue with respect to such payment for the period from and after such
  Interest Payment Date or Stated Maturity or, as the case may be.

  ARTICLE 2

  SECURITY FORMS

 SECTION
  2.01. Forms
  Generally. The Securities of each series and the Trustee's certificates
  of authentication shall be in substantially the forms set forth in this
  Article, or in such other form as shall be established by or pursuant
  to a Board Resolution of the Company or in one or more indentures supplemental
  hereto, in each case with such appropriate insertions, omissions, substitutions
  and other variations as are required or permitted by this Indenture, and
  may have such letters, numbers or other marks of identification and such
  legends or endorsements placed thereon as may be required to comply with
  the rules of any securities exchange or Depositary therefor, the Internal
  Revenue Code of 1986, as amended, and regulations thereunder, or as may,
  consistently herewith, be determined by the officers executing such Securities,
  as evidenced by their execution thereof.

 
 Unless
  it is determined pursuant to a Company Order or as otherwise provided
  in this Indenture that non-global Securities ("Physical Securities”)
  are to be issued, the Securities of each series shall be issued in the
  form of Global Securities.

 
 SECTION
  2.02. Form
  of Face of Security. [THIS SECURITY IS A GLOBAL SECURITY WITHIN THE
  MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN
  THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE
  EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER
  OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF
  ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN
  THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE].

 
 [UNLESS
  THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
  TRUST COMPANY ("DTC”), A NEW YORK CORPORATION, TO
  THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
  AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
  CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
  OF (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 THEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
  IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
  HAS AN INTEREST HEREIN.]

  

     AVON PRODUCTS, INC. 
  

  

     [Title of Security] 
  

	 	 
	 CUSIP
      No. __________	 $________ 

 Avon
  Products, Inc., a corporation duly organized and existing under the laws
  of New York (herein called the “Company”, which
  term includes any successor Person under the Indenture hereinafter referred
  to), for value received, hereby promises to pay to __________________,
  or registered assigns, the principal sum of _____________________ Dollars
  [INCLUDE IF SECURITY IS A GLOBAL SECURITY -- (which amount
  may from time to time be 

18

increased
  or decreased by adjustments made on the records of the Trustee, as custodian
  for the Depositary, in accordance with the rules and procedures of the
  Depositary)] on ______________________, and to pay interest
  thereon from _______________ or from the most recent Interest Payment
  Date to which interest has been paid or duly provided for, [semiannually]
  on _____ and _____ in each year, commencing _____ at the rate of ___%
  per annum, until the principal hereof is paid or made available for payment.

 The
  interest so payable, and punctually paid or duly provided for, on any
  Interest Payment Date will, as provided in such Indenture, be paid to
  the Person in whose name this Security (or one or more Predecessor Securities)
  is registered at the close of business on the Regular Record Date for
  such interest, which shall be the _____ or _____ (whether or not a Business
  Day), as the case may be, immediately preceding such Interest Payment
  Date. Any such interest not so punctually paid or duly provided for will
  forthwith cease to be payable to the Holder on such Regular Record Date
  and may either be paid to the Person in whose name this Security (or one
  or more Predecessor Securities) is registered at the close of business
  on a Special Record Date for the payment of such Defaulted Interest to
  be fixed by the Trustee, notice whereof shall be given to Holders of Securities
  not less than 10 days prior to such Special Record Date, or be paid at
  any time in any other lawful manner not inconsistent with the requirements
  of any securities exchange on which the Securities may be listed, and
  upon such notice as may be required by such exchange, all as more fully
  provided in said Indenture. Payment of the principal of and interest on
  this Security will be made at the office or agency of the Company maintained
  for that purpose in The City of New York, in such coin or currency of
  the United States of America as at the time of payment is legal tender
  for payment of public and private debts; provided, however,
  that at the option of the Company payment of interest may be made by check
  mailed to the address of the Person entitled thereto as such address shall
  appear in the Security Register. If this Security is a Global Security,
  then notwithstanding the foregoing, each such payment will be made in
  accordance with the procedures of the Depositary as then in effect.

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

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

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

19

	Dated:	 AVON PRODUCTS, INC.

       

	By 	___________________________________

        Name: 

        Title

	
      Attest:

       	
      _________________________

        Name:

        Title:

      	 	 

 

 SECTION
  2.03. Form
  of Reverse of Security. This Security is one of a duly authorized
  issue of Securities of the Company (herein called the “Securities”),
  issued and to be issued in one or more series under an Indenture, dated
  as of ______, 2003 (herein called the “Indenture”),
  between the Company and JPMorgan Chase Bank, as Trustee (herein called
  the “Trustee”, which term includes any successor
  trustee under the Indenture), to which Indenture and all indentures supplemental
  thereto reference is hereby made for a statement of the respective rights,
  limitations of rights, duties and immunities thereunder of the Company,
  the Trustee and the Holders of the Securities and of the terms upon which
  the Securities are, and are to be, authenticated and delivered.

 [If
  applicable, insert --The Securities are redeemable in whole or in
  part, at the option of the Company at any time and from time to time,
  on not less than 30 or more than 60 days' prior notice mailed to the Holders
  of the Securities, at a Redemption Price equal to the greater of (i) 100%
  of the principal amount of the Securities to be redeemed and (ii) the
  sum of the present values of the Remaining Scheduled Payments thereon
  discounted to the Redemption Date on a [semiannual] basis (assuming a
  360-day year consisting of twelve 30-day months) at the Treasury Rate
  plus __ basis points, together in either case with accrued interest on
  the principal amount being redeemed to the Redemption Date.

 Subject
  to payment by the Company of a sum sufficient to pay the amount due on
  redemption, interest on this Security (or portion hereof if this Security
  is redeemed in part) shall cease to accrue upon the Redemption Date of
  this Security (or portion hereof if this Security is redeemed in part).]

 [If
  applicable, insert - The Securities do not have the benefit of a
  sinking fund.]

20

 [INCLUDE
  IF SECURITY IS A GLOBAL SECURITY -- In the event of a deposit
  or withdrawal of an interest in this Security, including an exchange,
  transfer, repurchase or conversion of this Security in part only, the
  Trustee, as custodian of the Depositary, shall make an adjustment on its
  records to reflect such deposit or withdrawal in accordance with the rules
  and procedures of the Depositary.]

[If
  the Security is not an Original Issue Discount Security, insert -- If
  an Event of Default with respect to Securities of this series shall occur
  and be continuing, the principal of the Securities of this series may
  be declared due and payable in the manner and with the effect provided
  in the Indenture.] 

[If
  the Security is an Original Issue Discount Security, insert -- If
  an Event of Default with respect to Securities of this series shall occur
  and be continuing, an amount of principal of the Securities of this series
  may be declared due and payable in the manner and with the effect provided
  in the Indenture. Such amount shall be equal to -- insert formula
  for determining the amount. Upon payment (i) of the amount of principal
  so declared due and payable and (ii) of interest on any overdue principal,
  premium and interest (in each case to the extent that the payment of such
  interest shall be legally enforceable), all of the Company's obligations
  in respect of the payment of the principal of and premium and interest,
  if any, on the Securities of this series shall terminate.]

The Indenture
  contains provisions for defeasance at any time, upon compliance with certain
  conditions set forth therein, of (i) the entire Indebtedness evidenced
  by this Security or (ii) certain restrictive covenants and Events
  of Default with respect to this Security.

The Indenture
  permits, with certain exceptions as therein provided, the amendment thereof
  and the modification of the rights and obligations of the Company and
  the rights of the Holders of the Securities of each series to be affected
  under the Indenture at any time by the Company and the Trustee with the
  consent of the Holders of not less than a majority in aggregate principal
  amount of the Outstanding Securities of each series to be affected. The
  Indenture also contains provisions permitting the Holders of specified
  percentages in aggregate principal amount of the Outstanding Securities
  of each series, on behalf of the Holders of all the Securities of such
  series, to waive compliance by the Company with certain provisions of
  the Indenture and certain past defaults under the Indenture and their
  consequences. Any such consent or waiver by the Holder of this Security
  shall be conclusive and binding upon such Holder and upon all future Holders
  of this Security and of any Security issued upon the registration of transfer
  hereof or in exchange herefor or in lieu hereof, whether or not notation
  of such consent or waiver is made upon this Security.

21

As provided
  in and subject to the provisions of the Indenture, the Holder of this
  Security shall not have the right to institute any proceeding with respect
  to the Indenture or for the appointment of a receiver or trustee or for
  any other remedy thereunder, unless such Holder shall have previously
  given the Trustee written notice of a continuing Event of Default with
  respect to the Securities of this series, the Holders of not less than
  25% in principal amount of the Outstanding Securities of this series shall
  have made written request to the Trustee to institute proceedings in respect
  of such Event of Default as Trustee and offered the Trustee indemnity
  satisfactory to the Trustee, and the Trustee shall not have received from
  the Holders of a majority in principal amount of Outstanding Securities
  of this series a direction inconsistent with such request, and shall have
  failed to institute any such proceeding, for 60 days after receipt of
  such notice, request and offer of indemnity. The foregoing shall not apply
  to any suit instituted by the Holder of this Security for the enforcement
  of any payment of principal hereof or interest hereon on or after the
  respective due dates expressed herein.

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

As provided
  in the Indenture and subject to certain limitations therein set forth,
  the transfer of this Security is registrable in the Security Register,
  upon surrender of this Security for registration of transfer at the office
  or agency of the Company in The City of New York, duly endorsed by, or
  accompanied by a written instrument of transfer in form satisfactory to
  the Company and the Security Registrar duly executed by, the Holder hereof
  or his attorney duly authorized in writing, and thereupon one or more
  new Securities of this series, of authorized denominations and for the
  same aggregate principal amount, will be issued to the designated transferee
  or transferees.

The Securities
  are issuable only in registered form without coupons in denominations
  of $1,000 and any integral multiple thereof above that amount. As provided
  in the Indenture and subject to certain limitations therein set forth,
  Securities of this series are exchangeable for a like aggregate principal
  amount of Securities of this series of a different authorized denomination,
  as requested by the Holder surrendering the same.

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

Prior
  to due presentment of this Security for registration of transfer, the
  Company, the Trustee and any agent of the Company or the Trustee may treat
  the 

22

 

Person in whose name this Security
  is registered as the owner hereof for all purposes, whether or not this
  Security be overdue, and neither the Company, the Trustee nor any such
  agent shall be affected by notice to the contrary. 

All terms
  used in this Security which are defined in the Indenture shall have the
  meanings assigned to them in the Indenture.

  

     ASSIGNMENT FORM 
  

If you
  want to assign this Security, fill in the form below and have your signature
  guaranteed:

I or
  we assign and transfer this Security 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
  Security on the books of the Company. The agent may substitute another
  to act for him.

Date:
  _____________ Signed:____________________________

 (Sign
  exactly as your name appears on the other side of this Security)

Signature
  Guarantee: ________________________________

NOTICE:
  To be executed by an executive officer.

SECTION
  2.04. Form
  of Trustee's Certificate of Authentication. This is one of the Securities
  referred to in the within-mentioned Indenture.

  JPMORGAN CHASE BANK,        

   as Trustee

By__________________________

  Authorized Officer 

  

   23 

   ARTICLE 3 

  THE SECURITIES

SECTION
  3.01. Amount
  Unlimited; Issuable in Series. 

The aggregate
  principal amount of Securities which may be authenticated and delivered
  under this Indenture is unlimited.

The Securities
  may be issued in one or more series. There shall be established in or
  pursuant to a Board Resolution and, subject to Section 3.03,
  set forth, or determined in the manner provided, in an Officers' Certificate,
  or established in one or more indentures supplemental hereto, prior to
  the issuance of Securities of any series:

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

 (b)
    any limit upon the aggregate principal amount of the Securities
  of the series which may be authenticated and delivered under this Indenture
  (except for Securities authenticated and delivered upon registration of
  transfer of, or in exchange for, or in lieu of, other Securities of the
  series pursuant to Section 3.04, 3.05,
  3.06, 9.06 or 11.07
  and except for any Securities which, pursuant to Section 3.03
  of the Indenture, shall have not been issued and sold by the Company and
  are therefore deemed never to have been authenticated and delivered hereunder);

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

 (d)
    the Person to whom any interest on any Security of the series
  shall be payable if other than as set forth in Section 3.07;
  the rate or rates at which the Securities of the series shall bear any
  interest or the manner of calculation of such rate or rates, if any, the
  date or dates from which any such interest shall accrue, the Interest
  Payment Dates on which any such interest shall be payable and the Regular
  Record Date, for the interest payable on any Interest Payment Date;

 (e)  
  the place or places where the principal of and any premium or interest
  on Securities of the series shall be payable;

24

 (f)
    the period or periods within which, the price or prices at
  which and the terms and conditions upon which Securities of the series
  may be redeemed, in whole or in part, at the option of the Company and,
  if other than by a Board Resolution, the manner in which any election
  by the Company to redeem the Securities shall be evidenced;

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

 (h)
  if other than denominations of $1,000 and any integral multiple thereof,
  the denominations in which Securities of the series shall be issuable;

 (i)
  if other than the principal amount thereof, the portion of the principal
  amount of Securities of the series which shall be payable upon declaration
  of acceleration of the Maturity thereof pursuant to Section 3.10;

 (j)
  if applicable, that the Securities of the series, in whole or any specified
  part, shall be defeasible pursuant to Article 12
  and if other than a Board Resolution, the manner in which any election
  by the Company to defease those Securities shall be evidenced;

 (k)
  whether the Securities of the series are to be issuable in whole or in
  part in permanent global form, without coupons, and, if so, (i) the form
  of any legend or legends which shall be borne by any such permanent Global
  Security in addition to or in lieu of that set forth in Section 2.02,
  (ii) any circumstances in addition to or in lieu of those set forth in
  Clause (2) of the last paragraph of Section 3.05
  in which such permanent Global Security may be exchanged in whole or in
  part for Securities registered, and in which any transfer of such permanent
  Global Security in whole or in part may be registered, in the name of
  Persons other than the Depositary for such permanent Global Security or
  a nominee thereof and (iii) the Depositary with respect to any such permanent
  Global Security or Securities;

 (l)
  the currency or currencies, including composite currencies, in which payment
  of the principal of, and any premium and interest on, the Securities of
  the series shall be payable if other than the currency of the United States
  of America;

 (m)
  if the principal of, or any premium or interest on, any Securities of
  the series is to be payable, at the election of the Company or the Holder
  thereof, in one or more currencies or currency units other than that or
  those in which such Securities are stated to be payable, the currency,
  currencies or currency units in which the principal of or any premium
  or interest on such Securities as to which such election is made shall
  be payable, the periods within which and the terms and conditions upon
  which such election is to be made and the amount so payable (or the manner
  in which such amount shall be determined);

25

 (n)
  if the amount of payments of principal of, or any premium or interest
  on, the Securities of the series may be determined with reference to an
  index or pursuant to a formula, the manner in which such amounts shall
  be determined;

 (o)
  if the principal amount payable at the Stated Maturity of any Securities
  of the series will not be determinable as of any one or more dates prior
  to the Stated Maturity, the amount which shall be deemed to be the principal
  amount of such Securities as of any such date for any purpose thereunder
  or hereunder, including the principal amount thereof which shall be due
  and payable upon any Maturity other than the Stated Maturity or which
  shall be deemed to be Outstanding as of any date prior to the Stated Maturity
  (or, in any such case, the manner in which such amount deemed to be the
  principal amount shall be determined); 

 (p)
  any addition to or change in the Events of Default which applies to any
  Securities of the series and any change in the right of the Trustee or
  the requisite Holders of such Securities to declare the principal amount
  thereof due and payable pursuant to Section 5.01;

 (q)
  any addition to or change in the covenants set forth in Article Ten which
  applies to any Securities of the series; 

 (r)
  the terms, if any, on which Holders of Securities may convert or exchange
  any Securities of the series into any securities of any Person; and

 (s)
  any other terms of the series (which terms shall not be inconsistent with
  the provisions of this Indenture, except as permitted by Section 9.01(e)).

All Securities
  of any one series shall be substantially identical except as to denomination
  and except as may otherwise be provided in or pursuant to the Board Resolution
  referred to above and (subject to Section 3.03) set
  forth in the Officers' Certificate referred to above or in any such indenture
  supplemental hereto.

If any
  of the terms of the series are established by action taken pursuant to
  a Board Resolution, a copy of an appropriate record of such action shall
  be certified by the Secretary or an Assistant Secretary of the Company
  and delivered to the Trustee at or prior to the delivery of the Officers'
  Certificate setting forth the terms of the series.

26

 

 

SECTION
  3.02. Denominations.
  The Securities shall be issuable only in registered form and, unless otherwise
  provided as contemplated by Section 3.01 with respect to any series of
  Securities, without coupons and in denominations of $1,000 and any integral
  multiple thereof.

SECTION
  3.03. Execution,
  Authentication, Delivery and Dating. The Securities shall be executed
  on behalf of the Company by its Chairman of the Board, its Vice Chairman
  of the Board, its Chief Executive Officer, its President or one of its
  Vice Presidents, attested by its Secretary or one of its Assistant Secretaries.
  The signature of any of these officers on the Securities may be manual
  or facsimile.

Securities
  bearing the manual or facsimile signatures of individuals who were at
  any time the proper officers of the Company shall bind the Company, notwithstanding
  that such individuals or any of them have ceased to hold such offices
  prior to the authentication and delivery of such Securities or did not
  hold such offices at the date of such Securities.

