Document:

Exhibit 4.2

      FORM OF INDENTURE TO BE ENTERED INTO BETWEEN CELGENE CORPORATION AND A
                               TRUSTEE TO BE NAMED

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

                               CELGENE CORPORATION

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

                                    INDENTURE

                          Dated as of ____________ 200_

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

                                [Name of Trustee]

                                     Trustee

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

                          Subordinated Debt Securities

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                                TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE...........................................................1

       Section 1.1.        Definitions..........................................................................1

       Section 1.2.        Other Definitions....................................................................6

       Section 1.3.        Incorporation by Reference of Trust Indenture Act....................................6

       Section 1.4.        Rules of Construction................................................................7

ARTICLE II. SECURITIES..........................................................................................7

       Section 2.1.        Amount Unlimited; Issuable in Series.................................................7

       Section 2.2.        Establishment of Terms of Series of Securities.......................................7

       Section 2.3.        Authentication and Delivery of Securities...........................................10

       Section 2.4.        Execution of Securities; Trustee's Certificate of Authentication;
                           Form of Securities..................................................................11

       Section 2.5.        Registrar and Paying Agent..........................................................12

       Section 2.6.        Paying Agent to Hold Money in Trust.................................................12

       Section 2.7.        Securityholder Lists................................................................13

       Section 2.8.        Transfer and Exchange...............................................................13

       Section 2.9.        Mutilated, Destroyed, Lost and Stolen Securities....................................13

       Section 2.10.       Outstanding Securities..............................................................14

       Section 2.11.       Treasury Securities.................................................................15

       Section 2.12.       Temporary Securities................................................................15

       Section 2.13.       Cancellation........................................................................15

       Section 2.14.       Defaulted Interest..................................................................15

       Section 2.15.       Global Securities...................................................................15

       Section 2.16.       CUSIP Numbers.......................................................................17

ARTICLE III. REDEMPTION........................................................................................17

       Section 3.1.        Notice to Trustee...................................................................17

       Section 3.2.        Selection of Securities to be Redeemed..............................................17

       Section 3.3.        Notice of Redemption................................................................17

       Section 3.4.        Effect of Notice of Redemption......................................................18

       Section 3.5.        Deposit of Redemption Price.........................................................18

       Section 3.6.        Securities Redeemed in Part.........................................................18

ARTICLE IV. COVENANTS..........................................................................................19

       Section 4.1.        Payment of Principal and Interest...................................................19

       Section 4.2.        SEC Reports.........................................................................19

       Section 4.3.        Compliance Certificate..............................................................19

       Section 4.4.        Stay, Extension and Usury Laws......................................................19

       Section 4.5.        Corporate Existence.................................................................20

       Section 4.6.        Taxes...............................................................................20
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ARTICLE V. SUCCESSORS..........................................................................................20

       Section 5.1.        When Company May Merge, Etc.........................................................20

       Section 5.2.        Successor Corporation Substituted...................................................20

ARTICLE VI. DEFAULTS AND REMEDIES..............................................................................21

       Section 6.1.        Events of Default...................................................................21

       Section 6.2.        Acceleration of Maturity; Rescission and Annulment..................................22

       Section 6.3.        Collection of Indebtedness and Suits for Enforcement by Trustee.....................23

       Section 6.4.        Trustee May File Proofs of Claim....................................................24

       Section 6.5.        Trustee May Enforce Claims Without Possession of Securities.........................24

       Section 6.6.        Application of Money Collected......................................................25

       Section 6.7.        Limitation on Suits.................................................................25

       Section 6.8.        Unconditional Right of Holders to Receive Principal and Interest....................26

       Section 6.9.        Restoration of Rights and Remedies..................................................26

       Section 6.10.       Rights and Remedies Cumulative......................................................26

       Section 6.11.       Delay or Omission Not Waiver........................................................26

       Section 6.12.       Control by Holders..................................................................26

       Section 6.13.       Waiver of Past Defaults.............................................................27

       Section 6.14.       Undertaking for Costs...............................................................27

ARTICLE VII. TRUSTEE...........................................................................................27

       Section 7.1.        Duties of Trustee...................................................................27

       Section 7.2.        Rights of Trustee...................................................................29

       Section 7.3.        Individual Rights of Trustee........................................................29

       Section 7.4.        Trustee's Disclaimer................................................................30

       Section 7.5.        Notice of Defaults..................................................................30

       Section 7.6.        Reports by Trustee to Holders.......................................................30

       Section 7.7.        Compensation and Indemnity..........................................................30

       Section 7.8.        Replacement of Trustee..............................................................31

       Section 7.9.        Successor Trustee by Merger, Etc....................................................32

       Section 7.10.       Eligibility; Disqualification.......................................................32

       Section 7.11.       Preferential Collection of Claims Against Company...................................32

ARTICLE VIII. SATISFACTION AND DISCHARGE; DEFEASANCE...........................................................32

       Section 8.1.        Satisfaction and Discharge of Indenture.............................................32

       Section 8.2.        Application of Trust Funds; Indemnification.........................................33

       Section 8.3.        Legal Defeasance of Securities of any Series........................................34

       Section 8.4.        Covenant Defeasance.................................................................36

       Section 8.5.        Repayment to Company................................................................37

ARTICLE IX. AMENDMENTS AND WAIVERS.............................................................................37

       Section 9.1.        Without Consent of Holders..........................................................37

       Section 9.2.        With Consent of Holders.............................................................38

       Section 9.3.        Limitations.........................................................................38

       Section 9.4.        Compliance with Trust Indenture Act.................................................39

       Section 9.5.        Revocation and Effect of Consents...................................................39

       Section 9.6.        Notation on or Exchange of Securities...............................................39

       Section 9.7.        Trustee Protected...................................................................39
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ARTICLE X. MISCELLANEOUS.......................................................................................40

       Section 10.1.       Trust Indenture Act Controls........................................................40

       Section 10.2.       Notices.............................................................................40

       Section 10.3.       Communication by Holders with Other Holders.........................................41

       Section 10.4.       Certificate and Opinion as to Conditions Precedent..................................41

       Section 10.5.       Statements Required in Certificate or Opinion.......................................41

       Section 10.6.       Rules by Trustee and Agents.........................................................41

       Section 10.7.       Legal Holidays......................................................................42

       Section 10.8.       No Recourse Against Others..........................................................42

       Section 10.9.       Counterparts........................................................................42

       Section 10.10.      Governing Laws......................................................................42

       Section 10.11.      No Adverse Interpretation of Other Agreements.......................................42

       Section 10.12.      Successors..........................................................................42

       Section 10.13.      Severability........................................................................42

       Section 10.14.      Table of Contents, Headings, etc....................................................43

       Section 10.15.      Securities in a Foreign Currency....................................................43

       Section 10.16.      Judgment Currency...................................................................43

ARTICLE XI. SINKING FUNDS......................................................................................44

       Section 11.1.       Applicability of Article............................................................44

       Section 11.2.       Satisfaction of Sinking Fund Payments with Securities...............................44

       Section 11.3.       Redemption of Securities for Sinking Fund...........................................45

ARTICLE XII. SUBORDINATION OF SECURITIES.......................................................................45

       Section 12.1.       Agreement of Subordination..........................................................45

       Section 12.2.       Payments to Holders.................................................................46

       Section 12.3.       Subrogation of Securities...........................................................48

       Section 12.4.       Authorization to Effect Subordination...............................................49

       Section 12.5.       Notice to Trustee...................................................................49

       Section 12.6.       Trustee's Relation to Senior Indebtedness...........................................50

       Section 12.7.       No Impairment of Subordination......................................................51

       Section 12.8.       Article Applicable to Paying Agents.................................................51

       Section 12.9.       Senior Indebtedness Entitled to Rely................................................51
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                               CELGENE CORPORATION

             Reconciliation and tie between Trust Indenture Act of 1939 and
                       Indenture, dated as of _____________, 200_

Section 310 (a)(1)     ...................................      7.10
            (a)(2)     ...................................      7.10
            (a)(3)     ...................................      Not Applicable
            (a)(4)     ...................................      Not Applicable
            (a)(5)     ...................................      7.10
            (b)        ...................................      7.10
Section 311 (a)        ...................................      7.11
            (b)        ...................................      7.11
            (c)        ...................................      Not Applicable
Section 312 (a)        ...................................      2.7
            (b)        ...................................      10.3
            (c)        ...................................      10.3
Section 313 (a)        ...................................      7.6
            (b)(1)     ...................................      7.6
            (b)(2)     ...................................      7.6
            (c)(1)     ...................................      7.6
            (d)        ...................................      7.6
Section 314 (a)        ...................................      4.2, 10.5
            (b)        ...................................      Not Applicable
            (c)(1)     ...................................      10.4
            (c)(2)     ...................................      10.4
            (c)(3)     ...................................      Not Applicable
            (d)        ...................................      Not Applicable
            (e)        ...................................      10.5
            (f)        ...................................      Not Applicable
Section 315 (a)        ...................................      7.1
            (b)        ...................................      7.5
            (c)        ...................................      7.1
            (d)        ...................................      7.1
            (e)        ...................................      6.14
Section 316 (a)        ...................................      2.10
            (a)(1)(A)  ...................................      6.12
            (a)(1)(B)  ...................................      6.13
            (b)        ...................................      6.8
Section 317 (a)(1)     ...................................      6.3
            (a)(2)     ...................................      6.4
            (b)        ...................................      2.6
Section 318 (a)        ...................................      10.1

Note:   This reconciliation and tie shall not, for any purpose, be deemed
        to be part of the Indenture.

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 Indenture dated as of __________200_ between Celgene Corporation, a Delaware
corporation (the "Company"), and [Name of Trustee], a _____________ ("Trustee").

                                   WITNESSETH

         WHEREAS, the Company has duly authorized the issuance, execution and
delivery, from time to time, of its unsecured debentures, notes or other
evidences of indebtedness (hereinafter referred to as the "Securities"), without
limit as to principal amount, issuable in one or more Series (as hereinafter
defined), the amount and terms of each such Series to be determined as
hereinafter provided; and, to provide the terms and conditions upon which the
Securities are to be authenticated, issued and delivered, the Company has duly
authorized the execution of this Indenture;

         WHEREAS, all things necessary to make this Indenture a valid indenture
and agreement according to its terms have been done;

         NOW, THEREFORE:

         In consideration of the premises and the purchases of the Securities by
the holders thereof, the Company and the Trustee mutually covenant and agree for
the equal and proportionate benefit of the respective holders from time to time
of the Securities as follows:

                                  ARTICLE I.
                   DEFINITIONS AND INCORPORATION BY REFERENCE

         Section 1.1.      Definitions.

                  "Additional Amounts" means any additional amounts which are
required hereby or by any Security, under circumstances specified herein or
therein, to be paid by the Company in respect of certain taxes imposed on
Holders specified therein and which are owing to such Holders.

                  "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" (including, with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person, whether through the
ownership of voting securities or by agreement or otherwise.

                  "Agent" means any Registrar, Paying Agent or Service Agent.

                  "Authorized Newspaper" means a newspaper in an official
language of the country of publication customarily published at least once a day
for at least five days in each calendar week and of general circulation in the
place in connection with which the term is used. If it shall be impractical in
the opinion of the Trustee to make any publication of any notice

<PAGE>

required hereby in an Authorized Newspaper, any publication or other notice in
lieu thereof that is made or given by the Trustee shall constitute a sufficient
publication of such notice.

                  "Bearer" means anyone in possession from time to time of a
Bearer Security.

                  "Bearer Security" means any Security, including any interest
coupon appertaining thereto, that does not provide for the identification of the
Holder thereof.

                  "Board of Directors" means the Board of Directors of the
Company or any duly authorized committee thereof.

                  "Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been adopted by
the Board of Directors or pursuant to authorization by the Board of Directors
and to be in full force and effect on the date of the certificate and delivered
to the Trustee.

                  "Business Day" means, unless otherwise provided by Board
Resolution, Officers' Certificate or supplemental indenture hereto for a
particular Series, any day except a Saturday, Sunday or a legal holiday in the
City of New York on which banking institutions are authorized or required by
law, regulation or executive order to close.

                  "Company" means the party named as such above until a
successor replaces it and thereafter means the successor.

                  "Company Order" means a written order signed in the name of
the Company by two Officers, one of whom must be the Company's chief executive
officer, chief financial officer or principal accounting officer.

                  "Company Request" means a written request signed in the name
of the Company by its Chairman of the Board, a President or a Vice President,
and by either its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.

                  "Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered.

                  "Debt" of any person as of any date means, without
duplication, all obligations of such person in respect of borrowed money,
including all interest, fees and expenses owed in respect thereto (whether or
not the recourse of the lender is to the whole of the assets of such person or
only to a portion thereof), or evidenced by bonds, notes, debentures or similar
instruments.

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

                  "Depository" means, with respect to the Securities of any
Series issuable or issued in whole or in part in the form of one or more Global
Securities, the person designated as Depository for such Series by the Company,
which Depository shall be a clearing agency registered under the Exchange Act;
and if at any time there is more than one such person,

                                       2
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"Depository" as used with respect to the Securities of any Series shall mean the
Depository with respect to the Securities of such Series.

                  "Designated Senior Indebtedness" means any of our senior
indebtedness that expressly provides that it is "designated senior indebtedness"
for purposes of this Indenture (provided that the instrument, agreement or other
document creating or evidencing such Senior Indebtedness may place limitations
and conditions on the right of such Senior Indebtedness to exercise the rights
of Designated Senior Indebtedness).

                  "Discount Security" means any Security that provides for an
amount less than the stated principal amount thereof to be due and payable upon
declaration of acceleration of the maturity thereof pursuant to Section 6.2.

                  "Dollars" means the currency of the United States of America.

                  "Euro" means the single currency of participating member
states of the European Union.

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

                  "Foreign Currency" means any currency or currency unit issued
by a government other than the government of the United States of America.

                  "Foreign Government Obligations" means with respect to
Securities of any Series that are denominated in a Foreign Currency, (i) direct
obligations of the government that issued or caused to be issued such currency
for the payment of which obligations its full faith and credit is pledged or
(ii) obligations of a person controlled or supervised by or acting as an agency
or instrumentality of such government the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by such
government, which, in either case under clauses (i) or (ii), are not callable or
redeemable at the option of the issuer thereof.

                  "Global Security" or "Global Securities" means a Security or
Securities, as the case may be, in the form established pursuant to Section 2.2
evidencing all or part of a Series of Securities, issued to the Depository for
such Series or its nominee, and registered in the name of such Depository or
nominee.

                  "Holder" or "Securityholder" means a person in whose name a
Security is registered or the holder of a Bearer Security.

                  "Indenture" means this Indenture as amended from time to time
and shall include the form and terms of particular Series of Securities
established as contemplated hereunder.

                  "interest" with respect to any Discount Security which by its
terms bears interest only after Maturity, means interest payable after Maturity.

                  "Maturity," when used with respect to any Security or
installment of principal thereof, means the date on which the principal of such
Security or such installment of principal

                                       3

<PAGE>

becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, call for redemption, notice of
option to elect repayment or otherwise.

                  "Officer" means the Chairman of the Board, any President, any
Vice-President, the Treasurer, the Secretary, any Assistant Treasurer or any
Assistant Secretary of the Company.

                  "Officers' Certificate" means a certificate signed by two
Officers, one of whom must be the Company's principal executive officer,
principal financial officer or principal accounting officer.

                  "Opinion of Counsel" means a written opinion of legal counsel
who is acceptable to the Trustee. The counsel may be an employee of or counsel
to the Company.

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

                  "principal" of a Security means the principal of the Security
plus, when appropriate, the premium, if any, on, and any Additional Amounts in
respect of, the Security.

                  "Representative" means the (a) indenture trustee or other
trustee, agent or representative for any Senior Indebtedness or (b) with respect
to any Senior Indebtedness that does not have any such trustee, agent or other
representative, (i) in the case of such Senior Indebtedness issued pursuant to
an agreement providing for voting arrangements as among the holders or owners of
such Senior Indebtedness, any holder or owner of such Senior Indebtedness acting
with the consent of the required persons necessary to bind such holders or
owners of such Senior Indebtedness and (ii) in the case of all other such Senior
Indebtedness, the holder or owner of such Senior Indebtedness.

