Indenture - HealthSouth Corp. and PNC Bank NA


                                                                  EXECUTION COPY



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                             HEALTHSOUTH CORPORATION

                                       and

                   PNC BANK, NATIONAL ASSOCIATION, as Trustee

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

                                    INDENTURE

                            Dated as of June 22, 1998

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



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                             CROSS REFERENCE SHEET*

                                     Between

         Provisions  of Trust  Indenture  Act (as defined  herein) and Indenture
dated as of June 22, 1998 between HEALTHSOUTH Corporation and PNC Bank, National
Association, Trustee:

SECTION OF THE ACT                                          SECTION OF INDENTURE

310(a)(1) and (2)............................................................6.9
310(a)(3) and (4)...................................................Inapplicable
310(b)..............................................6.8 and 6.10(a), (b) and (d)
310(c)..............................................................Inapplicable
311(a)......................................................................6.14
311(b)......................................................................6.14
311(c)..............................................................Inapplicable
312(a)...............................................................4.1 and 4.2
312(b).......................................................................4.2
312(c).......................................................................4.2
313(a).......................................................................4.3
313(b)(1)...........................................................Inapplicable
313(b)(2)....................................................................4.3
313(c)................................................4.3, 5.11, 6.10, 6.11, 8.2
                                                                        and 12.2
313(d).......................................................................4.3
314(a)...............................................................3.5 and 4.2
314(b)..............................................................Inapplicable
314(c)(1) and (2)...........................................................11.5
314(c)(3)...........................................................Inapplicable
314(d)..............................................................Inapplicable
314(e)......................................................................11.5
314(f)..............................................................Inapplicable
315(a), (c) and (d)..........................................................6.1
315(b)......................................................................5.11
315(e)......................................................................5.12
316(a)(1)...........................................................5.9 and 5.10
316(a)(2)...........................................................Not required
316(a) (last sentence).......................................................7.4
316(b).......................................................................5.7
317(a).......................................................................5.2
317(b)............................................................3.4(a) and (b)
318(a)......................................................................11.7


*This Cross Reference Sheet is not part of the Indenture.







                                TABLE OF CONTENTS
                                -----------------

                                                                            Page
                                                                            ----

ARTICLE 1           DEFINITIONS ..............................................1
     SECTION 1.1    Certain Terms Defined ....................................1
     "Affiliate" .............................................................2
     "Authenticating Agent" ..................................................2
     "Authorized Newspaper" ..................................................2
     "Board of Directors" ....................................................2
     "Board Resolution" ......................................................2
     "Business Day" ..........................................................2
     "Capital Stock" .........................................................3
     "Commission" ............................................................3
     "Common Equity" .........................................................3
     "Company" ...............................................................3
     "Company Order" .........................................................3
     "Consolidated Tangible Assets" ..........................................3
     "Corporate Trust Office" ................................................3
     "Coupon" ................................................................4
     "Covenant Defeasance" ...................................................4
     "Depositary" ............................................................4
     "Dollar" or "$" .........................................................4
     "ECU" ...................................................................4
     "Event of Default" ......................................................4
     "Exchange Act" ..........................................................4
     "Fair Value" ............................................................4
     "Foreign Currency" ......................................................4
     "Holder," "Holder of Securities," "Securityholder" ......................4
     "Indenture" .............................................................4
     "Indenture" .............................................................5
     "IRS" ...................................................................5
     "Judgment Currency" .....................................................5
     "Maturity" ..............................................................5
     "Non-U.S. Person" .......................................................5
     "Officer's Certificate" .................................................5
     "144A Global Security" ..................................................5
     "Opinion of Counsel" ....................................................5
     "Original Issue Date" ...................................................5
     "Original Issue Discount Security" ......................................5
     "Outstanding" ...........................................................6
     "Paying Agent" ..........................................................6
     "Periodic Offering" .....................................................6
     "Person" ................................................................7
     "PORTAL Market" .........................................................7
     "Predecessor Security" ..................................................7
     "principal" .............................................................7
     "QIB" or "Qualified Institutional Buyer" ................................7
     "Regular Record Date" ...................................................7
     "Registered Global Security" ............................................7
     "Registered Security" ...................................................7
     "Regulation S" ..........................................................7
     "Regulation S Global Security" ..........................................7
     "Required Currency" .....................................................7
     "Responsible Officer" ...................................................7
     "Restricted Security" ...................................................8


                                       i





     "Rule 144" ..............................................................8
     "Rule 144A" .............................................................8
     "Rule 144K" .............................................................8
     "Securities Act" ........................................................8
     "Significant Subsidiary" ................................................8
     "Special Record Date" ...................................................8
     "Stated Maturity" .......................................................8
     "Subsidiary" ............................................................9
     "Transfer Restriction Termination Date" .................................9
     "Trustee" ...............................................................9
     "Unregistered Security" .................................................9
     "U.S. Government Obligations" ...........................................9
     "Voting Stock" ......................................................... 9
     "Yield to Maturity" .................................................... 9

ARTICLE 2         SECURITIES ................................................ 9
     SECTION 2.1  Forms Generally ...........................................10
     SECTION 2.2  Form of Trustee's Certificate of Authentication ...........10
     SECTION 2.3  Amount Unlimited; Issuable in Series ......................11
     SECTION 2.4  Authentication and Delivery of Securities .................14
     SECTION 2.5  Execution of Securities ...................................17
     SECTION 2.6  Certificate of Authentication .............................18
     SECTION 2.7  Denomination and Date of Securities; Payments of Interest..18
     SECTION 2.8  Registration, Transfer and Exchange .......................20
     SECTION 2.9  Mutilated, Defaced, Destroyed, Lost and Stolen Securities .27
     SECTION 2.10  Cancellation of Securities; Destruction Thereof ..........28
     SECTION 2.11  Temporary Securities .....................................28

ARTICLE 3         COVENANTS OF THE COMPANY ..................................29
     SECTION 3.1  Payment of Principal and Interest .........................29
     SECTION 3.2  Offices for Payments, Etc .................................30
     SECTION 3.3  Appointment to Fill a Vacancy in Office of Trustee ........31
     SECTION 3.4  Paying Agents .............................................31
     SECTION 3.5  Compliance Certificates ...................................32
     SECTION 3.6  Corporate Existence .......................................33
     SECTION 3.7  Maintenance of Properties .................................33
     SECTION 3.8  Payment of Taxes and Other Claims .........................33
     SECTION 3.9  Luxembourg Publications ...................................34
     SECTION 3.10 Usury Laws ................................................34
                                                                             
ARTICLE 4         SECURITYHOLDER LISTS AND REPORTS BY THE
                  COMPANY AND THE TRUSTEE
     SECTION 4.1  Company to Furnish Trustee Information                       
                  as to Names and Addresses of Securityholders ..............34
     SECTION 4.2  Preservation of Information; Communications to Holders ....35
     SECTION 4.3  Reports by Trustee ........................................35
     SECTION 4.4  Reports by Company ........................................35
     



                                       ii




ARTICLE 5         REMEDIES OF THE TRUSTEE AN
                  SECURITYHOLDERS ON EVENT OF DEFAULT
     SECTION 5.1  Event of Default Defined, Acceleration                       
                  of Maturity; Waiver of Default ............................36
     SECTION 5.2  Acceleration of Maturity; Rescission and Annulment ........38
     SECTION 5.3  Collection of Indebtedness by Trustee;                   
                  Trustee May Prove Debt ....................................40
     SECTION 5.5  Trustee May Enforce Claims Without                       
                  Possession of Securities ..................................42
     SECTION 5.6  Application of Proceeds ...................................42
     SECTION 5.7  Suits for Enforcement .....................................44
     SECTION 5.8  Limitations on Suits by Security Holders ..................44
     SECTION 5.9  Unconditional Right of Securityholders
                  to Institute Certain Suits ................................45
     SECTION 5.10 Restoration of Rights on Abandonment of
                  Proceedings ...............................................45
     SECTION 5.11 Powers and Remedies Cumulative; Delay
                  or Omission Not Waiver of Default .........................45
     SECTION 5.12 Delay or Omission Not Waiver ..............................45
     SECTION 5.13 Control by Holders of Securities ..........................46
     SECTION 5.14 Waiver of Past Defaults ...................................46
     SECTION 5.15 Trustee to Give Notice of Default, But
                  May Withhold in Certain Circumstances .....................47
     SECTION 5.16 Right of Court to Require Filing of
                  Undertaking to Pay Costs ..................................47
     SECTION 5.17 Waiver of Stay or Extension Laws ..........................48

ARTICLE 6         CONCERNING THE TRUSTEE ....................................48
     SECTION 6.1  Duties and Responsibilities of the
                  Trustee; During Default; Prior to
                  Default ...................................................48
     SECTION 6.2  Certain Rights of the Trustee .............................50
     SECTION 6.3  Trustee Not Responsible for Recitals,
                  Disposition of Securities or
                  Application of Proceeds Thereof ...........................51
     SECTION 6.4  Trustee and Agents May Hold Securities
                  or Coupons; Collections, Etc. .............................51
     SECTION 6.5  Moneys Held by Trustee ....................................51
     SECTION 6.6  Compensation and Indemnification of
                  Trustee and Its Prior Claim ...............................52
     SECTION 6.7  Right of Trustee to Rely on Officer's 
                  Certificate, Etc .... .....................................52
     SECTION 6.8  Indentures Not Creating Potential
                  Conflicting Interests for the Trustee .....................53
     SECTION 6.9  Qualification of Trustee: Conflicting Interests ...........53
     SECTION 6.10 Persons Eligible for Appointment as Trustee ...............53
     SECTION 6.11 Resignation and Removal; Appointment of
                  Successor Trustee . .......................................53
     SECTION 6.12 Acceptance of Appointment by Successor Trustee ............55
     SECTION 6.13 Merger, Conversion, Consolidation or
                  Succession to Business of Trustee .........................57


                                      iii



     SECTION 6.14 Preferential Collection of Claims
                  Against the Company .......................................57
     SECTION 6.15 Appointment of Authenticating Agent .......................57
                                                                               
ARTICLE 7         CONCERNING THE SECURITYHOLDERS ............................59
     SECTION 7.1  Evidence of Action Taken by
                  Securityholders ...........................................59
     SECTION 7.2  Proof of Execution of Instruments and
                  of Holding of Securities ..................................60
     SECTION 7.3  Holders to be Treated as Owners ...........................60
     SECTION 7.4  Securities Owned by Company Deemed Not Outstanding ........60
     SECTION 7.5  Right of Revocation of Action Taken .......................61
                                                                               