At any
  time and from time to time after the execution and delivery of this Indenture,
  the Company may deliver Securities of any series executed by the Company
  to the Trustee for authentication, together with a Company Order for the
  authentication and delivery of such Securities, and the Trustee in accordance
  with the Company Order shall authenticate and deliver such Securities.
  If the form or terms of the Securities of the series have been established
  by or pursuant to one or more Board Resolutions as permitted by Sections
  2.01 and 3.01, in authenticating
  such Securities, and accepting the additional responsibilities under this
  Indenture in relation to such Securities, the Trustee shall be entitled
  to receive, and (subject to Section 6.01) shall be
  fully protected in relying upon, an Opinion of Counsel stating:

 (a)
  if the form of such Securities has been established by or pursuant to
  Board Resolution as permitted by Section 2.01, that
  such form has been established in conformity with the provisions of this
  Indenture;

 (b)
  if the terms of such Securities have been established by or pursuant to
  Board Resolution as permitted by Section 3.01, that
  such terms have been established in conformity with the provisions of
  this Indenture; and

 (c)
  that such Securities, when authenticated and delivered by the Trustee
  and issued by the Company in the manner and subject to any conditions
  specified in such Opinion of Counsel, will constitute valid and legally
  binding obligations of the Company, enforceable in accordance with their
  terms, subject to bankruptcy, insolvency, reorganization and other laws
  of general applicability

27

 relating to or affecting the enforcement
  of creditors' rights and to general equity principles.

Notwithstanding
  the provisions of Section 3.01 and of the preceding
  paragraph, if all Securities of a series are not to be originally issued
  at one time, it shall not be necessary to deliver the Officers' Certificate
  otherwise required pursuant to Section 3.01 or the
  Company Order and Opinion of Counsel otherwise required pursuant to such
  preceding paragraph at or prior to the time of authentication of each
  Security of such series if such documents are delivered at or prior to
  the time of authentication upon original issuance of the first Security
  of such series to be issued.

Each
  Security shall be dated the date of its authentication.

No Security
  shall be entitled to any benefit under this Indenture or be valid or obligatory
  for any purpose unless there appears on such Security a certificate of
  authentication substantially in the form provided for herein executed
  by the Trustee by manual signature, and such certificate upon any Security
  shall be conclusive evidence, and the only evidence, that such Security
  has been duly authenticated and delivered hereunder and is entitled to
  the benefits of this Indenture.

Notwithstanding
  the foregoing and subject, in the case of a Security in permanent global
  form, to Section 2.02, if any Security shall have
  been authenticated and delivered hereunder but never issued and sold by
  the Company, and the Company shall deliver such Security to the Trustee
  for cancellation as provided in Section 3.10 together
  with a written statement (which need not comply with Section 1.02
  and need not be accompanied by an Opinion of Counsel) directing such cancellation
  and stating that such Security has never been issued and sold by the Company,
  for all purposes of this Indenture such Security shall be deemed never
  to have been authenticated and delivered hereunder and shall never be
  entitled to the benefits of this Indenture.

SECTION
  3.04. Temporary
  Securities. Pending the preparation of definitive Securities, the
  Company may execute, and upon Company Order the Trustee shall authenticate
  and deliver, temporary Securities which are printed, lithographed, typewritten,
  mimeographed or otherwise produced, in any authorized denomination, substantially
  of the tenor of the definitive Securities in lieu of which they are issued
  and with such appropriate insertions, omissions, substitutions and other
  variations as the officers executing such Securities may determine, as
  evidenced by their execution of such Securities.

If temporary
  Securities of any series are issued, the Company will cause definitive
  Securities of that series to be prepared without unreasonable delay. 

28

After the preparation of definitive
  Securities of such series, the temporary Securities of such series shall
  be exchangeable for definitive Securities of such series upon surrender
  of the temporary Securities of such series at the office or agency of
  the Company in a Place of Payment for that series, without charge to the
  Holder. Upon surrender for cancellation of any one or more temporary Securities
  of any series the Company shall execute and the Trustee shall authenticate
  and deliver in exchange therefor a like principal amount of definitive
  Securities of the same series and of like tenor of authorized denominations.
  Until so exchanged the temporary Securities of any series shall in all
  respects be entitled to the same benefits under this Indenture as definitive
  Securities of such series. 

SECTION
  3.05. Registration;
  Registration of Transfer and Exchange. (a) The Company shall cause
  to be kept at the Corporate Trust Office of the Trustee a register (the
  register maintained in such office and in any other office or agency in
  a Place of Payment being herein sometimes collectively referred to as
  the “Security Register”) in which, subject
  to such reasonable regulations as it may prescribe, the Company shall
  provide for the registration of Securities and of transfers of Securities.
  The Trustee is hereby appointed “Security Registrar" (the “Security
  Registrar”) for the purpose of registering Securities and
  transfers of Securities as herein provided.

Upon
  surrender for registration of transfer of any Security of any series at
  an office or agency of the Company in a Place of Payment for that series,
  the Company shall execute, and the Trustee shall authenticate and deliver,
  in the name of the designated transferee or transferees, one or more new
  Securities of the same series of any authorized denominations and of a
  like aggregate principal amount and tenor.

At the
  option of the Holder, Securities may be exchanged for other Securities
  of the same series, of any authorized denominations and of a like aggregate
  principal amount and tenor, upon surrender of the Securities to be exchanged
  at such office or agency. Whenever any Securities are so surrendered for
  exchange, the Company shall execute, and the Trustee shall authenticate
  and deliver, the Securities which the Holder making the exchange is entitled
  to receive.

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

Every
  Security presented or surrendered for registration of transfer or for
  exchange shall (if so required by the Company or the Trustee) be duly
  endorsed, or be accompanied by a written instrument of transfer in form
  satisfactory to the Company and the Security Registrar duly executed,
  by the Holder thereof or his attorney duly authorized in writing. As a
  condition to the registration of transfer of any Restricted Securities,
  the Company or the Trustee may require evidence satisfactory to them as
  to the compliance with the restrictions set forth in the legend on such
  securities.

29

No service
  charge shall be made for any registration of transfer or exchange of Securities,
  but the Company may require payment of a sum sufficient to cover any tax
  or other governmental charge that may be imposed in connection with any
  registration of transfer or exchange of Securities, other than exchanges
  pursuant to Section 3.04, 9.06
  or 11.07 not involving any transfer.

The Company
  shall not be required to exchange or register a transfer of any Security
  of a series (i) during the 15-day period immediately preceding the mailing
  of any notice of redemption of any Security of that series, or (ii) after
  any notice of redemption has been given to Holders of Securities of that
  series, except, where such notice provides that such Security is to be
  redeemed only in part, the Company shall be required to exchange or register
  a transfer of the portion thereof not to be redeemed.

 (b)
  Neither the Trustee nor any of its agents shall (i) have any duty to monitor
  compliance with or with respect to any federal or state or other securities
  or tax laws or (ii) have any duty to obtain documentation on any transfers
  or exchanges other than as specifically required hereunder.

SECTION
  3.06. Mutilated,
  Destroyed, Lost and Stolen Securities. If any mutilated Security
  is surrendered to the Trustee, the Company shall execute and the Trustee
  shall authenticate and deliver in exchange therefor a new Security of
  the same series and of like tenor and principal amount and bearing a number
  not contemporaneously outstanding.

If there
  shall be delivered to the Company and the Trustee (i) evidence to
  their satisfaction of the destruction, loss or theft of any Security and
  (ii) such security or indemnity as may be required by them to save
  each of them and any agent of either of them harmless, then, in the absence
  of notice to the Company or the Trustee that such Security has been acquired
  by a protected purchaser, the Company shall execute and the Trustee shall
  authenticate and deliver, in lieu of any such destroyed, lost or stolen
  Security, a new Security of the same series and of like tenor and principal
  amount and bearing an identification number not contemporaneously outstanding.

In case
  any such mutilated, destroyed, lost or stolen Security has become or is
  about to become due and payable, or has been called for redemption in
  full, the Company in its discretion may, instead of issuing a new Security,
  pay such Security.

30

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

Every
  new Security issued pursuant to this Section in lieu of any destroyed,
  lost or stolen Security shall constitute an original additional contractual
  obligation of the Company, whether or not the destroyed, lost or stolen
  Security shall be at any time enforceable by anyone, and shall be entitled
  to all the benefits of this Indenture equally and proportionately with
  any and all other Securities duly issued hereunder.

The provisions
  of this Section are exclusive and shall preclude (to the extent lawful)
  all other rights and remedies with respect to the replacement or payment
  of mutilated, destroyed, lost or stolen Securities.

SECTION
  3.07. Payment
  of Interest; Interest Rights Preserved. Unless otherwise provided
  as contemplated by Section 3.01 with respect to any
  series of Securities, interest on any Security which is payable, and is
  punctually paid or duly provided for, on any Interest Payment Date shall
  be paid to the Person in whose name that Security (or one or more Predecessor
  Securities) is registered at the close of business on the Regular Record
  Date for such interest.

Any interest
  on any Security of any series which is payable, but is not punctually
  paid or duly provided for, on any Interest Payment Date (herein called
  “Defaulted Interest”) shall forthwith cease
  to be payable to the Holder on the relevant Regular Record Date by virtue
  of having been such Holder, and such Defaulted Interest may be paid by
  the Company, at its election in each case, as provided in Clause (a)
  or (b) below:

 (a)
  The Company may elect to make payment of any Defaulted Interest to the
  Persons in whose names the Securities of such series (or their respective
  Predecessor Securities) are registered at the close of business on a Special
  Record Date for the payment of such Defaulted Interest, which shall be
  fixed in the following manner. The Company shall notify the Trustee in
  writing of the amount of Defaulted Interest proposed to be paid on each
  Security of such series and the date of the proposed payment, and at the
  same time the Company shall deposit with the Trustee an amount of money
  equal to the aggregate amount proposed to be paid in respect of such Defaulted
  Interest or shall make arrangements satisfactory to the Trustee for such
  deposit prior to the date of the proposed payment, such money when deposited
  to be held in trust for the benefit of the 

31

Persons entitled to such Defaulted
  Interest as in this Clause provided. Thereupon the Trustee shall fix a
  Special Record Date for the payment of such Defaulted Interest which shall
  be not more than 15 days and not less than 10 days prior to
  the date of the proposed payment and not less than 10 days after
  the receipt by the Trustee of the notice of the proposed payment. The
  Trustee shall promptly notify the Company of such Special Record Date
  and, in the name and at the expense of the Company, shall cause notice
  of the proposed payment of such Defaulted Interest and the Special Record
  Date therefor to be mailed, first-class postage prepaid, to each Holder
  of Securities of such series at his address as it appears in the Security
  Register, not less than 10 days prior to such Special Record Date.
  Notice of the proposed payment of such Defaulted Interest and the Special
  Record Date therefor having been so mailed, such Defaulted Interest shall
  be paid to the Persons in whose names the Securities of such series (or
  their respective Predecessor Securities) are registered at the close of
  business on such Special Record Date and shall no longer be payable pursuant
  to the following Clause (b). 

 (b)
  The Company may make payment of any Defaulted Interest in any other lawful
  manner not inconsistent with the requirements of any securities exchange
  on which the Securities may be listed, and upon such notice as may be
  required by such exchange, if, after notice given by the Company to the
  Trustee of the proposed payment pursuant to this Clause, such manner of
  payment shall be deemed practicable by the Trustee.

Subject
  to the foregoing provisions of this Section, each Security delivered under
  this Indenture upon registration of transfer of or in exchange for or
  in lieu of any other Security shall carry the rights to interest accrued
  and unpaid, and to accrue, which were carried by such other Security.

SECTION
  3.08. Persons
  Deemed Owners. Prior to due presentment of a Security for registration
  of transfer, the Company, the Trustee and any agent of the Company or
  the Trustee may treat the Person in whose name such Security is registered
  as the owner of such Security for the purpose of receiving payment of
  principal of and (subject to Section 3.07) interest
  on such Security and for all other purposes whatsoever, whether or not
  such Security be overdue, and neither the Company, the Trustee nor any
  agent of the Company or the Trustee shall be affected by notice to the
  contrary.

SECTION
  3.09. Book-entry
  Provisions for Global Securities. (a) The Global Securities initially
  shall (i) be registered in the name of the Depositary or the nominee of
  such Depositary, (ii) be delivered to the Trustee as custodian for the
  Depositary and (iii) bear legends as set forth on the face of the form
  of Security in Section 2.02.

32

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

 (b)
  Transfers of the Global Securities shall be limited to transfers in whole,
  but not in part, to the Depositary, its successors or their respective
  nominees. Interests of beneficial owners in a Global Security may be transferred
  or exchanged, in whole or in part, for Physical Securities in accordance
  with the rules and procedures of the Depositary. In addition, Physical
  Securities shall be transferred to all beneficial owners in exchange for
  their beneficial interests in the Global Securities if (A) such Depositary
  has notified the Company (or the Company becomes aware) that the Depositary
  (i) is unwilling or unable to continue as Depositary for such Global Security
  or (ii) has ceased to be a clearing agency registered under the Exchange
  Act when the Depositary is required to be so registered to act as such
  Depositary and, in both such cases, no successor Depositary shall have
  been appointed within 90 days of such notification or of the Company becoming
  aware of such event, (B) there shall have occurred and be continuing an
  Event of Default with respect to such Global Security and the Outstanding
  Securities of such series shall have become due and payable pursuant to
  Section  5.02 and the Trustee
  has requested that Physical Securities be issued or (C) the Company has
  decided to discontinue use of book-entry transfers through the Depositary
  (or a successor Depositary). 

 (c)
  In connection with any transfer or exchange of a portion of the beneficial
  interest in the Global Security to beneficial owners pursuant to paragraph
  (b), the Security Registrar shall (if one or more Physical Securities
  are to be issued) reflect on its books and records the date and a decrease
  in the principal amount of the Global Security in an amount equal to the
  principal amount of the beneficial interest in the Global Security to
  be transferred, and the Company shall execute, and the Trustee shall authenticate
  and deliver, one or more Physical Securities of like tenor and amount.

 (d)
  In connection with the transfer of the entire Global Security to beneficial
  owners pursuant to paragraph (b), the Global Security shall be deemed
  to be surrendered to the Trustee for cancellation, and the Company shall
  execute, and the Trustee shall authenticate and deliver, to each beneficial
  owner identified 

33

by the Depositary in exchange for
  its beneficial interest in the Global Security, an equal aggregate principal
  amount of Physical Securities of authorized denominations and the same
  tenor. 

 (e)
  The Holder of the Global Securities may grant proxies and otherwise authorize
  any Person, including Agent Members and Persons that may hold interests
  through Agent Members, to take any action which a Holder is entitled to
  take under this Indenture or the Securities.

SECTION
  3.10. Cancellation.
  The Company at any time may deliver to the Trustee for cancellation any
  Securities previously authenticated and delivered hereunder which the
  Company may have acquired in any manner whatsoever, and may deliver to
  the Trustee for cancellation any Securities previously authenticated hereunder
  which the Company has not issued and sold. The Trustee shall cancel all
  Securities surrendered for registration of transfer, exchange, payment,
  redemption or cancellation and shall dispose of such cancelled Securities,
  all in accordance with its customary practices. If the Company shall acquire
  any of the Securities, such acquisition shall not operate as a redemption
  or satisfaction of the indebtedness represented by such Securities unless
  and until the same are delivered to the Trustee for cancellation. The
  Company may not issue new Securities to replace Securities it has paid
  in full or delivered to the Trustee for cancellation.

SECTION
  3.11. Computation of Interest.
  Except as otherwise specified as contemplated by Section 3.01
  for Securities of any series, interest on the Securities of each series
  shall be computed on the basis of a 360-day year of twelve 30-day months.

  

  

  ARTICLE 4

  SATISFACTION AND DISCHARGE

SECTION
  4.01. Satisfaction
  and Discharge of Indenture. This Indenture shall cease to be of further
  effect (except as to any surviving rights of registration of transfer
  or exchange of Securities herein expressly provided for), and the Trustee,
  on demand of and at the expense of the Company, shall execute proper instruments
  acknowledging satisfaction and discharge of this Indenture, when

 (a)
  either

   (i)
    all Securities theretofore authenticated and delivered (other than (A) Securities
    which have been destroyed, lost or stolen and which have been replaced
    or paid as provided in Section  3.06
    and (B) Securities 

  34

  

  
  
   

  for whose payment money has theretofore
    been deposited in trust or segregated and held in trust by the Company
    and thereafter repaid to the Company or discharged from such trust,
    as provided in Section  10.03)
    have been delivered to the Trustee for cancellation; or

   (ii)
    all such Securities not theretofore delivered to the Trustee for cancellation

  
    
      (A) have become due and payable, or

    
      (B) will become due and payable at their Stated Maturity within one
      year, or

    
      (C) will be called for redemption within one year under arrangements
      satisfactory to the Trustee for the giving of notice of redemption
      by the Trustee in the name, and at the expense, of the Company,

  

and the Company, in the case of
  (A), (B) or (C) above, has deposited or caused to be deposited with the
  Trustee as trust funds in trust for the purpose an amount sufficient to
  pay and discharge the entire indebtedness evidenced by such Securities
  not theretofore delivered to the Trustee for cancellation, for principal
  and interest to the date of such deposit (in the case of Securities which
  have become due and payable) or to the Stated Maturity or Redemption Date,
  as the case may be; 

 (b)
  the Company has paid or caused to be paid all other sums payable hereunder
  by the Company; and

 (c)
  the Company has delivered to the Trustee an Officers' Certificate and
  an Opinion of Counsel, each stating that all conditions precedent herein
  provided for relating to the satisfaction and discharge of this Indenture
  have been complied with.

Notwithstanding
  the satisfaction and discharge of this Indenture, the obligations of the
  Company to the Trustee under Section 6.07 and, if
  money shall have been deposited with the Trustee pursuant to subclause (ii)
  of Clause (a) of this Section, the obligations of the Trustee under
  Section 4.02 and the last paragraph of Section 10.03
  shall survive.