                  "Responsible Officer" means any officer of the Trustee in its
Corporate Trust Office and also means, with respect to a particular corporate
trust matter, any other officer to whom any corporate trust matter is referred
because of his or her knowledge of and familiarity with a particular subject.

                  "SEC" means the Securities and Exchange Commission.

                  "Securities" has the meaning given such item in the preamble
hereto.

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

                  "Senior Indebtedness" means the principal, premium, if any,
interest, including any interest accruing after bankruptcy, and other amounts
due on any of our current or future Debt, whether created, incurred, assumed,
guaranteed or in effect guaranteed by us, including any deferrals, renewals,
extensions, refundings, amendments, modifications or supplements to the above.
However, Senior Indebtedness does not include: (i) any Debt that expressly
provides that it shall not be senior in right of payment to the Securities or
expressly provides that it is on the same basis or junior to the Securities;
(ii) any Debt by us to any of our majority-owned subsidiaries; and (iii) the
Securities.

                                       4

<PAGE>

                  "Series" or "Series of Securities" means each series of
debentures, notes or other debt instruments of the Company created pursuant to
Sections 2.1 and 2.2 hereof.

                  "Significant Subsidiary" means (i) any direct or indirect
Subsidiary of the Company that would be a "significant subsidiary" as defined in
Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities
Act, as such regulation is in effect on the date hereof, or (ii) any group of
direct or indirect Subsidiaries of the Company that, taken together as a group,
would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Securities Act, as such regulation
is in effect on the date hereof.

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

                  "Subsidiary" of any specified person means any corporation of
which at least a majority of the outstanding stock having by the terms thereof
ordinary voting power for the election of directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned by
such person, or by one or more other Subsidiaries, or by such person and one or
more other Subsidiaries.

                  "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb) as in effect on the date of this Indenture; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after such
date, "TIA" means, to the extent required by any such amendment, the Trust
Indenture Act as so amended.

                  "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 or include each person who is then a Trustee hereunder, and
if at any time there is more than one such person, "Trustee" as used with
respect to the Securities of any Series shall mean the Trustee with respect to
Securities of that Series.

                  "U.S. Government Obligations" means securities which are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations 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, and which in the case of (i)
and (ii) are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank or trust company as
custodian with respect to any such U.S. Government Obligation or a specific
payment of interest on or principal of any such U.S. Government Obligation held
by such custodian for the account of the holder of a depository receipt,
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 depository
receipt from any amount

                                       5

<PAGE>

received by the custodian in respect of the U.S. Government Obligation
evidenced by such depository receipt.

         Section 1.2.      Other Definitions.

                                                                 DEFINED IN
TERM                                                              SECTION
----                                                             --------
"Bankruptcy Law"                                                    6.1
"Custodian"                                                         6.1
"Event of Default"                                                  6.1
"Judgment Currency"                                                10.16
"Legal Holiday"                                                     10.7
"mandatory sinking fund payment"                                    11.1
"Market Exchange Rate"                                             10.15
"New York Banking Day"                                             10.16
"optional sinking fund payment"                                     11.1
"Paying Agent"                                                      2.5
"Registrar"                                                         2.5
"Required Currency"                                                10.16
"Service Agent"                                                     2.5
"successor person"                                                  5.1

         Section 1.3.      Incorporation by Reference of Trust Indenture Act.

                  Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:

                  "Commission" means the SEC.

                  "indenture securities" means the Securities.

                  "indenture security holder" means a Securityholder.

                  "indenture to be qualified" means this Indenture.

                  "indenture trustee" or "institutional trustee" means the
Trustee.

                  "obligor" on the indenture securities means the Company and
any successor obligor upon the Securities.

                  All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA and not otherwise defined herein are used herein as so defined.

                                       6
<PAGE>

         Section 1.4.  Rules of Construction.

                  Unless the context otherwise requires:

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

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

                 (c)   "or" is not exclusive;

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

                 (e)   provisions apply to successive events and transactions.

                                   ARTICLE II.
                                   SECURITIES

         Section 2.1.  Amount Unlimited; Issuable in Series.

                  The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is unlimited. The Securities
may be issued in one or more Series. All Securities of a Series shall be
identical except as may be set forth in a Board Resolution, a supplemental
indenture or an Officers' Certificate detailing the adoption of the terms
thereof pursuant to the authority granted under a Board Resolution. In the case
of Securities of a Series to be issued from time to time, the Board Resolution,
Officers' Certificate or supplemental indenture may provide for the method by
which specified terms (such as interest rate, maturity date, record date or date
from which interest shall accrue) are to be determined. Securities may differ
between Series in respect of any matters, provided that all Series of Securities
shall be equally and ratably entitled to the benefits of the Indenture.

         Section 2.2.  Establishment of Terms of Series of Securities.

                  At or prior to the issuance of any Securities within a Series,
the following shall be established (as to the Series generally, in the case of
subparagraph 2.2.1 and either as to such Securities within the Series or as to
the Series generally in the case of subparagraphs 2.2.2 through 2.2.22) by a
Board Resolution, a supplemental indenture or an Officers' Certificate pursuant
to authority granted under a Board Resolution:

                  2.2.1.   the title of the Series (which shall distinguish the
Securities of that particular Series from the Securities of any other Series);

                                       7

<PAGE>

                  2.2.2.   the price or prices (expressed as a percentage of the
principal amount thereof) at which the Securities of the Series will be issued;

                  2.2.3. 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 2.8, 2.9, 2.10, 3.6 or 9.6);

                  2.2.4. date or dates on which the principal of the Securities
of the Series is payable;

                  2.2.5. the rate or rates (which may be fixed or variable) per
annum or, if applicable, the method used to determine such rate or rates
(including, but not limited to, any commodity, commodity index, stock exchange
index or financial index) at which the Securities of the Series shall bear
interest, if any, the date or dates from which such interest, if any, shall
accrue, the date or dates on which such interest, if any, shall commence and be
payable and any regular record date for the interest payable on any interest
payment date;

                  2.2.6. the place or places where the principal of and
interest, if any, on the Securities of the Series shall be payable, or the
method of such payment, if by wire transfer, mail or other means;

                  2.2.7. if applicable, the period or periods within which, the
price or prices at which and the terms and conditions upon which the Securities
of the Series may be redeemed, in whole or in part, at the option of the
Company;

                  2.2.8. the obligation, if any, of the Company to redeem or
purchase the 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;

                  2.2.9. the dates, if any, on which and the price or prices at
which the Securities of the Series will be repurchased by the Company at the
option of the Holders thereof and other detailed terms and provisions of such
repurchase obligations;

                  2.2.10. if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which the Securities of the Series shall
be issuable;

                  2.2.11. the forms of the Securities of the Series in bearer or
fully registered form (and, if in fully registered form, whether the Securities
will be issuable as Global Securities);

                  2.2.12. if other than the principal amount thereof, the
portion of the principal amount of the Securities of the Series that shall be
payable upon declaration of acceleration of the maturity thereof pursuant to
Section 6.2;

                  2.2.13. the currency of denomination of the Securities of the
Series, which may be Dollars or any Foreign Currency, including, but not limited
to, the Euro, and if such currency of denomination is a composite currency other
than the Euro, the agency or organization, if any, responsible for overseeing
such composite currency;

                                       8

<PAGE>

                  2.2.14. the designation of the currency, currencies or
currency units in which payment of the principal of and interest, if any, on the
Securities of the Series will be made;

                  2.2.15. if payments of principal of or interest, if any, on
the Securities of the Series are to be made in one or more currencies or
currency units other than that or those in which such Securities are
denominated, the manner in which the exchange rate with respect to such payments
will be determined;

                  2.2.16. the manner in which the amounts of payment of
principal of or interest on, if any, the Securities of the Series will be
determined, if such amounts may be determined by reference to an index based on
a currency or currencies or by reference to a commodity, commodity index, stock
exchange index or financial index;

                  2.2.17. the provisions, if any, relating to any security
provided for the Securities of the Series;

                  2.2.18. if the holders of Securities of the Series may convert
or exchange the Securities into or for securities of the Issuer or other
property, the period or periods within which, the rate or rates at which and the
terms and conditions upon which Securities of the Series may be converted or
exchanged, in whole or in part;

                  2.2.19. 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 6.2;

                  2.2.20. any addition to or change in the covenants set forth
in Articles IV or V which applies to Securities of the Series;

                  2.2.21. any other terms of the Securities of the Series (which
terms shall not be inconsistent with the provisions of this Indenture, except as
permitted by Section 9.1, but which may modify or delete any provision of this
Indenture insofar as it applies to such Series); and

                  2.2.22. any depositories, interest rate calculation agents,
exchange rate calculation agents or other agents with respect to Securities of
such Series if other than those appointed herein.

                  All Securities of any one Series need not be issued at the
same time and may be issued from time to time, consistent with the terms of this
Indenture, if so provided by or pursuant to the Board Resolution, supplemental
indenture or Officers' Certificate referred to above, and the authorized
principal amount of any Series may not be increased to provide for issuances of
additional Securities of such Series, unless otherwise provided in such Board
Resolution, supplemental indenture or Officers' Certificate.

                                       9

<PAGE>

         Section 2.3.  Authentication and Delivery of Securities.

                  At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver any Series of Securities
executed by the Company to the Trustee for authentication by it, and the Trustee
shall thereupon authenticate and deliver said Securities to or upon a Company
Order, without any further corporate action by the Company. If the form or terms
of such Series of Securities have been established in or pursuant to one or more
Board Resolutions or a supplemental indenture as permitted by this Section 2.3
and Section 2.2, 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 7.1) shall be
fully protected in relying upon:

            (1)   each Board Resolution relating to such Series of Securities;

            (2)   an executed supplemental indenture, if any, relating to such
                  series of Securities;

            (3)   an Officers' Certificate setting forth the form and terms of
                  the Securities, stating that the form and terms of the
                  Securities have been established pursuant to Section 2.2 and
                  subparagraph 2.4.3 and comply with this Indenture, and
                  covering such other matters as the Trustee may reasonably
                  request;

            (4)   an Opinion of Counsel to the effect that:

            (a)   if the form of such Securities has been established
                  by or pursuant to resolutions of the Board of Directors of
                  the Company as permitted by subparagraph 2.4.3 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 Resolutions as permitted by this Section 2.1,
                 that such terms have been established in conformity with the
                 provisions of this Indenture;

            (c)  that such Securities, when authenticated and delivered by
                 the Trustee and executed and issued by the Company in the
                 manner and subject to any conditions specified in such Opinion
                 of Counsel, will be valid and binding obligations of the
                 Company, except as any rights thereunder may be limited by
                 bankruptcy, insolvency and other similar laws affecting the
                 enforcement of creditor's rights generally and by general
                 equity principles;

            (d)  that all laws and requirements in respect of the execution and
                 delivery by the Company of such Securities have been complied
                 with and that authentication and delivery of the Securities by
                 the Trustee will not violate the terms of this Indenture; and

            (e)  covering such other matters as the Trustee may reasonably
                 request.

                                      10

<PAGE>

                   Each fully registered Security shall be dated the date of its
authentication. Any series of Bearer Securities shall be dated as provided in
the Board Resolution or the provisions of the supplemental indenture creating
such series.

         Section 2.4.    Execution of Securities; Trustee's Certificate
                         of Authentication; Form of Securities.

                   2.4.1. Two Officers shall sign the Securities for the Company
by manual or facsimile signature.

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

                   2.4.2. Only such Securities bearing a certificate of
authentication executed by the Trustee by the manual signature of one of its
Responsible Officers, shall be entitled to the benefits of this Indenture or be
valid or obligatory for any purpose. Such certificate by the Trustee upon any
Security executed by the Company shall be conclusive evidence that the Security
so authenticated has been duly authenticated and delivered hereunder and that
the Holder is entitled to the benefits of this Indenture.

                          The Trustee shall have the right to decline to
authenticate and deliver any Securities of such Series: (a) if the Trustee,
being advised by counsel, determines that such action may not lawfully be taken;
or (b) if the Trustee in good faith by its board of directors or trustees,
executive committee or a trust committee of directors and/or vice-presidents
shall determine that such action would expose the Trustee to personal liability
to Holders of any then outstanding Series of Securities.

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

                   2.4.3. The Securities of each series shall be substantially
of the tenor and purport as shall be authorized by a Board Resolution or in an
indenture or 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 or designation and such legends or endorsements thereon as the
Board of Directors of the Company may deem appropriate and as are not
inconsistent with the provisions of this Indenture, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Securities may be
listed, or to conform to usage.

                          The definitive Securities may be printed, lithographed
or fully or partly engraved or produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their executions
thereof.

                                      11

<PAGE>

         Section 2.5.    Registrar and Paying Agent.

                 The Company shall maintain, with respect to each Series of
Securities, at the place or places specified with respect to such Series
pursuant to Section 2.2, an office or agency where Securities of such Series may
be presented or surrendered for payment ("Paying Agent"), where Securities of
such Series may be surrendered for registration of transfer or exchange
("Registrar") and where notices and demands to or upon the Company in respect of
the Securities of such Series and this Indenture may be served ("Service
Agent"). The Registrar shall keep a register with respect to each Series of
Securities and to their transfer and exchange. The Company will give prompt
written notice to the Trustee of the name and address, and any change in the
name or address, of each Registrar, Paying Agent or Service Agent. If at any
time the Company shall fail to maintain any such required Registrar, Paying
Agent or Service Agent or shall fail to furnish the Trustee with the name and
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
co-registrars, additional paying agents or additional service agents and may
from time to time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligations to maintain a Registrar, Paying Agent and Service Agent in each
place so specified pursuant to Section 2.2 for Securities of any Series for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the name or address of any such
co-registrar, additional paying agent or additional service agent. The term
"Registrar" includes any co-registrar; the term "Paying Agent" includes any
additional paying agent; and the term "Service Agent" includes any additional
service agent.

                 The Company hereby appoints the Trustee the initial Registrar,
Paying Agent and Service Agent for each Series unless another Registrar, Paying
Agent or Service Agent, as the case may be, is appointed prior to the time
Securities of that Series are first issued.

         Section 2.6.    Paying Agent to Hold Money in Trust.

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

                                      12

<PAGE>

         Section 2.7.    Securityholder Lists.

                 The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Securityholders of each Series of Securities and shall otherwise
comply with TIA Section 312(a). If the Trustee is not the Registrar, the Company
shall furnish to the Trustee at least ten days before each interest payment date
and at such other times as the Trustee may request in writing a list, in such
form and as of such date as the Trustee may reasonably require, of the names and
addresses of Securityholders of each Series of Securities.

         Section 2.8.    Transfer and Exchange.

                 Where Securities of a Series are presented to the Registrar
with a request to register a transfer or to exchange them for an equal principal
amount of Securities of the same Series, the Registrar shall register the
transfer or make the exchange if its requirements for such transactions are met.
To permit registrations of transfers and exchanges, the Trustee shall
authenticate Securities at the Registrar's request. No service charge shall be
made for any registration of transfer or exchange (except as otherwise expressly
permitted herein), but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer tax or similar governmental charge
payable upon exchanges pursuant to Sections 2.12, 3.6 or 9.6).

                 Neither the Company nor the Registrar shall be required (a) to
issue, register the transfer of, or exchange Securities of any Series for the
period beginning at the opening of business 15 days immediately preceding the
mailing of a notice of redemption of Securities of that Series selected for
redemption and ending at the close of business on the day of such mailing, or
(b) to register the transfer of or exchange Securities of any Series selected,
called or being called for redemption as a whole or the portion being redeemed
of any such Securities selected, called or being called for redemption in part.

         Section 2.9.    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 bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and make available for delivery, 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 a number not contemporaneously outstanding.

                                      13

<PAGE>

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

                 Upon the issuance of any new Security under this Section 2.9,
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 of any Series 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 of that Series 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 2.10.   Outstanding Securities.