ARTICLE 8.        SUPPLEMENTAL INDENTURES ...................................62
     SECTION 8.1  Supplemental Indentures Without Consent
                  of Securityholders ........................................62
     SECTION 8.2  Supplemental Indentures With Consent of Securityholders ...63
     SECTION 8.4  Documents to be Given to Trustee ..........................65
     SECTION 8.5  Notation on Securities in Respect of
                  Supplemental Indentures ...................................66
                                                                               
ARTICLE 9         CONSOLIDATION, MERGER, SALE OR CONVEYANCE
     SECTION 9.1  Company May Consolidate, Etc ..............................66
     SECTION 9.2  Successor Entity Substituted ..............................67
     SECTION 9.3  Opinion of Counsel To Be Given Trustee ....................67
                                                                               
ARTICLE 10        SATISFACTION AND DISCHARGE ................................67
     SECTION 10.1  Satisfaction and Discharge of Indenture ..................67
     SECTION 10.2  Application by Trustee of Funds
                   Deposited for Payment of Securities ......................72
     SECTION 10.3  Repayment of Moneys Held by Paying Agent .................72
     SECTION 10.4  Return of Unclaimed Moneys Held by
                   Trustee and Paying Agent .................................72
     SECTION 10.5  Indemnity for U.S. Government Obligations ................73
                                                                               
ARTICLE 11         MISCELLANEOUS PROVISIONS .................................73
     SECTION 11.1  Incorporators, Stockholders, Officers
                   and Directors of Company Exempt from
                   Individual Liability .....................................73
     SECTION 11.2  Provisions of Indenture for the Sole
                   Benefit of Parties and Holders of
                   Securities and Coupons ...................................73
     SECTION 11.3  Successors and Assigns of Company Bound by Indenture .....73
     SECTION 11.4  Notices and Demands on Company, Trustee
                   and Holders of Securities and Coupons ....................74
     SECTION 11.5  Officer's Certificates and Opinions of
                   Counsel; Statements to be Contained
                   Therein ..................................................74
     SECTION 11.6  Payments Due on Saturdays, Sundays and Holidays ..........76


                                       iv




     SECTION 11.7  Conflict of Any Provision of Indenture
                   with Trust Indenture Act .................................76
     SECTION 11.8  New York Law to Govern ...................................76
     SECTION 11.9  Counterparts .............................................76
     SECTION 11.10 Effect of Headings .......................................76
     SECTION 11.11 Securities in a Foreign Currency or in ECU ...............76
     SECTION 11.12 Judgment Currency ........................................77
                                                                               
ARTICLE 12         REDEMPTION OF SECURITIES SINKING FUNDS ...................78
     SECTION 12.1  Applicability of Article .................................78
     SECTION 12.2  Notice of Redemption; Partial Redemptions ................78
     SECTION 12.3  Payment of Securities Called for Redemption ..............80
     SECTION 12.4  Exclusion of Certain Securities from
                   Eligibility for Selection for Redemption .................81
     SECTION 12.5  Mandatory and Optional Sinking Funds .....................81
     


                                       v





     THIS  INDENTURE,  dated as of June __,  1998,  by and  between  HEALTHSOUTH
CORPORATION,  a Delaware  corporation  (the "Company"),  and PNC BANK,  NATIONAL
ASSOCIATION, a national banking association, as trustee (the "Trustee"),


                              W I T N E S S E T H:

     WHEREAS, the Company has duly authorized the issuance,  sale, execution and
delivery,  from  time to time,  of its  unsecured  evidences  of  unsubordinated
indebtedness (hereinafter referred to as the "Securities"),  without limit as to
principal amount,  issuable in one or more series,  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 issued,  authenticated  and
delivered, the Company has duly authorized the execution of this Indenture; and

     WHEREAS,  all acts  and  things  necessary  to make  the  Securities,  when
executed by the Company and  authenticated  and  delivered  by the Trustee as in
this  Indenture  provided,  the  valid,  binding  and legal  obligations  of the
Company,  and to  constitute  this  Indenture a valid  indenture  and  agreement
according to its terms, have been done and performed,  and the execution of this
Indenture and the issuance hereunder of the Securities have in all respects been
duly authorized; and

     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 and of the coupons, if any, appertaining thereto as follows:

                                    ARTICLE 1

                                   DEFINITIONS

SECTION 1.1 Certain Terms Defined

     The following terms (except as otherwise  expressly  provided or unless the
context  otherwise  clearly  requires) for all purposes of this Indenture and of
any indenture  supplemental  hereto shall have the respective meanings specified
in this Section.  All other terms used in this Indenture that are defined in the
Trust  Indenture Act of 1939,  as amended (the "Trust  Indenture  Act"),  or the
definitions of which in the Securities Act of 1933, as amended (the  "Securities
Act"),  are referred to in the Trust  Indenture  Act,  including  terms  defined
therein by reference to the Securities Act (except as herein


                                       1





otherwise  expressly provided or unless the context otherwise  requires),  shall
have the meaning  assigned to such terms in the Trust  Indenture  Act and in the
Securities Act as in effect from time to time. All accounting  terms used herein
and not  expressly  defined  shall have the  meanings  assigned to such terms in
accordance  with  generally  accepted  accounting   principles,   and  the  term
"generally accepted accounting  principles" means such accounting  principles as
are generally  accepted at the time of any  computation  unless a different time
shall be specified  with respect to such series of Securities as provided for in
Section 2.3. The words  "herein,"  "hereof" and  "hereunder"  and other words of
similar  import  refer to this  Indenture  as a whole and not to any  particular
Article,  Section or other  subdivision.  The terms defined in this Article have
the meanings  assigned to them in this Article and include the plural as well as
the singular.

     "Affiliate"  has the same  meaning  as given to that term in Rule 405 under
the Securities Act or any successor provision.

     "Authenticating Agent" shall have the meaning set forth in Section 6.15.

     "Authorized Newspaper" means a newspaper (which, in the case of The City of
New York, will, if practicable, be The Wall Street Journal (Eastern Edition), in
the case of the United  Kingdom  of Great  Britain  and  Northern  Ireland  (the
"United Kingdom"), will, if practicable, be The Financial Times (London Edition)
and,  in the case of the Grand  Duchy of  Luxembourg  ("Luxembourg"),  will,  if
practicable,  be the  Luxemburger  Wort)  published  in an  official  or  common
language of the county of publication  customarily published at least once a day
for at least five days in each calendar week and of general  circulation  in The
City of New York, the United Kingdom or Luxembourg,  as applicable.  If it shall
be  impractical  in the  opinion of the Trustee to make any  publication  of any
notice  required  hereby in an Authorized  Newspaper,  any  publication or other
notice in lieu  thereof  which is made or given with the approval of the Trustee
shall constitute a sufficient publication of such notice.

     "Board of Directors"  means either the Board of Directors of the Company or
any committee of such Board duly authorized to act on its behalf.

     "Board  Resolution" means a copy of one or more  resolutions,  certified by
the secretary or an assistant secretary of the Company to have been duly adopted
or consented  to by the Board of  Directors  and to be in full force and effect,
and delivered to the Trustee.

     "Business  Day" means,  with respect to any Security,  a day other than any
day on which banking  institutions in the city (or in any of the cities, if more
than one) in which amounts are payable, as specified in the form of


                                       2





such Security, are authorized or required by any applicable law or regulation to
be closed.

     "Capital Stock" of any Person means any and all shares, rights to purchase,
warrants or options  (whether or not currently  exercisable);  participation  or
other equivalents of or interests in (however designated) the equity (including,
without  limitation,  common stock,  preferred  stock and  partnership and joint
venture  interests)  of such  Person  (excluding  any debt  securities  that are
convertible into, or exchangeable for, such equity).

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

     "Common  Equity" of any Person means all Capital  Stock of such Person that
is generally entitled to (a) vote in the election of directors of such Person or
(b) if such Person is not a  corporation,  vote or otherwise  participate in the
selection of the governing body, partners,  managers or others that will control
the management and policies of such Person.

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

     "Company Order" means a written statement,  request or order of the Company
signed in its name by the chairman of the Board of Directors, the president, any
vice president or the treasurer of the Company.

     "Consolidated Tangible Assets" of any Person as of any date means the total
assets of such Person and its  Subsidiaries  (excluding any assets that would be
classified as "intangible assets" under generally accepted accounting principles
("GAAP")) on a consolidated basis at such date, as determined in accordance with
GAAP,  less all  write-ups  subsequent  to the date of initial  issuance  of the
Securities  in the book  value of any asset  owned by such  Person or any of its
Subsidiaries.

     "Corporate  Trust  Office"  means the  office of the  Trustee  at which the
corporate  trust  business of the Trustee  shall,  at any  particular  time,  be
principally  administered,  which  office is, as of the date of this  Indenture,
located at 500 West Jefferson Street, Louisville, KY 40202, Attention: Corporate
Trust Administration.


                                       3





     "Coupon"  means  any  interest  coupon   appertaining  to  an  Unregistered
Security.

     "Covenant Defeasance" shall have the meaning set forth in Section 10.1(C).

     "Defaulted Interest" has the meaning specified in Section 2.7.

     "Depositary"  means,  with respect to the Securities of any series issuable
or issued in the form of one or more Registered  Global  Securities,  the Person
designated  as  Depositary  by the  Company  pursuant  to  Section  2.3  until a
successor   Depositary  shall  have  become  such  pursuant  to  the  applicable
provisions of this Indenture,  and thereafter "Depositary" shall mean or include
each Person who is then a Depositary hereunder, and if at any time there is more
than one such Person, "Depositary" as used with respect to the Securities of any
such series  shall mean the  Depositary  with respect to the  Registered  Global
Securities of that series.

     "Dollar" or "$" means the coin or currency of the United  States of America
as at the time of payment is legal  tender for the payment of public and private
debts.

     "ECU" means the European  Currency Unit as defined and revised from time to
time by the European Monetary System of the European Community.

     "Event  of  Default"  means  any event or  condition  specified  as such in
Section 5.1.

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

     "Fair  Value"  when used with  respect to any Voting  Stock  means the fair
value as determined in good faith by the Board of Directors of the Company.

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

     "Holder," "Holder of Securities,"  "Securityholder"  or other similar terms
mean (a) in the case of any Registered  Security,  the person in whose name such
Security is  registered  in the Security  Register  kept by the Company for that
purpose  in  accordance  with  the  terms  hereof,  and  (b) in the  case of any
Unregistered  Security,  the bearer of such Security, or any Coupon appertaining
thereto, as the case may be.