SECTION
  4.02. Application
  of Trust Money. Subject to the provisions of the last paragraph of
  Section 10.03, all money deposited with the
  Trustee pursuant to Section  4.01
  shall be held in trust and applied by it, in accordance with the provisions
  of the Securities and this Indenture, to the payment, either directly
  or 

35

through any Paying Agent (including
  the Company acting as its own Paying Agent) as the Trustee may determine,
  to the Persons entitled thereto, of the principal and interest for whose
  payment such money has been deposited with the Trustee. 

ARTICLE 5

  REMEDIES

SECTION
  5.01. Events
  of Default. “Event of Default”, wherever
  used herein with respect to Securities of any series, 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)
  default in the payment of any interest upon any Security of that series
  when it becomes due and payable, and continuance of such default for a
  period of 30 days; or

 (b)
  default in the payment of the principal of any Security of that series
  at its Maturity; or

 (c)
  default in the deposit of any sinking fund payment, when and as due by
  the terms of a Security of that series; or

 (d)
  default in the performance of any covenant, agreement
  or condition of the Company in this Indenture or the Securities of that
  series (other than a covenant, agreement or condition a default in whose
  performance or whose breach is specifically dealt with elsewhere in this
  section or which has been expressly included in this Indenture solely
  for the benefit of series of Securities other than that series), and continuance
  of such default for a period of 60 days after there has been given,
  by registered or certified mail, to the Company by the Trustee or to the
  Company and the Trustee by the Holders of at least 25% in principal amount
  of the Outstanding Securities of that series a written notice specifying
  such default and requiring it to be remedied and stating that such notice
  is a “Notice of Default” hereunder; or

 (e)
  a default under any bond, debenture, note or other
  evidence of Indebtedness for money borrowed by the Company, whether such
  Indebtedness now exists or shall hereafter be created, which default shall
  constitute a failure to pay the principal of Indebtedness having an aggregate
  principal amount outstanding of at least $100 million when due and payable
  after the expiration of any applicable grace period with respect thereto
  or shall have resulted in such

36

 Indebtedness becoming or being
  declared due and payable prior to the date on which it would otherwise
  have become due and payable, without such Indebtedness having been discharged,
  or such acceleration having been rescinded or annulled, within a period
  of 30 days after there shall have been given, by registered or certified
  mail, to the Company by the Trustee or to the Company and the Trustee
  by the Holders of at least 25% in principal amount of the Outstanding
  Securities of that series a written notice specifying such default and
  requiring the Company to cause such Indebtedness to be discharged or cause
  such acceleration to be rescinded or annulled and stating that such notice
  is a “Notice of Default” hereunder; provided,
  however, that, subject to the provisions of Sections 6.01
  and 6.02, the Trustee shall not be deemed to have
  knowledge of such default unless either (A) a Responsible Officer
  of the Trustee shall have actual knowledge of such default or (B) the
  Trustee shall have received written notice thereof from the Company, from
  any Holder or from the holder of or trustee in respect of any such Indebtedness;
  or 

 (f)
  the entry by a court having jurisdiction in the premises
  of (i) a decree or order for relief in respect of the Company of
  a voluntary case or proceeding under any applicable Federal or State bankruptcy,
  insolvency, reorganization or other similar law or (ii) a decree
  or order adjudging the Company a bankrupt or insolvent, or approving as
  properly filed a petition seeking reorganization, arrangement, adjustment
  or composition of or in respect of the Company under any applicable Federal
  or State law, or appointing a custodian, receiver, liquidator, assignee,
  trustee, sequestrator or other similar official of the Company or of any
  substantial part of its property, or ordering the winding up or liquidation
  of its affairs, and the continuance of any such decree or order for relief
  or any such other decree or order unstayed and in effect for a period
  of 60 consecutive days; or

 (g)
  the commencement by the Company of a voluntary case
  or proceeding under any applicable Federal or State bankruptcy, insolvency,
  reorganization or other similar law or of any other case or proceeding
  to be adjudicated a bankrupt or insolvent, or the consent by it to the
  entry of a decree or order for relief in respect of the Company in an
  involuntary case or proceeding under any applicable Federal or State bankruptcy,
  insolvency, reorganization or other similar law or to the commencement
  of any bankruptcy or insolvency case or proceeding against it, or the
  filing by it of a petition or answer or consent seeking reorganization
  or relief under any applicable Federal or State law, or the consent by
  it to the filing of such petition or to the appointment of or taking possession
  by a custodian, receiver, liquidator, assignee, trustee, sequestrator
  or other similar official of the Company or of any substantial part of
  its property, or the making by it of an assignment for the benefit of
  creditors, or the admission by it in writing of its inability to pay its
  debts generally as they become due, or the taking of corporate action
  by the Company in furtherance of any such action; or

37

(h) the
  occurrence of any other event of default with respect to the Securities
  of that series as provided in a supplemental indenture applicable to such
  series of Securities or a Board Resolution pursuant to which such series
  of Securities is established.

SECTION
  5.02. Acceleration
  of Maturity; Rescission and Annulment. (a) If an Event of Default
  (other than those specified in Sections 5.01(f) and
  5.01(g)) occurs with respect to any series of Outstanding
  Securities and is continuing, then and in every such case the Trustee
  or the Holders of not less than 25% in principal amount of the Outstanding
  Securities of such series may declare the principal amount (or, if the
  Securities of any such series are Original Issue Discount Securities,
  such portion of the principal amount as may be specified in the terms
  of that series) of all the Securities to be due and payable immediately,
  by a notice in writing to the Company (and to the Trustee if given by
  Holders), and upon any such declaration such principal shall become immediately
  due and payable.

Notwithstanding
  the foregoing, in the case of an Event of Default specified in Sections
  5.01(f) or 5.01(g), the principal
  amount (or, if the Securities of any such series are Original Issue Discount
  Securities, such portion of the principal amount as may be specified in
  the terms of that series) of all Outstanding Securities will ipso
  facto become due and payable without any declaration or other
  Act on the part of the Trustee or any Holder.

 (b)
  At any time after such a declaration of acceleration with respect to the
  Securities of any series has been made and before a judgment or decree
  for payment of the money due has been obtained by the Trustee as hereinafter
  in this Article provided, the Holders of a majority in principal amount
  of the Outstanding Securities of that series, 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 overdue interest on all Securities of the series,

    
      (B) the principal of any Securities of that series which have become
      due otherwise than by such declaration of acceleration and interest
      thereon at the rate borne by such Securities,

    
      (C) to the extent that payment of such interest is lawful, interest
      upon overdue interest at the rate borne by such Securities, and

    38

  

  
    
      (D) all sums paid or advanced by the Trustee hereunder and the reasonable
      compensation, expenses, disbursements and advances of the Trustee,
      its agents and counsel, and any other amounts due the Trustee under
      Section 6.07;

  

and

   (ii)
    all Events of Default, other than the non-payment of the principal of
    Securities of that series which have become due solely by such declaration
    of acceleration, have been cured or waived as provided in Section 5.13.

No such
  rescission shall affect any subsequent default or impair any right consequent
  thereon.

SECTION
  5.03. Collection
  of Indebtedness and Suits for Enforcement by Trustee. The Company
  covenants that if

   (i)
    default is made in the payment of any interest on any Security when
    such interest becomes due and payable and such default continues for
    a period of 30 days, or

   (ii)
    default is made in the payment of the principal of any Security at the
    Maturity thereof,

 the Company will, upon demand
  of the Trustee, pay to it, for the benefit of the Holders of such Securities,
  the whole amount then due and payable on such Securities for principal
  and interest, and, to the extent that payment of such interest shall be
  legally enforceable, interest on any overdue principal and on any overdue
  interest, at the rate borne by the Securities, and, in addition thereto,
  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. 

If an
  Event of Default with respect to the Securities of any series occurs and
  is continuing, the Trustee may in its discretion, subject to applicable
  law, proceed to protect and enforce its rights and the rights of the Holders
  of Securities of such series by such appropriate judicial proceedings
  as the Trustee shall deem most effectual to protect and enforce any such
  rights, whether for the specific enforcement of any covenant or agreement
  in this Indenture or in aid of the exercise of any power granted herein,
  or to enforce any other proper remedy.

Section
  5.04. Trustee
  May File Proofs of Claim. In case of any judicial proceeding relative
  to the Company (or any other obligor upon the Securities), its

39

 property or its creditors, the
  Trustee shall be entitled and empowered, by intervention in such proceeding
  or otherwise, to take any and all actions authorized under the Trust Indenture
  Act in order to have claims of the Holders and the Trustee allowed in
  any such proceeding. In particular, the Trustee shall be authorized to
  collect and receive any moneys or other property payable or deliverable
  on any such claims and to distribute the same; and any custodian, receiver,
  assignee, trustee, liquidator, sequestrator or other similar official
  in any such judicial proceeding 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 it for the reasonable compensation, expenses,
  disbursements and advances of the Trustee, its agents and counsel, and
  any other amounts due the Trustee under Section 6.07.

No provision
  of this Indenture 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 Securities 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
  5.05. Trustee
  May Enforce Claims Without Possession of Securities. All rights of
  action and claims under this Indenture or the Securities may be prosecuted
  and enforced by the Trustee without the possession of any of the Securities
  or the production thereof in any proceeding relating thereto, and any
  such proceeding instituted by the Trustee shall be brought in its own
  name as trustee of an express trust, and any recovery of judgment shall,
  after provision for the payment of the reasonable compensation, expenses,
  disbursements and advances of the Trustee, its agents and counsel, and
  any other amounts due the Trustee under Section 6.07,
  be for the ratable benefit of the Holders of the Securities in respect
  of which such judgment has been recovered.

SECTION
  5.06. Application
  of Money Collected. Any money collected by the Trustee pursuant to
  this Article shall be applied in the following order, at the date or dates
  fixed by the Trustee and, in case of the distribution of such money on
  account of principal or interest, upon presentation of the Securities
  and the notation thereon of the payment if only partially paid and upon
  surrender thereof if fully paid:

  
    
      FIRST: To the payment of all amounts due the Trustee under Section 6.07;
      and

    
      SECOND: To the payment of the amounts then due and unpaid for principal
      of and interest on the Securities in respect of which or for the benefit
      of which such money has been collected, ratably, without 

    40

  

  
    preference or priority of any
      kind, according to the amounts due and payable on such Securities
      for principal and interest, respectively.

  

SECTION
  5.07. Limitation
  on Suits. No Holder of any Security shall have any right to institute
  any proceeding, judicial or otherwise, with respect to this Indenture,
  or for the appointment of a receiver or trustee, or for any other remedy
  hereunder, unless 

  
    
      (i) such Holder has previously given written notice to the Trustee
      of a continuing Event of Default with respect to the Securities of
      that series;

    
      (ii) the Holders of not less than 25% in aggregate principal amount
      of the Outstanding Securities of that series shall have made written
      request to the Trustee to institute proceedings in respect of such
      Event of Default in its own name as Trustee hereunder;

    
      (iii) such Holder or Holders have offered to the Trustee reasonable
      indemnity satisfactory to the Trustee against the costs, expenses
      and liabilities to be incurred in compliance with such request;

    
      (iv) the Trustee for 60 days after its receipt of such notice,
      request and offer of indemnity has failed to institute any such proceeding;
      and

    
      (v) no direction inconsistent with such written request has been given
      to the Trustee during such 60-day period by the Holders of a majority
      in aggregate principal amount of the Outstanding Securities of that
      series;

  

 it being understood and intended
  that no one or more Holders shall have any right in any manner whatever
  by virtue of, or by availing of, any provision of this Indenture to affect,
  disturb or prejudice the rights of any other Holders, or to obtain or
  to seek to obtain priority or preference over any other Holders or to
  enforce any right under this Indenture, except in the manner herein provided
  and for the equal and ratable benefit of all the Holders. 

SECTION
  5.08. Unconditional
  Right of Holders to Receive Principal and Interest. Notwithstanding
  any other provision in this Indenture, the Holder of any Security shall
  have the right, which is absolute and unconditional, to receive payment
  of the principal of and (subject to Section 3.07)
  interest on such Security on the respective Stated Maturities expressed
  in such Security and to institute suit for the enforcement of any such
  payment, and such rights shall not be impaired without the consent of
  such Holder.

41

SECTION
  5.09. Restoration
  of Rights and Remedies. If the Trustee or any Holder has instituted
  any proceeding to enforce any right or remedy under this Indenture and
  such proceeding has been discontinued or abandoned for any reason, or
  has been determined adversely to the Trustee or to such Holder, then and
  in every such case, subject to any determination in such proceeding, the
  Company, the Trustee and the Holders shall 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.

SECTION
  5.10. Rights and Remedies
  Cumulative. Except as otherwise provided with respect to the replacement
  or payment of mutilated, destroyed, lost or stolen Securities in the last
  paragraph of Section 3.06, no right or remedy
  herein conferred upon or reserved to the Trustee or to the Holders is
  intended to be exclusive of any other right or remedy, and every right
  and remedy shall, to the extent permitted by law, be cumulative and in
  addition to every other right and remedy given hereunder or now or hereafter
  existing at law or in equity or otherwise. The assertion or employment
  of any right or remedy hereunder, or otherwise, shall not prevent the
  concurrent assertion or employment of any other appropriate right or remedy.

SECTION
  5.11. Delay or Omission
  Not Waiver. No delay or omission of the Trustee or of any Holder
  of any Security to exercise any right or remedy accruing upon any Event
  of Default shall impair any such right or remedy or constitute a waiver
  of any such Event of Default or an acquiescence therein. Every right and
  remedy given by this Article or by law to the Trustee or to the Holders
  may be exercised from time to time, and as often as may be deemed expedient,
  by the Trustee or by the Holders, as the case may be.

SECTION
  5.12. Control
  by Holders. The Holders of a majority in principal amount of the
  Outstanding Securities of any series 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,
  with respect to the Securities of such series, provided that
  

  
    
      (i) such direction shall not be in conflict with any rule of law or
      with this Indenture, and 

    
      (ii) the Trustee may take any other action deemed proper by the Trustee
      which is not inconsistent with such direction.

  

SECTION
  5.13. Waiver
  of Past Defaults. The Holders of not less than a majority in principal
  amount of the Outstanding Securities affected by any past default hereunder
  (all voting together as one class) may, on behalf of the Holders

42

 of all the Securities affected
  by such past default, waive such past default and its consequences, subject
  to the payment of the amounts required under Section 5.02(b)(i)(D), except
  a default  

  
    
      (i) in the payment of the principal of or interest on any Security,
      or

    
      (ii) in respect of a covenant or provision hereof which under Article
      Nine cannot be modified or amended without the consent of the Holder
      of each Outstanding Security affected.

  

Upon
  any such waiver, such default shall cease to exist, and any Event of Default
  arising therefrom shall be deemed to have been cured, for every purpose
  of this Indenture; but no such waiver shall extend to any subsequent or
  other default or impair any right consequent thereon.

SECTION
  5.14. 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, in either case in respect to the Securities,
  a court may require any party litigant in such suit to file an undertaking
  to pay the costs of the suit, and the court may assess reasonable costs,
  including reasonable attorney's 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; but the provisions of this Section shall not
  apply to any suit instituted by the Company, to any suit instituted by
  the Trustee, to any suit instituted by any Holder, or group of Holders,
  holding in the aggregate more than 25% in principal amount of the Outstanding
  Securities of any series, or to any suit instituted by any Holder for
  the enforcement of the payment of the principal of or interest on any
  Security on or after the maturity of such Security.

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

  43

  

ARTICLE 6 

  THE TRUSTEE

SECTION
  6.01. Certain
  Duties and Responsibilities. The duties and responsibilities of the
  Trustee shall be as provided by the Trust Indenture Act. Notwithstanding
  the foregoing, 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. Whether or not therein
  expressly so provided, every provision of this Indenture relating to the
  conduct or affecting the liability of or affording protection to the Trustee
  shall be subject to the provisions of this Section.

SECTION
  6.02. Notice
  of Defaults. The Trustee shall give the Holders notice of any default
  hereunder as and to the extent provided by the Trust Indenture Act; provided,
  however, that in the case of any default of the character specified
  in Section 5.01(d), no such notice to Holders
  shall be given until at least 30 days after the occurrence thereof.
  For the purpose of this Section, the term “default”
  means any event which is, or after notice or lapse of time or both would
  become, an Event of Default.

SECTION
  6.03. Certain
  Rights of Trustee. Subject to the provisions of Section 6.01:

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

 (b)
  any request or direction of the Company mentioned herein shall be sufficiently
  evidenced by a Company Request or Company Order and any resolution of
  the Board of Directors of the Company, or the Finance and Strategic Planning
  Committee of the Board of Directors of the Company, may be sufficiently
  evidenced by a Board Resolution;

 (c)
  whenever in the administration of this Indenture the Trustee shall deem
  it desirable that a matter be proved or established prior to taking, suffering
  or omitting any action hereunder, the Trustee (unless other evidence be
  herein specifically prescribed) may, in the absence of bad faith on its
  part, rely upon an Officers' Certificate;

44

 

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

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

 (f)
  the Trustee shall not be bound to make any investigation into the facts
  or matters stated in any resolution, certificate, statement, instrument,
  opinion, report, notice, request, direction, consent, order, bond, debenture,
  note, other evidence of indebtedness or other paper or document, but the
  Trustee, in its discretion, may make such further inquiry or investigation
  into such facts or matters as it may see fit; 

 (g)
  the Trustee may execute any of the trusts or powers hereunder or perform
  any duties hereunder either directly or by or through agents or attorneys
  and the Trustee shall not be responsible for any misconduct or negligence
  on the part of any agent or attorney appointed with due care by it hereunder;

 (h)
  the Trustee shall not be charged with knowledge of any Default or Event
  of Default (except as provided in Section 5.01(e))
  with respect to the Securities unless either (i) a Responsible Officer
  shall have actual knowledge of such Default or Event of Default or (ii)
  written notice of such Default or Event of Default shall have been given
  to the Trustee by the Company or any other obligor on such Securities
  or by any Holder of such Securities; and

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

SECTION
  6.04. Not
  Responsible for Recitals. The recitals contained herein and in the
  Securities, except the Trustee's certificates of authentication, shall
  be taken as the statements of the Company, and the Trustee assumes no
  responsibility for their correctness. The Trustee makes no representations
  as to the validity or sufficiency of this Indenture or of the Securities.
  The Trustee shall not be accountable for the use or application by the
  Company of Securities or the proceeds thereof.