                 The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest on a Global Security
effected by the Trustee in accordance with the provisions hereof and those
described in this Section as not outstanding.

                 If a Security is replaced pursuant to Section 2.9, it ceases
to be outstanding until the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.

                 If the Paying Agent (other than the Company, a Subsidiary or
an Affiliate of any thereof) holds on the Maturity of Securities of a Series
money sufficient to pay such Securities payable on that date, then on and after
that date such Securities of the Series cease to be outstanding and interest on
them ceases to accrue.

                 A Security does not cease to be outstanding because the
Company or an Affiliate holds the Security.

                 In determining whether the Holders of the requisite principal
amount of outstanding Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, the principal amount of a
Discount Security that shall be deemed to be outstanding for such purposes shall
be the amount of the principal thereof that would be due and payable as of the
date of such determination upon a declaration of acceleration of the Maturity
thereof pursuant to Section 6.2.

                                      14

<PAGE>

         Section 2.11.   Treasury Securities.

                 In determining whether the Holders of the required principal
amount of Securities of a Series have concurred in any request, demand,
authorization, direction, notice, consent or waiver, Securities of a Series
owned by the Company or an Affiliate shall be disregarded, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such request, demand, authorization, direction, notice, consent or waiver only
Securities of a Series that the Trustee knows are so owned shall be so
disregarded.

         Section 2.12.   Temporary Securities.

                 Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities upon
a Company Order. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee upon request shall authenticate definitive
Securities of the same Series and date of maturity in exchange for temporary
Securities. Until so exchanged, temporary securities shall have the same rights
under this Indenture as the definitive Securities.

         Section 2.13.   Cancellation.

                 The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to them for registration of transfer,
exchange or payment. The Trustee shall cancel all Securities surrendered for
transfer, exchange, payment, replacement or cancellation and shall destroy such
canceled Securities (subject to the record retention requirement of the Exchange
Act) and deliver a certificate of such destruction to the Company, unless the
Company otherwise directs. The Company may not issue new Securities to replace
Securities that it has paid or delivered to the Trustee for cancellation.

         Section 2.14.   Defaulted Interest.

                 If the Company defaults in a payment of interest on a Series
of Securities, it shall pay the defaulted interest, plus, to the extent
permitted by law, any interest payable on the defaulted interest, to the persons
who are Securityholders of the Series on a subsequent special record date. The
Company shall fix the record date and payment date. At least 30 days before the
record date, the Company shall mail to the Trustee and to each Securityholder of
the Series a notice that states the record date, the payment date and the amount
of interest to be paid. The Company may pay defaulted interest in any other
lawful manner.

         Section 2.15.   Global Securities.

                   2.15.1. Terms of Securities. A Board Resolution, a
supplemental indenture hereto or an Officers' Certificate shall establish
whether the Securities of a Series shall be issued in whole or in part in the
form of one or more Global Securities and the Depository for such Global
Security or Securities.

                                      15

<PAGE>

                   2.15.2. Transfer and Exchange. Notwithstanding any provisions
to the contrary contained in Section 2.8 of the Indenture and in addition
thereto, any Global Security shall be exchangeable pursuant to Section 2.8 of
the Indenture for Securities registered in the names of Holders other than the
Depository for such Security or its nominee only if (i) such Depository notifies
the Company that it is unwilling or unable to continue as Depository for such
Global Security or if at any time such Depository ceases to be a clearing agency
registered under the Exchange Act, and, in either case, the Company fails to
appoint a successor Depository within 90 days of such event, (ii) the Company
executes and delivers to the Trustee an Officers' Certificate to the effect that
such Global Security shall be so exchangeable or (iii) an Event of Default with
respect to the Securities represented by such Global Security shall have
happened and be continuing. Any Global Security that is exchangeable pursuant to
the preceding sentence shall be exchangeable for Securities registered in such
names as the Depository shall direct in writing in an aggregate principal amount
equal to the principal amount of the Global Security with like tenor and terms.

                   Except as provided in this Section 2.15.2, a Global Security
may not be transferred except as a whole by the Depository with respect to such
Global Security to a nominee of such Depository, by a nominee of such Depository
to such Depository or another nominee of such Depository or by the Depository or
any such nominee to a successor Depository or a nominee of such a successor
Depository.

                   2.15.3. Legend. Any Global Security issued hereunder shall
bear a legend in substantially the following form:

                   "This Security is a Global Security within the meaning of the
Indenture hereinafter referred to and is registered in the name of the
Depository or a nominee of the Depository. This Security is exchangeable for
Securities registered in the name of a person other than the Depository or its
nominee only in the limited circumstances described in the Indenture, and may
not be transferred except as a whole by the Depository to a nominee of the
Depository, by a nominee of the Depository to the Depository or another nominee
of the Depository or by the Depository or any such nominee to a successor
Depository or a nominee of such a successor Depository."

                   2.15.4. Acts of Holders. The Depository, as a Holder, may
appoint agents and otherwise authorize participants to give or take any request,
demand, authorization, direction, notice, consent, waiver or other action which
a Holder is entitled to give or take under the Indenture.

                   2.15.5. Payments. Notwithstanding the other provisions of
this Indenture, unless otherwise specified as contemplated by Section 2.2,
payment of the principal of and interest, if any, on any Global Security shall
be made to the Holder thereof.

                   2.15.6. Consents, Declaration and Directions. Except as
provided in subparagraph 2.15.5, the Company, the Trustee and any Agent shall
treat a person as the Holder of such principal amount of outstanding Securities
of such Series represented by a Global Security as shall be specified in a
written statement of the Depository with respect to such Global Security, for
purposes of obtaining any consents, declarations, waivers or directions required
to be given by the Holders pursuant to this Indenture.

                                      16

<PAGE>

         Section 2.16.   CUSIP Numbers.

                 The Company in issuing the Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other elements of
identification printed on the Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers.

                                  ARTICLE III.
                                   REDEMPTION

         Section 3.1.    Notice to Trustee.

                 The Company may, with respect to any Series of Securities,
reserve the right to redeem and pay the Series of Securities or may covenant to
redeem and pay the Series of Securities or any part thereof prior to the Stated
Maturity thereof at such time and on such terms as provided for in such
Securities. If a Series of Securities is redeemable and the Company wants or is
obligated to redeem prior to the Stated Maturity thereof all or part of the
Series of Securities pursuant to the terms of such Securities, it shall notify
the Trustee of the redemption date and the principal amount of Series of
Securities to be redeemed. The Company shall give the notice at least 45 days
before the redemption date (or such shorter notice as may be acceptable to the
Trustee).

         Section 3.2.    Selection of Securities to be Redeemed.

                 Unless otherwise indicated for a particular Series by a Board
Resolution, a supplemental indenture or an Officers' Certificate, if less than
all the Securities of a Series are to be redeemed, the Trustee shall select the
Securities of the Series to be redeemed in any manner that the Trustee deems
fair and appropriate. The Trustee shall make the selection from Securities of
the Series outstanding not previously called for redemption. The Trustee may
select for redemption portions of the principal of Securities of the Series that
have denominations larger than $1,000. Securities of the Series and portions of
them it selects shall be in amounts of $1,000 or whole multiples of $1,000 or,
with respect to Securities of any Series issuable in other denominations
pursuant to Section 2.2.10, the minimum principal denomination for each Series
and integral multiples thereof. Provisions of this Indenture that apply to
Securities of a Series called for redemption also apply to portions of
Securities of that Series called for redemption.

         Section 3.3.    Notice of Redemption.

                 Unless otherwise indicated for a particular Series by Board
Resolution, a supplemental indenture hereto or an Officers' Certificate, at
least 30 days but not more than 60 days before a redemption date, the Company
shall mail a notice of redemption by first-class mail

                                      17

<PAGE>

to each Holder whose Securities are to be redeemed and if any Bearer Securities
are outstanding, publish on one occasion a notice in an Authorized Newspaper.

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

                 (a)   the redemption date;

                 (b)   the redemption price;

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

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

                 (e)   that interest on Securities of the Series called for
         redemption ceases to accrue on and after the redemption date; and

                 (f)   any other information as may be required by the terms
         of the particular Series or the Securities of a Series being redeemed.

                  At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense.

         Section 3.4.    Effect of Notice of Redemption.

                 Once notice of redemption is mailed or published as provided
in Section 3.3, Securities of a Series called for redemption become due and
payable on the redemption date and at the redemption price. A notice of
redemption may not be conditional. Upon surrender to the Paying Agent, such
Securities shall be paid at the redemption price plus accrued interest to the
redemption date.

         Section 3.5.    Deposit of Redemption Price.

                 On or before the redemption date, the Company shall deposit
with the Paying Agent money sufficient to pay the redemption price of and
accrued interest, if any, on all Securities to be redeemed on that date.

         Section 3.6.    Securities Redeemed in Part.

                 Upon surrender of a Security that is redeemed in part, the
Trustee shall authenticate for the Holder a new Security of the same Series and
the same maturity equal in principal amount to the unredeemed portion of the
Security surrendered.

                                      18

<PAGE>

                                   ARTICLE IV.
                                    COVENANTS

         Section 4.1.    Payment of Principal and Interest.

                 The Company covenants and agrees for the benefit of the
Holders of each Series of Securities that it will duly and punctually pay the
principal of and interest, if any, on the Securities of that Series in
accordance with the terms of such Securities and this Indenture.

         Section 4.2.    SEC Reports.

                 The Company shall deliver to the Trustee within 15 days after
it files them with the SEC copies of the annual reports and of the information,
documents, and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) which the Company is required
to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The
Company also shall comply with the other provisions of TIA Section 314(a).

         Section 4.3.    Compliance Certificate.

                 The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year of the Company, an Officers' Certificate stating
that a review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his knowledge the Company has kept, observed, performed and fulfilled each and
every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions hereof
(or, if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he may have knowledge).

                 The Company will, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such Default or
Event of Default and what action the Company is taking or proposes to take with
respect thereto.

         Section 4.4.    Stay, Extension and Usury Laws.

                 The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture or the Securities; and the
Company (to the extent it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law and covenants that it will not, by resort
to any such law, 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 has been enacted.

                                      19

<PAGE>

         Section 4.5.    Corporate Existence.

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

         Section 4.6.    Taxes.

                 The Company shall, and shall cause each of its Significant
Subsidiaries to, pay prior to delinquency all taxes, assessments and
governmental levies, except as contested in good faith and by appropriate
proceedings.

                                   ARTICLE V.
                                   SUCCESSORS

         Section 5.1.    When Company May Merge, Etc.

                 The Company shall not consolidate with or merge into, or
convey, transfer or lease all or substantially all of its properties and assets
to, any person (a "successor person"), and may not permit any person to merge
into, or convey, transfer or lease its properties and assets substantially as an
entirety to, the Company, unless:

                 (a)    the successor person (if any) is a corporation,
         partnership, trust or other entity organized and validly existing
         under the laws of any U.S. domestic jurisdiction and expressly assumes
         the Company's obligations on the Securities and under this Indenture
         and

                 (b)    immediately after giving effect to the transaction, no
         Default or Event of Default shall have occurred and be continuing.

                  The Company shall deliver to the Trustee prior to the
consummation of the proposed transaction an Officers' Certificate to the
foregoing effect and an Opinion of Counsel stating that the proposed transaction
and such supplemental indenture comply with this Indenture.

         Section 5.2.    Successor Corporation Substituted.

                 Upon any consolidation or merger, or any sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company in accordance with Section 5.1, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such sale,
lease, conveyance or other disposition is made shall succeed to,

                                      20

<PAGE>

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 has been
named as the Company herein; provided, however, that the predecessor Company in
the case of a sale, lease, conveyance or other disposition shall not be released
from the obligation to pay the principal of and interest, if any, on the
Securities.

                                   ARTICLE VI.
                              DEFAULTS AND REMEDIES

         Section 6.1.    Events of Default.

                 "Event of Default," wherever used herein with respect to
Securities of any Series, means any one of the following events, unless in the
establishing Board Resolution, supplemental indenture or Officers' Certificate
it is provided that such Series shall not have the benefit of said Event of
Default:

                 (a) default in the payment of any interest on any Security of
         that Series when it becomes due and payable, and continuance of such
         default for a period of 30 days (unless the entire amount of such
         payment is deposited by the Company with the Trustee or with a Paying
         Agent prior to the expiration of such 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 in respect of any Security of that Series; or

                 (d) default in the performance or breach of any covenant or
         warranty of the Company in this Indenture (other than a covenant or
         warranty that has been included in this Indenture solely for the
         benefit of Series of Securities other than that Series), which default
         continues uncured 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 or breach and requiring it to be remedied and
         stating that such notice is a "Notice of Default" hereunder; or

                 (e) the Company or any of its Significant Subsidiaries pursuant
         to or within the meaning of any Bankruptcy Law:

                     (i)    commences a voluntary case,

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

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

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

                                      21

<PAGE>

                     (v)   generally is unable to pay its debts as the same
                 become due; or

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

                     (i)   is for relief against the Company or any of its
                 Significant Subsidiaries in an involuntary case,

                     (ii)  appoints a Custodian of the Company or any of its
                 Significant Subsidiaries or for all or substantially all of its
                 property, or

                     (iii) orders the liquidation of the Company or any of its
                 Significant Subsidiaries, and the order or decree remains
                 unstayed and in effect for 60 days; or

                 (g) any other Event of Default provided with respect to
         Securities of that Series, which is specified in a Board Resolution,
         a supplemental indenture hereto or an Officers' Certificate, in
         accordance with subparagraph 2.2.19.

                 The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.

         Section 6.2.    Acceleration of Maturity; Rescission and Annulment.

                 If an Event of Default with respect to Securities of any
Series at the time outstanding occurs and is continuing (other than an Event of
Default referred to in Section 6.1(e) or (f)) then in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
outstanding Securities of that Series may declare the principal amount (or, if
any Securities of that Series are Discount Securities, such portion of the
principal amount as may be specified in the terms of such Securities) of and
accrued and unpaid interest, if any, on all of the Securities of that Series 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
amount (or specified amount) and accrued and unpaid interest, if any, shall
become immediately due and payable. If an Event of Default specified in Section
6.1(e) or (f) shall occur, the principal amount (or specified amount) of and
accrued and unpaid interest, if any, on all outstanding Securities shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Holder.

                 At any time after such a declaration of acceleration with
respect to 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
VI 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:

                 (a) the Company has paid or deposited with the Trustee a sum
         sufficient to pay

                                      22

<PAGE>

                     (i) all overdue interest, if any, on all Securities of that
                  Series,

                     (ii) 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 or rates
                  prescribed therefor in such Securities,

                     (iii) to the extent that payment of such interest is
                  lawful, interest upon any overdue principal and overdue
                  interest at the rate or rates prescribed therefor in such
                  Securities, and

                     (iv) 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

            (b)  all Events of Default with respect to Securities of that
         Series, 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 6.13.

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

         Section 6.3.    Collection of Indebtedness and Suits for Enforcement
                         by Trustee.

                 The Company covenants that if

                 (a) 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

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

                 (c) default is made in the deposit of any sinking fund payment
         when and as due by the terms of a Security,

then, 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 or any
overdue interest, at the rate or rates prescribed therefor in such 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 the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or

                                      23

<PAGE>

final decree and may enforce the same against the Company or any other obligor
upon such Securities and collect the moneys adjudged or deemed to be payable in
the manner provided by law out of the property of the Company or any other
obligor upon such Securities, wherever situated.

                 If an Event of Default with respect to any Securities of any
Series occurs and is continuing, the Trustee may in its discretion 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 6.4.    Trustee May File Proofs of Claim.

                 In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,

                 (a) to file and prove a claim for the whole amount of principal
         and interest owing and unpaid in respect of the Securities and to file
         such other papers or documents as may be necessary or advisable in
         order to have the claims of the Trustee (including any claim for the
         reasonable compensation, expenses, disbursements and advances of the
         Trustee, its agents and counsel) and of the Holders allowed in such
         judicial proceeding, and

                 (b) 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 7.7.