     "Indenture" means this instrument as originally  executed and delivered or,
if amended or supplemented as herein provided,  as so amended or supplemented or
both, and



                                       4




shall include the forms and terms of particular series of Securities established
as contemplated hereunder.

     "Indenture" means this instrument as originally  executed and delivered or,
if amended or supplemented as herein provided,  as so amended or supplemented or
both,  and shall include the forms and terms of particular  series of Securities
established as contemplated hereunder.

     "Interest  Payment  Date," means the Stated  Maturity of an  installment of
interest on such Security.

     "IRS" means the Internal Revenue Service of the United States Department of
the Treasury, or any successor entity.

     "Judgment Currency" has the meaning set forth in Section 11.12.

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

     "Non-U.S. Person" means any person that is not a "U.S. person" as such term
is defined in Rule 902 under the Securities Act.

     "Officer's  Certificate"  means a certificate signed by the chairman of the
Board of Directors,  the president or any vice president or the treasurer of the
Company and delivered to the Trustee.  Each such  certificate  shall comply with
Section 314 of the Trust  Indenture Act and include the statements  provided for
in Section 11.5.

     "144A Global Security" has the meaning set forth in Section 2.8(b)(i).

     "Opinion of Counsel"  means an opinion in writing  signed by legal  counsel
who may be an  employee  of the  Company or other  counsel  satisfactory  to the
Trustee.  Each such opinion shall comply with Section 314 of the Trust Indenture
Act and include the statements provided for in Section 11.5.

     "Original  Issue  Date" of any  Security  (or  portion  thereof)  means the
earlier of (a) the date of such  Security  or (b) the date of any  Security  (or
portion  thereof) for which such Security was issued (directly or indirectly) on
registration of transfer, exchange or substitution.

     "Original Issue Discount  Security" means any Security that provides for an
amount less than the principal amount thereof to be due and



                                       5




payable upon a declaration of acceleration of the Maturity  thereof  pursuant to
Section 5.2.

     "Outstanding" (except as otherwise provided in Section 7.4), when used with
reference to Securities,  means, subject to the provisions of Section 7.4, as of
any particular time, all Securities  authenticated  and delivered by the Trustee
under this Indenture, except

          (a) Securities theretofore canceled by the Trustee or delivered to the
     Trustee for cancellation;

          (b) Securities,  or portions thereof, for the payment or redemption of
     which  moneys or U.S.  Government  Obligations  (as provided for in Section
     10.1) in the necessary  amount shall have been  deposited in trust with the
     Trustee or with any Paying  Agent  (other  than the  Company) or shall have
     been set aside, segregated and held in trust by the Company for the Holders
     of such  Securities  (if the  Company  shall act as its own Paying  Agent),
     provided, that if such Securities,  or portions thereof, are to be redeemed
     prior to the Maturity  thereof,  notice of such redemption  shall have been
     given as herein provided,  or provisions  satisfactory to the Trustee shall
     have been made for giving such notice; and

          (c) Securities which shall have been paid or in substitution for which
     other Securities shall have been  authenticated  and delivered  pursuant to
     the terms of Section 2.9 (except  with  respect to any such  Security as to
     which proof  satisfactory to the Trustee is presented that such Security is
     held by a Person in whose hands such Security is a legal, valid and binding
     obligation of the Company).

     In  determining  whether the Holders of the requisite  principal  amount of
Outstanding  Securities  of any or all series  have given any  request,  demand,
authorization,  direction,  notice,  consent or waiver hereunder,  the principal
amount  of an  Original  Issue  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 5.2.

     "Paying  Agent"  means any  Person  authorized  by the  Company  to pay the
principal of (and  premium,  if any) or interest on any  Securities on behalf of
the Company.

     "Periodic  Offering"  means an offering of Securities of a series from time
to time, the specific terms of which Securities,  including, without limitation,
the  rate or  rates  of  interest,  if any,  thereon,  the  Stated  Maturity  or
Maturities thereof and the redemption provisions,  if any, with respect thereto,
are to be determined



                                       6




by the Company or its agents upon the issuance of such Securities.

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

     "PORTAL  Market"  means  Private  Offerings,  Resales and  Trading  through
Automatic Linkages Market.

     "Predecessor  Security" of any  particular  Security  means every  previous
Security  evidencing all or a portion of the same debt as that evidenced by such
particular  Security;  and,  for the purposes of this  definition,  any Security
authenticated  and  delivered  under Section 2.4 in exchange for or in lieu of a
mutilated,  destroyed,  lost or stolen  Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.

     "principal"  whenever used with reference to the Securities or any Security
or any  portion  thereof,  shall be deemed to  include  "and  premium,  if any,"
provided,  however,  that such  inclusion  of  premium,  if any,  shall under no
circumstances  result in the double  counting of such premium for the purpose of
any calculation required hereunder.

     "QIB" or "Qualified  Institutional  Buyer" means  "Qualified  Institutional
Buyer" as such term is defined in Rule 144A under the Securities Act.

     "Regular Record Date" for the interest payable on any Interest Payment Date
on the  Securities  of any series means the date  specified  for that purpose as
contemplated in Section 2.3.

     "Registered Global Security" means a Security evidencing all or a part of a
series of Registered  Securities,  issued to the  Depositary  for such series in
accordance  with Section 2.4, and bearing the legend  prescribed  in Section 2.4
and any other legend required by the Depositary for such series.

     "Registered  Security"  means  any  Security  registered  on  the  Security
Register of the Company.

     "Regulation  S"  means  Regulation  S  under  the  Securities  Act,  or any
successor provision.

     "Regulation S Global Security" has the meaning set forth in Section 2.8(b).

     "Required Currency" shall have the



                                       7




meaning set forth in Section 11.12 .

     "Responsible  Officer"  when used with  respect  to the  Trustee  means the
chairman of the board of directors, any vice chairman of the board of directors,
the chairman of the trust  committee,  the chairman of the executive  committee,
any vice chairman of the executive committee,  the president, any vice president
(whether or not  designated  by numbers or words added before or after the title
"Vice President"), the cashier, the secretary, the treasurer, any trust officer,
an assistant trust officer, any assistant vice president, any assistant cashier,
any  assistant  secretary,  any  assistant  treasurer,  or any other  officer or
assistant  officer of the Trustee  customarily  performing  functions similar to
those  performed  by the  persons  who at  the  time  shall  be  such  officers,
respectively,  or to whom any corporate trust matter is referred  because of his
or her knowledge of and familiarity with the particular subject.

     "Restricted Security" has the meaning set forth in Section 2.8(b).

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

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

     "Rule 144K" means Rule 144(k) under the Securities Act.

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

     "Security" or  "Securities"  (except as otherwise  provided in Section 7.4)
has the meaning stated in the first recital of this  Indenture,  or, as the case
may be,  Securities  that have  been  authenticated  and  delivered  under  this
Indenture.

     "Security  Register" and "Security  Registrar" have the respective meanings
specified in Section 2.9.

     "Significant  Subsidiary"  means a Subsidiary  of the Company  which at the
time of determination  either (i) had tangible assets which, as of the Company's
most recent  quarterly  consolidated  balance sheet,  constituted at least 5% of
Consolidated  Tangible  Assets as of such  date,  or (ii) had  revenues  for the
12-month  period  ending  on the date of the  Company's  most  recent  quarterly
consolidated  statement of income which constituted at least 5% of the Company's
total consolidated revenues for such period.

     "Special  Record Date" for the payment of any  Defaulted  Interest  means a
date fixed by the Trustee pursuant to Section 2.7.



                                       8




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

     "Subsidiary" of any Person means (a) any corporation of which Common Equity
having  ordinary  voting  power to elect a  majority  of the  directors  of such
corporation  is owned by such  Person  directly  or  through  one or more  other
Subsidiaries of such Person and (b) any entity other than a corporation in which
such Person,  directly or indirectly,  owns at least 50% of the Common Equity of
such entity and has the authority to manage such entity on a day-to-day basis.

     "Transfer Restriction Termination Date" means the earlier of the first date
on which (i) the Securities of a series (other than such Securities  acquired by
the Company or any Affiliate  thereof  since the issue date of such  Securities)
may be sold pursuant to Rule 144K (or any successor provision) and (ii) all such
Securities  have been  exchanged or sold  pursuant to an effective  registration
statement.

     "Trustee"  means the Person  identified as "Trustee" in the first paragraph
hereof  and,  subject to the  provisions  of Article 6, shall also  include  any
successor trustee.  "Trustee" shall also 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 the Securities of such series.

     "Unregistered   Security"  means  any  Security  other  than  a  Registered
Security.

     "U.S.  Government  Obligations" shall have the meaning set forth in Section
10.1(A).

     "Voting  Stock" means stock of any class or classes  having  general voting
power  under  ordinary  circumstances  to  elect  a  majority  of the  board  of
directors,  managers or trustees of the corporation in question, provided, that,
for  the  purposes   hereof,   stock  which  carries  only  the  right  to  vote
conditionally on the happening of an event shall not be considered  voting stock
whether or not such event shall have happened.

     "Yield to Maturity"  means the yield to maturity on a series of securities,
calculated  at the time of issuance of such series,  or, if  applicable,  at the
most recent  redetermination  of  interest on such  series,  and  calculated  in
accordance with accepted financial practice.



                                       9




                                    ARTICLE 2

                                   SECURITIES

SECTION 2.1 Forms Generally

     The  Securities  of each  series and the  Coupons,  if any,  to be attached
thereto  shall  be  substantially  in such  form  (not  inconsistent  with  this
Indenture)  as  shall  be  established  by or  pursuant  to  one or  more  Board
Resolutions  (as set forth in a Board  Resolution or, to the extent  established
pursuant to but not set forth in a Board  Resolution,  an Officer's  Certificate
detailing such establishment) or in one or more indentures  supplemental hereto,
in each case with such  appropriate  insertions,  omissions,  substitutions  and
other  variations  as are required or permitted by this  Indenture  and may have
imprinted   or   otherwise   reproduced   thereon  such  legend  or  legends  or
endorsements,  not inconsistent with the provisions of this Indenture, as may be
required  to  comply  with any law or with any  rules  or  regulations  pursuant
thereto,  or with any rules of any securities  exchange or to conform to general
usage,  all as may be determined by the officers  executing such  Securities and
Coupons, if any, as evidenced by their execution of such Securities and Coupons.