SECTION
  6.05. May Hold
  Securities. The Trustee, any Paying Agent, any Security Registrar
  or any other agent of the Company, in its individual or any

45

 other capacity, may become the
  owner or pledgee of Securities and, subject to Sections 6.08
  and 6.13, may otherwise deal with the Company with
  the same rights it would have if it were not Trustee, Paying Agent, Security
  Registrar or such other agent. 

SECTION
  6.06. Money
  Held in Trust. Money held by the Trustee in trust hereunder need
  not be segregated from other funds except to the extent required by law.
  The Trustee shall be under no liability for interest on any money received
  by it hereunder except as otherwise agreed in writing with the Company.

SECTION
  6.07. Compensation
  and Reimbursement. The Company agrees:

 (i)
  to pay to the Trustee from time to time reasonable compensation for all
  services rendered by it hereunder (which compensation shall not be limited
  by any provision of law in regard to the compensation of a trustee of
  an express trust);

 (ii)
  except as otherwise expressly provided herein, to reimburse the Trustee
  upon its request for all reasonable expenses, disbursements and advances
  incurred or made by the Trustee in accordance with any provision of this
  Indenture (including the reasonable compensation and the expenses and
  disbursements of its agents and counsel), except any such expense, disbursement
  or advance as may be attributable to its negligence or bad faith; and

 (iii)
  to indemnify the Trustee for, and to hold it harmless against, any loss,
  liability or expense incurred without negligence or bad faith on its part,
  arising out of or in connection with the acceptance or administration
  of this trust, including the reasonable costs and expenses of defending
  itself against any claim or liability in connection with the exercise
  or performance of any of its powers or duties hereunder.

The obligations
  of the Company under this Section 6.07 shall survive
  the satisfaction and discharge of this Indenture. To secure the Company's
  payment obligations in this Section 6.07, the Trustee
  shall have a Lien prior to the Securities on all money or property held
  or collected by the Trustee, except that held in trust to pay principal
  and interest on the Securities. Such Lien shall survive the satisfaction
  and discharge of this Indenture. When the Trustee incurs expenses or renders
  services after a Default or an Event of Default specified in Sections
  5.01(f) or 5.01(g) hereof occurs,
  the expenses and the compensation for the services (including the fees
  and expenses of its agents and counsel) are intended to constitute expenses
  of administration under U.S. Code, Title 11 or any other similar foreign,
  federal or state law for the relief of debtors.

46

SECTION
  6.08. Disqualification;
  Conflicting Interests. If the Trustee has or shall acquire a conflicting
  interest within the meaning of the Trust Indenture Act, the Trustee shall
  either eliminate such interest or resign, to the extent and in the manner
  provided by, and subject to the provisions of, the Trust Indenture Act
  and this Indenture.

SECTION
  6.09. Corporate
  Trustee Required; Eligibility. There shall at all times be a Trustee
  hereunder which shall be a Person that is eligible pursuant to the Trust
  Indenture Act to act as such and has a combined capital and surplus of
  at least $50,000,000. If such Person publishes reports of condition at
  least annually, pursuant to law or to the requirements of said supervising
  or examining authority, then for the purposes of this Section, the combined
  capital and surplus of such Person shall be deemed to be its combined
  capital and surplus as set forth in its most recent report of condition
  so published. If at any time the Trustee shall cease to be eligible in
  accordance with the provisions of this Section, it shall resign immediately
  in the manner and with the effect hereinafter specified in this Article.

SECTION
  6.10. Resignation
  and Removal; Appointment of Successor. (a) No resignation or removal
  of the Trustee and no appointment of a successor Trustee pursuant to this
  Article shall become effective until the acceptance of appointment by
  the successor Trustee under Section 6.11.

 (b)
  The Trustee may resign at any time with respect to the Securities of one
  or more series by giving written notice thereof to the Company. If an
  instrument of acceptance by a successor Trustee shall not have been delivered
  to the Trustee within 30 days after the giving of such notice of
  resignation, the resigning Trustee may petition any court of competent
  jurisdiction for the appointment of a successor Trustee with respect to
  the Securities of such series.

 (c)
  The Trustee may be removed at any time with respect to the Securities
  of any series by Act of the Holders of a majority in principal amount
  of the Outstanding Securities of such series, delivered to the Trustee
  and to the Company.

 (d)
  If at any time:

   (i)
    the Trustee shall fail to comply with Section 6.08
    after written request therefor by the Company or by any Holder who has
    been a bona fide Holder of a Security for at least six months, or

   (ii)
    the Trustee shall cease to be eligible under Section 6.09
    and shall fail to resign after written request therefor by the Company
    or by any such Holder, or

  47

   (iii)
    the Trustee shall become incapable of acting or shall be adjudged a
    bankrupt or insolvent, or 

   (iv)
    a receiver of the Trustee or of its property shall be appointed or any
    public officer shall take charge or control of the Trustee or of its
    property or affairs for the purpose of rehabilitation, conservation
    or liquidation,

then, in any such case, (A) the
  Company by a Company Order may remove the Trustee, or (B) subject
  to Section 5.14, any Holder who has been a bona fide
  Holder of a Security of any series for at least six months may, on behalf
  of himself and all others similarly situated, petition any court of competent
  jurisdiction for the removal of the Trustee with respect to such series
  of Securities and the appointment of a successor Trustee. 

 (e)
  If the Trustee shall resign, be removed or become incapable of acting,
  or if a vacancy shall occur in the office of Trustee for any cause, with
  respect to the Securities of one or more series, the Company, by a Company
  Order, shall promptly appoint a successor Trustee with respect to the
  Securities of such series (it being understood that any such successor
  Trustee may be appointed with respect to the Securities of one or more
  or all of such series and that at any time there shall be only one Trustee
  with respect to the Securities of any particular series). If, within one
  year after such resignation, removal or incapability, or the occurrence
  of such vacancy, a successor Trustee with respect to the Securities of
  any series shall be appointed by Act of the Holders of a majority in principal
  amount of the Outstanding Securities of such series delivered to the Company
  and the retiring Trustee, the successor Trustee so appointed shall, forthwith
  upon its acceptance of such appointment, become the successor Trustee
  with respect to Securities of such series and supersede the successor
  Trustee appointed by the Company. If no successor Trustee with respect
  to the Securities of any series shall have been so appointed by the Company
  or the Holders and accepted appointment in the manner hereinafter provided,
  any Holder who has been a bona fide Holder of a Security for at least
  six months may, on behalf of himself and all others similarly situated,
  petition any court of competent jurisdiction for the appointment of a
  successor Trustee with respect to Securities of such series.

 (f)
  The Company shall give notice of each resignation and each removal of
  the Trustee with respect to Securities of any series and each appointment
  of a successor Trustee with respect to Securities of such series to all
  Holders of Securities of such series in the manner provided in Section 1.06.
  Each notice shall include the name of the successor Trustee and the address
  of its Corporate Trust Office.

48

SECTION
  6.11. Acceptance
  of Appointment by Successor. 

 (a)
  In case of the appointment hereunder of a successor Trustee with respect
  to all Securities, every such successor Trustee so appointed shall execute,
  acknowledge and deliver to the Company and to the retiring Trustee an
  instrument accepting such appointment, and thereupon the resignation or
  removal of the retiring Trustee shall become effective and such successor
  Trustee, without any further act, deed or conveyance, shall become vested
  with all the rights, powers, trusts and duties of the retiring Trustee
  but, on the request of the Company or the successor Trustee, such retiring
  Trustee shall, upon payment of its charges, execute and deliver an instrument
  transferring to such successor Trustee all the rights, powers and trusts
  of the retiring Trustee and shall duly assign, transfer and deliver to
  such successor Trustee all property and money held by such retiring Trustee
  hereunder.

 (b)
  In case of the appointment hereunder of a successor Trustee with respect
  to the Securities of one or more (but not all) series, the Company, the
  retiring Trustee and each successor Trustee with respect to the Securities
  of one or more series shall execute and deliver an indenture supplemental
  hereto wherein each successor Trustee shall accept such appointment and
  which (1) shall contain such provisions as shall be necessary or desirable
  to transfer and confirm to, and to vest in, each successor Trustee all
  the rights, powers, trusts and duties of the retiring Trustee with respect
  to the Securities of that or those series to which the appointment of
  such successor Trustee relates, (2) if the retiring Trustee is not retiring
  with respect to all Securities, shall contain such provisions as shall
  be deemed necessary or desirable to confirm that all the rights, powers,
  trusts and duties of the retiring Trustee with respect to the Securities
  of that or those series as to which the retiring Trustee is not retiring
  shall continue to be vested in the retiring Trustee, and (3) shall add
  to or change any of the provisions of this Indenture as shall be necessary
  to provide for or facilitate the administration of the trusts hereunder
  by more than one Trustee, it being understood that nothing herein or in
  such supplemental indenture shall constitute such Trustees to be co-trustees
  of the same trust and that each such Trustee shall be trustee of a trust
  or trusts hereunder separate and apart from any trust or trusts hereunder
  administered by any other such Trustee; and upon the execution and delivery
  of such supplemental indenture the resignation or removal of the retiring
  Trustee shall become effective to the extent provided therein and each
  such successor Trustee, without any further act, deed or conveyance, shall
  become vested with all the rights, powers, trusts and duties of the retiring
  Trustee with respect to the Securities of that or those series to which
  the appointment of such successor Trustee relates; but, on request of
  the Company or any successor Trustee, such retiring Trustee shall duly
  assign, transfer and deliver to such successor Trustee all property and
  money held by such retiring Trustee hereunder with respect to the Securities
  of that or those series to which the appointment of such successor Trustee
  relates.

49

 (c)
  Upon request of any such successor Trustee, the Company shall execute
  any and all instruments for more fully and certainly vesting in and confirming
  to such successor Trustee all such rights, powers and trusts referred
  to in paragraph (a) or (b) of this Section, as the case may be.

 (d)
  No such successor Trustee shall accept its appointment unless at the time
  of such acceptance such successor Trustee shall be qualified and eligible
  under this Article.

SECTION
  6.12. Merger,
  Conversion, Consolidation or Succession to Business. Any corporation
  into which the Trustee may be merged or converted or with which it may
  be consolidated, or any corporation resulting from any merger, conversion
  or consolidation to which the Trustee shall be a party, or any corporation
  succeeding to all or substantially all the corporate trust business of
  the Trustee, shall be the successor of the Trustee hereunder, provided
  such corporation shall be otherwise qualified and eligible under this
  Article, without the execution or filing of any paper or any further act
  on the part of any of the parties hereto. In case any Securities shall
  have been authenticated, but not delivered, by the Trustee then in office,
  any successor by merger, conversion or consolidation to such authenticating
  Trustee may adopt such authentication and deliver the Securities so authenticated
  with the same effect as if such successor Trustee had itself authenticated
  such Securities.

SECTION
  6.13. Preferential
  Collection of Claims Against. If and when the Trustee shall be or
  become a creditor of the Company (or any other obligor upon the Securities),
  the Trustee shall be subject to the provisions of the Trust Indenture
  Act regarding the collection of claims against the Company (or any such
  other obligor).

ARTICLE 7

  HOLDERS' LISTS AND REPORTS BY
  TRUSTEE

SECTION
  7.01.Company
  to Furnish Trustee Names and Addresses of Holders. The Company will
  furnish or cause to be furnished to the Trustee

 (a)
  with respect to the Securities of any series, not more than 15 days after
  each Regular Record Date, if any, for such series, a list, in such form
  as the Trustee may reasonably require, of the names and addresses of the
  Holders of the Securities of such series as of such Regular Record Date,
  and

50

 (b)
  at such other times as the Trustee may request in writing, within 30 days
  after the receipt by the Company of any such request, a list of similar
  form and content as of a date not more than 15 days prior to the
  time such list is furnished;

 excluding
  from any such list names and addresses received by the Trustee in its
  capacity as Security Registrar; provided, however, that no such list need
  be furnished so long as the Trustee is acting as Security Registrar.

SECTION
  7.02. Preservation
  of Information; Communications to Holders. (a) The Trustee shall
  preserve, in as current a form as is reasonably practicable, the names
  and addresses of Holders contained in the most recent list furnished to
  the Trustee as provided in Section 7.01 and the names
  and addresses of Holders received by the Trustee in its capacity as Security
  Registrar. The Trustee may destroy any list furnished to it as provided
  in Section 7.01 upon receipt of a new list so furnished.

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

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

SECTION
  7.03. Reports
  by Trustee. (a) The Trustee shall transmit to Holders such reports
  concerning the Trustee and its actions under this Indenture as may be
  required pursuant to the Trust Indenture Act at the times and in the manner
  provided pursuant thereto. Reports so required to be transmitted at stated
  intervals of not more than 12 months shall be transmitted no later than
  January 31, in each calendar year, commencing one year after the original
  issuance of the first series of Securities under this Indenture.

 (b)
  A copy of each such report shall, at the time of such transmission to
  Holders, be filed by the Trustee with each stock exchange upon which the
  Securities are listed, with the Commission and with the Company. The Company
  will notify the Trustee when the Securities are listed on any stock exchange.

SECTION
  7.04. Reports
  by Company. The Company shall file with the Trustee and the Commission,
  and transmit to Holders, such information, documents and other reports,
  and such summaries thereof, as may be required

51

 pursuant to the Trust Indenture
  Act at the times and in the manner provided pursuant to such Act; provided
  that any such information, documents or reports required to be filed with
  the Commission pursuant to Section 13 or 15(d) of the Exchange Act
  shall be filed with the Trustee within 15 days after the same is
  so required to be filed with the Commission. In the event the Company
  is not subject to Section 13 or 15(d) of the Exchange Act, it shall file
  with the Trustee upon request the information required to be delivered
  pursuant to Rule 144A(d)(4) under the Securities Act.

  

ARTICLE 8

  CONSOLIDATION,
  MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION
  8.01. Company
  May Consolidate, Etc., Only on Certain Terms. The Company shall not
  consolidate with or merge into any other Person or convey, transfer or
  lease its properties and assets substantially as an entirety to any Person,
  and the Company shall not permit any Person to consolidate with or merge
  into the Company or convey, transfer or lease its properties and assets
  substantially as an entirety to the Company, unless: 

   (i)
    in case the Company shall consolidate with or merge into another Person
    or convey, transfer or lease its properties and assets substantially
    as an entirety to any Person, the Person formed by such consolidation
    or into which the Company is merged or the Person which acquires by
    conveyance or transfer, or which leases, the properties and assets of
    the Company substantially as an entirety shall be a corporation, partnership
    or trust, shall be organized and validly existing under the laws of
    the United States of America, any State thereof or the District of Columbia
    and shall expressly assume, by an indenture supplemental hereto, executed
    and delivered to the Trustee, in form satisfactory to the Trustee, the
    due and punctual payment of the principal of and interest, if any, on
    all the Securities and the performance or observance of every covenant
    of this Indenture on the part of the Company to be performed or observed;

   (ii)
    immediately after giving effect to such transaction and treating any
    Indebtedness which becomes an obligation of the Company as a result
    of such transaction as having been incurred by the Company at the time
    of such transaction, no Event of Default, and no event which, after
    notice or lapse of time or both, would become an Event of Default, shall
    have happened and be continuing; and 

  52

   (iii)
    the Company has delivered to the Trustee an Officers' Certificate and
    an Opinion of Counsel, each stating that such consolidation, merger,
    conveyance, transfer or lease and, if a supplemental indenture is required
    in connection with such transaction, such supplemental indenture comply
    with this Article.

SECTION
  8.02. Successor
  Substituted. Upon any consolidation of the Company with, or merger
  of the Company into, any other Person or any conveyance, transfer or lease
  of the properties and assets of the Company substantially as an entirety
  in accordance with Section 8.01, the successor
  Person formed by such consolidation or into which the Company is merged
  or to which such conveyance, transfer or lease is made shall succeed to,
  and be substituted for, and may exercise every right and power of, the
  Company under this Indenture with the same effect as if such successor
  Person had been named as the Company herein, and thereafter, except in
  the case of a lease, the predecessor Person shall be relieved of all obligations
  and covenants under this Indenture and the Securities.