                 Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any 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 6.5.    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

                                      24

<PAGE>

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, be for the ratable benefit of the Holders
of the Securities in respect of which such judgment has been recovered.

         Section 6.6.    Application of Money Collected.

                 Any money collected by the Trustee pursuant to this Article VI
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 7.7; 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 preference or
priority of any kind, according to the amounts due and payable on such
Securities for principal and interest, respectively; and

                  Third:  To the Company.

         Section 6.7.    Limitation on Suits.

                  No Holder of any Security of any Series 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

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

                 (b) the Holders of not less than 25% in 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;

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

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

                 (e) 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 principal amount of the outstanding Securities of that
         Series;

it being understood and intended that no one or more of such 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 of
such Holders, or to obtain or to seek to obtain priority or

                                      25

<PAGE>

preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.

         Section 6.8.    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 interest, if any, on
such Security on the Stated Maturity or Stated Maturities expressed in such
Security (or, in the case of redemption, on the redemption date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.

         Section 6.9.    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 6.10.   Rights and Remedies Cumulative.

                 Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in Section 2.9, 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 6.11.   Delay or Omission Not Waiver.

                 No delay or omission of the Trustee or of any Holder of any
Securities 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 VI 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 6.12.   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

                                      26

<PAGE>

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

                 (b) the Trustee may take any other action deemed proper by the
         Trustee which is not inconsistent with such direction, and

                 (c) subject to the provisions of Section 6.1, the Trustee shall
         have the right to decline to follow any such direction if the Trustee
         in good faith shall, by a Responsible Officer of the Trustee, determine
         that the proceeding so directed would involve the Trustee in personal
         liability.

         Section 6.13.   Waiver of Past Defaults.

                 The Holders of not less than a majority in principal amount of
the outstanding Securities of any Series may on behalf of the Holders of all the
Securities of such Series waive any past Default hereunder with respect to such
Series and its consequences, except a Default in the payment of the principal of
or interest on any Security of such Series (provided, however, that the Holders
of a majority in principal amount of the outstanding Securities of any Series
may rescind an acceleration and its consequences, including any related payment
default that resulted from such acceleration). Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.

         Section 6.14.   Undertaking for Costs.

                 All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, 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, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 6.14 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 10% 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 Stated Maturity or Stated Maturities
expressed in such Security (or, in the case of redemption, on the redemption
date).

                                   ARTICLE VII.
                                     TRUSTEE

         Section 7.1.    Duties of Trustee.

                 (a) If an Event of Default has occurred and is continuing, the
         Trustee shall exercise the rights and powers vested in it by this
         Indenture and use the same degree of

                                      27

<PAGE>

care and skill in its exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.

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

                     (i) The Trustee need perform only those duties that are
                 specifically set forth in this Indenture and no others.

                     (ii) In the absence of bad faith on its part, the Trustee
                 may conclusively rely, as to the truth of the statements and
                 the correctness of the opinions expressed therein, upon
                 Officers' Certificates or Opinions of Counsel furnished to the
                 Trustee and conforming to the requirements of this Indenture;
                 however, in the case of any such Officers' Certificates or
                 Opinions of Counsel which by any provisions hereof are
                 specifically required to be furnished to the Trustee, the
                 Trustee shall examine such Officers' Certificates and Opinions
                 of Counsel to determine whether or not they conform to the
                 requirements of this Indenture.

                 (c) The Trustee may not be relieved from liability for its own
         negligent action, its own negligent failure to act or its own willful
         misconduct, except that:

                     (i) This paragraph does not limit the effect of paragraph
                 (b) of this Section.

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

                     (iii) The Trustee shall not be liable with respect to any
                 action taken, suffered or omitted to be taken by it with
                 respect to Securities of any Series in good faith in accordance
                 with the direction of the Holders of a majority in principal
                 amount of the outstanding Securities of such Series relating to
                 the time, method and place of conducting any proceeding for any
                 remedy available to the Trustee, or exercising any trust or
                 power conferred upon the Trustee, under this Indenture with
                 respect to the Securities of such Series.

                 (d) Every provision of this Indenture that in any way relates
         to the Trustee is subject to paragraph (a), (b) and (c) of this Section
         7.1.

                 (e) The Trustee may refuse to perform any duty or exercise any
         right or power unless it receives indemnity satisfactory to it against
         any loss, liability or expense.

                 (f) The Trustee shall not be liable for interest on any money
         received by it except as the Trustee may agree in writing with the
         Company. Money held in trust by the Trustee need not be segregated from
         other funds except to the extent required by law.

                 (g) No provision of this Indenture shall require the Trustee to
         risk its own funds or otherwise incur any financial liability in the
         performance of any of its duties, or

                                      28

<PAGE>

         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 is not reasonably assured to it.

                 (h) The Paying Agent, the Registrar and any authenticating
         agent shall be entitled to the protections, immunities and standard of
         care as are set forth in paragraphs (a), (b) and (c) of this Section
         with respect to the Trustee.

         Section 7.2.    Rights of Trustee.

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

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

                 (c) The Trustee may act through agents and shall not be
         responsible for the misconduct or negligence of any agent appointed
         with due care. No Depository shall be deemed an agent of the Trustee
         and the Trustee shall not be responsible for any act or omission by any
         Depository.

                 (d) The Trustee shall not be liable for any action it takes or
         omits to take in good faith which it believes to be authorized or
         within its rights or powers.

                 (e) The Trustee may consult with counsel and the 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.

                 (f) The Trustee shall be under no obligation to exercise any of
         the rights or powers vested in it by this Indenture at the request or
         direction of any of the Holders of Securities 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.

         Section 7.3.    Individual Rights of Trustee.

                 The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company or an
Affiliate with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. The Trustee is also subject to Sections 7.10
and 7.11.

                                      29

<PAGE>

         Section 7.4.    Trustee's Disclaimer.

                 The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be accountable for
the Company's use of the proceeds from the Securities and it shall not be
responsible for any statement in the Securities other than its authentication.

         Section 7.5.    Notice of Defaults.

                 If a Default or Event of Default occurs and is continuing with
respect to the Securities of any Series and if it is known to a Responsible
Officer of the Trustee, the Trustee shall mail to each Securityholder of the
Securities of that Series and, if any Bearer Securities are outstanding, publish
on one occasion in an Authorized Newspaper, notice of a Default or Event of
Default within 90 days after it occurs or, if later, after a Responsible Officer
of the Trustee has knowledge of such Default or Event of Default. Except in the
case of a Default or Event of Default in payment of principal of or interest on
any Security of any Series, the Trustee may withhold the notice if and so long
as its corporate trust committee or a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of
Securityholders of that Series.

         Section 7.6.    Reports by Trustee to Holders.

                 Within 60 days after May 15 in each year, the Trustee shall
transmit by mail to all Securityholders, as their names and addresses appear on
the register kept by the Registrar and, if any Bearer Securities are
outstanding, publish in an Authorized Newspaper, a brief report dated as of such
May 15, in accordance with, and to the extent required under, TIA Section 313.

                  A copy of each report at the time of its mailing to
Securityholders of any Series shall be filed with the SEC and each stock
exchange on which the Securities of that Series are listed. The Company shall
promptly notify the Trustee when Securities of any Series are listed on any
stock exchange.

         Section 7.7.    Compensation and Indemnity.

                 The Company shall pay to the Trustee from time to time
reasonable compensation for its services. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred by it. Such expenses shall include the
reasonable compensation and expenses of the Trustee's agents and counsel.

                 The Company shall indemnify the Trustee (including the cost of
defending itself) against any loss, liability or expense incurred by it except
as set forth in the next paragraph in the performance of its duties under this
Indenture as Trustee or Agent. The Trustee shall notify the Company promptly of
any claim for which it may seek indemnity. The Company shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent,
which consent shall not be

                                      30

<PAGE>

unreasonably withheld. This indemnification shall apply to officers, directors,
employees, shareholders and agents of the Trustee.

                The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee or by any officer,
director, employee, shareholder or agent of the Trustee through negligence or
bad faith.

                 To secure the Company's payment obligations in this Section
7.7, the Trustee shall have a lien prior to the Securities of any Series on all
money or property held or collected by the Trustee, except that held in trust to
pay principal and interest on particular Securities of that Series.

                 When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.1(e) or (f) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.

         Section 7.8.    Replacement of Trustee.

                 A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.8.

                 The Trustee may resign with respect to the Securities of one
or more Series by so notifying the Company. The Holders of a majority in
principal amount of the Securities of any Series may remove the Trustee with
respect to that Series by so notifying the Trustee and the Company. The Company
may remove the Trustee with respect to Securities of one or more Series if:

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

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

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

                 (d) the Trustee becomes incapable of acting.

                 If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the then outstanding Securities may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.

                 If a successor Trustee with respect to the Securities of any
one or more Series does not take office within 60 days after the retiring
Trustee resigns or is removed, the retiring Trustee, the Company or the Holders
of at least 10% in principal amount of the Securities of the applicable Series
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.

                                      31

<PAGE>

                 If the Trustee with respect to the Securities of any one or
more Series fails to comply with Section 7.10, any Securityholder of the
applicable Series may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.

                 A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee subject to the lien provided for in Section 7.7, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
with respect to each Series of Securities for which it is acting as Trustee
under this Indenture. A successor Trustee shall mail a notice of its succession
to each Securityholder of each such Series and, if any Bearer Securities are
outstanding, publish such notice on one occasion in an Authorized Newspaper.
Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the
Company's obligations under Section 7.7 hereof shall continue for the benefit of
the retiring trustee with respect to reasonable expenses and liabilities
incurred by it prior to such replacement.

         Section 7.9.    Successor Trustee by Merger, Etc.

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

         Section 7.10.   Eligibility; Disqualification.

                 This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee shall always
have a combined capital and surplus of at least $25,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA Section 310(b).

         Section 7.11.   Preferential Collection of Claims Against Company.

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

                                 ARTICLE VIII.
                     SATISFACTION AND DISCHARGE; DEFEASANCE

         Section 8.1.    Satisfaction and Discharge of Indenture.

                 This Indenture shall upon Company Order cease to be of further
effect (except as hereinafter provided in this Section 8.1), and the Trustee, at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when

                     (a)      either

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<PAGE>

                     (i) all Securities theretofore authenticated and delivered
                 (other than Securities that have been destroyed, lost or stolen
                 and that have been replaced or paid) have been delivered to the
                 Trustee for cancellation; or

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

                             (1)   have become due and payable, or

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

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

                             (4)   are deemed paid and discharged pursuant to
                          Section 8.3, as applicable;

and the Company, in the case of (1), (2) or (3) above, has deposited or caused
to be deposited with the Trustee as trust funds in trust an amount sufficient
for the purpose of paying and discharging the entire indebtedness on 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 on or prior to the date of such deposit) 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 7.7, and,
if money shall have been deposited with the Trustee pursuant to clause (a) of
this Section, the provisions of Sections 2.5, 2.8, 2.9, 8.1, 8.2 and 8.5 shall
survive.

         Section 8.2.    Application of Trust Funds; Indemnification.

                 (a) Subject to the provisions of Section 8.5, all money
         deposited with the Trustee pursuant to Section 8.1, all money and U.S.
         Government Obligations or Foreign Government Obligations deposited with
         the Trustee pursuant to Section 8.3 or 8.4 and all money received by
         the Trustee in respect of U.S. Government Obligations or Foreign
         Government Obligations deposited with the Trustee pursuant to Section
         8.3 or 8.4, 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 through any Paying Agent (including the

                                      33

<PAGE>

         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 or received by the
         Trustee or to make mandatory sinking fund payments or analogous
         payments as contemplated by Sections 8.3 or 8.4.

                 (b) The Company shall pay and shall indemnify the Trustee
         against any tax, fee or other charge imposed on or assessed against
         U.S. Government Obligations or Foreign Government Obligations deposited
         pursuant to Sections 8.3 or 8.4 or the interest and principal received
         in respect of such obligations other than any payable by or on behalf
         of Holders.

                 (c) The Trustee shall deliver or pay to the Company from time
         to time upon Company Request any U.S. Government Obligations or Foreign
         Government Obligations or money held by it as provided in Sections 8.3
         or 8.4 which, in the opinion of a nationally recognized firm of
         independent certified public accountants expressed in a written
         certification thereof delivered to the Trustee, are then in excess of
         the amount thereof which then would have been required to be deposited
         for the purpose for which such U.S. Government Obligations or Foreign
         Government Obligations or money were deposited or received. This
         provision shall not authorize the sale by the Trustee of any U.S.
         Government Obligations or Foreign Government Obligations held under
         this Indenture.

         Section 8.3.    Legal Defeasance of Securities of any Series.

                 Unless this Section 8.3 is otherwise specified, pursuant to
subparagraph 2.2.21, to be inapplicable to Securities of any Series, the Company
shall be deemed to have paid and discharged the entire indebtedness on all the
outstanding Securities of such Series on the 91st day after the date of the
deposit referred to in subparagraph (c)(1) hereof, and the provisions of this
Indenture, as it relates to such outstanding Securities of such Series, shall no
longer be in effect (and the Trustee, at the expense of the Company, shall, at
Company Request, execute proper instruments acknowledging the same), except as
to:

                 (a) the rights of Holders of Securities of such Series to
         receive, from the trust funds described in subparagraph (c)(1) hereof,
         (i) payment of the principal of and each installment of principal of
         and interest on the outstanding Securities of such Series on the Stated
         Maturity of such principal or installment of principal or interest and
         (ii) the benefit of any mandatory sinking fund payments applicable to
         the Securities of such Series on the day on which such payments are due
         and payable in accordance with the terms of this Indenture and the
         Securities of such Series;

                 (b) the provisions of Sections 2.5, 2.8, 2.9, 8.2, 8.3 and 8.5;
         and

                 (c) the rights, powers, trust and immunities of the Trustee
         hereunder;

provided that, the following conditions shall have been satisfied:

                     (1) the Company shall have deposited or caused to be
                 deposited irrevocably with the Trustee as trust funds in trust
                 for the purpose of making the

                                      34

<PAGE>

                 following payments, specifically pledged as security for
                 and dedicated solely to the benefit of the Holders of such
                 Securities (i) in the case of Securities of such Series
                 denominated in Dollars, cash in Dollars (or such other money or
                 currencies as shall then be legal tender in the United States)
                 and/or U.S. Government Obligations, or (ii) in the case of
                 Securities of such Series denominated in a Foreign Currency
                 (other than a composite currency), money and/or Foreign
                 Government Obligations, which through the payment of interest
                 and principal in respect thereof, in accordance with their
                 terms, will provide (and without reinvestment and assuming no
                 tax liability will be imposed on such Trustee), not later than
                 one day before the due date of any payment of money, an amount
                 in cash, 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 each installment of principal (including mandatory
                 sinking fund or analogous payments) of and interest, if any, on
                 all the Securities of such Series on the dates such
                 installments of interest or principal are due;

                     (2) such deposit will not result in a breach or violation
                 of, or constitute a default under, this Indenture or any other
                 agreement or instrument to which the Company is a party or by
                 which it is bound;

                     (3) no Default or Event of Default with respect to the
                 Securities of such Series shall have occurred and be continuing
                 on the date of such deposit or during the period ending on the
                 91st day after such date;

                     (4) the Company shall have delivered to the Trustee an
                 Officers' Certificate and an Opinion of Counsel to the effect
                 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 execution of this Indenture, there has been a
                 change in the applicable Federal income tax law, in either case
                 to the effect that, and based thereon such Opinion of Counsel
                 shall confirm that, the Holders of the Securities of such
                 Series will not recognize income, gain or loss for Federal
                 income tax purposes as a result of such deposit, defeasance and
                 discharge and will be subject to Federal income tax on the same
                 amount and in the same manner and at the same times as would
                 have been the case if such deposit, defeasance and discharge
                 had not occurred;

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

                     (6) such deposit shall not result in the trust arising from
                 such deposit constituting an investment company (as defined in
                 the Investment Company Act of 1940, as amended), or such trust
                 shall be qualified under such Act or exempt from regulation
                 thereunder; and

                                      35

<PAGE>

                     (7) the Company shall have delivered to the Trustee an
                 Officers' Certificate and an Opinion of Counsel, each stating
                 that all conditions precedent provided for relating to the
                 defeasance contemplated by this Section 8.3 have been complied
                 with.