     The  definitive   Securities  and  Coupons,   if  any,  shall  be  printed,
lithographed  or  engraved on steel  engraved  borders or may be produced in any
other manner,  all as determined by the officers  executing such  Securities and
Coupons, if any, as evidenced by their execution of such Securities and Coupons,
if any.

SECTION 2.2  Form  of  Trustee's  Certificate  of  Authentication 

     The Trustee's  certificate of  authentication on all Securities shall be in
substantially the following form:

     "This  is  one  of  the  Securities  referred  to in  the  within-mentioned
Indenture.

                                                  PNC BANK, NATIONAL ASSOCIATION

                                                  as Trustee

                                                  By
                                                    ----------------------------
                                                          Authorized Signatory"

     If at any  time  there  shall be an  Authenticating  Agent  appointed  with
respect  to  any  series  of  Securities,  then  the  Trustee's  Certificate  of
Authentication  to be borne  by the 



                                       10




Securities of each such series shall be substantially as follows:

     "This  is  one  of  the  Securities  referred  to in  the  within-mentioned
Indenture.

                                                   [___________________________]
                                                      as Authenticating Agent

                                                   By
                                                     ---------------------------
                                                         Authorized Signatory"

SECTION 2.3 Amount Unlimited;  Issuable in Series.

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

     The  Securities  may be issued in one or more series.  With respect to each
such  series  there  shall be  established  in or  pursuant to one or more Board
Resolutions  (and to the extent  established  pursuant to but not set forth in a
Board Resolution,  in an Officer's  Certificate detailing such establishment) or
established in one or more indentures  supplemental hereto, prior to the initial
issuance of Securities of any series,

          (1) the  designation  of the  Securities  of the  series,  which shall
     distinguish  the  Securities of the series from the Securities of all other
     series, and which may be part of a series of Securities previously issued;

          (2) any limit upon the aggregate principal amount of the Securities of
     the series that 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, 2.11, 8.5 or 12.3);

          (3) if  other  than  Dollars,  the  coin  or  currency  in  which  the
     Securities of the series are  denominated  (including,  but not limited to,
     any Foreign Currency or ECU);

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

          (5) the rate or rates at which the Securities of the series shall bear
     interest,  if any, the date or dates from which such interest shall accrue,
     on which  such  interest  shall be payable  and (in the case of



                                       11




     Registered   Securities)   on  which  a  record  shall  be  taken  for  the
     determination  of Holders to whom interest is payable  and/or the method by
     which such rate or rates or date or dates shall be determined;

          (6) the place or places  where the  principal  of and any  interest on
     Securities  of the series  shall be  payable,  if other than as provided in
     Section 3.2;

          (7) the right, if any, of the Company to redeem  Securities,  in whole
     or in part, at its option and the period or periods within which, the price
     or prices at which and any terms and  conditions  upon which  Securities of
     the series may be so redeemed, pursuant to any sinking fund or otherwise;

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

          (9) if other than  denominations  of $1,000 and any integral  multiple
     thereof in the case of Registered  Securities,  or $1,000 and $5,000 in the
     case of Unregistered  Securities,  the denominations in which Securities of
     the series shall be issuable;

          (10) if other than the entire principal amount thereof, the portion of
     the  principal  amount of  Securities  of the series which shall be payable
     upon declaration of acceleration of the Maturity thereof;

          (11) if other than the coin or currency in which the Securities of the
     series  are  denominated,  the coin or  currency  in which  payment  of the
     principal of or interest on the Securities of such series shall be payable;

          (12) if the  principal of or interest on the  Securities of the series
     are to be payable, at the election of the Company or a Holder thereof, in a
     coin or currency other than that in which the  Securities are  denominated,
     the period or  periods  within  which,  and the terms and  conditions  upon
     which, such election may be made;

          (13) if the amount of payments  of  principal  of and  interest on the
     Securities of the series may be determined with reference to an index based
     on a coin or currency other than that in which the Securities of the series
     are denominated, the manner in which such



                                       12




     amounts shall be determined;

          (14)  whether  the  Securities  of the  series  will  be  issuable  as
     Registered  Securities  (and  if so,  whether  all  or a  portion  of  such
     Securities   will  be  issuable  as  Registered   Global   Securities)   or
     Unregistered  Securities (with or without  Coupons),  or any combination of
     the foregoing,  any restrictions  applicable to the offer, sale or delivery
     of Unregistered Securities or the payment of interest thereon and, if other
     than as  provided  in  Section  2.8,  the  terms  upon  which  Unregistered
     Securities of any series may be exchanged for Registered Securities of such
     series and vice versa;

          (15)  whether  and  under  what  circumstances  the  Company  will pay
     additional  amounts on the Securities of the series held by a Person who is
     not a U.S. person in respect of any tax,  assessment or governmental charge
     withheld or deducted  and, if so,  whether the Company will have the option
     to redeem the  Securities  of the series  rather  than pay such  additional
     amounts;

          (16) if the  Securities of the series are to be issuable in definitive
     form (whether upon original issue or upon exchange of a temporary  Security
     of such  series)  only  upon  receipt  of  certain  certificates  or  other
     documents or satisfaction of other  conditions,  the form and terms of such
     certificates, documents or conditions;

          (17) any  trustees,  depositaries,  authenticating  or paying  agents,
     transfer  agents or  registrars  of any other  agents  with  respect to the
     Securities of such series;

          (18) any other  events of default  or  covenants  with  respect to the
     Securities of such series;

          (19) if the  Securities  of the series are to be  convertible  into or
     exchangeable  for any  other  security,  the  terms  upon  which  any  such
     conversion or exchange may be effected; and

          (20)  any  other  terms  of  the  series  (which  terms  shall  not be
     inconsistent with the provisions of this Indenture).

     All Securities of any one series and Coupons, if any,  appertaining thereto
shall be substantially identical, except in the case of Registered Securities as
to  denomination  and except as may  otherwise be provided by or pursuant to the
Board Resolution or Officer's  Certificate  referred to above or as set forth in
any indenture  supplemental hereto. All Securities of any one series need not be
issued at the same time and may be



                                       13




     issued from time to time,  consistent with the terms of this Indenture,  if
     so  provided  by or  pursuant  to such  Board  Resolution,  such  Officer's
     Certificate or in any indenture supplemental hereto.

SECTION 2.4  Authentication  and Delivery of Securities.

     The Company may deliver  Securities of any series having  attached  thereto
appropriate  Coupons,  if  any,  executed  by the  Company  to the  Trustee  for
authentication  together with the applicable documents referred to below in this
Section  2.4,  and the Trustee  shall  thereupon  authenticate  and deliver such
Securities and Coupons,  if any, to or upon the order of the Company  (contained
in the  Company  Order  referred  to below in this  Section) or pursuant to such
procedures  acceptable to the Trustee and to such recipients as may be specified
from time to time by a Company Order.  The maturity  date,  original issue date,
interest rate and any other terms of the  Securities of such series and Coupons,
if any,  appertaining thereto shall be determined by or pursuant to such Company
Order and procedures. If provided for in such procedures, such Company Order may
authorize   authentication   and  delivery   pursuant  to  oral  or   electronic
instructions  from the  Company or its duly  authorized  agent or agents,  which
instructions, if oral, shall be promptly confirmed in writing. In authenticating
such  Securities  and  accepting  the  additional  responsibilities  under  this
Indenture  in relation  to such  Securities,  the  Trustee  shall be entitled to
receive (in the case of  subparagraphs  (2), (3) and (4) below only at or before
the time of the first  request  of the  Company to the  Trustee to  authenticate
Securities of such series) and (subject to Section 6.1) shall be fully protected
in  relying  upon,  the  following  enumerated  documents  unless and until such
documents have been superseded or revoked:

          (1) a Company Order requesting such  authentication  and setting forth
     delivery  instructions if the Securities and Coupons, if any, are not to be
     delivered to the Company,  provided  that,  with respect to Securities of a
     series  subject  to a  Periodic  Offering,  (a) such  Company  Order may be
     delivered  by the  Company  to the  Trustee  prior to the  delivery  to the
     Trustee of such Securities for authentication and delivery, (b) the Trustee
     shall authenticate and deliver Securities of such series for original issue
     from time to time,  in an  aggregate  principal  amount not  exceeding  the
     aggregate  principal  amount  established  for such  series,  pursuant to a
     Company Order or pursuant to procedures acceptable to the Trustee as may be
     specified  from time to time by a Company  Order,  (c) the maturity date or
     dates,  original issue date or dates,  interest rate or rates and any other
     terms of  Securities  of such series shall be determined by a Company Order
     or pursuant to such procedures and (d) if provided for in such  procedures,
     such Company Order may authorize  authentication  and



                                       14




     delivery  pursuant to oral or electronic  instructions  from the Company or
     its duly authorized agent or agents, which instructions,  if oral, shall be
     promptly confirmed in writing;

          (2)  any  Board  Resolution,  Officer's  Certificate  and/or  executed
     supplemental indenture referred to in Section 2.1 and 2.3 by or pursuant to
     which the  forms and terms of the  Securities  and  Coupons,  if any,  were
     established;

          (3) an Officer's Certificate setting forth the form or forms and terms
     of the Securities and Coupons,  if any,  stating that the form or forms and
     terms of the Securities and Coupons, if any, have been established pursuant
     to Sections 2.1 and 2.3 and comply with this  Indenture,  and covering such
     other matters as the Trustee may reasonably request; and

          (4) At the  option of the  Company,  either  one or more  Opinions  of
     Counsel,  or a letter addressed to the Trustee permitting it to rely on one
     or more Opinions of Counsel, substantially to the effect that:

               (a) the form or forms of the Securities and Coupons, if any, have
          been duly authorized and established in conformity with the provisions
          of this Indenture;

               (b) in the case of an  underwritten  offering,  the  terms of the
          Securities  have been duly  authorized  and  established in conformity
          with the provisions of this Indenture, and, in the case of an offering
          that is not  underwritten,  certain terms of the Securities  have been
          established pursuant to a Board Resolution,  an Officer's  Certificate
          or a supplemental  indenture in accordance  with this  Indenture,  and
          when such other terms as are to be  established  pursuant t procedures
          set forth in a Company  Order  shall have been  established,  all such
          terms will have been duly authorized by the Company and will have been
          established in conformity with the provisions of this Indenture; and

               (c) such  Securities  and Coupons,  if any,  when executed by the
          Company  and  authenticated  by the  Trustee  in  accordance  with the
          provisions of this Indenture and delivered to and duly paid for by the
          purchasers  thereof,  and subject to any conditions  specified in such
          Opinion of Counsel,  will have been duly issued under this  Indenture,
          will be entitled to the benefits of this Indenture,  and will be valid
          and binding obligations of the Company, enforceable in accordance with
          their  respective  terms except as 



                                       15




          the   enforceability   thereof  may  be  limited  by  (i)  bankruptcy,
          insolvency or similar laws affecting creditors' rights generally, (ii)
          rights  of  acceleration,  if  any,  and  (iii)  the  availability  of
          equitable  remedies may be limited by equitable  principles of general
          applicability  and such counsel need express no opinion with regard to
          the  enforceability  of Section 6.6 or of a judgment  denominated in a
          currency other than Dollars.