ARTICLE
  9

  SUPPLEMENTAL
  INDENTURES

SECTION
  9.01. Supplemental
  Indentures Without Consent of Holders. Without the consent of any
  Holders, the Company, when authorized by a Board Resolution, and the Trustee,
  at any time and from time to time, may enter into one or more indentures
  supplemental hereto, in form satisfactory to the Trustee, for any of the
  following purposes: 

 (a)
  to evidence the succession of another Person to the Company and the assumption
  by any such successor of the covenants of the Company herein and in the
  Securities; or

 (b)
  to add to the covenants of the Company for the benefit of the Holders
  of all or any series of the Securities, or to surrender any right or power
  herein conferred upon the Company; or

 (c)
  to add any additional Events of Default for the benefit of the Holders
  of all or any series of the Securities;

 (d)
  to cure any ambiguity, to correct or supplement any provision herein which
  may be inconsistent with any other provision herein, or to make any other
  provisions with respect to matters or questions arising under this Indenture
  which shall not be inconsistent with the provisions of this Indenture,
  provided that such 

53

action pursuant to this Clause (d)
  shall not adversely affect the interests of the Holders in any material
  respect; 

(e)
  to add to, change or eliminate any of the provisions of this Indenture
  in respect of one or more series of Securities, provided that
  any such addition, change or elimination shall (A) neither (i) apply to
  Securities of any series created prior to the execution of such supplemental
  indenture and entitled to the benefit of such provision nor (ii) modify
  the rights of the Holder of such Securities with respect to such provision
  or (B) become effective only when there is no such Security Outstanding;

 (f)
  to establish the form or terms of Securities of any series as permitted
  by Sections 2.01 and 3.01;

(g) to
  authorize the issuance of additional Securities of a series previously
  authorized; or

 (h)
  to evidence and provide for the acceptance of appointment hereunder by
  a successor Trustee with respect to the Securities of one or more series.

SECTION
  9.02. Supplemental
  Indentures with Consent of Holders. With the consent of the Holders
  of not less than a majority in principal amount of the Outstanding Securities
  of each series affected by such supplemental indenture voting as one class,
  by Act of said Holders delivered to the Company and the Trustee, the Company,
  when authorized by a Board Resolution, and the Trustee may enter into
  an indenture or indentures supplemental hereto for the purpose of adding
  any provisions to or changing in any manner or eliminating any of the
  provisions of this Indenture or of modifying in any manner the rights
  of the Holders of each such series under this Indenture; provided,
  however, that no such supplemental indenture shall, without the
  consent of the Holder of each Outstanding Security affected thereby, 

   (i)
    change the Stated Maturity of the principal of, or any installment of
    interest on, any Security, or reduce the principal amount thereof or
    the rate of interest thereon or any Redemption Price thereof, or reduce
    the amount of the principal of an Original Issue Discount Security that
    would be due and payable upon a declaration of acceleration of the Maturity
    thereof pursuant to Section 5.02, or change the Place of Payment where,
    or the currency in which, any Security or interest thereon is payable,
    or impair the right to institute suit for the enforcement of any such
    payment on or after the Stated Maturity thereof (or, in the case of
    redemption, on or after the Redemption Date); or

  54

  

  
  
   (ii)
    reduce the percentage in principal amount of the Outstanding Securities,
    the consent of whose Holders is required for any such supplemental indenture,
    or the consent of whose Holders is required for any waiver (of compliance
    with certain provisions of this Indenture or certain defaults hereunder
    and their consequences) provided for in this Indenture; or

   (iii)
    modify any of the provisions of this Section, Section 5.13
    or Section  10.11, except
    to increase any such percentage or to provide that certain other provisions
    of this Indenture cannot be modified or waived without the consent of
    the Holder of each Outstanding Security affected thereby.

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

SECTION
  9.03. Execution
  of Supplemental Indentures. In executing, or accepting the additional
  trusts created by, any supplemental indenture permitted by this Article
  or the modifications thereby of the trusts created by this Indenture,
  the Trustee shall be entitled to receive, and (subject to Section
   6.01) shall be fully protected in
  relying upon, in addition to the documents required by Section 1.02,
  an Opinion of Counsel stating that the execution of such supplemental
  indenture is authorized or permitted by this Indenture. 

SECTION
  9.04. Effect
  of Supplemental Indentures. Upon the execution of any supplemental
  indenture under this Article, this Indenture shall be modified in accordance
  therewith, and such supplemental indenture shall form a part of this Indenture
  for all purposes; and, unless such supplemental indenture states that
  it shall only apply to Securities of series specified therein, every Holder
  of Securities theretofore or thereafter authenticated and delivered hereunder
  shall be bound thereby.

SECTION
  9.05. Conformity
  with Trust Indenture Act. Every supplemental indenture executed pursuant
  to this Article shall conform to the requirements of the Trust Indenture
  Act.

SECTION
  9.06. Reference
  in Securities to Supplemental Indentures. Securities of any series
  authenticated and delivered after the execution of any supplemental indenture
  pursuant to this Article may, and shall if required by the Trustee, bear
  a notation in form approved by the Trustee as to any matter provided for
  in such supplemental indenture. If the Company shall so determine, new
  Securities of any series so modified as to conform, in the opinion of
  the Trustee and the Company, to any such supplemental indenture may be
  prepared and 

55

executed by the Company and authenticated
  and delivered by the Trustee in exchange for Outstanding Securities of
  such series.

  

ARTICLE 10

  COVENANTS

SECTION
  10.01. Payment
  of Principal and Interest. The Company covenants and agrees for the
  benefit of each series of Securities that it will duly and punctually
  pay the principal of and any premium or interest on the Securities of
  that series in accordance with the terms of the Securities of that series
  and this Indenture.

SECTION
  10.02. Maintenance
  of Office or Agency. The Company shall maintain in each Place of
  Payment for any series of Securities an office or agency where Securities
  of that series may be presented or surrendered for payment, where Securities
  of that series may be surrendered for registration of transfer or exchange
  and where notices and demands to or upon the Company in respect of the
  Securities of that series and this Indenture may be served. The Company
  shall give prompt written notice to the Trustee of the location, and any
  change in the location, of such office or agency. If at any time the Company
  shall fail to maintain any such required office or agency or shall fail
  to furnish the Trustee with the address thereof, such presentations, surrenders,
  notices and demands may be made or served at the Corporate Trust Office
  of the Trustee, and the Company hereby appoints the Trustee as its agent
  to receive all such presentations, surrenders, notices and demands.

The Company
  may also from time to time designate one or more other offices or agencies
  where the Securities of one or more series may be presented or surrendered
  for any or all such purposes and may from time to time rescind such designation;
  provided, however, that no such designation or rescission shall
  in any manner relieve the Company of its obligation to maintain an office
  or agency in each Place of Payment for Securities of any series for such
  purposes. The Company will give prompt written notice to the Trustee and
  the Holders of any such designation or rescission and of any change in
  the location of any such other office or agency.

SECTION
  10.03. Money
  for Security Payments to Be Held in Trust. If the Company shall at
  any time act as its own Paying Agent with respect to any series of Securities,
  it shall, on or before each due date of the principal of or interest on
  any of the Securities of that series, segregate and hold in trust for
  the benefit of the Persons entitled thereto a sum sufficient to pay the
  principal or interest so becoming due until such sums shall be paid to
  such Persons or otherwise disposed

56

 of as herein provided and shall
  promptly notify the Trustee of its action or failure so to act.

Whenever
  the Company shall have one or more Paying Agents for any series of Securities,
  it will, prior to 10:00 a.m., New York City time, on each due date of
  the principal of or interest on any Securities of that series, deposit
  with a Paying Agent a sum sufficient to pay such amount, such sum to be
  held as provided by the Trust Indenture Act, and (unless such Paying Agent
  is the Trustee) the Company will promptly notify the Trustee of its action
  or failure so to act.

The Company
  shall cause each Paying Agent for any series of Securities other than
  the Trustee to execute and deliver to the Trustee an instrument in which
  such Paying Agent shall agree with the Trustee, subject to the provisions
  of this Section, that such Paying Agent will (i) comply with the
  provisions of the Trust Indenture Act applicable to it as a Paying Agent
  and (ii) during the continuance of any default by the Company (or
  any other obligor upon the Securities of that series) in the making of
  any payment in respect of the Securities of that series, upon the written
  request of the Trustee, forthwith pay to the Trustee all sums held in
  trust by such Paying Agent as such.

The Company
  may at any time, for the purpose of obtaining the satisfaction and discharge
  of this Indenture or for any other purpose, pay, or by Company Order direct
  any Paying Agent to pay, to the Trustee all sums held in trust by the
  Company or such Paying Agent, such sums to be held by the Trustee upon
  the same trusts as those upon which such sums were held by the Company
  or such Paying Agent; and, upon such payment by any Paying Agent to the
  Trustee, such Paying Agent shall be released from all further liability
  with respect to such money.

Any money
  deposited with the Trustee or any Paying Agent, or then held by the Company,
  in trust for the payment of the principal of or interest on any Security
  of any series and remaining unclaimed for two years after such principal
  or interest has become due and payable shall be paid to the Company on
  Company Request, or (if then held by the Company) shall be discharged
  from such trust; and the Holder of such Security shall thereafter, as
  an unsecured general creditor, look only to the Company for payment thereof,
  and all liability of the Trustee or such Paying Agent with respect to
  such trust money, and all liability of the Company as trustee thereof,
  shall thereupon cease; provided, however, that the Trustee
  or such Paying Agent, before being required to make any such repayment,
  may at the expense of the Company cause to be published once, in a newspaper
  published in the English language, customarily published on each New York
  City Business Day and of general circulation in The City of New York,
  notice that such money remains unclaimed and that, after a date specified
  therein, which shall not be less 

57

than 30 days from the date
  of such publication, any unclaimed balance of such money then remaining
  shall be repaid to the Company.  

SECTION
  10.04. Statement
  by Officers as to Default. The Company will deliver to the Trustee,
  within 120 days after the end of each fiscal year of the Company
  ending after the date hereof, an Officers' Certificate, stating whether
  or not to the best knowledge of the signers thereof the Company is in
  default in the performance and observance of any of the terms, provisions
  and conditions of this Indenture (without regard to any period of grace
  or requirement of notice provided hereunder) and, if the Company shall
  be in default, specifying all such defaults and the nature and status
  thereof of which they may have knowledge.

SECTION
  10.05. Existence.
  Subject to Article Eight, the Company shall do or cause to be done all
  things necessary to preserve and keep in full force and effect its existence,
  rights (charter and statutory) and franchises; provided, however,
  that the Company shall not be required to preserve any such right or franchise
  if the Board of Directors of the Company shall determine that the preservation
  thereof is no longer desirable in the conduct of the business of the Company
  and that the loss thereof is not disadvantageous in any material respect
  to the Holders.

SECTION
  10.06. Liens.
  The Company shall not, and shall not permit any Significant Subsidiary
  to issue, assume, incur or guarantee any Indebtedness secured by a Lien,
  except Permitted Liens, on any Principal Property or any shares of Capital
  Stock of any Subsidiary ("Secured Debt”), without
  at the same time effectively providing that the Securities shall be secured
  equally and ratably with (or prior to) the Indebtedness so secured for
  so long as such Indebtedness is so secured, unless after giving effect
  thereto, the aggregate amount of Secured Debt, together with all Attributable
  Debt of the Company and its Subsidiaries in respect of Restricted Sale/Leaseback
  Transactions would not exceed 20% of Consolidated Net Tangible Assets.

SECTION
  10.07. Limitation
  on Restricted Sale/Leaseback Transactions. The Company shall not,
  and shall not permit any Significant Subsidiary to, enter into, assume,
  guarantee or otherwise become liable with respect to any Restricted Sale/Leaseback
  Transaction, unless after giving effect thereto the aggregate amount of
  Attributable Debt of the Company and its Subsidiaries in respect of Restricted
  Sale/Leaseback Transactions, together (without duplication) with all Secured
  Debt then outstanding, would not exceed 20% of Consolidated Net Tangible
  Assets.

SECTION
  10.08. Reports
  and Delivery of Certain Information. Whether or not required by the
  rules and regulations of the Commission, so long as any Securities are
  outstanding, the Company shall furnish to the Holders of the 

58

Securities (i) all quarterly
  and annual financial information that is substantially equivalent to that
  which would be required to be contained in a filing with the Commission
  on Forms 10-Q and 10-K if the Company were required to file such Forms,
  including a “Management's Discussion and Analysis of Financial Condition
  and Results of Operations" section and, with respect to the annual information
  only, a report thereon by the Company's certified independent accountants
  and (ii) all reports that are substantially equivalent to that which
  would be required to be filed with the Commission on Form 8-K if the Company
  were required to file such reports. In addition, whether or not required
  by the rules and regulations of the Commission, the Company shall file
  a copy of all such information with the Commission for public availability
  (unless the Commission will not accept such a filing) and make such information
  available to investors who request it in writing.  

SECTION
  10.09. Resale
  of Certain Securities. During the period beginning on the Issue Date
  and ending on the date that is two years from the Issue Date, the Company
  shall not, and shall not permit any of its “affiliates”
  (as defined under Rule 144 under the Securities Act or any successor
  provision thereto) to, resell any Securities which constitute “restricted
  securities” under Rule 144 that have been reacquired
  by any of them. The Trustee shall have no responsibility in respect of
  the Company's performance of its agreement in the preceding sentence.

SECTION
  10.10. Book-Entry
  System. If the Securities cease to trade in the Depositary's book-entry
  settlement system, the Company covenants and agrees that it shall use
  reasonable efforts to make such other book-entry arrangements that it
  determines are reasonable for the Securities.

SECTION
  10.11. Waiver
  of Certain Covenants. The Company may omit in any particular instance
  to comply with any covenant or condition set forth in Sections 10.06
  and 10.07 if before the time for such compliance
  the Holders of at least a majority in principal amount of the Outstanding
  Securities of all series affected by such waiver, all voting together
  as one class, shall, by Act of such Holders, either waive such compliance
  in such instance or generally waive compliance with such covenant or condition,
  but no such waiver shall extend to or affect such covenant or condition
  except to the extent so expressly waived, and, until such waiver shall
  become effective, the obligations of the Company and the duties of the
  Trustee in respect of any such covenant or condition shall remain in full
  force and effect.

59

ARTICLE 11

  OPTIONAL REDEMPTION OF SECURITIES

SECTION
  11.01. Applicability of Article. 

Securities
  of any series which are redeemable before their Stated Maturity shall
  be redeemable in accordance with their terms and (except as otherwise
  specified as contemplated by Section 3.01 for Securities
  of any series) in accordance with this Article.

SECTION
  11.02. Election
  to Redeem; Notice to Trustee. 

The election
  of the Company to redeem any Securities shall be evidenced by a Board
  Resolution. In case of any redemption at the election of the Company of
  less than all the Securities of any series, the Company shall, at least
  60 days prior to the Redemption Date fixed by the Company (unless a shorter
  notice shall be satisfactory to the Trustee), notify the Trustee of such
  Redemption Date, of the tenor, if applicable, of the Securities to be
  redeemed, and of the principal amount of Securities of such series to
  be redeemed. In the case of any redemption of Securities prior to the
  expiration of any restriction on such redemption provided in the terms
  of such Securities or elsewhere in this Indenture, the Company shall furnish
  the Trustee with an Officers' Certificate evidencing compliance with such
  restriction.

SECTION
  11.03. Selection by Trustee of Securities to
  Selection by Trustee of Securities to Be Redeemed. 

If less
  than all the Securities of any series are to be redeemed, the particular
  Securities to be redeemed shall be selected not more than 60 days prior
  to the Redemption Date by the Trustee, from the Outstanding Securities
  of such series not previously called for redemption, by such method as
  the Trustee shall deem fair and appropriate and which may provide for
  the selection for redemption of portions (equal to the minimum authorized
  denomination for Securities of that series or any integral multiple thereof)
  of the principal amount of Securities of such series of a denomination
  larger than the minimum authorized denomination for Securities of that
  series. 

The Trustee
  shall promptly notify the Company in writing of the Securities selected
  for redemption and, in the case of any Securities selected for partial
  redemption, the principal amount thereof to be redeemed.

For all
  purposes of this Indenture, unless the context otherwise requires, all
  provisions relating to the redemption of Securities shall relate, in the
  case of any Securities redeemed or to be redeemed only in part, to the
  portion of the principal amount of such Securities which has been or is
  to be redeemed.

60

SECTION
  11.04. Notice
  of Redemption. 

Notice
  of redemption shall be given by first-class mail, postage prepaid, mailed
  not less than 30 nor more than 60 days prior to the Redemption Date to
  each Holder of Securities to be redeemed, at the address appearing in
  the Security Register.

All notices
  of redemption shall state:

 (a)
  the Redemption Date,

 (b)
  the Redemption Price,

 (c)
  if less than all the Outstanding Securities of any series are to be redeemed,
  the identification (and, in the case of partial redemption, the principal
  amounts) of the particular Securities to be redeemed,

 (d)
  that on the Redemption Date the Redemption Price will become due and payable
  upon each such Security to be redeemed and, if applicable, that interest
  thereon will cease to accrue on and after said date,

 (e)
  the place or places where such Securities are to be surrendered for payment
  of the Redemption Price,

 (f)
  for any Securities that by their terms may be converted, the terms of
  conversion, the date on which the right to convert the Security to be
  redeemed will terminate and the place or places where such Securities
  may be surrendered for conversion, and

 (g)
  that the redemption is for a sinking fund, if such is the case.

Notice
  of redemption of Securities to be redeemed at the election of the Company
  shall be given by the Company or, at the Company's request, by the Trustee
  in the name and at the expense of the Company, and shall be irrevocable.
  The notice of redemption mailed in the manner herein provided shall be
  conclusively presumed to have been duly given whether or not the Holder
  receives such notice. In any case, failure to give such notice by mail
  or any defect in the notice to the Holder of any Security shall not affect
  the validity of the proceeding for the redemption of any other Security.

SECTION
  11.05. Deposit
  of Redemption Price. 