         Section 8.4.    Covenant Defeasance.

                 Unless this Section 8.4 is otherwise specified pursuant to
subparagraph 2.2.21 to be inapplicable to Securities of any Series, on and after
the 91st day after the date of the deposit referred to in subparagraph (a)
hereof, the Company may omit to comply with any term, provision or condition set
forth under Sections 4.2, 4.3, 4.4, 4.5, 4.6, and 5.1 as well as any additional
covenants contained in a supplemental indenture hereto for a particular Series
of Securities or a Board Resolution or an Officers' Certificate delivered
pursuant to subparagraph 2.2.21 (and the failure to comply with any such
covenants shall not constitute a Default or Event of Default under Section 6.1)
and the occurrence of any event described in clause (e) of Section 6.1 shall not
constitute a Default or Event of Default hereunder, with respect to the
Securities of such Series, provided that the following conditions shall have
been satisfied:

                 (a) With reference to this Section 8.4, the Company has
         deposited or caused to be irrevocably deposited (except as provided in
         Section 8.2(c)) with the Trustee as trust funds in trust, specifically
         pledged as security for, and dedicated solely to, the benefit of the
         Holders of such Securities (i) in the case of Securities of such Series
         denominated in Dollars, cash in Dollars (or such other money or
         currencies as shall then be legal tender in the United States) and/or
         U.S. Government Obligations, or (ii) in the case of Securities of such
         Series denominated in a Foreign Currency (other than a composite
         currency), money and/or Foreign Government Obligations, which through
         the payment of interest and principal in respect thereof, in accordance
         with their terms, will provide (and without reinvestment and assuming
         no tax liability will be imposed on such Trustee), not later than one
         day before the due date of any payment of money, an amount in cash,
         sufficient, in the opinion of a nationally recognized firm of
         independent certified public accountants expressed in a written
         certification thereof delivered to the Trustee, to pay principal and
         interest, if any, on and any mandatory sinking fund in respect of the
         Securities of such Series on the dates such installments of interest or
         principal are due;

                 (b) Such deposit will not result in a breach or violation of,
         or constitute a default under, this Indenture or any other agreement or
         instrument to which the Company is a party or by which it is bound;

                 (c) No Default or Event of Default with respect to the
         Securities of such Series shall have occurred and be continuing on the
         date of such deposit or during the period ending on the 91st day after
         such date;

                 (d) the Company shall have delivered to the Trustee an Opinion
         of Counsel confirming that Holders of the Securities of such Series
         will not recognize income, gain or loss for Federal income tax purposes
         as a result of such deposit and defeasance and will be subject to
         Federal income tax on the same amounts, in the same manner and at the
         same times as would have been the case if such deposit and defeasance
         had not occurred;

                                      36

<PAGE>

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

                 (f) The Company shall have delivered to the Trustee an
         Officers' Certificate and an Opinion of Counsel, each stating that all
         conditions precedent herein provided for relating to the defeasance
         contemplated by this Section 8.4 have been complied with.

         Section 8.5.    Repayment to Company.

                 The Trustee and the Paying Agent shall pay to the Company upon
request any money held by them for the payment of principal and interest that
remains unclaimed for two years. After that, Securityholders entitled to the
money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another person.

                                   ARTICLE IX.
                             AMENDMENTS AND WAIVERS

         Section 9.1.    Without Consent of Holders.

                 The Company and the Trustee may amend or supplement this
Indenture or the Securities of one or more Series without the consent of any
Securityholder:

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

                 (b) to comply with Article V;

                 (c) to provide for uncertificated Securities in addition to or
         in place of certificated Securities, and to convey, transfer, assign,
         mortgage or pledge to the Trustee as security for the Securities of one
         or more Series any property or assets;

                 (d) to make any change that does not adversely affect the
         rights of any Securityholder;

                 (e) to provide for the issuance of and establish the form and
         terms and conditions of Securities of any Series as permitted by this
         Indenture;

                 (f) to evidence and provide for the acceptance of appointment
         hereunder by a successor Trustee with respect to the Securities of one
         or more Series and to 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; or

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

                                      37

<PAGE>

         Section 9.2.    With Consent of Holders.

                 The Company and the Trustee may enter into a supplemental
indenture with the written consent of the Holders of at least a majority in
principal amount of the outstanding Securities of each Series affected by such
supplemental indenture (including consents obtained in connection with a tender
offer or exchange offer for the Securities of such Series), for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying in
any manner the rights of the Securityholders of each such Series. Except as
provided in Section 6.13, the Holders of at least a majority in principal amount
of the outstanding Securities of each Series affected by such waiver by notice
to the Trustee (including consents obtained in connection with a tender offer or
exchange offer for the Securities of such Series) may waive compliance by the
Company with any provision of this Indenture or the Securities with respect to
such Series.

                 It shall not be necessary for the consent of the Holders of
Securities under this Section 9.2 to approve the particular form of any proposed
supplemental indenture or waiver, but it shall be sufficient if such consent
approves the substance thereof. After a supplemental indenture or waiver under
this Section 9.2 becomes effective, the Company shall mail to the Holders of
Securities affected thereby and, if any Bearer Securities affected thereby are
outstanding, publish on one occasion in an Authorized Newspaper, a notice
briefly describing the supplemental indenture or waiver. Any failure by the
Company to mail or publish such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture or waiver.

                 An amendment under this Section 9.2 or Section 9.1 may not make
any change that adversely affects the rights under Article XII of any holder of
Senior Indebtedness thus outstanding unless the requisite holders of such Senior
Indebtedness consent to such change pursuant to the terms of such Senior
Indebtedness.

         Section 9.3.    Limitations.

                 Nothwithstanding the foregoing, without the consent of each
Securityholder affected, an amendment or waiver may not:

                 (a) change the amount of Securities whose Holders must consent
         to an amendment, supplement or waiver;

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

                 (c) reduce the principal or change the Stated Maturity of any
         Security or reduce the amount of, or postpone the date fixed for, the
         payment of any sinking fund or analogous obligation;

                 (d) reduce the principal amount of Discount Securities payable
         upon acceleration of the maturity thereof;

                 (e) waive a Default or Event of Default in the payment of the
         principal of or interest, if any, on any Security (except a rescission
         of acceleration of the Securities of any Series by the Holders of at
         least a majority in principal amount of the outstanding Securities of
         such Series and a waiver of the payment default that resulted from such
         acceleration);

                                      38

<PAGE>

                 (f) make the principal of or interest, if any, on any Security
         payable in any currency other than that stated in the Security;

                 (g) make any change in Sections 6.8, 6.13, 9.3 (this sentence),
         10.15 or 10.16; or

                 (h) waive a redemption payment with respect to any Security or
         change any of the provisions with respect to the redemption of any
         Securities.

         Section 9.4.    Compliance with Trust Indenture Act.

                 Every amendment to this Indenture or the Securities of one or
more Series shall be set forth in a supplemental indenture hereto that complies
with the TIA as then in effect.

         Section 9.5.    Revocation and Effect of Consents.

                 Until an amendment or waiver becomes effective, a consent to
it by a Holder of a Security is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent Holder may revoke
the consent as to his Security or portion of a Security if the Trustee receives
the notice of revocation before the date the amendment or waiver becomes
effective.

                 Any amendment or waiver once effective shall bind every
Securityholder of each Series affected by such amendment or waiver unless it is
of the type described in any of clauses (a) through (h) of Section 9.3. In that
case, the amendment or waiver shall bind each Holder of a Security who has
consented to it and every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's Security.

         Section 9.6.    Notation on or Exchange of Securities.

                 The Trustee may place an appropriate notation about an
amendment or waiver on any Security of any Series thereafter authenticated. The
Company in exchange for Securities of that Series may issue and the Trustee
shall authenticate upon request new Securities of that Series that reflect the
amendment or waiver.

         Section 9.7.    Trustee Protected.

                 In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article IX or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 7.1) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee shall sign
all supplemental indentures, except that the Trustee need not sign any
supplemental indenture that adversely affects its rights.

                                      39

<PAGE>

                                    ARTICLE X.
                                  MISCELLANEOUS

         Section 10.1.   Trust Indenture Act Controls.

                 If any provision of this Indenture limits, qualifies, or
conflicts with another provision which is required or deemed to be included in
this Indenture by the TIA, such required or deemed provision shall control.

         Section 10.2.   Notices.

                 Any notice or communication by the Company or the Trustee to
the other is duly given if in writing and delivered in person or mailed by
first-class mail:

if to the Company:

                                    Celgene Corporation
                                    7 Powder Horn Drive
                                    Warren, New Jersey 07059
                                    Attention:  Chief Executive Officer

if to the Trustee:

                                    [Name of Trustee]
                                    [Address]

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

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

                                    Attention: _______________

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

                 Any notice or communication to a Securityholder shall be
mailed by first-class mail to his or her address shown on the register kept by
the Registrar and, if any Bearer Securities are outstanding, published in an
Authorized Newspaper. Failure to mail a notice or communication to a
Securityholder of any Series or any defect in it shall not affect its
sufficiency with respect to other Securityholders of that or any other Series.

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

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

                                      40

<PAGE>

         Section 10.3.   Communication by Holders with Other Holders.

                 Securityholders of any Series may communicate pursuant to TIA
Section 312(b) with other Securityholders of that Series or any other Series
with respect to their rights under this Indenture or the Securities of that
Series or all Series. The Company, the Trustee, the Registrar and anyone else
shall have the protection of TIA Section 312(c).

         Section 10.4.   Certificate and Opinion as to Conditions Precedent.

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

                 (a) an Officers' Certificate stating that, in the opinion of
         the signers, all conditions precedent, if any, provided for in this
         Indenture relating to the proposed action have been complied with; and

                 (b) an Opinion of Counsel stating that, in the opinion of such
         counsel, all such conditions precedent have been complied with.

         Section 10.5.   Statements Required in Certificate or Opinion.

                 Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:

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

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

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

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

         Section 10.6.   Rules by Trustee and Agents.

                 The Trustee may make reasonable rules for action by or a
meeting of Securityholders of one or more Series. Any Agent may make reasonable
rules and set reasonable requirements for its functions.

                                      41

<PAGE>

         Section 10.7.   Legal Holidays.

                 Unless otherwise provided by Board Resolution, Officers'
Certificate or supplemental indenture for a particular Series, a "Legal Holiday"
is any day that is not a Business Day. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.

         Section 10.8.   No Recourse Against Others.

                 A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Securityholder by accepting a
Security waives and releases all such liability. The waiver and release are part
of the consideration for the issue of the Securities. All Securities, including
Global Securities, shall bear a legend in a form substantially setting forth
the foregoing statements in this Section 10.8.

         Section 10.9.   Counterparts.

                 This Indenture may be executed in any number of counterparts
and by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.

         Section 10.10.  Governing Laws.

                 THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
IN SUCH STATE, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.

         Section 10.11.  No Adverse Interpretation of Other Agreements.

                 This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or a Subsidiary. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.

         Section 10.12.  Successors.

                 All agreements of the Company in this Indenture and the
Securities shall bind its successor. All agreements of the Trustee in this
Indenture shall bind its successor.

         Section 10.13.  Severability.

                 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.

                                      42

<PAGE>

         Section 10.14.  Table of Contents, Headings, Etc.

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

         Section 10.15.  Securities in a Foreign Currency.

         Unless otherwise specified in a Board Resolution, a supplemental
indenture hereto or an Officers' Certificate delivered pursuant to Section 2.2
of this Indenture with respect to a particular Series of Securities, whenever
for purposes of this Indenture any action may be taken by the Holders of a
specified percentage in aggregate principal amount of Securities of all Series
or all Series affected by a particular action at the time outstanding and, at
such time, there are outstanding Securities of any Series which are denominated
in a coin or currency other than Dollars (including Euros), then the principal
amount of Securities of such Series which shall be deemed to be outstanding for
the purpose of taking such action shall be that amount of Dollars that could be
obtained for such amount at the Market Exchange Rate at such time. For purposes
of this Section 10.15, "Market Exchange Rate" shall mean the noon Dollar buying
rate in New York City for cable transfers of that currency as published by the
Federal Reserve Bank of New York. If such Market Exchange Rate is not available
for any reason with respect to such currency, the Trustee shall use, in its sole
discretion and without liability on its part, such quotation of the Federal
Reserve Bank of New York, as of the most recent available date, or quotations
from one or more major banks in the City of New York, London or in the country
of issue of the currency in question or such other quotations as the Trustee,
upon consultation with the Company, shall deem appropriate. The provisions of
this paragraph shall apply in determining the equivalent principal amount in
respect of Securities of a Series denominated in currency other than Dollars in
connection with any action taken by Holders of Securities pursuant to the terms
of this Indenture.

                 All decisions and determinations of the Trustee regarding the
Market Exchange Rate or any alternative determination provided for in the
preceding paragraph shall be in its sole discretion and shall, in the absence of
manifest error, be conclusive to the extent permitted by law for all purposes
and irrevocably binding upon the Company and all Holders.

       Section 10.16.    Judgment Currency.

               The Company agrees, to the fullest extent that it may
effectively do so under applicable law, that (a) if for the purpose of obtaining
judgment in any court it is necessary to convert the sum due in respect of the
principal of or interest or other amount on the Securities of any Series (the
"Required Currency") into a currency in which a judgment will be rendered (the
"Judgment Currency"), the rate of exchange used shall be the rate at which in
accordance with

                                      43

<PAGE>

normal banking procedures the Trustee could purchase in the City of New York the
Required Currency with the Judgment Currency on the day on which final
unappealable judgment is entered, unless such day is not a New York Banking Day,
then, the rate of exchange used shall be the rate at which in accordance with
normal banking procedures the Trustee could purchase in the City of New York the
Required Currency with the Judgment Currency on the New York Banking Day
preceding the day on which final unappealable judgment is entered and (b) its
obligations under this Indenture to make payments in the Required Currency (i)
shall not be discharged or satisfied by any tender, any recovery pursuant to any
judgment (whether or not entered in accordance with subsection (a)), in any
currency other than the Required Currency, except to the extent that such tender
or recovery shall result in the actual receipt, by the payee, of the full amount
of the Required Currency expressed to be payable in respect of such payments,
(ii) shall be enforceable as an alternative or additional cause of action for
the purpose of recovering in the Required Currency the amount, if any, by which
such actual receipt shall fall short of the full amount of the Required Currency
so expressed to be payable, and (iii) shall not be affected by judgment being
obtained for any other sum due under this Indenture. For purposes of the
foregoing, "New York Banking Day" means any day except a Saturday, Sunday or a
legal holiday in the City of New York on which banking institutions are
authorized or required by law, regulation or executive order to close.

                                   ARTICLE XI.
                                  SINKING FUNDS

         Section 11.1.   Applicability of Article.

                 The provisions of this Article XI shall be applicable to any
sinking fund for the retirement of the Securities of a Series, except as
otherwise permitted or required by any form of Security of such Series issued
pursuant to this Indenture.

                 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 other amount provided for by the terms of
Securities of such Series is herein referred to as an "optional sinking fund
payment." If provided for by the terms of Securities of any Series, the cash
amount of any sinking fund payment may be subject to reduction as provided in
Section 11.2. Each sinking fund payment shall be applied to the redemption of
Securities of any Series as provided for by the terms of the Securities of such
Series.

         Section 11.2.   Satisfaction of Sinking Fund Payments with Securities.