     In  rendering  such  opinions,  any counsel may qualify any  opinions as to
enforceability by stating that such enforceability may be limited by bankruptcy,
insolvency,  reorganization,  liquidation,  moratorium,  fraudulent transfer and
other similar laws affecting the rights and remedies of creditors and is subject
to general  principles of equity  (regardless of whether such  enforceability is
considered  in a  proceeding  in equity or at law).  Such  counsel may rely upon
opinions of other  counsel  (copies of which shall be  delivered to the Trustee)
reasonably  satisfactory  to the Trustee,  in which case the opinion shall state
that such  counsel  believes he and the Trustee  are  entitled so to rely.  Such
counsel may also state that,  insofar as such opinion  involves factual matters,
he has relied,  to the extent he deems proper,  upon certificates of officers of
the Company and its subsidiaries and certificates of public officials.

     The Trustee shall have the right to decline to authenticate and deliver any
Securities  under  this  section  if the  Trustee,  being  advised  by  counsel,
determines  that such action may not  lawfully be taken by the Company or if the
Trustee in good faith by its board of directors or board of trustees,  executive
committee or a trust  committee of directors or trustees  shall  determine  that
such action would expose the Trustee to personal  liability to existing  Holders
or would  affect  the  Trustee'  own  rights,  duties  or  immunities  under the
Securities, this Indenture or otherwise.

     If the  Company  shall  establish  pursuant  to  Section  2.3 that all or a
portion  of the  Securities  of a series  are to be issued in the form of one or
more  Registered  Global  Securities,  then the  Company  shall  execute and the
Trustee  shall,  in  accordance  with this  Section and the  Company  Order with
respect to such series,  authenticate and deliver one or more Registered  Global
Securities  that (i) shall represent and shall be denominated in an amount equal
to the aggregate  principal amount of al of the Securities of such series issued
in such form and not yet  canceled,  (ii) shall be registered in the name of the
Depositary for such  Registered  Global Security or Securities or the nominee of
such  Depositary,  (iii) shall be delivered by the Trustee to such Depositary or
delivered or held pursuant to such Depositary's instructions and (iv) shall bear
a  legend  substantially  to the  following  effect:  "Unless  and  until  it is
exchanged in whole or in part for Securities in definitive registered form, this
Security may not be transferred except as



                                       16




a whole by the  Depositary  to the nominee of the  Depositary or by a nominee of
the Depositary to the Depositary or another  nominee of the Depositary or by the
Depositary  or any such nominee to a successor  Depositary  or a nominee of such
successor Depositary."

     Each Depositary designated pursuant to Section 2.3 must, at the time of its
designation and at all times while it serves as Depositary, be a clearing agency
registered  under  the  Exchange  Act  and  any  other  applicable   statute  or
regulation.

SECTION 2.5 Execution of Securities.

     The  Securities  and each Coupon  appertaining  thereto,  if any,  shall be
signed on behalf of the Company by the chairman or vice chairman of its Board of
Directors or its president, or any executive (senior or other), a vice president
or its treasurer, under its corporate seal (except in the case of Coupons) which
may, but need not, be attested.  Such  signatures may be the manual or facsimile
signatures of the present or any future such  officers.  The seal of the Company
may be in the  form  of a  facsimile  thereof  and  may be  impressed,  affixed,
imprinted or otherwise  reproduced on the  Securities.  Typographical  and other
minor  errors  or  defects  in any  such  reproduction  of the  seal or any such
signature shall not affect the validity or  enforceability  of any Security that
has been duly authenticated and delivered by the Trustee.

     In case any  officer  of the  Company  who  shall  have  signed  any of the
Securities  or  Coupons,  if any,  shall  cease to be such  officer  before  the
Security  or Coupon so signed  (or the  Security  to which the  Coupon so signed
appertains)  shall be authenticated  and delivered by the Trustee or disposed of
by the Company,  such Security or Coupon  nevertheless may be authenticated  and
delivered or disposed of as though the person who signed such Security or Coupon
had not ceased to be such officer of the Company; and any Security or Coupon may
be signed on behalf of the Company by such persons as, at the actual date of the
execution  of such  Security  or  Coupon,  shall be the proper  officers  of the
Company,  although at the date of the execution  and delivery of this  Indenture
any such person was not such an officer.

SECTION 2.6 Certificate of Authentication.

     Only such Securities as shall bear thereon a certificate of  authentication
substantially in the form hereinbefore  recited,  executed by the Trustee by the
manual  signature of one of its  authorized  officers,  shall be entitled to the
benefits of this Indenture or be valid or obligatory for any purpose.  No Coupon
shall be  entitled  to the  benefits  of this  Indenture  or shall be valid  and
obligatory  for any  purpose  until the  certificate  of  authentication  on the
Security to which such Coupon  appertains  shall have been duly  executed by the
Trustee.  The  execution  of such  certificate  by the Trustee upon



                                       17




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.

SECTION 2.7 Denomination and Date of Securities; Payments of Interest.

     The Securities of each series shall be issuable as Registered Securities or
Unregistered Securities in denominations  established as contemplated by Section
2.3 or, with  respect to the  Registered  Securities  of any  series,  if not so
established,  in denominations of $1,000 and any integral multiple  thereof.  If
denominations  of Unregistered  Securities of any series are not so established,
such Securities  shall be issuable in  denominations  of $1,000 and $5,000.  The
Securities of each series shall be numbered, lettered or otherwise distinguished
in such manner or in  accordance  with such plan as the  officers of the Company
executing the same may determine with the approval of the Trustee,  as evidenced
by the execution and authentication thereof.

     Each  Registered  Security  shall be dated the date of its  authentication.
Each  Unregistered  Security shall be dated as provided in the Board  Resolution
referred to in Section 2.3. The  Securities of each series shall bear  interest,
if any,  from  the  date,  and such  interest  shall be  payable  on the  dates,
established as contemplated by Section 2.3.

     Interest on any Security which is payable,  and is punctually  paid or duly
provided for, on any Interest  Payment Date shall be paid to the Person in whose
name that Security (or one or more Predecessor  Securities) is registered at the
close of business on the Regular Record Date for such interest. At the option of
the  Company,  interest  on any  Security  may be paid by mailing a check to the
address  of the  Holder  thereof  as  such  address  appears  in the  Securities
Register.

     Any interest on any Security which is payable,  but is not punctually  paid
or duly provided  for, on any Interest  Payment Date (herein  called  "Defaulted
Interest")  shall  forthwith  cease to be payable to the Holder on the  relevant
Regular  Record Date by virtue of having been such  Holder,  and such  Defaulted
Interest may be paid by the Company,  at its election in each case,  as provided
in clause (1) or (2) below:

          (1) The Company may elect to make payment of any Defaulted Interest to
     the Persons in whose names the Securities (or their respective  Predecessor
     Securities)  are  registered  at the close of business on a Special  Record
     Date for the payment of such  Defaulted  Interest,  which shall be fixed in
     the  following  manner.  The Company shall notify the Trustee in writing of
     the amount of Defaulted  Interest  proposed to be paid on each Security and
     the date of



                                       18




     the proposed  payment,  and a the same time the Company  shall deposit with
     the Trustee an amount of money equal to the aggregate amount proposed to be
     paid in  respect of such  Defaulted  Interest  or shall  make  arrangements
     satisfactory  to the  Trustee  for  such  deposit  prior to the date of the
     proposed  payment,  such money when  deposited  to be held in trust for the
     benefit of the  Persons  entitled  to such  Defaulted  Interest  as in this
     clause provided.  Thereupon the Trustee shall fix a Special Record Date for
     the payment of such Defaulted Interest which shall be not more than 15 days
     and not less than 10 days prior to the date of the proposed payment and not
     less than 10 days  after the  receipt  by the  Trustee of the notice of the
     proposed  payment.  The Trustee shall  promptly  notify the Company of such
     Special  Record Date and,  in the name and at the  expense of the  Company,
     shall cause notice of the proposed  payment of such Defaulted  Interest and
     the Special Record Date therefor to be mailed, first-class postage prepaid,
     to each Holder at his address as it appears in the Security  Register,  not
     less than 10 days prior to such Special Record Date. Notice of the proposed
     payment of such  Defaulted  Interest and the Special  Record Date  therefor
     having been so mailed, such Defaulted Interest shall be paid to the Persons
     in whose names the Securities (or their respective Predecessor  Securities)
     are  registered  at the close of business on such  Special  Record Date and
     shall no longer be payable pursuant to the following claus (2).

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

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

SECTION 2.8 Registration, Transfer and Exchange.

     (a) The Company will keep at each office or agency to be maintained for the
purpose as provided in Section 3.2 for each series of  Securities  a register or
registers  (the  register  maintained  in such office and in any other office or
agency of the Company designated  pursuant to Section 3.2 being herein sometimes
collectively  referred to as the "Security  Register") in which, subject to such
reasonable  regulations  as the Company



                                       19




may prescribe,  it will provide for the registration of Registered Securities of
such series and the  registration  of transfer of Registered  Securities of such
series.  Such Security Register shall be in written form in the English language
or in any  other  form  capable  of being  converted  into  such  form  within a
reasonable  time. At all  reasonable  times such Security  Register or registers
shall be open for inspection by the Trustee.

     Upon due  presentation  for  registration  of  transfer  of any  Registered
Security  of any series at any such  office or agency to be  maintained  for the
purpose as provided in Section  3.2, the Company  shall  execute and the Trustee
shall  authenticate  and deliver in the name of the  transferee or transferees a
new Registered  Security or Registered  Securities of the same series,  maturity
date,  interest rate and original issue date in authorized  denominations  for a
like aggregate principal amount.