Prior
  to 10:00 a.m. New York City time on any Redemption Date, the Company shall
  deposit with the Trustee or with a Paying Agent (or, if the 

61

Company is acting as its own Paying
  Agent, segregate and hold in trust as provided in Section 10.03)
  an amount of money sufficient to pay the Redemption Price of, and (except
  if the Redemption Date shall be an Interest Payment Date) accrued interest
  on, all the Securities which are to be redeemed on that date, other than
  any Securities called for redemption on that date which have been converted
  prior to the date of such deposit. 

If any
  Security called for redemption is converted, any money deposited with
  the Trustee or with any Paying Agent or so segregated and held in trust
  for the redemption of such Security shall (subject to any right of the
  Holder of such Security or any Predecessor Security to receive interest
  as provided in the last paragraph of Section 3.07
  or in the terms of such Security) be paid to the Company upon Company
  Request or, if then held by the Company, shall be discharged from such
  trust.

SECTION
  11.06. Securities Payable on Redemption Date.
  

Notice
  of redemption having been given as aforesaid, the Securities so to be
  redeemed shall, on the Redemption Date, become due and payable at the
  Redemption Price therein specified, and from and after such date (unless
  the Company shall default in the payment of the Redemption Price and accrued
  interest), such Securities shall cease to bear interest. Upon surrender
  of any such Security for redemption in accordance with said notice, such
  Security shall be paid by the Company at the Redemption Price, together
  with accrued interest to the Redemption Date; provided, however,
  that installments of interest whose Stated Maturity is on or prior to
  the Redemption Date shall be payable to the Holders of such Securities,
  or one or more Predecessor Securities, registered as such at the close
  of business on the relevant Record Dates according to their terms and
  the provisions of Section 3.07.

If any
  Security called for redemption shall not be so paid upon surrender thereof
  for redemption, the principal and any premium shall, until paid, bear
  interest from the Redemption Date at the rate prescribed therefor in the
  Security.

SECTION
  11.07. Securities
  Redeemed in Part. Any Security which is to be
  redeemed only in part shall be surrendered at a Place of Payment therefor
  (with, if the Company or the Trustee so requires, due endorsement by,
  or a written instrument of transfer in form satisfactory to the Company
  and the Trustee duly executed by, the Holder thereof or his attorney duly
  authorized in writing), and the Company shall execute, and the Trustee
  shall authenticate and deliver to the Holder of such Security without
  service charge to the Holder, a new Security or Securities of the same
  series and of like tenor, of any authorized denomination as requested
  by such Holder, in aggregate principal amount equal to and in exchange
  for the unredeemed portion of the principal of the Security so surrendered.

62

  ARTICLE 12

  DEFEASANCE AND COVENANT DEFEASANCE

SECTION
  12.01. Company's
  Option to Effect Defeasance or Covenant Defeasance. The Company may
  elect, at its option at any time, to have Section 12.02
  or Section 12.03 applied to any series of the
  Outstanding Securities upon compliance with the conditions set forth below
  in this Article. Any such election shall be evidenced by a Board Resolution.
  

SECTION
  12.02. Defeasance
  and Discharge. Upon the Company's exercise of its option (if any)
  to have this Section applied to the Outstanding Securities of any series,
  the Company shall be deemed to have been discharged from its obligations
  with respect to such series of Securities as provided in this Section
  on and after the date the conditions set forth in Section 12.04
  are satisfied (hereinafter called “Defeasance”).
  For this purpose, such Defeasance means that the Company shall be deemed
  to have paid and discharged the entire indebtedness represented by the
  Outstanding Securities of such series and to have satisfied all its other
  obligations under such series of Securities and this Indenture insofar
  as such series of Securities are concerned (and the Trustee, at the expense
  of the Company, shall execute proper instruments acknowledging the same),
  subject to the following which shall survive until otherwise terminated
  or discharged hereunder: (a) the rights of Holders of such series
  of Securities to receive, solely from the trust fund described in Section 12.04
  and as more fully set forth in such Section, payments in respect of the
  principal of and interest on such Securities when payments are due, (b) the
  Company's obligations with respect to such series of Securities under
  Sections 3.04, 3.05, 3.06,
  10.02 and 10.03, (c) the
  rights, powers, trusts, duties and immunities of the Trustee hereunder
  and (d) this Article. Subject to compliance with this Article, the
  Company may exercise its option (if any) to have this Section applied
  to the Outstanding Securities of any series notwithstanding the prior
  exercise of its option (if any) to have Section 12.03
  applied to such series of Securities.

SECTION
  12.03. Covenant
  Defeasance. Upon the Company's exercise of its option (if any) to
  have this Section applied to any series of the Securities, (a) the
  Company shall, with respect to such series of Securities, be released
  from its obligations under Section 10.06, Section
  10.07 and Article 8 and (b) the
  occurrence of any event specified in Sections 5.01(d)
  (with respect to any of Section 10.06, Section 10.07
  or Article 8) or 5.01(e) shall
  be deemed not to be or result in an Event of Default, in each case with
  respect to such series of Securities as provided in this Section on and
  after the date the conditions set forth in Section 12.04
  are satisfied (hereinafter called “Covenant Defeasance”).
  For this purpose, such Covenant Defeasance means that, with respect to
  such series of Securities, the Company may omit to comply with and shall
  have no liability in respect of 

63

any term, condition or limitation
  set forth in any such specified Section (to the extent so specified in
  the case of Section 5.01(d)), whether directly or
  indirectly by reason of any reference elsewhere herein to any such Section
  or by reason of any reference in any such Section to any other provision
  herein or in any other document, but the remainder of this Indenture and
  such series of Securities shall be unaffected thereby.  

SECTION
  12.04. Conditions
  to Defeasance or Covenant Defeasance. The following shall be the
  conditions to the application of Section  12.02
  or Section 12.03 to the then Outstanding Securities
  of any series:

 (a)
  The Company shall irrevocably have deposited or caused to be deposited
  with the Trustee (or another trustee which satisfies the requirements
  contemplated by Section 6.09 and agrees to comply
  with the provisions of this Article applicable to it) as trust funds in
  trust for the purpose of making the following payments, specifically pledged
  as security for, and dedicated solely to, the benefits of the Holders
  of such series of Securities, (i) money in an amount, or (ii) U.S.
  Government Obligations which through the scheduled payment of principal
  and interest in respect thereof in accordance with their terms will provide,
  not later than one day before the due date of any payment, money in an
  amount, or (iii) a combination thereof, in each case sufficient,
  in the opinion of a nationally recognized firm of independent public accountants
  expressed in a written certification thereof delivered to the Trustee,
  to pay and discharge, and which shall be applied by the Trustee (or any
  such other qualifying trustee) to pay and discharge, the principal of
  and interest, if any, on such series of Securities on the respective Stated
  Maturities, in accordance with the terms of this Indenture and such series
  of Securities. As used herein, “U.S. Government Obligation”
  means (x) any security which is (1) a direct obligation of the
  United States of America for the payment of which the full faith and credit
  of the United States of America is pledged or (2) an obligation of
  a Person controlled or supervised by and acting as an agency or instrumentality
  of the United States of America the payment of which is unconditionally
  guaranteed as a full faith and credit obligation by the United States
  of America, which, in either case (1) or (2), is not callable or redeemable
  at the option of the issuer thereof, and (y) any depositary receipt
  issued by a bank (as defined in Section 3(a)(2) of the Securities
  Act) as custodian with respect to any U.S. Government Obligation which
  is specified in Clause (x) above and held by such bank for the account
  of the holder of such depositary receipt, or with respect to any specific
  payment of principal of or interest on any U.S. Government Obligation
  which is so specified and held, provided that (except as required
  by law) such custodian is not authorized to make any deduction from the
  amount payable to the holder of such depositary receipt from any amount
  received by the custodian in respect of the U.S. Government Obligation
  or the specific payment of principal or interest evidenced by such depositary
  receipt.

64

 (b)
  In the event of an election to have Section 12.02
  apply to such series of Securities, the Company shall have delivered to
  the Trustee an Opinion of Counsel stating that (i) the Company has
  received from, or there has been published by, the Internal Revenue Service
  a ruling or (ii) since the date of this instrument, there has been
  a change in the applicable Federal income tax law, in either case (i)
  or (ii) to the effect that, and based thereon such opinion shall confirm
  that, the Holders of such series of Securities will not recognize gain
  or loss for Federal income tax purposes as a result of the deposit, Defeasance
  and discharge to be effected with respect to such series of Securities
  and will be subject to Federal income tax on the same amount, in the same
  manner and at the same times as would be the case if such deposit, Defeasance
  and discharge were not to occur. 

 (c)
  In the event of an election to have Section 12.03
  apply to such series of Securities, the Company shall have delivered to
  the Trustee an Opinion of Counsel to the effect that the Holders of such
  series of Securities will not recognize gain or loss for Federal income
  tax purposes as a result of the deposit and Covenant Defeasance to be
  effected with respect to such series of Securities and will be subject
  to Federal income tax on the same amount, in the same manner and at the
  same times as would be the case if such deposit and Covenant Defeasance
  were not to occur. 

 (d)
  The Company shall have delivered to the Trustee an Officers' Certificate
  to the effect that such series of Securities, if then listed on any securities
  exchange, will not be delisted as a result of such deposit. 

 (e)
  No event which is, or after notice or lapse of time or both would become,
  an Event of Default with respect to such series of Securities shall have
  occurred and be continuing at the time of such deposit or, with regard
  to any such event specified in Sections 5.01(f) and
  5.01(g), at any time on or prior to the 90th day
  after the date of such deposit (it being understood that this condition
  shall not be deemed satisfied until after such 90th day). 

 (f)
  Such Defeasance or Covenant Defeasance shall not cause the Trustee to
  have a conflicting interest within the meaning of the Trust Indenture
  Act (assuming all Securities are in default within the meaning of such
  Act). 

 (g)
  Such Defeasance or Covenant Defeasance shall not result in a breach or
  violation of, or constitute a default under, any other agreement or instrument
  to which the Company is a party or by which the Company is bound. 

 (h)
  Such Defeasance or Covenant Defeasance shall not result in the trust arising
  from such deposit constituting an investment company within the meaning
  

65

of the Investment Company Act unless
  such trust shall be registered under such Act or exempt from registration
  thereunder. 

 (i)
  The Company shall have delivered to the Trustee an Officers' Certificate
  and an Opinion of Counsel, each stating that all conditions precedent
  with respect to such Defeasance or Covenant Defeasance have been complied
  with. 

SECTION
  12.05. Deposited
  Money and U.S. Government Obligations to be Held in Trust; Miscellaneous
  Provisions. Subject to the provisions of the last paragraph of Section
  10.03, all money and U.S. Government Obligations
  (including the proceeds thereof) deposited with the Trustee or other qualifying
  trustee (solely for purposes of this Section and Section 12.06,
  the Trustee and any such other trustee are referred to collectively as
  the “Trustee”) pursuant to Section 12.04
  in respect of the Outstanding Securities of such series shall be held
  in trust and applied by the Trustee, in accordance with the provisions
  of such series of Securities and this Indenture, to the payment, either
  directly or through any such Paying Agent (including the Company acting
  as its own Paying Agent) as the Trustee may determine, to the Holders
  of such series of Securities, of all sums due and to become due thereon
  in respect of principal and interest, but money so held in trust need
  not be segregated from other funds except to the extent required by law.

The Company
  shall pay and indemnify the Trustee against any tax, fee or other charge
  imposed on or assessed against the U.S. Government Obligations deposited
  pursuant to Section 12.04 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
  Securities. 

Anything
  in this Article to the contrary notwithstanding, the Trustee shall deliver
  or pay to the Company from time to time upon Company Request any money
  or U.S. Government Obligations held by it as provided in Section 12.04
  with respect to the Outstanding Securities of any series which, in the
  opinion of a nationally recognized firm of independent public accountants
  expressed in a written certification thereof delivered to the Trustee,
  are in excess of the amount thereof which would then be required to be
  deposited to effect the Defeasance or Covenant Defeasance, as the case
  may be, with respect to such series of Securities. 

SECTION
  12.06. Reinstatement.
  If the Trustee or the Paying Agent is unable to apply any money in accordance
  with this Article with respect to the Outstanding Securities of any series
  by reason of any order or judgment of any court or governmental authority
  enjoining, restraining or otherwise prohibiting such application, then
  the obligations under this Indenture and such series of 

66

Securities from which the Company
  has been discharged or released pursuant to Section  12.02
  or 12.03 shall be revived and reinstated as though
  no deposit had occurred pursuant to this Article with respect to such
  series of Securities, until such time as the Trustee or Paying Agent is
  permitted to apply all money held in trust pursuant to Section 12.05
  with respect to such series of Securities in accordance with this Article;
  provided, however, that if the Company makes any payment
  of principal of or interest on any such Security of that series following
  such reinstatement of its obligations, the Company shall be subrogated
  to the rights (if any) of the Holders of such series of Securities to
  receive such payment from the money so held in trust.

  

ARTICLE 13

  SINKING FUNDS

SECTION
  13.01. Applicability of Article. The provisions
  of this Article shall be applicable to any sinking fund for the retirement
  of Securities of any series if so specified as contemplated by Section
  3.01 for Securities of such series.

The minimum
  amount of any sinking fund payment provided for by the terms of the Securities
  of any series is herein referred to as a “mandatory sinking fund
  payment", and any payment in excess of such minimum amount provided for
  by the terms of the Securities of any series is herein referred to as
  an “optional sinking fund payment". If provided for by the terms
  of the Securities of any series, the cash amount of any sinking fund payment
  may be subject to reduction as provided in Section 13.02. Each sinking
  fund payment shall be applied to the redemption of the Securities of any
  series as provided for by the terms of the Securities of such series.

SECTION
  13.02. Satisfaction of Sinking Fund Payments
  with Securities. The Company (1) may deliver Outstanding Securities
  of a series (other than any previously called for redemption) and (2)
  may apply as a credit Securities of a series which have been converted
  in accordance with their terms or which have been redeemed either at the
  election of the Company pursuant to the terms of such Securities or through
  the application of permitted optional sinking fund payments pursuant to
  the terms of such Securities, in each case in satisfaction of all or any
  part of any sinking fund payment with respect to the Securities of such
  series required to be made pursuant to the terms of the Securities of
  such series as provided for by the terms of such series; provided
  that the Securities to be so credited have not been previously so credited.
  The Securities to be so credited shall be received and credited for such
  purpose by the Trustee at the Redemption Price, as specified in the Securities
  to be so redeemed (or at such other prices as may be specified for such
  Securities as contemplated in Section 3.01), for 

67

redemption through operation of
  the sinking fund and the amount of such sinking fund payment shall be
  reduced accordingly. 

SECTION
  13.03. Redemption of Securities for Sinking Fund.
  Not less than 60 days prior to each sinking fund payment date for any
  series of Securities, the Company will deliver to the Trustee an Officers'
  Certificate specifying the amount of the next ensuing sinking fund payment
  for that series pursuant to the terms of such Securities, the portion
  thereof, if any, which is to be satisfied by payment of cash and the portion
  thereof, if any, which is to be satisfied by delivering and crediting
  Securities of that series pursuant to Section 13.02
  stating that such Securities have not been previously used as a credit
  against any sinking fund payment and will also deliver to the Trustee
  any Securities to be so delivered. Not less than 30 days before each such
  sinking fund payment date the Trustee shall select the Securities to be
  redeemed upon such sinking fund payment date in the manner specified in
  Section 11.03 and cause notice of the redemption
  thereof to be given in the name of and at the expense of the Company in
  the manner provided in Section 11.04. Such notice
  having been duly given, the redemption of such Securities shall be made
  upon the terms and in the manner stated in Section 11.05, 11.06 and 11.07.

 This
  instrument may be executed in any number of counterparts, each of which
  so executed shall be deemed to be an original, but all such counterparts
  shall together constitute but one and the same instrument. 

68

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

 

	 	AVON PRODUCTS,
      INC.
	 	 
	 	By	
      /s/ Dennis Ling  
 Group
      Vice President - Finance and Treasurer
      

	 	 	 

	 	 JPMORGAN CHASE BANK,

           as
      Trustee, 
	 	 
	 	By	
      /s/ Kathleen Perry 
 Vice
      President 

	 	 	 
	 	By	 /s/ Joanne Adamis
      
 Vice President 

	 	 	 

 

  69<PAGE>
            FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
                      AND MODIFICATION TO CREDIT DOCUMENTS

      This First Amendment to Amended and Restated Credit Agreement and
Modification to Credit Documents (this "Amendment"), dated as of September 30,
2002 (the "Amendment Date"), is among the financial institutions listed on the
signature pages hereof, Bank of America, N. A. as administrative agent for the
Lenders (the "Agent"), The CIT Group/Business Credit, Inc., as syndication
agent, Friedman's Inc., a Delaware corporation ("Friedman's"), each of its
Subsidiaries party to the original "Agreement" referred to below (collectively
with Friedman's, the "Original Credit Parties"), Friedman's Beneficiary Inc., a
Delaware corporation ("FBI"), and Friedman's Investments LLC, a Georgia limited
liability company ("Investments" and together with FBI, the "New Credit
Parties").

                                    RECITALS:

      A. The Original Credit Parties, the Lenders, and the Agent are parties to
that certain Amended and Restated Credit Agreement dated as of August 28, 2002
(as amended, restated, or otherwise modified from time to time, the
"Agreement").

      B. The Original Credit Parties have advised the Agent that ownership of
Stores is being reorganized as described in Exhibit A hereto (the
"Reorganization").

      C. The Original Credit Parties have requested that the Lenders amend the
Agreement in certain respects as more specifically provided hereinbelow to
reflect and permit the Reorganization.

      D. Subject to the satisfaction of the conditions set forth herein, the
Lenders party hereto are willing to amend the Agreement.

      NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

      Section 1.1 Definitions. Unless otherwise defined in this Amendment,
capitalized terms used in this Amendment shall have the same meanings as are
given to such terms in the Agreement (as amended by this Amendment) and the
Security Agreements.
<PAGE>
                                    ARTICLE 2

                                   AMENDMENTS

      Section 2.1 Amendment to Section 1.1 of the Agreement. Effective as of the
Amendment Date, the following definitions contained in Section 1.1 of the
Agreement are hereby amended and restated to read in their entirety as follows:

            "Guarantors" means, Friedman's, FMC, FFP, FHC, Stores, FCJVH,
      FCJVLP, FBI, Investments, and each other Person which may hereafter become
      a party to a Guaranty Agreement reasonably acceptable to the Agent,
      together with their successors and "Guarantor" means any one of such
      Persons.

            "Permitted Acquisition" means (a) the Reorganization, or (b) any
      Acquisition that satisfies each of the following requirements:

                  (i) such Acquisition is not a hostile or contested
            Acquisition;

                  (ii) the business acquired in connection with such Acquisition
            is (A) located in the United States, (B) organized under
            Requirements of Law of the United States, and (C) not engaged,
            directly or indirectly, in any line of business other than the
            businesses in which the Borrowers are engaged on the Closing Date
            and any business activities that are substantially similar, related,
            or incidental thereto;

                  (iii) both immediately before and immediately after giving
            effect to such Acquisition and the Extensions of Credit (if any)
            requested to be made in connection therewith, each of the
            representations and warranties in the Credit Documents is true and
            correct (except (A) any such representation or warranty which
            relates to a specified prior date, and (B) to the extent the Agent
            and the Lenders have been notified in writing by the Credit Parties
            that any representation or warranty is not correct and the Required
            Lenders have explicitly waived in writing compliance with such
            representation or warranty) and no Default or Event of Default
            exists or will exist or would result therefrom;

                  (iv)(A) as soon as available, but not less than thirty (30)
            days prior to such Acquisition, the Borrowers have given the Agent
            (l) notice of such Acquisition (2) a copy of all business and
            financial information reasonably requested by the Agent including
            financial statements, statements of cash flow, and projections of
            availability (i.e. Borrowing Base minus the Obligations) prepared on
            a Pro Forma Basis for the twelve (12) Fiscal Periods ended as of the
            most recent Fiscal Period end and for each of the subsequent

                                       2
<PAGE>
            twelve (12) Fiscal Periods, such financial information to be
            reasonably satisfactory to the Agent, (3) if the Installment
            Contracts and inventory acquired in connection with such Acquisition
            are proposed to be included in the determination of the Borrowing
            Base, the Agent shall have conducted a field audit and appraisal of
            the business and property of the acquired entity, including its
            Installment Contracts and inventory, and (4) a certificate of an
            Executive Officer of Friedman's certifying (and showing the
            calculations therefor in reasonable detail) that the Credit Parties
            will be in compliance with each of the covenants set forth in
            Section 6.11 on a Pro Forma Basis for the twelve (12) Fiscal Periods
            ended as of the most recent Fiscal Period end before and after
            giving effect to such Acquisition and (B) as soon as available, the
            information provided to the board of directors of Friedman's with
            respect to such Acquisition;

                  (v) the aggregate consideration in connection with any such
            Acquisition (whether paid in cash, constituting assumed or acquired
            Indebtedness, or otherwise, but excluding any Capital Stock of
            Friedman's) does not exceed $7,000,000 and the aggregate
            consideration paid in connection with all such Acquisitions (whether
            paid in cash, constituting assumed or acquired Indebtedness, or
            otherwise, but excluding any Capital Stock of Friedman's) does not
            exceed $14,000,000 during the term of this Agreement;

                  (vi) if such Acquisition is an Acquisition of the Capital
            Stock of a Person, the Acquisition is structured so that the
            acquired Person shall become a wholly-owned Subsidiary of a Borrower
            and (if applicable), subject to Section 10.20, a Credit Party
            pursuant to the terms of this Agreement;

                  (vii) no Credit Party shall, as a result of or in connection
            with any such Acquisition, assume or incur any direct or contingent
            liabilities (whether relating to environmental, tax, litigation, or
            other matters) that could reasonably be expected, as of the date of
            such Acquisition, to result in the existence or occurrence of a
            Material Adverse Effect;

                  (viii) in connection with an Acquisition of the Capital Stock
            of any Person, all Liens, other than any Liens which constitute
            Permitted Liens hereunder, on Property of such Person shall be
            terminated, and in connection with an Acquisition of the assets of
            any Person, all Liens on such assets, other than Liens which
            constitute Permitted Liens hereunder, shall be terminated; and

                                       3
<PAGE>
                  (ix) Friedman's shall certify (and provide the Agent and the
            Lenders with a calculation prepared on a Pro Forma Basis in form and
            substance reasonably satisfactory to the Agent) to the Agent and the
            Lenders that, immediately before and immediately after giving effect
            to completion of such Acquisition, the Excess Availability is not
            less than the Minimum Excess Availability Requirement.

            "Permitted Distributions" means (a) any Restricted Payment by a
      Credit Party to a Borrower or by a Credit Party that is not a Borrower to
      another Credit Party that is not a Borrower, (b) cash dividends payable by
      Friedman's to the holders of its Capital Stock; provided that all such
      dividends under this clause b shall not exceed $2,500,000 during any
      Fiscal Year and no such dividends shall be paid if before or after making
      such payment any Default or Event of Default exists or would exist,
      including any Default or Event of Default under Section 6.11 on a Pro
      Forma Basis determined for the preceding twelve (12) Fiscal Periods after
      giving effect thereto, (c) Permitted Stock Repurchases, (d) partnership
      distributions of not more than 99% of Stores' taxable income from Stores
      to Investments provided that the proceeds thereof are immediately
      distributed by Investments to FBI, immediately distributed by FBI to FHC,
      immediately distributed by FHC to FMC and immediately distributed by FMC
      to Friedman's and (e) partnership distributions of not more than 99% of
      FFP's taxable income from FFP to FMC provided that the proceeds thereof
      are immediately distributed by FMC to Friedman's; provided, further, with
      respect to clauses (d) and (e) preceding, no distribution of taxable
      income may be made more than three years after such taxable income was
      earned by Stores or FFP, respectively.

            "Permitted Investments" means Investments which are (a) cash and
      Cash Equivalents, (b) accounts receivable created, acquired, or made in
      the ordinary course of business and payable or dischargeable in accordance
      with customary trade terms, (c) Investments consisting of Capital Stock,
      obligations, securities, or other Property received in settlement of
      accounts receivable (created in the ordinary course of business) from
      bankrupt obligors, (d) Investments existing as of the Closing Date and set
      forth in Schedule 1.1B, (e) advances or loans to directors, officers, and
      employees in the ordinary course of business for reasonable business
      expenses that do not exceed $1,000,000 in the aggregate at any one time
      outstanding, (f) Investments by members of the Consolidated Group in their
      Subsidiaries and Affiliates existing on the Closing Date; provided that
      such Investments in Crescent shall not at anytime exceed $95,000,000 in
      the aggregate as follows: (i) an initial investment of $85,000,000 on the
      Closing Date; (ii) an additional Investment not in excess of $5,000,000 in
      the aggregate at anytime after the Closing Date if the Excess Availability
      immediately after giving effect to the making of such Investment is equal
      to or greater than $10,000,000;

                                       4
<PAGE>
      provided that if such additional Investment is made in December the Excess
      Availability immediately after giving effect to the making of such
      Investment shall be equal to or greater than $35,000,000; and (iii) an
      additional Investment not in excess of $5,000,000 in the aggregate if the
      Excess Availability immediately after giving effect to the making of such
      Investment is equal to or greater than the Minimum Excess Availability
      Requirement, (g) Investments by members of the Consolidated Group in and
      to Domestic Credit Parties, (h) Investments which constitute Permitted
      Acquisitions, (i) Investments in Persons that do not become Subsidiaries
      after giving effect to such Investments, representing the formation of
      strategic alliances or other similar arrangements in an amount not to
      exceed $6,000,000 in the aggregate at any time outstanding; provided that
      at the time of making any such Investment, Excess Availability is equal to
      or in excess of the Minimum Excess Availability Requirement immediately
      after giving effect to such Investment, and no Default or Event of Default
      exists, (j) the Reorganization and (k) other Investments of a nature not
      contemplated in clauses a through (j) preceding in an amount not to exceed
      $3,000,000 in the aggregate at any time outstanding.

            "Subsidiary" means, with respect to any Person (the "subject
      Person"), (a) any corporation, partnership, association, limited liability
      company, joint venture, trust or other business entity of which more than
      fifty percent (50.0%) of the voting Capital Stock or other Capital Stock,
      is owned or controlled directly or indirectly by the subject Person, or
      one or more of the Subsidiaries of the subject person, or a combination
      thereof; provided that Crescent shall not be a Subsidiary of any Credit
      Party unless such Credit Party (or the Credit Parties collectively)
      beneficially owns or controls a majority of the Capital Stock of Crescent
      having ordinary voting power (other than by reason of the happening of a
      contingency) for the election of the members of the board of directors of
      Crescent. Unless the context otherwise clearly requires, "Subsidiary" or
      "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of Friedman's.

      Section 2.2 Additions to Section 1.1 of the Agreement. Effective as of the
Amendment Date, the following definitions shall be added to Section 1.1 of the
Agreement in alphabetical order:

            "FBI" means Friedman's Beneficiary Inc., a Delaware corporation, and
      its successors and assigns.

            "First Amendment" means that certain First Amendment to Amended and
      Restated Credit Agreement and Modification to Credit Documents, dated as
      of September 30, 2002, among the Borrowers, the other Credit Parties, the
      Agent, and the Lenders.

            "Investments" means Friedman's Investments LLC, a Georgia limited
      liability company, and its successors and assigns.

                                       5
<PAGE>
            "Reorganization" has the meaning set forth in the Recitals and
      Exhibit A to the First Amendment.

            "Subordination Agreement" means that certain Subordination Agreement
      dated as of August 28, 2002 among Friedman's, the Agent, Crescent, and
      Crescent Jewelers, Inc., a Delaware corporation, as the same may be
      amended, restated or otherwise modified from time to time.

      Section 2.3 Addition of Section 6.18. Effective as of the Amendment Date,
Article 6 of the Agreement is amended to include a new Section 6.18 to read in
its entirety as follows:

            Section 6.18 Distributions among Borrower and Guarantors. The Credit
      Parties and Investments will cause any proceeds of dividends, redemptions,
      collections, interest payments or proceeds of the sale or other
      disposition of the Series A Preferred Stock referred to in the
      Subordination Agreement, the Junior Notes referred to in the Subordination
      Agreement and the $1,651,393 Note delivered to Investments as part of the
      Reorganization and all partnership distributions from Stores to
      Investments to be distributed or otherwise contributed by Investments
      immediately to FBI, by FBI immediately to FHC, by FHC immediately to FMC
      and by FMC immediately to Friedman's; provided, however, that this
      requirement shall not permit any payment or other action prohibited by the
      Subordination Agreement, Section 7.7 of this Agreement or otherwise. The
      Credit Parties and FMC will cause all partnership distributions from FFP
      to FMC to be distributed or otherwise contributed by FMC immediately to
      Friedman's, provided, however, that this requirement shall not permit any
      payment or other action prohibited by Section 7.7 of this Agreement or
      otherwise.

      Section 2.4 Amendment to Section 7.10. Effective as of the Amendment Date,
Section 7.10 of the Agreement is amended in its entirety to read as follows:

            Section 7.10 Fiscal Year; Organizational Documents. Without the
      prior written consent of the Required Lenders (which consent shall not be
      unreasonably withheld), the Credit Parties will not permit any member of
      the Consolidated Group to amend, modify, or change (a) the last day of its
      Fiscal Year or (b) its articles of incorporation (or corporate charter,
      trust agreement, or other similar organizational document) or bylaws (or
      other similar document) other than in a manner which does not adversely
      affect the rights of the Agent or the Lenders.

                                       6
<PAGE>
                                   ARTICLE 3

                       MODIFICATIONS TO CREDIT DOCUMENTS

      Section 3.1 Amendments to Postclosing Agreement. Effective as of the
Amendment Date, the Postclosing Agreement among the parties to the original
Agreement dated the date thereof (the "Postclosing Agreement") is amended as
follows:

            (a) The words "within thirty (30) days of the Agreement Date", where
      they appear in clause (b) of paragraph 1 of the Postclosing Agreement, are
      hereby amended to read "within fifty-eight (58) days of the Agreement
      Date", and

            (b) The words "within thirty (30) days of the Agreement Date", where
      they appear in clause (c) of paragraph 1 of the Postclosing Agreement, are
      hereby amended to read "within forty five (45) days of the Agreement
      Date."

      Section 3.2 Waiver. The Credit Parties have advised the Agent and the
Lenders that an Event of Default has occurred as a result of the Credit Parties'
failure to deliver, on or before September 27, 2002, the tax status certificates
and terminations, releases, or UCC amendments prescribed by clauses (b) and (c)
of paragraph 1 of the Postclosing Agreement (such instances of noncompliance
hereinafter being called the "Specified Defaults"). The Credit Parties have
requested that the Agent and the Lenders waive the Specified Defaults. The Agent
and each of the Lenders, subject to Section 10.6 of the Agreement and to the
satisfaction of the conditions precedent set forth in Article 5 of this
Amendment, waives the Specified Defaults; provided, that such waiver is
expressly limited as provided herein, and provided further, that in order to
induce the Agent and the Lenders to agree to the foregoing waiver, each of the
Credit Parties agrees that the waiver granted under this Section 3.2 shall not
constitute or be deemed a waiver of any other Event of Default, now existing or
hereafter arising, or a waiver of any rights or remedies arising as a result of
any such other Event of Default. Without limiting the foregoing, any failure to
comply with the requirements of clauses (b) and (c) of paragraph 1 of the
Postclosing Agreement other than as specified in the first sentence of this
Section 3.2 shall constitute an Event of Default.

                                   ARTICLE 4

                                    JOINDER

      Section 4.1 Joinder of the New Credit Parties. The Original Credit Parties
have requested that each of the New Credit Parties become a "Guarantor" pursuant
to Sections 6.12 and 10.20 of the Agreement. Each of the New Credit Parties
hereby assumes all the obligations of a "Guarantor" under the Guaranty Agreement
executed by the Subsidiaries of Friedman's (the "Subsidiary Guaranty Agreement")
and the other Credit Documents and agrees that it is a "Guarantor" and bound as
a "Guarantor" under the terms of the Subsidiary Guaranty Agreement and the other
Credit Documents as if it had been an original signatory thereto. In accordance
with the foregoing and for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, each of the New Credit Parties irrevocably and
unconditionally guarantees to the Agent and the

                                       7
<PAGE>
Lenders the full and prompt payment and performance of the Guaranteed
Obligations (as defined in the Subsidiary Guaranty Agreement) upon the terms and
conditions set forth in the Subsidiary Guaranty Agreement. Each of the New
Credit Parties hereby assumes all the obligations of a "Grantor" under the
Security Agreement executed by the Subsidiaries of Friedman's (the "Subsidiary
Security Agreement") and agrees that it is a "Grantor" and bound as a "Grantor"
under the terms of the Subsidiary Security Agreement and the other Credit
Documents as if it had been an original signatory thereto. In accordance with
the foregoing and for valuable consideration, as security for all Total
Obligations each of the New Credit Parties hereby assigns and grants to the
Agent, for the benefit of the Agent and the Lenders, a continuing security
interest in, lien on, assignment of, and right of set-off against, all of its
property and assets, whether now owned or existing or hereafter acquired or
arising, regardless of where located, including without limitation the following
Collateral (as defined in the Subsidiary Security Agreement): (a) all Accounts,
including any credit enhancement therefor; (b) all money, cash, Cash
Equivalents, securities, and other property of any kind held directly or
indirectly by the Agent or any Lender, (c) all Chattel Paper; (d) all Contracts;
(c) all Deposit Accounts, credits, and balances with and other claims against
the Agent or any Lender or any of their Affiliates or any other financial
institution with which any Grantor maintains deposits, including any Payment
Accounts; (f) all Documents; (g) all Equipment; (h) all Fixtures; (i) all
General Intangibles (including, without limitation, Payment Intangibles,
Intercompany Accounts, and Software); (j) all Instruments; (k) all Inventory;
(l) all Investment Property; provided that with respect to any Voting Capital
Stock of any Foreign Subsidiary, the amount of such Voting Capital Stock of such
Foreign Subsidiary included in the Collateral shall be limited to the maximum
amount thereof that is less than or equal to 65% of the issued and outstanding
Voting Capital Stock of such Foreign Subsidiary; (m) all Supporting Obligations
and Letter-of-Credit Rights; (n) all Goods; (o) all Commercial Tort Claims from
time to time disclosed to the Agent pursuant to Sections 2.4(j) and 2.4(m) of
the Subsidiary Security Agreement, (p) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks, and related data processing
software (owned by such Grantor or in which it has an interest) that at any time
evidence or contain information relating to any Collateral or otherwise
necessary or helpful in the collection thereof or realization thereupon; (q) all
accessions to, substitutions for, and replacements and products of any of the
foregoing; (r) all Real Estate covered by each Mortgage; (s) all equity
interests in Subsidiaries pledged to the Agent; (t) all other property of each
Grantor; and (u) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing, including, but not limited to, proceeds of any
insurance policies, claims against third parties, and condemnation or
requisition payments with respect to all or any of the foregoing. Each of the
New Credit Parties hereby confirms that the representations and warranties set
forth in the Agreement and the other Credit Documents applicable to such New
Credit Party and its Collateral are true and correct after giving effect to such
amendment to the Schedules. In furtherance of its obligations under the
Agreement and the other Credit Documents, each of the New Credit Parties (a)
irrevocably authorizes the Agent at any time and from time to time to file in
any filing office any financing statements and amendments thereto that (i)
indicate the Collateral (A) as "all assets" or "all personal property" of such
New Credit Party, or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls

                                       8
<PAGE>
within the scope of Article 9 of the UCC, or (B) as being of an equal or lesser
scope or with greater detail and (ii) contain any other information required by
Part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance
of any financing statement or amendment, including (A) whether such New Credit
Party is an organization, the type of organization, any organization
identification number issued to such New Credit Party, and any employer or
taxpayer identification number issued to such New Credit Party, and (B) in the
case of a financing statement filed as fixture filing or indicating any
Collateral as as-extracted collateral or timber to be cut, a sufficient
description of real property to which such Collateral relates and (b) agrees to
execute and deliver such other documentation as the Agent may require to
evidence, protect, and perfect the Liens created by the Agreement and the other
Credit Documents as modified hereby.