                 The Company may, in satisfaction of all or any part of any
sinking fund payment with respect to the Securities of any Series to be made
pursuant to the terms of such Securities (1) deliver outstanding Securities of
such Series to which such sinking fund payment is applicable (other than any of
such Securities previously called for mandatory sinking fund redemption) and (2)
apply as credit Securities of such Series to which such sinking fund payment is
applicable and which have been redeemed either at the election of the Company
pursuant to the terms of such Series of Securities (except pursuant to any
mandatory sinking fund) or through the application of permitted optional sinking
fund payments or other optional redemptions pursuant to the terms of such
Securities, provided that such Securities have not been

                                      44

<PAGE>

previously so credited. Such Securities shall be received by the Trustee,
together with an Officers' Certificate with respect thereto, not later than 15
days prior to the date on which the Trustee begins the process of selecting
Securities for redemption, and shall be credited for such purpose by the Trustee
at the price specified in such Securities for redemption through operation of
the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly. If as a result of the delivery or credit of Securities in lieu of
cash payments pursuant to this Section 11.2. The principal amount of Securities
of such Series to be redeemed in order to exhaust the aforesaid cash payment
shall be less than $100,000, the Trustee need not call Securities of such Series
for redemption, except upon receipt of a Company Order that such action be
taken, and such cash payment shall be held by the Trustee or a Paying Agent and
applied to the next succeeding sinking fund payment, provided, however, that the
Trustee or such Paying Agent shall from time to time upon receipt of a Company
Order pay over and deliver to the Company any cash payment so being held by the
Trustee or such Paying Agent upon delivery by the Company to the Trustee of
Securities of that Series purchased by the Company having an unpaid principal
amount equal to the cash payment required to be released to the Company.

         Section 11.3.   Redemption of Securities for Sinking Fund.

                 Not less than 45 days (unless otherwise indicated in the Board
Resolution, supplemental indenture hereto or Officers' Certificate in respect of
a particular Series of Securities) 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 mandatory sinking fund
payment for that Series pursuant to the terms of that Series, 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 of
Securities of that Series pursuant to Section 11.2. and the optional amount, if
any, to be added in cash to the next ensuing mandatory sinking fund payment, and
the Company shall thereupon be obligated to pay the amount therein specified.
Not less than 30 days (unless otherwise indicated in the Board Resolution,
Officers' Certificate or supplemental indenture in respect of a particular
Series of Securities) 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 3.2 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 3.3. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 3.4, 3.5 and 3.6.

                                  ARTICLE XII.
                           SUBORDINATION OF SECURITIES

         Section 12.1.     Agreement of Subordination.

                 The Company covenants and agrees, and each Holder of
Securities issued hereunder by his or her acceptance thereof likewise covenants
and agrees, that all Securities shall be issued subject to the provisions of
this Article XII; and each Person holding any Security, whether upon original
issue or upon transfer, assignment or exchange thereof, accepts and agrees to be
bound by such provisions.

                                      45
<PAGE>

                 The payment of the principal of, premium, if any, and interest
on all Securities (including, but not limited to, the redemption price with
respect to the Securities called for redemption in accordance with Article 3 as
provided in the Indenture) issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and subject in right of payment to
the prior payment in full of all Senior Indebtedness, whether outstanding at the
date of this Indenture or thereafter incurred.

                 No provision of this Article XII shall prevent the occurrence
of any Default or Event of Default hereunder.

         Section 12.2.     Payments to Holders.

                 No payment shall be made with respect to the principal of, or
premium, if any, or interest on the Securities (including, but not limited to,
the redemption price with respect to the Securities to be called for redemption
in accordance with Article III as provided in the Indenture), except payments
and distributions made by the Trustee as permitted by the first or second
paragraph of Section 12.5, if:

                 (i) a default in the payment of principal, premium, interest
                 or other obligations due on any Senior Indebtedness occurs and
                 is continuing (or, in the case of Senior Indebtedness for
                 which there is a period of grace, in the event of such a
                 default that continues beyond the period of grace, if any,
                 specified in the instrument or lease evidencing such Senior
                 Indebtedness), unless and until such default shall have been
                 cured or waived or shall have ceased to exist; or

                 (ii) a default, other than a payment default, on a Designated
                 Senior Indebtedness occurs and is continuing that then permits
                 holders of such Designated Senior Indebtedness to accelerate
                 its maturity and the Trustee receives a notice of the default
                 (a "Payment Blockage Notice") from a Representative or the
                 Company.

                 If the Trustee receives any Payment Blockage Notice pursuant
to clause (ii) above, no subsequent Payment Blockage Notice shall be effective
for purposes of this Section 12.1 unless and until (A) at least 365 days shall
have elapsed since the initial effectiveness of the immediately prior Payment
Blockage Notice, and (B) all scheduled payments of principal, premium, if any,
and interest on the Securities that have come due have been paid in full in
cash. No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice.

                 The Company may and shall resume payments on and distributions
in respect of the Securities upon the earlier of:

                     (1) the date upon which the default is cured or waived or
                 ceases to exist, or

                     (2) in the case of a default referred to in clause (ii)
                 above, 179 days after notice is received if the maturity of
                 such Designated Senior Indebtedness has not been accelerated,

                                      46

<PAGE>

unless this Article XII otherwise prohibits the payment or distribution at the
time of such payment or distribution.

                 Upon any payment by the Company, or distribution of assets of
the Company of any kind or character, whether in cash, property or securities,
to creditors upon any dissolution or winding-up or liquidation or reorganization
of the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full in cash or other payment
satisfactory to the holders of such Senior Indebtedness, or payment thereof in
accordance with its terms provided for in cash or other payment satisfactory to
the holders of such Senior Indebtedness, before any payment is made on account
of the principal of, premium, if any, or interest on the Securities (except
payments made pursuant to Article VI from monies deposited with the Trustee
pursuant thereto prior to commencement of proceedings for such dissolution,
winding-up, liquidation or reorganization); and upon any such dissolution or
winding-up or liquidation or reorganization of the Company or bankruptcy,
insolvency, receivership or other proceeding, any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Securities or the Trustee
would be entitled, except for the provision of this Article XII, shall (except
as aforesaid) be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the Holders of the Securities or by the Trustee under this Indenture if
received by them or it, directly to the holders of Senior Indebtedness (pro rata
to such holders on the basis of the respective amounts of Senior Indebtedness
held by such holders, or as otherwise required by law or a court order) or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay all Senior Indebtedness in full, in cash or other payment
satisfactory to the holders of such Senior Indebtedness, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness, before any payment or distribution or provision therefor is made
to the Holders of the Securities or to the Trustee.

                 For purposes of this Article XII, the words, "cash, property
or securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article XII with respect
to the Securities to the payment of all Senior Indebtedness which may at the
time be outstanding; provided that (i) the Senior Indebtedness is assumed by the
new corporation, if any, resulting from any reorganization or readjustment, and
(ii) the rights of the holders of Senior Indebtedness (other than leases which
are not assumed by the Company or the new corporation, as the case may be) are
not, without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article V shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 12.2
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article V.

                                      47

<PAGE>

                 In the event of the acceleration of the Securities because of
an Event of Default, no payment or distribution shall be made to the Trustee or
any Holder of Securities in respect of the principal of, premium, if any, or
interest on the Securities (including, but not limited to, the redemption price
with respect to the Securities called for redemption in accordance with Article
III as provided in the Indenture), except payments and distributions made by the
Trustee as permitted by the first or second paragraph of Section 12.5, until all
Senior Indebtedness has been paid in full in cash or other payment satisfactory
to the holders of Senior Indebtedness or such acceleration is rescinded in
accordance with the terms of this Indenture. If payment of the Securities is
accelerated because of an Event of Default, the Company shall promptly notify
holders of Senior Indebtedness of the acceleration.

                 In the event that, notwithstanding the foregoing provisions,
any payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities (including, without limitation, by way
of setoff or otherwise), prohibited by the foregoing, shall be received by the
Trustee or the Holders of the Securities before all Senior Indebtedness is paid
in full in cash or other payment satisfactory to the holders of such Senior
Indebtedness, or provision is made for such payment thereof in accordance with
its terms in cash or other payment satisfactory to the holders of such Senior
Indebtedness, such payment or distribution shall be held in trust for the
benefit of and shall be paid over or delivered to the holders of Senior
Indebtedness or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing any
Senior Indebtedness may have been issued, as their respective interests may
appear, as calculated by the Company, for application to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in cash or other payment satisfactory to the holders of
such Senior Indebtedness, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.

                 Nothing in this Section 12.2 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 7.7. This Section 12.2
shall be subject to the further provisions of Section 12.5.

         Section 12.3.   Subrogation of Securities.

                 Subject to the payment in full of all Senior Indebtedness, the
rights of the Holders of the Securities shall be subrogated to the extent of the
payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article XII (equally and ratably with the
holders of all indebtedness of the Company which by its express terms is
subordinated to other indebtedness of the Company to substantially the same
extent as the Securities are subordinated and is entitled to like rights of
subrogation) to the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company
applicable to the Senior Indebtedness until the principal, premium, if any, and
interest on the Securities shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of the
Securities or the Trustee would be entitled except for the provisions of this
Article XII, and no payment over pursuant to the provisions of this Article XII,
to or for the benefit of the holders of Senior Indebtedness by Holders of the
Securities or the Trustee, shall, as between the Company, its creditors other
than holders of Senior Indebtedness,

                                      48

<PAGE>

and the Holders of the Securities, be deemed to be a payment by the Company to
or on account of the Senior Indebtedness; and no payments or distributions of
cash, property or securities to or for the benefit of the Holders of the
Securities pursuant to the subrogation provisions of this Article XII, which
would otherwise have been paid to the holders of Senior Indebtedness shall be
deemed to be a payment by the Company to or for the account of the Securities.
It is understood that the provisions of this Article XII are and are intended
solely for the purposes of defining the relative rights of the Holders of the
Securities, on the one hand, and the holders of the Senior Indebtedness, on the
other hand.

                 Nothing contained in this Article XII or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as among the
Company, its creditors other than the holders of Senior Indebtedness, and the
Holders of the Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities the principal of (and
premium, if any) and interest on the Securities as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Holders of the Securities and creditors
of the Company other than the holders of the Senior Indebtedness, nor shall
anything herein or therein prevent the Trustee or the Holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article XII of
the holders of Senior Indebtedness in respect of cash, property or securities of
the Company received upon the exercise of any such remedy.

                 Upon any payment or distribution of assets of the Company
referred to in this Article XII, the Trustee, subject to the provisions of
Section 7.1, and the Holders of the Securities shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction in which such
bankruptcy, dissolution, winding-up, liquidation or reorganization proceedings
are pending, or a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or distribution,
delivered to the Trustee or to the Holders of the Securities, for the purpose of
ascertaining the persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other indebtedness of the Company, the
amount thereof or payable thereon and all other facts pertinent thereto or to
this Article XII.

         Section 12.4.     Authorization to Effect Subordination.

                 Each Holder of a Security by the Holder's acceptance thereof
authorizes and directs the Trustee on the Holder's behalf to take such action as
may be necessary or appropriate to effectuate the subordination as provided in
this Article XII and appoints the Trustee to act as the Holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 6.3 hereof at least 30 days before the expiration of the
time to file such claim, the holders of any Senior Indebtedness or their
representatives are hereby authorized to file an appropriate claim for and on
behalf of the Holders of the Securities.

         Section 12.5.     Notice to Trustee.

                 The Company shall give prompt written notice in the form of an
Officers' Certificate to a Responsible Officer of the Trustee and to any Paying
Agent of any fact known to

                                      49

<PAGE>

the Company which would prohibit the making of any payment of monies to or by
the Trustee or any Paying Agent in respect of the Securities pursuant to the
provisions of this Article XII. Notwithstanding the provisions of this Article
XII or any other provision of this Indenture, the Trustee shall not be charged
with knowledge of the existence of any facts which would prohibit the making of
any payment of monies to or by the Trustee in respect of the Securities pursuant
to the provisions of this Article XII, unless and until a Responsible Officer of
the Trustee shall have received written notice thereof at the Corporate Trust
Office from the Company (in the form of an Officers' Certificate) or a
Representative or a holder or holders of Senior Indebtedness or from any trustee
thereof; and before the receipt of any such written notice, the Trustee, subject
to the provisions of Section 7.1, shall be entitled in all respects to assume
that no such facts exist; provided that if on a date not fewer than two Business
Days prior to the date upon which by the terms hereof any such monies may become
payable for any purpose (including, without limitation, the payment of the
principal of, or premium, if any, or interest on any Security) the Trustee shall
not have received, with respect to such monies, the notice provided for in this
Section 12.5, then, anything herein contained to the contrary notwithstanding,
the Trustee shall have full power and authority to receive such monies and to
apply the same to the purpose for which they were received, and shall not be
affected by any notice to the contrary which may be received by it on or after
such prior date.

                 Notwithstanding anything in this Article XII to the contrary,
nothing shall prevent any payment by the Trustee to the Holders of monies
deposited with it pursuant to Section 8.1, and any such payment shall not be
subject to the provisions of Section 12.1 or 12.2.

                 The Trustee, subject to the provisions of Section 7.1, shall
be entitled to rely on the delivery to it of a written notice by a
Representative or a person representing himself to be a holder of Senior
Indebtedness (or a trustee on behalf of such holder) to establish that such
notice has been given by a Representative or a holder of Senior Indebtedness or
a trustee on behalf of any such holder or holders. In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any person as a holder of Senior Indebtedness to participate in any
payment or distribution pursuant to this Article XII, the Trustee may request
such person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness held by such person, the extent to which
such person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such person under this Article XII, and
if such evidence is not furnished the Trustee may defer any payment to such
person pending judicial determination as to the right of such person to receive
such payment.

         Section 12.6.     Trustee's Relation to Senior Indebtedness.

                 The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article XII in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in Section 7.11 or elsewhere in this Indenture
shall deprive the Trustee of any of its rights as such holder.

                 With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article XII, and no implied
covenants or obligations with respect to the holders of Senior

                                      50

<PAGE>

Indebtedness shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness and, subject to the provisions of Section 7.1, the Trustee shall
not be liable to any holder of Senior Indebtedness if it shall pay over or
deliver to Holders of Securities, the Company or any other person money or
assets to which any holder of Senior Indebtedness shall be entitled by virtue of
this Article XII or otherwise.

         Section 12.7.   No Impairment of Subordination.

                 No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof which any such holder may
have or otherwise be charged with.

         Section 12.8.     Article Applicable to Paying Agents.

                 If at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article XII shall (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article XII in addition to or in place of the Trustee; provided,
however, that the first paragraph of Section 12.5 shall not apply to the Company
or any Affiliate of the Company if it or such Affiliate acts as Paying Agent.

         Section 12.9.     Senior Indebtedness Entitled to Rely.

                 The holders of Senior Indebtedness (including, without
limitation, Designated Senior Indebtedness) shall have the right to rely upon
this Article XII, and no amendment or modification of the provisions contained
herein shall diminish the rights of such holders unless such holders shall have
agreed in writing thereto.

                                      51
<PAGE>

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

                                    CELGENE CORPORATION

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

                                    [Name of Trustee]

                                    By:
                                       -------------------------------------
                                       Name:
                                       Title:EXHIBIT 10.2

                 WAKE FOREST FEDERAL SAVINGS & LOAN ASSOCIATION
                              EMPLOYMENT AGREEMENT

         This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
April 3, 2001 by and between WAKE FOREST FEDERAL SAVINGS & LOAN ASSOCIATION, a
savings and loan association organized and operating under federal laws of the
United States and having an office at 302 South Brooks Street, Wake Forest,
North Carolina 27588-0707 ("Association") and BILLY B. FAULKNER, an individual
residing at 120 Hill Place, Louisburg, North Carolina 27549 ("Executive").

         WHEREAS, the Executive currently serves the Association in the capacity
of Vice President; and

         WHEREAS, the Association desires to assure for itself the continued
availability of the Executive's services and the ability of the Executive to
perform such services with a minimum of personal distraction in the event of a
pending or threatened Change in Control (as hereinafter defined); and

         WHEREAS, the Executive is willing to continue to serve the Association
on the terms and conditions set forth;

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions hereinafter set forth, the Association and the
Executive hereby agree as follows:

         SECTION 1.        EMPLOYMENT.
                           -----------

         The Association agrees to continue to employ the Executive, and the
Executive hereby agrees to such continued employment, during the period and upon
the terms and conditions set forth in this Agreement.