     Unregistered  Securities  (except  for any  temporary  global  Unregistered
Securities)  and Coupons  (except for Coupons  attached to any temporary  global
Unregistered Securities) shall be transferable by delivery.

     At the option of the Holder  thereof,  Registered  Securities of any series
(other than a  Registered  Global  Security,  except as set forth  below) may be
exchanged  for a Registered  Security or  Registered  Securities  of such series
having authorized  denominations and an equal aggregate  principal amount,  upon
surrender  of such  Registered  Securities  to be exchanged at the agency of the
Company that shall be maintained for such purpose in accordance with Section 3.2
and upon payment,  if the Company shall so require,  of the charges  hereinafter
provided.  If the  Securities  of any series are issued in both  registered  and
unregistered  form,  at the option of the Holder  thereof,  except as  otherwise
specified pursuant to Section 2.3, Unregistered  Securities of any series may be
exchanged  for   Registered   Securities   of  such  series  having   authorized
denominations and an equal aggregate  principal  amount,  upon surrender of such
Unregistered  Securities to be exchanged at the agency of the Company that shall
be maintained for such purpose in accordance with Section 3.2, with, in the case
of Unregistered Securities that have Coupons attached, all unmatured Coupons and
all matured Coupons in default thereto  appertaining,  and upon payment,  if the
Company shall so require, of the charges hereinafter  provided. At the option of
the Holder  thereof,  if Unregistered  Securities of any series,  maturity date,
interest  rate and  original  issue date are issued in more than one  authorized
denomination,  except as  otherwise  specified  pursuant  to Section  2.3,  such
Unregistered  Securities  may be exchanged for  Unregistered  Securities of such
series having authorized  denominations and an equal aggregate principal amount,
upon surrender of such Unregistered  Securities to be exchanged at the agency of
the Company that shall be maintained for such purpose in accordance with Section
3.2 or as specified pursuant to Section 2.3, with, in the case of Unregistered




                                       20




Securities  that have Coupons  attached,  all unmatured  Coupons and all matured
Coupons in default thereto appertaining,  and upon payment, if the Company shall
so require, of the charges hereinafter  provided.  Registered  Securities of any
series may not be exchanged  for  Unregistered  Securities of such series unless
(1)  otherwise  specified  pursuant  to  Section  2.3 and (2)  the  Company  has
delivered to the Trustee an Opinion of Counsel that (x) the Company has received
from the IRS a ruling or (y) since the date  hereof,  there has been a change in
the  applicable  Federal  income tax law,  in either case to the effect that the
inclusion  of  terms  permitting  Registered  Securities  to  be  exchanged  for
Unregistered  Securities would result in no Federal income tax effect adverse to
the Company or to any Holder.  Whenever any Securities  are so  surrendered  for
exchange,  the Company shall  execute,  and the Trustee shall  authenticate  and
deliver,  the  Securities  which the Holder  making the  exchange is entitled to
receive.  All Securities and Coupons,  if any,  surrendered upon any exchange or
transfer  provided for in this Indenture shall be promptly canceled and disposed
of by the Trustee,  and the Trustee shall deliver a certificate  of  disposition
thereof to the Company.

     All Registered Securities presented for registration of transfer, exchange,
redemption  or payment  shall (if so required by the Company or the  Trustee) be
duly  endorsed,  or be  accompanied  by a written  instrument or  instruments of
transfer in form  satisfactory to the Company and the Trustee duly executed,  by
the Holder or his attorney duly authorized in writing.

     The  Company may require  payment of a sum  sufficient  to cover any tax or
other governmental charge that may be imposed in connection with any exchange or
registration of transfer of Securities.  No service charge shall be made for any
such transaction.

     The Company shall not be required to exchange or register a transfer of (a)
any Securities of any series for a period of 15 days preceding the first mailing
of notice of  redemption  of Securities of such series to be redeemed or (b) any
Securities selected, called or being called for redemption, in whole or in part,
except,  in the case of any Security to be redeemed in part, the portion thereof
not so to be redeemed.

     Notwithstanding  any other  provision of this Section 2.8, unless and until
it is  exchanged in whole or in part for  Securities  in  definitive  registered
form,  a  Registered  Global  Security  representing  all  or a  portion  of the
Securities  of a  series  may  not  be  transferred  except  as a  whole  by the
Depositary  for such series to a nominee of such  Depositary  or by a nominee of
such  Depositary to such  Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor Depositary for such series or
a nominee of such successor Depositary.



                                       21




     If at any time the  Depositary  for any  Registered  Securities of a series
represented by one or more  Registered  Global  Securities  notifies the Company
that it is unwilling  or unable to continue as  Depositary  for such  Registered
Securities or if at any time the Depositary for such Registered Securities shall
no longer be eligible  under  Section 2.4, the Company shall appoint a successor
Depositary   eligible  under  Section  2.4  with  respect  to  such   Registered
Securities.  If a  successor  Depositary  eligible  under  Section  2.4 for such
Registered  Securities is not appointed by the Company  within 90 days after the
Company  receives  such  notice  or  becomes  aware of such  ineligibility,  the
Company's  election  pursuant to Section 2.3 that such Registered  Securities be
represented  by one or more  Registered  Global  Securities  shall no  longer be
effective  and the Company will  execute,  and the  Trustee,  upon receipt of an
Officer's   Certificate  for  the  authentication  and  delivery  of  definitive
Securities of such series,  will  authenticate  and deliver,  Securities of such
series  in  definitive  registered  form  without  coupons,  in  any  authorized
denominations, in an aggregate principal amount equal to the principal amount of
the  Registered  Global  Security or  Securities  representing  such  Registered
Securities in exchange for such Registered Global Security or Securities.

     The Company may at any time and in its sole  discretion  determine that the
Registered Securities of any series issued in the form of one or more Registered
Global Securities shall no longer be represented by a Registered Global Security
or  Securities.  In such event the Company will execute,  and the Trustee,  upon
receipt of any  Officer's  Certificate  for the  authentication  and delivery of
definitive Securities of such series, will authenticate and deliver,  Securities
of such series in definitive  registered form without coupons, in any authorized
denominations, in an aggregate principal amount equal to the principal amount of
the  Registered  Global  Security or  Securities  representing  such  Registered
Securities, in exchange for such Registered Global Security or Securities.

     If  specified  by the  Company  pursuant  to  Section  2.3 with  respect to
Securities  represented by a Registered Global Security, the Depositary for such
Registered  Global  Security may surrender such  Registered  Global  Security in
exchange in whole or in part for  Securities  of the same  series in  definitive
registered  form on  such  terms  as are  acceptable  to the  Company  and  such
Depositary.  Thereupon,  the  Company  shall  execute,  and  the  Trustee  shall
authenticate and deliver, without service charge,

          (i) to the  Person  specified  by  such  Depositary  a new  Registered
     Security or Securities of the same series, of any authorized  denominations
     as requested by such Person, in an aggregate  principal amount equal to and
     in exchange for such Person's  beneficial interest in the Registered Global
     Security; and

          (ii)  to  such  Depositary  a  new  Registered  Global



                                       22




     Security in a denomination  equal to the  difference,  if any,  between the
     principal  amount of the  surrendered  Registered  Global  Security and the
     aggregate  principal  amount of  Registered  Securities  authenticated  and
     delivered pursuant to clause (i) above.

     Upon the  exchange  of a  Registered  Global  Security  for  Securities  in
definitive  registered form without coupons, in authorized  denominations,  such
Registered  Global  Security shall be canceled by the Trustee or an agent of the
Company or the Trustee. Securities in definitive registered form without coupons
issued in exchange for a Registered Global Security pursuant to this Section 2.8
shall be registered in such names and in such  authorized  denominations  as the
Depositary for such Registered  Global Security,  pursuant to instructions  from
its direct or indirect participants or otherwise,  shall instruct the Trustee or
an agent of the Company or the Trustee.  The Trustee or such agent shall deliver
such  Securities to or as directed by the Persons in whose names such Securities
are so registered.

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

     Notwithstanding anything herein or in the terms of any series of Securities
to the contrary, none of the Company, the Trustee or any agent of the Company or
the Trustee (any of which,  other than the  Company,  shall rely on an Officer's
Certificate  and an  Opinion of  Counsel)  shall be  required  to  exchange  any
Unregistered Security for a Registered Security if such exchange would result in
Federal  income tax  consequences  adverse to the Company (such as, for example,
the inability of the Company to deduct from its income,  as computed for Federal
income tax purposes, the interest payable on the Unregistered  Securities) under
then applicable United States Federal income tax laws.

     (b)(i)  Securities  that are  distributed  to QIBs will be represented by a
global Security (the "144A Global Security"). Securities that are distributed to
Non-U.S.  Persons will be  represented by a global  Security (the  "Regulation S
Global Security").  Each of the 144A Global Security and the Regulation S Global
Security  shall  be  referred  to  herein  as a  "Global  Security."  If  Global
Securities are issued, transfers of interests in the Securities between the 144A
Global  Security and the Regulation S Global Security will be made in accordance
with  the  standing  instructions  and  procedures  of the  Depositary  and  its
participants  and the Trustee  shall make  appropriate  endorsements  to reflect
increases or decreases in the  principal  amounts of such Global  Securities  to
reflect any such transfers.

     Except as provided  below,  beneficial  owners of a Security in global form
shall not be entitled to have  certificates  registered in their names, will not
receive  or  be



                                       23




entitled to receive  physical  delivery of  certificates  in definitive form and
will not be considered Holders of such Securities in global form.

     (ii) So long as the Securities are eligible for book-entry settlement,  and
to the extent that Securities are held by QIBs or Non-U.S.  Persons, as the case
may be, in a Global  Security,  or unless  otherwise  required by law,  upon any
transfer of a definitive  Security to a QIB in accordance with Rule 144A or to a
Non-U.S.  Person in accordance with Regulation S, unless otherwise  requested by
the transferor,  and upon receipt of the definitive Security or Securities being
so  transferred,  together with a  certification  from the  transferor  that the
transfer is being made in compliance with Rule 144A or Regulation S, as the case
may be (or other evidence  satisfactory to the Trustee),  the Trustee shall make
an endorsement on any 144A Global Security or any Regulation S Global  Security,
as the case may be, to reflect an increase in the aggregate  principal amount of
the Securities represented by such Global Security, and the Trustee shall cancel
such  definitive   Security  or  Securities  in  accordance  with  the  standing
instructions and procedures of the Depositary, the aggregate principal amount of
Securities  represented  by such Global  Security to be  increased  accordingly;
provided that no definitive  Security,  or portion thereof,  in respect of which
the Company or an Affiliate of the Company held any beneficial interest shall be
included  in such  Global  Security  until such  definitive  Security  is freely
tradable in  accordance  with Rule  144(k);  provided  further  that the Trustee
shall,  at the written  request of the Company,  issue  Securities in definitive
form upon any  transfer of a beneficial  interest in the Global  Security to the
Company or any Affiliate of the Company.