                                    ARTICLE 5

                                  MISCELLANEOUS

      Section 5.1 Conditions Precedent. The effectiveness of Articles 2, 3 and 4
of this Amendment is subject to the satisfaction of each of the following
conditions precedent:

            (a) The Agent shall have received all of the following, each dated
      the Amendment Date (unless otherwise indicated), in form and substance
      satisfactory to the Agent:

                  (i) Amendment Documents. This Amendment and any other
            instrument, document, or certificate reasonably required by the
            Agent to be executed or delivered by the Credit Parties in
            connection with this Amendment, in each case duly executed
            (collectively, the "Amendment Documents");

                  (ii) Receipt of Financing Statements and Corporate Certificate
            of each Credit Party. Executed, to the extent applicable, originals
            of (A) UCC financing statements with respect to each of the New
            Credit Party's Collateral in which a Lien is granted to the Agent
            and take all other steps reasonably required by the Agent to
            evidence, perfect, maintain, protect, and enforce the Agent's Liens
            in all such property and (B) a certificate duly executed by the
            secretary and president of each Credit Party designated by the Agent
            certifying (1) that such Credit Party is in existence and good
            standing in its jurisdiction of organization and in each other
            jurisdiction in which it is required to be qualified as a foreign
            business entity to transact its business as presently conducted, (2)
            to the current incumbency with respect to each of the officers of
            each such Credit Party authorized to execute and deliver this
            Amendment and the other Amendment Documents to be executed by such
            Credit Party in connection therewith and to request Loans and the
            issuance of Letters of Credit (as applicable), (3) attaching true
            and complete copies of authorizing resolutions of the board of
            directors of each such Credit Party to authorize

                                       9
<PAGE>
            the execution, delivery, and performance of this Amendment and the
            other Amendment Documents, and (4) where applicable, attaching true
            and correct copies of the organizational and governing documents of
            each New Credit Party;

                  (iii) Stock Certificates and Powers. The Agent shall have
            received (A) one or more stock certificate(s) representing the
            Series A Preferred Stock referred to in the Subordination Agreement,
            and (B) executed stock powers in blank for each such certificate;

                  (iv) Endorsement of Junior Note. The Agent shall have received
            the endorsements of the Junior Note referred to in the Subordination
            Agreement by Friedman's to FMC, FMC to FHC, FHC to Investments and
            by Investments to the Agent;

                  (v) Delivery and Endorsement of Note. The Agent shall have
            received the $1,651,393 Promissory Note from Friedman's, as maker,
            payable to the order of Investments together with our endorsement
            thereof by Investments to the Agent;

                  (vi) Reorganization Documents. The Agent shall have received
            true and correct copies of the documents listed on Exhibit C hereto
            which will result in the Reorganization;

                  (vii) Legal Opinions. The Agent shall have received multiple
            counterparts of opinions of counsel for the Credit Parties relating
            to the Amendment Documents and the transactions contemplated
            therein, in form and substance satisfactory to the Agent and the
            Lenders, and including, among other things, opinions regarding the
            enforceability of the Amendment Documents and the perfection of the
            security interests created thereby; and

                  (viii) Additional Information. Such additional documents,
            instruments, and information as the Agent may reasonably request to
            effect the transactions contemplated hereby.

            (b) The representations and warranties contained herein, in the
      Agreement, and in all other Credit Documents, as amended hereby, shall be
      true and correct in all material respects as of the date hereof as if made
      on the date hereof (except those, if any, which by their terms
      specifically relate only to a different date).

            (c) All corporate proceedings taken in connection with the
      transactions contemplated by this Amendment and all other agreements,
      documents, and instruments executed and/or delivered pursuant hereto, and
      all legal matters incident thereto, shall be reasonably satisfactory to
      the Agent.

                                       10
<PAGE>

            (d) No Default or Event of Default shall have occurred and be
      continuing.

      Section 5.2 Representations and Warranties. Each Credit Party hereby
represents and warrants to the Agent and the Lenders that, as of the date of and
after giving effect to this Amendment, (a) the execution, delivery, and
performance of this Amendment and any and all other Amendment Documents executed
and/or delivered in connection herewith have been authorized by all requisite
corporate, limited liability company, partnership, trust or other action on the
part of each Credit Party and will not violate any Credit Party's organizational
or governing documents, (b) all representations and warranties set forth in the
Agreement and in any other Credit Document are true and correct in all material
respects as if made again on and as of such date (except those, if any, which by
their terms specifically relate only to a different date), (c) no Default or
Event of Default has occurred and is continuing, and (d) the Reorganization has
been consummated, the New Credit Parties have been formed and the ownership
thereof is as described in Exhibit A and the Reorganization documents listed on
Exhibit C.

      Section 5.3 Survival of Representations and Warranties. All
representations and warranties made in this Amendment or any other Credit
Document shall survive the execution and delivery of this Amendment and the
other Credit Documents, and no investigation by the Agent or any Lender, or any
closing, shall affect the representations and warranties or the right of the
Agent and the Lenders to rely upon them.

      Section 5.4 Reference to Agreement. Each of the Credit Documents,
including the Agreement, the Amendment Documents, and any and all other
agreements, documents, or instruments now or hereafter executed and/or delivered
pursuant to the terms hereof or pursuant to the terms of the Agreement as
amended hereby, are hereby amended so that any reference in such Credit
Documents to the Agreement, whether direct or indirect, shall mean a reference
to the Agreement as amended hereby.

      Section 5.5 Ratifications. Each of the parties hereto agrees that the
Credit Documents, as amended hereby, shall continue to be legal, valid, binding,
and enforceable in accordance with their respective terms. Without limiting the
generality of the foregoing, each Credit Party hereby acknowledges and confirms,
that upon the effectiveness of this Amendment, and as a result thereof, the
liens, security interests, and assignments created and evidenced by the Credit
Documents are valid and existing liens, security interests, and assignments of
the respective priority recited in the Credit Documents.

      Section 5.6 Severability. Any provision of this Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

      Section 5.7 General. This Amendment, when signed by the Agent, the
Lenders, and each Credit Party, as provided hereinbelow (a) shall be deemed
effective prospectively as of the Amendment Date, (b) contains the entire
agreement among the

                                       11
<PAGE>
parties and may not be amended or modified except in writing signed by all
parties, (c) shall be governed and construed according to the laws of the State
of New York, (d) may be executed in any number of counterparts, each of which
shall be valid as an original and all of which shall be one and the same
agreement, and (e) shall constitute a Credit Document. A telecopy or other
electronic transmission of any executed counterpart shall be deemed valid as an
original.

      Section 5.8 Entirety. This Amendment together with the other Amendment
Documents and the Credit Documents represent the entire agreement of the parties
hereto and thereto, and supersede all prior agreements and understandings, oral
or written, if any, including any correspondence relating to the Credit
Documents or the transactions contemplated herein and therein.

                  [Remainder of page intentionally left blank]

                                       12
<PAGE>
         IN WITNESS WHEREOF, the parties have entered into this Amendment on the
date first above written.

                                        CREDIT PARTIES:

                                        FRIEDMAN'S INC.

                                        By: /s/ Victor M. Suglia
                                           ------------------------------------
                                           Victor M. Suglia
                                        Senior Vice President, Chief Financial
                                        Officer

                                        FRIEDMAN'S FLORIDA PARTNERSHIP

                                        By: Friedman's Management Corp., its
                                            Managing Partner

                                            By: /s/ Victor M. Suglia
                                               --------------------------------
                                               Victor M. Suglia
                                               President

                                        FI STORES LIMITED PARTNERSHIP

                                        By: Friedman's Inc., its general partner

                                            By: /s/ Victor M. Suglia
                                               ---------------------------------
                                               Victor M. Suglia
                                               Senior Vice President, Chief
                                               Financial Officer

                                        FRIEDMAN'S HOLDING CORP.

                                        By: /s/ Victor M. Suglia
                                            ------------------------------------
                                            Victor M. Suglia
                                            Secretary and Treasurer

                                        FRIEDMAN'S MANAGEMENT CORP.

                                        By: /s/ Victor M. Suglia
                                            ------------------------------------
                                            Victor M. Suglia
                                            President

                                       13
<PAGE>
                                        FCJV HOLDING CORP.

                                        By: /s/ Victor M. Suglia
                                            ------------------------------------
                                            Victor M. Suglia
                                            President

                                        FCJV, L.P.

                                        By:    FCJV Holding Corp., its general
                                               partner

                                               By: /s/ Victor M. Suglia
                                                  ------------------------------
                                                  Victor M. Suglia
                                                  President

                                        FRIEDMAN'S INVESTMENTS LLC

                                        By:    Friedman's Inc.,
                                               its Managing Member

                                        By: /s/ Victor M. Suglia
                                           -------------------------------------
                                        Name:  Victor M. Suglia
                                             -----------------------------------
                                        Title: Chief Financial Officer,
                                              ----------------------------------
                                               Secretary and Treasurer
                                              ----------------------------------

                                        FRIEDMAN'S BENEFICIARY INC.

                                        By: /s/ Victor M. Suglia
                                           -------------------------------------
                                        Name:  Victor M. Suglia
                                             -----------------------------------
                                        Title: Secretary and Treasurer
                                              ----------------------------------

                                        AGENT:

                                        BANK OF AMERICA, N.A., as the Agent

                                        By: /s/ David Knoblauch
                                           -------------------------------------
                                        Name:  David Knoblauch
                                             -----------------------------------
                                        Title: Senior Vice-President
                                              ----------------------------------

                                       14
<PAGE>
                                        LENDERS:

                                        BANK OF AMERICA, N.A.

                                        By: /s/ David Knoblauch
                                           -------------------------------------
                                        Name:  David Knoblauch
                                             -----------------------------------
                                        Title: Senior Vice-President
                                              ----------------------------------

                                        THE CIT GROUP/BUSINESS CREDIT, INC.

                                        By: /s/ James Karnowski
                                           -------------------------------------

                                        Name:  James Karnowski
                                             -----------------------------------
                                        Title: Vice President
                                              ----------------------------------

                                       15
<PAGE>
                                    EXHIBIT A

                               THE REORGANIZATION

1.    Friedman's Inc. will contribute Crescent preferred stock ($50 million book
      value) and Crescent note ($35 million book value) to the capital of
      Friedman's Management Corp.;

2.    Friedman's Management Corp. will contribute Crescent preferred stock ($50
      million book value) and Crescent note ($35 million book value) to the
      capital of Friedman's Holding Corp.;

3.    Friedman's Inc. and Friedman's Holding Corp. will create Friedman's
      Investments LLC;

4.    Friedman's Holding Corp, will contribute its 99% LP interest in FI Stores
      Limited Partnership (estimated book value $80,139,276), Crescent preferred
      stock ($50 million book value), Crescent note ($35 million book value);
      TOTAL of $165,139,276 Book value) to Friedman's Investments LLC in
      exchange for a 99% interest in Friedman's Investments LLC;

5.    Friedman's Inc. will contribute a note payable of $1,651,393 (interest
      only at prime) to Friedman's Investments LLC in exchange for a 1% interest
      in Friedman's Investments LLC;

6.    Friedman's Holding Corp. will create Friedman's Beneficiary Inc.;

7.    Friedman's Holding Corp contributes its 99% interest in Friedman's
      Investments LLC to Friedman's Beneficiary Inc.; and

8.    Friedman's Beneficiary Inc. transfers to Friedman's Holding Corp. 100% of
      its common stock.
<PAGE>
                                    EXHIBIT B
                                  SCHEDULE 5.14
                                       TO
            FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
                      AND MODIFICATION TO CREDIT DOCUMENTS
<PAGE>
                                  Schedule 5.14

SUBSIDIARIES

<TABLE>
<S>                                            <C>
FRIEDMAN'S MANAGEMENT CORP.
Jurisdiction of Organization:                  Delaware
Class of Stock:                                Common
Authorized Shares:                             100 shares of common $0.01 par value
Outstanding Shares and Owner:                  100 shares of common held by Friedman's Inc
Existing buy-sell, voting trust or other shareholder agreements
None

FRIEDMAN'S HOLDING CORP. (wholly owned by Friedman's Management Corp.)
Jurisdiction of Organization:                  Delaware
Class of Stock:                                Common
Authorized Shares:                             100 shares of common $0.01 par value
Outstanding Shares and Owner:                  100 shares of common held by Friedman's Management Corp.
Existing buy-sell, voting trust or other shareholder agreements
None

FRIEDMAN'S BENEFICIARY INC. (wholly owned by Friedman's Holding Corp.)
Jurisdiction of Organization:                  Delaware
Class of Stock:                                Common
Authorized Shares:                             100 shares of common $0.01 par value
Outstanding Shares and Owner:                  100 shares of common held by Friedman's Holding Corp.
Existing buy-sell, voting trust or other shareholder agreements
None

FRIEDMAN'S INVESTMENTS LLC
Jurisdiction of Organization:                  Georgia
Percent of Membership Interests Held
   by Friedman's Inc.:                         1% (Controlling Manager)
Percent of Membership Interests Held
   by Friedman's Beneficiary Inc.:             99%
Existing buy-sell, voting trust or other shareholder agreements
None

FI STORES LIMITED PARTNERSHIP
Jurisdiction of Organization:                  Georgia
Percent of Partnership Held
   by Friedman's Inc.:                         1% general
Percent of Partnership Held
   by Friedman's Investments LLC.:             99% limited
Existing buy-sell, voting trust or other shareholder agreements
None
</TABLE>
<PAGE>
<TABLE>
<S>                                            <C>
FCJV HOLDING CORP.
Jurisdiction of Organization:                  Delaware
Class of Stock:                                Common
Authorized Shares:                             100 shares of common $0.01 par value
Outstanding Shares and Owner:                  100 shares of common held by Friedman's Inc.
Existing buy-sell, voting trust or other shareholder agreements
None

FCJV, L.P.
Jurisdiction of Organization:                  Delaware
Percent of Partnership Held
   by Friedman's Inc.                          64% limited
Percent of Partnership Held
   by Crescent Jewelers                        35% limited
Percent of Partnership Held
   by FCJV Holding Corp.:                      1% general
Existing buy-sell, voting trust or other shareholder agreements
None

FRIEDMAN'S FLORIDA PARTNERSHIP
Jurisdiction of Organization:                  Florida
Percent of Partnership Held
   by Friedman's Inc.:                         1% general
Percent of Partnership Held
   by Friedman's Management Corp.              99% general
Existing buy-sell, voting trust or other shareholder agreements
None

COUGAR REINSURANCE COMPANY LTD.
Jurisdiction of Organization                   Turk & Ciacos Islands Company
Capital Structure
Authorized Shares:                             5000 at $1 par value
Issued Shares:                                 1
Outstanding Shares:                            1
Percent of Shares Held
   by Friedman's Inc.:                         100%
Existing buy-sell, voting trust or other shareholder agreements
None
</TABLE>

                                       2
<PAGE>
                                    EXHIBIT C

                            REORGANIZATION DOCUMENTS

1.    Action Taken by Unanimous Written Consent of the Board of Directors of
      Friedman's Inc. dated September 28, 2002

2.    Action Taken by Unanimous Written Consent of the Board of Directors of
      Friedman's Management Corp. dated September 28, 2002

3.    Action Taken by Unanimous Written Consent of the Board of Directors of
      Friedman's Holding Corp. dated September 28, 2002

4.    Action Taken by Unanimous Written Consent of the Board of Directors of
      Friedman's Beneficiary Inc. In Lieu of an Organizational Meeting dated
      September 28, 2002

5.    Consent of Friedman's Inc. as Member of Friedman's Investments LLC to the
      transfer of the membership interest by Friedman's Holding Corp. dated
      September 28, 2002

6.    Consent of Friedman's Inc. as General Partner of FI Stores Limited
      Partnership to the transfer of the limited partnership interest by
      Friedman's Holding Corp. dated September 28, 2002

7.    Contribution Agreement dated September 28, 2002 among Friedman's Inc.,
      Friedman's Management Corp., Friedman's Holding Corp. and Friedman's
      Investments LLC

8.    Contribution Agreement dated September 28, 2002 among Friedman's Holding
      Corp. and Friedman's Beneficiary Inc.

9.    Subscription Agreement dated September 28, 2002 for the Purchase of
      Limited Liability Company Interest by Friedman's Inc. and accepted by
      Friedman's Investments LLC

l0.   Subscription Agreement dated September 28, 2002 for the Purchase of
      Limited Liability Company Interest by Friedman's Holding Corp. and
      accepted by Friedman's Investments LLC

11.   Subscription Agreement dated September 28, 2002 for the Purchase of Common
      Stock by Friedman's Holding Corp. and accepted by Friedman's Beneficiary
      Inc.

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