         SECTION 2.        EMPLOYMENT PERIOD.
                           ------------------

         (a) The terms and conditions of this Agreement shall be and remain in
effect during the period of employment established under this section 2
("Employment Period"). The Employment Period shall be for an initial term of
three years beginning on the effective date of this Agreement. Prior to the
first anniversary of the effective date of this Agreement and each anniversary
date thereafter (each, an "Anniversary Date"), the Board of Directors of the
Association ("Board") shall review the terms of this Agreement and the
Executive's performance of services hereunder and may, in the absence of
objection from the Executive, approve an extension of the Employment Period. In
such event, the Employment Period shall be extended to the third anniversary of
the relevant Anniversary Date.

                                       1

<PAGE>

         (b) Nothing in this Agreement shall be deemed to prohibit the
Association from terminating the Executive's employment at any time during the
Employment Period with or without notice for any reason; provided, however, that
the relative rights and obligations of the Association and the Executive in the
event of any such termination shall be determined under this Agreement.

         SECTION 3.        DUTIES.
                           -------

         The Executive shall serve as Vice President of the Association, having
such power, authority and responsibility and performing such duties as are
prescribed by or under the By-laws of the Association and as are customarily
associated with such position or as assigned by the Board acting in good faith.
The Executive shall devote his full business time and attention (other than
during weekends, holidays, approved vacation periods, and periods of illness or
approved leaves of absence) to the business and affairs of the Association and
shall use his best efforts to advance the interests of the Association.

         SECTION 4.        CASH COMPENSATION .
                           -------------------

         In consideration for the services to be rendered by the Executive
hereunder, the Association shall pay to him a salary at an initial annual rate
of SIXTY-FIVE THOUSAND DOLLARS ($65,000), payable in approximately equal
installments in accordance with the Association's customary payroll practices
for senior officers. Prior to each Anniversary Date occurring during the
Employment Period, the Board shall review the Executive's annual rate of salary
and may, in its discretion, approve an increase therein. In addition to salary,
the Executive may receive other cash compensation, including bonuses, from the
Association for services hereunder at such times, in such amounts and on such
terms and conditions as the Board may determine from time to time.

         SECTION 5.        EMPLOYMENT BENEFIT PLANS AND PROGRAMS.
                           --------------------------------------

         During the Employment Period, the Executive shall be treated as an
employee of the Association shall be eligible to participate in and receive
benefits under any and all qualified or non-qualified retirement, pension,
savings, profit-sharing or stock bonus plans, any and all group life, health
(including hospitalization, medical and major medical), dental, accident and
long term disability insurance plans, and any other employee benefit and
compensation plans (including, but not limited to, any incentive compensation
plans or programs, stock option and appreciation rights plans and restricted
stock plans) as may from time to time be maintained by, or cover executive
employees of, the Association, in accordance with the terms and conditions of
such employee benefit plans and programs and consistent with the Association's
customary practices.

                                       2
<PAGE>

         SECTION 6.        INDEMNIFICATION AND INSURANCE.
                           ------------------------------

         (a) During the Employment Period and for a period of six (6) years
thereafter, the Association shall cause the Executive to covered by and named as
an insured under any policy or contract of insurance obtained by it to insure
its directors and officers against personal liability for acts or omissions in
connection with service as an officer or director of the Association or service
in other capacities at the request of the Association. The coverage provided to
the Executive pursuant to this section 6 shall be of the same scope and on the
same terms and conditions as the coverage (if any) provided to other officers or
directors of the Association.

         (b) To the maximum extent permitted under applicable law (including 12
C.F.R. 545.121 to the extent applicable), during the Employment Period and for a
period six (6) years thereafter, the Association shall indemnify, and shall
cause its subsidiaries and affiliates to indemnify the Executive against and
hold him harmless from any costs, liabilities, losses and exposures to the
fullest extent and on the most favorable terms and conditions that similar
indemnification is offered to any director or officer of the Association or any
subsidiary of affiliate thereof. This section 6(b) shall not be applicable where
section 18 is applicable.

         SECTION 7.        OUTSIDE ACTIVITIES.
                           -------------------

         The Executive may serve as a member of the boards of directors of such
business, community and charitable organizations as he may disclose to and as
may be approved by the Board (which approval shall not be unreasonably
withheld); provided, however, that such service shall not materially interfere
with the performance of his duties under this Agreement. The Executive may also
engage in personal business and investment activities which do not materially
interfere with the performance of his duties hereunder; provided, however, that
such activities are not prohibited under any code of conduct or investment or
securities trading policy established by the Association and generally
applicable to all similarly situated executives (including, without limitation,
any applicable conflict of interest policy adopted by the Board of Directors as
contemplated by 12 C.F.R. 571.7) The Executive may also serve as an officer or
director of the Mutual Holding Company and the Stock Holding Company on such
terms and conditions as the Association and the Mutual Holding Company or the
Stock Holding Company may mutually agree upon, and such service shall not be
deemed to materially interfere with the Executive's performance of his duties
hereunder or otherwise to result in a material breach of this Agreement.

         SECTION 8.        WORKING FACILITIES AND EXPENSES.
                           --------------------------------

         The Executive's principal place of employment shall be at the
Association's executive offices at the address first above written, or at such
other location within Wake County at which the Association and the Executive may
mutually agree upon. The Association shall provide the Executive at his
principal place of employment with a private office, secretarial services and
other support services and facilities suitable to his position with the
Association and necessary or appropriate in connection with the performance of
his assigned duties under this Agreement. The Association shall reimburse the
Executive for his ordinary and necessary business expenses,

                                       3
<PAGE>

including, without limitation, fees for membership in such clubs and
organizations as the Executive and the Association shall mutually agree are
necessary and appropriate for business purposes, and his travel and
entertainment expenses incurred in connection with the performance of his duties
under this Agreement, in each case upon presentation to the Association of an
itemized account of such expenses in such form as the Association may reasonably
require.

         SECTION 9.        TERMINATION OF EMPLOYMENT WITH SEVERANCE BENEFITS.
                           --------------------------------------------------

         (a) The Executive shall be entitled to the severance benefits described
herein in the event that his employment with the Association terminates during
the Employment Period under any of the following circumstances:

         (i) The Executive's voluntary resignation from employment with the
Association within ninety (90) days following:

                           (A) the failure of the Board to appoint or re-appoint
                  or elect or reelect the Executive to the office of Vice
                  President (or a more senior office) of the Association;

                           (B) the expiration of a thirty (30) day period
                  following the date on which the Executive gives written notice
                  to the Association of its material failure, whether by
                  amendment of the Association's Organization Certificate or
                  By-laws, action of the Board or the Association's stockholders
                  or otherwise, to vest in the Executive the functions, duties,
                  or responsibilities prescribed in section 3 of this Agreement
                  as of the date hereof, unless, during such thirty (30) day
                  period, the Association fully cures such failure;

                           (C) the expiration of a thirty (30) day period
                  following the date on which the Executive gives written notice
                  to the Association of its material breach of any term,
                  condition or covenant contained in this Agreement (including,
                  without limitation any reduction of the Executive's rate of
                  base salary in effect from time to time and any change in the
                  terms and conditions of any compensation or benefit program in
                  which the Executive participates which, either individually or
                  together with other changes, has a material adverse effect on
                  the aggregate value of his total compensation package),
                  unless, during such thirty (30) day period, the Association
                  fully cures such failure; or

         (ii) the termination of the Executive's employment with the Association
         for any other reason not described in section 10(a)- (Termination for
         "Cause").

                                       4

<PAGE>

In such event, subject to section 25, the Association shall provide the benefits
and pay to the Executive in the amounts described in section 9(b).

                           (b) upon the termination of the Executive's
                  employment with the Association under circumstances described
                  in section 9(a) of this Agreement, the Association shall pay
                  and provide to the Executive (or, in the event of his death,
                  to his estate):

         (i) his earned but unpaid compensation as of the date of the
         termination of his employment with the Association, such payment to be
         made at the time and in the manner prescribed by law applicable to the
         payment of wages but in no event later than thirty (30) days after
         termination of employment;

         (ii) the benefits, if any, to which he is entitled as a former employee
         under the employee benefit plans and programs and compensation plans
         and programs maintained for the benefit of the Association's officers
         and employees;

         (iii) continued group life, health (including hospitalization, medical
         and major medical), dental, accident and long term disability insurance
         benefits, in addition to that provided pursuant to section 9(b)(ii),
         and after taking into account the coverage provided by any subsequent
         employer, if and to the extent necessary to provide for the Executive,
         for a period of three (3) years, coverage equivalent to the coverage to
         which he would have been entitled under such plans (as in effect on the
         date of his termination of employment, or, if his termination of
         employment occurs after a Change in Control, on the date of such Change
         in Control, whichever benefits are greater) if he had continued working
         for the Association.

         (iv) with thirty (30) days following his termination of employment with
         the Association, a lump sum payment, in an amount equal to three (3)
         times the Executive's highest rate of annual salary, including bonuses
         and stock awards included as W-2 wages, achieved during the Employment
         Period.

         (v) within thirty (30) days following his termination of employment
         with the Association, a lump sum payment in an amount equal to:

                           (A) the present value of the aggregate benefits to
                  which he would be entitled under any and all qualified and
                  non-qualified retirement plans, maintained by, or covering
                  employees of the Association as if he were 100% vested at date
                  of termination. Present value is to be determined in
                  accordance with IRC Section 280G. In the case of the
                  Association's leveraged Employee Stock Ownership Plan, the
                  additional assets allocable to him will be computed based
                  upon: (1) the fair market value of such assets at termination
                  of employment, assuming he were 100% vested in the Plan, and
                  (2) the Association made the maximum amount of employee
                  contributions required under the Plan during the remaining
                  debt service

                                       5

<PAGE>

                  period, and (3) the Executive had continued working for the
                  Association at the highest rate of pay during the Employment
                  Period.

         (vi) at the election of the Association's Board of Directors made
         within thirty (30) days following his termination of employment with
         the Association, upon surrender of stock options or appreciation rights
         granted such Executive under any stock option or appreciation rights
         plan covering employees of the Association, a lump sum payment equal to
         the product of:

                           (A) the excess of (1) the fair market value of a
                  share of stock of the same class as the stock subject to the
                  option or appreciation right, determined as of the date of
                  termination of employment, over (2) the exercise price per
                  share for such option or appreciation right, as specified in
                  or under the relevant plan or program; multiplied by

                           (B) the number of shares with respect to which
                  options or appreciation rights are being surrendered.

For purposes of this section 9(b)(vi), the Executive shall be deemed fully
vested in all options and appreciation rights under any stock option or
appreciation rights plan or program maintained by, or covering employees of the
Association, even if he is not vested under such plan or program.

                           (vii) at the election of the Association's Board of
                  Directors made with thirty (30) days following the Executive's
                  termination of employment with the Association, upon surrender
                  of any shares awarded to the Executive under any restricted
                  stock plan maintained by, or covering employees of the
                  Association, a lump sum payment in an amount equal to the
                  product of:

                                 (A) the fair market value of a share of stock
                           of the same class of stock granted under such plan,
                           determined as of the date of the Executive's
                           termination of employment; multiplied by

                                 (B) the number of shares which are being
                           surrendered.

For purposes of this section 9(b)(vii), the Executive shall be deemed fully
vested in all shares awarded under any restricted stock plan maintained by, or
covering employees of, the Association, even if he is not vested under such plan
or program.

                                       6
<PAGE>

The Association and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that the
payments and benefits contemplated by this section 9(b) constitute reasonable
damages under the circumstances and shall be payable without any requirement of
proof of actual damage and without regard to the Executive's efforts, if any, to
mitigate damages. The Association and the Executive further agree that the
Association may condition the payments described under section 9(b) on the
receipt of the Executive's resignation from any and all positions which he holds
as an officer or employee of the Association, the Mutual Holding Company, or the
Stock Holding Company.

         SECTION 10.       TERMINATION WITHOUT ADDITIONAL ASSOCIATION LIABILITY.
                           -----------------------------------------------------

         In the event that the Executive's employment with the Association shall
terminate during the Employment Period on account of:

         (a) the discharge of the Executive for "cause," which, for purposes of
         this Agreement shall mean personal dishonesty, incompetence, willful
         misconduct, breach of fiduciary duty involving personal profit,
         intentional failure to perform stated duties, willful violation of any
         law, rule or regulation (other than traffic violations or similar
         offenses) or final cease and desist order, or any material breach of
         this Agreement, in each case as measured against standards generally
         prevailing at the relevant time in the savings and community banking
         industry; provided, however, that the Executive shall not be deemed to
         have been discharged for cause unless and until he shall have received
         a written notice of termination from the Board, which notice shall be
         given to the Executive not later than five (5) business days after the
         Board adopts, and shall be accompanied by, a resolution duly approved
         by affirmative vote a a majority of the entire Board at a meeting
         called and held for such purpose (which meeting shall be held not more
         than fifteen (15) days nor more than thirty (30) days after notice to
         the Executive), at which meeting there shall be a reasonable
         opportunity for the Executive to make oral and written presentations to
         the members of the Board, on his own behalf, or through a
         representative, who may be legal counsel, to refute the grounds for the
         proposed determination finding that in the good faith opinion of the
         Board grounds exist for discharging the Executive for cause; or

         (b) the Executive's voluntary resignation from employment with the
         Association for reasons other than those specified in section 9(a)(i);

         (c) the Executive's death;

         (d) a determination that the Executive is eligible for long-term
         disability benefits under the Association's long-term disability
         insurance program or, if there is not such program, under the federal
         Social Security Act; or

         (e) the Executive's termination of employment for any reason at or
         after attainment of mandatory retirement age under the Association's
         mandatory retirement policy for executive officers in effect as of the
         date of this Agreement;

                                       7
<PAGE>

         then the Association shall have no further obligations under this
         Agreement, other than the payment to the Executive ( or, in the event
         of his death, to his estate) of his earned but unpaid compensation as
         of the date of the termination of his employment, and the provision of
         such other benefits, if any, to which he is entitled as a former
         employee under the employee benefit plans and programs and compensation
         plans and programs maintained by, or covering employees of, the
         Association.

         SECTION 11.       TERMINATION UPON OR FOLLOWING A CHANGE IN CONTROL.
                           --------------------------------------------------

         (a) A Change in Control of the Association ("Change in Control") shall
         be deemed to have occurred upon the happening of any of the following
         events:

         (i) approval by the stockholders of the Association of a transaction
         that would result in the reorganization, merger or consolidation of the
         Association, respectively, with one or more other persons, other than a
         transaction following which:

                           (A) at least 51% of the equity ownership interest of
                  the entity resulting from such transaction are beneficially
                  owned (within the meaning of Rule 13d-3 promulgated under the
                  Securities Exchange Act of 1934 ("Exchange Act")) in
                  substantially the same relative proportions by persons who,
                  immediately prior to such transaction, beneficially owned
                  (within the meaning of Rule 13d-3 promulgated under the
                  Exchange Act) at least 51% of the outstanding equity ownership
                  interests in the Association; and

                           (B) at least 51% of the securities entitled to vote
                  generally in the election of directors of the entity resulting
                  from such transaction are beneficially owned (within the
                  meaning of Rule 13d-3 promulgated under the Exchange Act) in
                  substantially the same relative proportions by persons who,
                  immediately prior to such transaction, beneficially owned
                  (within the meaning of Rule 13d-3 promulgated under the
                  Exchange Act) at least 51% of the securities entitled to vote
                  generally in the election of directors of the Association;

         (ii) the acquisition of all or substantially all of the assets of the
         Association or beneficial ownership (within the meaning of Rule 13d-3
         promulgated under the Exchange Act) or 25% or more of the outstanding
         securities of the Association entitled to vote generally in the
         election of directors by any person or by any persons acting in
         concert, or approval by the stockholders of the Association of any
         transaction which would result in such an acquisition; or

         (iii) a complete liquidation or dissolution of the Association, or
         approval by the stockholders of the Association of a plan for such
         liquidation or dissolution; or

                                       8

<PAGE>

         (iv) the occurrence of any event if, immediately following such event,
         at least 50% of the members of the board of directors of the
         Association do not belong to any of the following groups:

                           (A) individuals who were members of the Board of the
                  Association on the date of this Agreement; or

                           (B) individuals who first became members of the Board
                  of the Association after the date of this Agreement either:

                                            (1) upon election to serve as a
                           member of the Board to serve as a member of the board
                           of directors of the Board, but only if nominated for
                           election by affirmative vote of three-quarters of the
                           members of the board of directors of the Board, or of
                           a nominating committee thereof , in office at the
                           time of such first nomination;

                           provided, however, that such individual's election or
                  nomination did not result from an actual or threatened
                  election contest (within the meaning of Rule 14a-11 of
                  Regulation 14A promulgated under the Exchange Act) or other
                  actual or threatened solicitation of proxies or consents
                  (within the meaning of Rule 14a-11 of Regulation 14a-11 of
                  Regulation 14A promulgated under the Exchange Act) other than
                  by or on behalf of the Board of the Association;

         In no event, however, shall a Change in Control be deemed to have
occurred as a result of any acquisition of securities or assets of the
Association by any employee benefit plan maintained by the Association. For
purposes of this section 11, the term "person" shall have the meaning assigned
to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.