     Any Global  Security may be endorsed with or have  incorporated in the text
thereof such legends or recitals or changes not inconsistent with the provisions
of this  Indenture as may be required by the  Depositary,  by the New York Stock
Exchange or by the National Association of Securities Dealers, Inc. in order for
the Securities to be tradable on the PORTAL Market or as may be required for the
Securities  to be  tradable  on  any  other  market  developed  for  trading  of
securities  pursuant to Rule 144A or required to comply with any  applicable law
or any regulation thereunder or with the rules and regulations of any securities
exchange  upon which the  Securities  may be listed or traded or to conform with
any usage with  respect  thereto,  or to  indicate  any special  limitations  or
restrictions to which any particular Securities are subject.

     (iii) Each  Security that bears or is required to bear the legend set forth
in this  Section  2.8(b)  (a  "Restricted  Security")  shall be  subject  to the
restrictions  on  transfer  provided  in the  legend  set forth in this  Section
2.8(b),  unless such  restrictions  on  transfer  shall be waived by the written
consent of the  Company,  and the Holder of each  Restricted  Security,  by such
Holder's  acceptance  thereof,  agrees  to be  bound  by  such  restrictions  on
transfer.  As used in this Section



                                       24




2.8(b),  the term  "transfer"  encompasses any sale,  pledge,  transfer or other
disposition of any Restricted Security.

     Prior  to  the  Transfer  Restriction  Termination  Date,  any  certificate
evidencing a Security shall bear a legend in  substantially  the following form,
unless  otherwise  agreed by the Company  (with  written  notice  thereof to the
Trustee):

     THE  SECURITY  EVIDENCED  HEREBY  HAS NOT BEEN  REGISTERED  UNDER  THE U.S.
     SECURITIES  ACT  OF  1933,  AS  AMENDED  (THE   "SECURITIES   ACT"),   AND,
     ACCORDINGLY,  MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR
     FOR THE  ACCOUNT OR BENEFIT  OF,  U.S.  PERSONS  EXCEPT AS SET FORTH IN THE
     FOLLOWING  SENTENCE.  BY ITS ACQUISITION  HEREOF, THE HOLDER (1) REPRESENTS
     THAT (A) IT IS A "QUALIFIED  INSTITUTIONAL  BUYER" (AS DEFINED IN RULE 144A
     UNDER  THE  SECURITIES  ACT)  OR  (B)  IT  IS AN  INSTITUTIONAL  "ACCREDITE
     INVESTOR"  (AS  DEFINED  IN  RULE  501(A)(1),  (2),  (3) OR (7)  UNDER  THE
     SECURITIES ACT)  ("INSTITUTIONAL  ACCREDITED  INVESTOR") OR (C) IT IS NOT A
     U.S. PERSON AND IS ACQUIRING THE SECURITY  EVIDENCED  HEREBY IN AN OFFSHORE
     TRANSACTION,  (2) AGREES  THAT IT WILL NOT PRIOR TO THE  EXPIRATION  OF THE
     HOLDING PERIOD  APPLICABLE TO SALES OF THE SECURITY  EVIDENCED HEREBY UNDER
     RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR  PROVISION),  RESELL
     OR  OTHERWISE   TRANSFER  THE  SECURITY  EVIDENCED  HEREBY  EXCEPT  (A)  TO
     HEALTHSOUTH  CORPORATION  (THE  "COMPANY") OR ANY SUBSIDIARY  THEREOF,  (B)
     PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT UNDER THE SECURITIES ACT,
     (C) TO A QUALIFIED  INSTITUTIONAL  BUYER IN COMPLIANCE WITH RULE 144A UNDER
     THE SECURITIES ACT, (D) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR
     TO SUCH  TRANSFER,  FURNISHES  TO THE TRUSTEE FOR THE  SECURITIES  A SIGNED
     LETTER CONTAINING CERTAIN  REPRESENTATIONS  AND AGREEMENTS  RELATING TO THE
     RESTRICTIONS  ON TRANSFER  OF THE  SECURITY  EVIDENCED  HEREBY (THE FORM OF
     WHICH  LETTER CAN BE OBTAINED  FROM SUCH  TRUSTEE),  (E) OUTSIDE THE UNITED
     STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (F) PURSUANT
     TO  THE  EXEMPTION  FROM  REGISTRATION  PROVIDED  BY  RULE  144  UNDER  THE
     SECURITIES  ACT (IF  AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO EACH
     PERSON  TO WHOM THE  SECURITY  EVIDENCED  HEREBY  IS  TRANSFERRED  A NOTICE
     SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER
     OF THE SECURITY  EVIDENCED  HEREBY PRIOR TO THE  EXPIRATION  OF THE HOLDING
     PERIOD  APPLICABLE  TO SALES OF THE  SECURITY  EVIDENCED  HEREBY UNDER RULE
     144(K) UNDER THE  SECURITIES ACT (OR ANY SUCCESSOR  PROVISION),  THE HOLDER
     MUST CHECK THE  APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
     THE MANNER OF SUCH TRANSFER AND SUBMIT THIS  CERTIFICATE TO THE TRUSTEE FOR
     THE SECURITIES.  IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL  ACCREDITED
     INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO
     SUCH 



                                       25




     TRANSFER,  FURNISH TO THE TRUSTEE FOR THE SECURITIES  SUCH  CERTIFICATIONS,
     LEGAL  OPINIONS  OR OTHER  INFORMATION  AS THE  COMPANY OR THE  TRUSTEE MAY
     REASONABLY REQUIRE, TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
     AN EXEMPTION  FROM,  OR IN A TRANSACTION  NOT SUBJECT TO, THE  REGISTRATION
     REQUIREMENTS  OF THE SECURITIES  ACT. THIS LEGEND WILL BE REMOVED AFTER THE
     EXPIRATION  OF THE  HOLDING  PERIOD  APPLICABLE  TO SALES  OF THE  SECURITY
     EVIDENCED  HEREBY  UNDER RULE  144(K)  UNDER THE  SECURITIES  ACT.  AS USED
     HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON"
     HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

     Following  the  Transfer  Restriction  Termination  Date,  any  Security or
security  issued in exchange or  substitution  therefor  (other than  Securities
acquired by the  Company or any  Affiliate  thereof  since the issue date of the
Securities)  may upon  surrender  of such  Security for exchange to the Security
Registrar in  accordance  with the  provisions of this Section 2.8, be exchanged
for a new Security or Securities,  of like tenor and aggregate principal amount,
which shall not bear the restrictiv legend required by this Section 2.8(b).

SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen Securities.

     In case any temporary or definitive  Security or any Coupon appertaining to
any Security shall be mutilated, defaced, destroyed, lost or stolen, the Company
in its  discretion  may execute and, upon the written  request of any officer of
the Company,  the Trustee shall  authenticate and deliver, a new Security of the
same series,  maturity date,  interest rate and original  issue date,  bearing a
number or other  distinguishing  symbol not  contemporaneously  outstanding,  in
exchange and substitution for the mutilated or defaced  Security,  or in lieu of
and in substitution  for the Security so destroyed,  lost or stolen with Coupons
corresponding  to the  Coupons  appertaining  to the  Securities  so  mutilated,
defaced,  destroyed,  lost or stolen,  or in  exchange or  substitution  for the
Security to which such  mutilated,  defaced,  destroyed,  lost or stolen  Coupon
appertained,  with Coupons appertaining thereto  corresponding to the Coupons so
mutilated, defaced, destroyed, lost or stolen. In every case the applicant for a
substitute  Security or Coupon  shall  furnish to the Company and to the Trustee
and any agent of the Company or the Trustee such security or indemnity as may be
required by them to indemnify  and defend and to save each of them harmless and,
in every case of destruction,  loss or theft,  evidence to their satisfaction of
the  destruction,  loss or theft of such Security or Coupon and of the ownership
thereof,  and in the  case of  mutilation  or  defacement  shall  surrender  the
Security and related Coupons to th Trustee or such agent.

     Upon the  issuance of any  substitute  Security or Coupon,  the Company may
require the payment of a sum  sufficient



                                       26




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)
or its agent  connected  therewith.  In case any  Security  or Coupon  which has
matured or is about to mature or has been  called for  redemption  in full shall
become  mutilated or defaced or be  destroyed,  lost or stolen,  the Company may
instead of issuing a substitute  Security,  pay or authorize  the payment of the
same or the relevant Coupon (without  surrender  thereof except in the case of a
mutilated  or defaced  Security or Coupon),  if the  applicant  for such payment
shall  furnish to the Company and to the Trustee and any agent of the Company or
the Trustee  such  security or indemnity as any of them may require to save each
of them  harmless,  and,  in  every  case of  destruction,  loss or  theft,  the
applicant  shall also furnish to th Company and the Trustee and any agent of the
Company or the Trustee evidence to their  satisfaction of the destruction,  loss
or theft of such Security or Coupons and of the ownership thereof.

     Every  substitute  Security or Coupon of any series issued  pursuant to the
provisions  of this  Section  by virtue of the fact  that any such  Security  or
Coupon is destroyed,  lost or stolen shall constitute an additional  contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security
or Coupon  shall be at any time  enforceable  by anyone and shall be entitled to
all the benefits of (but shall be subject to all the  limitations  of rights set
forth in) this  Indenture  equally  and  proportionately  with any and all other
Securities or Coupons of such series duly authenticated and delivered hereunder.
All  Securities  and Coupons shall be held and owned upon the express  condition
that,  to the extent  permitted by law, the foregoing  provisions  are exclusive
with respect to the  replacement or payment of mutilated,  defaced or destroyed,
lost or stolen  Securities  and  Coupons  and shall  preclude  any and all other
rights or remedies  notwithstanding  any law or statute  existing  or  hereafter
enacted to the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.

SECTION 2.10 Cancellation of Securities; Destruction Thereof.