         (b) In the event of Change in Control, the Executive shall be entitled
         to the payments and benefits contemplated by section 9(b) in the event
         of his termination of employment with the Association under any of the
         circumstances described in section 9(a) of this Agreement or under any
         of the following circumstances:

                           (i) resignation, voluntary or otherwise, by the
                  Executive at any time during the Employment Period and within
                  ninety (90) days following his demotion, loss of title, office
                  or significant authority or responsibility, or following any
                  reduction in any element of his package of compensation and
                  benefits;

                           (ii) resignation, voluntary or otherwise, by the
                  Executive at anytime during the Employment Period and within
                  ninety (90) days following relocation of his principal place
                  of employment (Wake Forest, North Carolina) or any change in
                  working conditions at such principal place of employment which
                  is embarrassing, derogatory or otherwise materially adverse to
                  the Executive;
                                       9
<PAGE>

                           (iii) resignation, voluntary or otherwise, by the
                  Executive at any time during the Employment Period following
                  the failure of any successor to the Association in the Change
                  in Control to include the Executive in any compensation or
                  benefit program maintained by it or covering any of its
                  executive officers, unless the Executive is already covered by
                  a substantially similar plan of the Association which is at
                  least as favorable to him; or

                           (iv) resignation, voluntary or otherwise, for any
                  reason whatsoever following the expiration of a transition
                  period of thirty days beginning on the effective date of the
                  Change in Control (or such longer period, not to exceed ninety
                  (90) days beginning on the effective date of the Change in
                  Control, as the Association or its successor may reasonably
                  request) to facilitate a transfer of management
                  responsibilities.

                  SECTION 12.       COVENANT NOT TO COMPETE.
                                    ------------------------

The Executive hereby covenants and agrees that, in the event of his termination
of employment with the Association prior to the expiration of the Employment
Period, for a period of one (1) year following the date of his termination of
employment with the Association (or, if less, the remaining unexpired Employment
Period), he shall not, without the written consent of the Association, become an
officer, employee, consultant, director or trustee with executory, managerial,
supervisory or strategic authority or influence at any savings bank, savings and
loan association, savings and loan holding company, bank or bank holding
company, or any direct or indirect subsidiary of affiliate of any such entity,
that entails working within 50 miles of the headquarters of the Association on
the date of the Executive's termination of employment; provided, however, that
this section 12 shall not apply if the Executive's employment is terminated for
the reasons set forth in section 9(a) or section 11; and provided, further, that
if the Executive's employment shall be terminated on account of disability as
provided in section 10(d) of this Agreement, this section 12 shall not prevent
the Executive from accepting any position or performing any services if (a) he
first offers, by written notice, to accept a similar position with, or perform
similar services for, the Association on substantially the same terms and
conditions and (b) the Association declines to accept such offer within ten (10)
days after such notice is given.

SECTION 13.       CONFIDENTIALITY.
                   ---------------

Unless he obtains the prior written consent of the Association, the Executive
shall keep confidential and shall refrain from using for the benefit of himself,
or any person or entity other than the Association or any entity which is an
affiliate of the Association, any material document or information obtained from
the Association, or from its parent or subsidiaries, in the course of his
employment with any of them concerning their properties, operations, or business
(unless such document or information is readily ascertainable from public or
published information or trade sources or has otherwise been made available to
the public through no fault of his own) until the same ceases to be material (or
becomes so ascertainable or available); provided, however, that nothing in this
section 13 shall prevent the Executive, with or without the

                                       10
<PAGE>

Association's consent, from participating in or disclosing documents or
information in connection with any judicial or administrative investigation,
inquiry or proceeding to the extent that such participation or disclosure is
required under applicable law.

                  SECTION 14.       SOLICITATION
                                    ------------

         The Executive hereby covenants and agrees that, for a period of one (1)
year following his termination of employment with the Association, he shall not
without the written consent of the Association, either directly or indirectly:

         (a) solicit, offer employment to, or take any other action intended, or
         that a reasonable person acting in like circumstances would expect, to
         have the effect of causing any officer or employee of the Association
         or any affiliate, as of the date of this Agreement, of either of them
         to terminate her or his employment and accept employment or become
         affiliated with, or provide services for compensation in any capacity
         whatsoever to, any savings bank, savings and loan association, bank,
         bank holding company, savings and loan holding company, or other
         institution engaged in the business of accepting deposits and making
         loans, doing business with 50 miles of the headquarters of the
         Association or any affiliate, as of the date of this Agreement, of
         either of them;

         (b) provide any information, advice or recommendation with respect to
         any such officer or employee of any savings bank, savings and loan
         association, bank, bank holding company, savings and loan holding
         company, or other institution engaged in the business of accepting
         deposits and making loans, doing business within 50 miles of the
         headquarters of the Association or any affiliate, as of the date of
         this Agreement, of either of them that is intended, or that a
         reasonable person acting in like circumstances would expect, to have
         the effect of causing any officer or employee of the Association or any
         affiliate, as of the date of this Agreement, of either of them to
         terminate her or his employment and accept employment or become
         affiliated with, or provide services for compensation in any capacity
         whatsoever to, any savings bank, savings and loan association, bank,
         bank holding company, savings and loan holding company, or other
         institution engaged in the business of accepting deposits and making
         loans, doing business within 50 miles of the headquarters of the
         Association or any affiliate, as of the date of this Agreement, of
         either of them;

         (c) solicit, provide any information, advice or recommendation or take
         any other action intended, or that a reasonable person acting in like
         circumstances would expect to have the effect of causing any customer
         of the Association to terminate an existing business or commercial
         relationship with the Association.

                                       11

<PAGE>

         SECTION 15.       NO EFFECT ON EMPLOYEE BENEFIT PLANS OR PROGRAMS.
                           ------------------------------------------------

         The termination of the Executive's employment during the term of this
Agreement or thereafter, whether by the Association or by the Executive, shall
have no effect on the rights and obligations of the parties hereto under the
Association's qualified or non-qualified retirement, pension, savings, thrift,
profit-sharing or stock bonus plans, group life, health (including
hospitalization, medical and major medical), dental, accident and long term
disability insurance plans or such other employee benefit plans or programs, or
compensation plans or programs, as may be maintained by, or cover employees of
the Association from time to time.

         SECTION 16.       SUCCESSORS AND ASSIGNS.
                           -----------------------

         This Agreement will inure to the benefit of and be binding upon the
Executive, his legal representatives and testate or intestate distributees, and
the Association and its successors and assigns, including any successor by
merger or consolidation or any other person or firm or corporation to which all
or substantially all of the assets and business of the Association may be sold
or otherwise transferred. Failure of the Association to obtain from any
successor its express written assumption of the Association's obligations
hereunder at least sixty (60) days in advance of the scheduled effective date of
any such succession shall be deemed a material breach of this Agreement unless
cured within ten (10) days after notice thereof by the Executive to the
Association.

         SECTION 17.       NOTICES.
                            -------

         Any communication required or permitted to be given under this
Agreement, including any notice, direction, designation, consent, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally, or five (5) days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to such party at the address listed below or at such other
address as one such party may by written notice specify to the other party:

         If to the Executive:

                  Billy B. Faulkner
                  120 Hill Place
                  Louisburg, North Carolina  27549

         If to the Association:

                  Wake Forest Federal Savings and Loan Association
                  302 S. Brooks Street, P.O. Box 1167
                  Wake Forest, North Carolina, 27588

                  Attention:  Chairman of the Board
                                 ------------------

                                       12

<PAGE>

         SECTION 18.       INDEMNIFICATION FOR ATTORNEYS' FEES.
                           ------------------------------------

         The Association shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees, incurred by him in connection
with or arising out of any action, suit or proceeding in which he may be
involved, as a result of his efforts, in good faith, to defend or enforce the
terms of this Agreement; provided, however, that the Executive shall have
substantially prevailed on the merits pursuant to a judgment, decree or order of
a court of competent jurisdiction or of an arbitrator in an arbitration
proceeding, or in a settlement. For purposes of this Agreement, any settlement
agreement which provides for payment of any amounts in settlement of the
Association's obligations hereunder shall be conclusive evidence of the
Executive's entitlement to indemnification hereunder, and any such
indemnification payments shall be in addition to amounts payable pursuant to
such settlement agreement, unless such settlement agreement expressly provides
otherwise.

         SECTION 19.       SEVERABILITY.
                            ------------

         A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.

         SECTION 20.       WAIVER.
                           -------

         Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition. A waiver of any provision of this Agreement must be made
in writing, designated as a waiver, and signed by the party against whom its
enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.

         SECTION 21.       COUNTERPARTS.
                           -------------

         This Agreement may be executed in two (2) or more counterparts, each of
which shall be deemed an original, and all of which shall constitute one and the
same Agreement.

         SECTION 22.       GOVERNING LAW.
                           --------------

         This Agreement shall be governed by and construed and enforced in
accordance with the federal laws of the United States and, to the extent that
federal law is inapplicable, in accordance with the laws of the State of North
Carolina applicable to contracts entered into and to be performed entirely
within the State of North Carolina.

         SECTION 23.       HEADINGS AND CONSTRUCTION.
                           --------------------------

         The headings of sections in this Agreement are for convenience of
reference only and are not intended to qualify the meaning of any section. Any
reference to a section number shall refer to a section of this Agreement, unless
otherwise stated.

                                       13
<PAGE>

         SECTION 24.       ENTIRE AGREEMENT; MODIFICATIONS.
                           --------------------------------

         This instrument contains the entire agreement of the parties relating
to the subject matter hereof, and supersedes in its entirety any and all prior
agreements, understandings or representations relating to the subject matter
hereof. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.

         SECTION 25.       REQUIRED REGULATORY PROVISIONS.
                           -------------------------------

         The following provisions are included for the purposes of complying
with various laws, rules, and regulations applicable to the Association:

         (a) Notwithstanding anything herein contained to the contrary, in no
         event shall the aggregate amount of compensation payable to the
         Executive under section 9(b) hereof (exclusive of amounts described in
         Section 9(b)(i), (vi) and (vii)) exceed three times the Executive's
         average annual compensation for the last five consecutive calendar
         years to end prior to his termination of employment with the
         Association (or for his entire period of employment with the
         Association if less than five calendar years). The compensation payable
         to the Executive hereunder shall be further reduced (but not below
         zero) if such reduction would avoid the assessment of excise taxes on
         excess parachute payments (within the meaning of section 280G of the
         Code). "Annual compensation" is defined to include any cash bonuses and
         the value of stock awards vested during a calendar year under any
         restricted stock plan maintained by, or covering employees of the
         Association, which are reportable as taxable wages.

         (b) Notwithstanding anything herein contained to the contrary, any
         payments to the Executive by the Association, whether pursuant to this
         Agreement or otherwise, are subject to and conditioned upon their
         compliance with section 18(k) of the Federal Deposit Insurance Act
         ("FDI Act"), 12 U.S.C. 1828(k), and any regulations promulgated
         thereunder.

         (c) Notwithstanding anything herein contained to the contrary, if the
         Executive is suspended from office and/or temporarily prohibited from
         participating in the conduct of the affairs of the Association pursuant
         to a notice served under section 8(e)(3) or 8(g)(1) of the FDI Act, 12
         U.S.C. 1818(e)(3) or 1818(g)(1), the Association's obligations under
         this Agreement shall be suspended as of the date of service of such
         notice, unless stayed by appropriate proceedings. If the charges in
         such notice are dismissed, the Association, in its discretion may (i)
         pay to the Executive all or part of the compensation withheld while the
         Association's obligations hereunder were suspended and (ii) reinstate,
         in whole or in part, any of the obligations which were suspended.

                                       14

<PAGE>

         (d) Notwithstanding anything herein contained to the contrary, if the
         Executive is removed and/or permanently prohibited from participating
         in the conduct of the Association's affairs by an order issued under
         section 8(e)(4) or 8(g)(1) of the FDI Act, 12 U.S.C. 1818(e)(4) or
         (g)(1), all prospective obligations of the Association under this
         Agreement shall terminate as of the effective date of the order, but
         vested rights and obligations of the Association and the Executive
         shall not be affected.

         (e) Notwithstanding anything herein contained to the contrary, if the
         Association is in default (within the meaning of section 3(x)(1) of the
         DI Act, 12 U.S.C. 1813(x)(1), all prospective obligations of the
         Association under this Agreement shall terminate as of the date of
         default, but vested rights and obligations of the Association and the
         Executive shall not be affected.

         (f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Association hereunder shall be terminated, except
to the extent that a continuation of this Agreement is necessary for the
continued operation of the Association: (i) by the Director of the Office of
Thrift Supervision ("OTS") or his designee or the Federal Deposit Insurance
Corporation ("FDIC"), at the time the FDIC enters into an agreement to provide
assistance to or on behalf of the Association under the authority contained in
section 13(c) of the FDI Act, 12 U.S.C. 1823(c); (ii) by the Director of the OTS
or his designee at the time such Director or designee approves a supervisory
merger to resolve problems related to the operation of the Association or when
the Association is determined by such Director to be in an unsafe or unsound
condition. The vested rights and obligations of the parties shall not be
affected.

If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.

         SECTION 26.       EFFECTIVE DATE.
                           ---------------

         This Agreement shall take effect April 3, 2001.

                                       15

<PAGE>

                  IN WITNESS WHEREOF, the Association has caused this Agreement
to be executed and the Executive has hereunto set his hand, all as of the day
and year first above written.

                                                _______________________________
                                                        BILLY B. FAULKNER

ATTEST:                                          WAKE FOREST FEDERAL
                                                   SAVINGS AND LOAN ASSOCIATION

By_________________________                      By_____________________________
       Secretary                                   Name:  Howard R. Brown
                                                   Title: Chairman of the Board

[Seal]

                                       16
<PAGE>

STATE OF NORTH CAROLINA   )
                        : ss.:
COUNTY OF WAKE            )

                  On this _____ day of ________________, 2001, before me
personally came Billy B. Faulkner, to me known, and known to me to be the
individual described in the foregoing instrument, who, being by me duly sworn,
did depose and say that he resides at the address set forth is said instrument
and that he signed his name to the foregoing instrument.

                                                 ------------------------------
                                                           Notary Public

STATE OF NORTH CAROLINA    )
                          :ss.:
COUNTY OF WAKE             )

                  On this ______ day of ___________________, 2001, before me
personally came Howard L. Brown, to me known, who, being by me duly sworn, did
depose and say that he resides at 900 Averette Road, Wake Forest, North
Carolina, 27587, that he is Chairman of the Board of Directors of WAKE FOREST
FEDERAL SAVINGS & LOAN ASSOCIATION, the savings institution described in and
which executed the foregoing instrument; that he knows the seal of said savings
institution; that the seal affixed to said instrument is such seal; that it was
so affixed by order of the Board of Directors of said savings institution, and
that he signed his name thereto by like order.

                                         ------------------------------
                                                   Notary Public

                                       17

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