     All   Securities   and  Coupons   surrendered   for  payment,   redemption,
registration  of  transfer  or  exchange,  or for credit  against any payment in
respect of a sinking or analogous fund, if any, if surrendered to the Company or
any agent of the  Company or the Trustee or any agent of the  Trustee,  shall be
delivered to the Trustee or its agent for cancellation or, if surrendered to the
Trustee,  shall be canceled by it; and no  Securities or Coupons shall be issued
in lieu thereof  except as expressl  permitted by any of the  provisions of this
Indenture.  The Trustee or its agent shall  dispose of canceled  Securities  and
Coupons held by it and deliver a certificate of  disposition to the Company.  If
the Company or its agent shall acquire any of the  Securities  or Coupons,  such
acquisition   shall  not  operate



                                       27




as a  redemption  or  satisfaction  of  the  indebtedness  represented  by  such
Securities or Coupons  unless and until the same are delivered to the Trustee or
its agent for cancellation.

SECTION 2.11 Temporary Securities.

     Pending the  preparation  of  definitive  Securities  for any  series,  the
Company may execute and the Trustee  shall  authenticate  and deliver  temporary
Securities  for such series  (printed,  lithographed,  typewritten  or otherwise
reproduced,  in each  case  in  form  satisfactory  to the  Trustee).  Temporary
Securities  of any series  shall be issuable as  Registered  Securities  without
coupons, or as Unregistered Securities with or without coupons attached thereto,
of any authorized denomination,  and substantially in the form of the definitive
Securities of such series but with such omissions,  insertions and variations as
may be  appropriate  for temporary  Securities,  all as may be determined by the
Company with the  concurrence  of the Trustee as evidenced by the  execution and
authentication thereof.  Temporary Securities may contain such references to any
provisions of this Indenture as may be  appropriate.  Every  temporary  Security
shall be executed by the Company and be  authenticated  by the Trustee  upon the
same conditions and in substantially  the same manner,  and with like effect, as
the definitive Securities.  Without unreasonable delay the Company shall execute
and shall furnish definitive  Securities of such series and thereupon  temporary
Registered  Securities of such series may be  surrendered  in exchange  therefor
without charge at each office or agency to be maintained by the Company for that
purpose pursuant to Section 3.2 and, in the case of Unregistered Securities,  at
any agency  maintained by the Company for such purpose as specified  pursuant to
Section 2.4, and the Trustee shall authenticate and deliver in exchange for such
temporary  Securities  of such  series an equal  aggregate  principal  amount of
definitive Securities of the same series having authorized denominations and, in
the case of Unregistered  Securities,  having  attached  thereto any appropriate
Coupons.  Until so exchanged,  the  temporary  Securities of any series shall be
entitled to the same benefits under this  Indenture as definitive  Securities of
such  series,   unless  otherwise  established  pursuant  to  Section  2.3.  The
provisions of this Section are subject to any restrictions or limitations on the
issue and delivery of temporary  Unregistered  Securities of any series that may
be   established   pursuant  to  Section  2.4   (including  any  provision  that
Unregistered  Securities  of such  series  initially  be issued in the form of a
single  global  Unregistered  Security to be delivered to a depositary or agency
located  outside  the  United  States  and  the  procedures  pursuant  to  which
definitive or global  Unregistered  Securities of such series would be issued in
exchange for such temporary global Unregistered Security).



                                       28




                                    ARTICLE 3

                            COVENANTS OF THE COMPANY

SECTION 3.1 Payment of Principal and Interest.

     The  Company  covenants  and  agrees  for the  benefit  of each  series  of
Securities  that it  will  duly  and  punctually  pay or  cause  to be paid  the
principal  of, and interest on, if any,  each of the  Securities  of such series
(together  with any  additional  amounts  payable  pursuant to the terms of such
Securities) at the place or places,  at the respective  time or times and in the
manner  provided in such  Securities  and in the Coupons,  if any,  appertaining
thereto and in this Indenture.  The interest on Securities with Coupons attached
(together  with any  additional  amounts  payable  pursuant to the terms of such
Securities) shall be payable only upon presentation and surrender of the several
Coupons  for  such  interest  installments  as are  evidenced  thereby  as  they
severally mature. If any temporary  Unregistered Security provides that interest
thereon may be paid while such  Security is in temporary  form,  the interest on
any such temporary  Unregistered  Security (together with any additional amounts
payable  pursuant  to the  terms of such  Security)  shall  be  paid,  as to the
installments of interest  evidenced by Coupons  attached  thereto,  if any, only
upon presentation and surrender  thereof,  and, as to the other  installments of
interest, if any, only upon presentation of such Securities for notation thereon
of the payment of such interest,  in each case subject to any restrictions  that
may be established pursuant to Section 2.4. The interest,  if any, on Registered
Securities  (together with any additional  amounts payable pursuant to the terms
of such  Securities)  shall be payable only to or upon the written  order of the
Holders thereof and, at the option of the Company,  may be paid by wire transfer
or by mailing  checks for such interest  payable to or upon the written order of
such Holders at their last addresses as they appear on the Security  Register of
the Company.

SECTION 3.2 Offices for Payments, Etc.

     So long as any Registered  Securities are authorized for issuance  pursuant
to this Indenture or are outstanding hereunder, the Company will maintain in the
Borough  of  Manhattan,  The City of New York,  an  office  or agency  where the
Registered  Securities  of each series may be presented  for payment,  where the
Securities  of each series may be presented  for exchange as is provided in this
Indenture and, if  applicable,  pursuant to Section 2.4 and where the Registered
Securities  of each series ma be presented  for  registration  of transfer as in
this Indenture provided.

     The  Company  will  maintain  one or more  offices or agencies in a city or
cities  located  outside the United States  (including any city in which such an
agency is required  to be



                                       29




maintained under the rules of any stock exchange on which the Securities of such
series are listed) where the Unregistered Securities, if any, of each series and
Coupons, if any,  appertaining  thereto may be presented for payment. No payment
on any  Unregistered  Security or Coupon will be made upon  presentation  of suc
Unregistered  Security or Coupon at an agency of the  Company  within the United
States nor will any  payment be made by transfer to an account in, or by mail to
an address in, the United  States unless  pursuant to  applicable  United States
laws and  regulations  then in  effect  such  payment  can be made  without  tax
consequences adverse to the Company.  Notwithstanding the foregoing, payments in
Dollars  of  Unregistered  Securities  of any series  and  Coupons  appertaining
thereto  which are  payable in Dollars  may be made at an agency of the  Company
maintained in the Borough of Manhattan,  The City of New York if such payment in
Dollars at each agency  maintained by the Company  outside the United States for
payment on such Unregistered  Securities is illegal or effectively  precluded by
exchange controls or other similar restrictions.

     The Company  will  maintain in the  Borough of  Manhattan,  The City of New
York,  an office or agency  where  notices and demands to or upon the Company in
respect of the  Securities of any series,  the Coupons  appertaining  thereto or
this Indenture may be served.

     The Company will give to the Trustee written notice of the location of each
such office or agency and of any change of location thereof. In case the Company
shall fail to maintain any agency  required by this Section to be located in the
Borough of Manhattan, The City of New York, or shall fail to give such notice of
the  location or for any change in the  location  of any of the above  agencies,
presentations and demands may be made and notices may be served at the Corporate
Trust Office of the Trustee.

     The Company may from time to time designate one or more additional  offices
or  agencies  where the  Securities  of a series  and any  Coupons  appertaining
thereto may be presented for payment, where the Securities of that series may be
presented for exchange as provided in this Indenture and pursuant to Section 2.4
and  where  the  Registered  Securities  of that  series  may be  presented  for
registration of transfer as in this Indenture provided, and the Company may from
time to time rescind any such designation,  as the Company may deem desirable or
expedient;  provided, that no such designation or rescission shall in any manner
relieve the Company of its obligations to maintain the agencies  provided for in
this Section. The Company shall give to the Trustee prompt written notice of any
such designation or rescission thereof.

SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee.

     The Company, whenever necessary to avoid or fill a



                                       30




vacancy in the office of  Trustee,  will  appoint,  in the  manner  provided  in
Section  6.10,  a Trustee,  so that there  shall at all times be a Trustee  with
respect to each series of Securities hereunder.

SECTION 3.4 Paying Agents.

     Whenever  the Company  shall  appoint a Paying Agent other than the Trustee
with respect to the Securities of any series, it will cause such Paying Agent to
execute and deliver to the Trustee an instrument in which such agent shall agree
with the Trustee, subject to the provisions of this Section,

          (a) that it will hold all sums  received  by it as such  agent for the
     payment of the  principal of or interest on the  Securities  of such series
     (whether  such sums have  been  paid to it by the  Company  or by any other
     obligor on the  Securities  of such series) in trust for the benefit of the
     Holders of the Securities of such series, or Coupons appertaining  thereto,
     if any, or of the Trustee;

          (b) that it will give the Trustee notice of any failure by the Company
     (or by any other  obligor  on the  Securities  of such  series) to make any
     payment of the  principal of or interest on the  Securities  of such series
     when the same shall be due and payable; and

          (c)  that it will  pay any  such  sums so held in  trust  by it to the
     Trustee  upon  the  Trustee's  written  request  at  any  time  during  the
     continuance of the failure referred to in the foregoing clause (b).

     The  Company  will,  on or prior to each  due date of the  principal  of or
interest on the  Securities of such series,  deposit with the Paying Agent a sum
sufficient  to pay such  principal or interest so becoming due, and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of any
failure to take such action.

     If the  Company  shall act as its own  Paying  Agent  with  respect  to the
Securities  of any series,  it will, on or before each due date of the principal
of or interest on the Securities of such series,  set aside,  segregate and hold
in trust for the benefit of the Holders of the  Securities of such series or the
Coupons  appertaining thereto a sum sufficient to pay such principal or interest
so becoming due. The Company will promptly  notify the Trustee of any failure to
take such action.

     Anything in this  Section to the contrary  notwithstanding,  but subject to
Section  10.1,  the  Company  may at any time,  for the  purpose of  obtaining a
satisfaction  and  discharge  with  respect  to one or  more  or all  series  of
Securities  hereunder,  or for any other reason,  pay or cause to be paid to the
Trustee  all sums held in trust for any such series by the Company or any Paying
Agent  hereunder,  as  required  by this  Section,  such  sums



                                       31




to be held by the Trustee upon the trusts herein contained.

     Anything in this Section to the contrary notwithstanding,  the agreement to
hold sums in trust as provided in this Section is subject to the  provisions  of
Sections 10.3 and 10.4.

SECTION 3.5 Compliance Certificates.

     The Company  will  furnish to the  Trustee on or before  January 31 in each
year  (beginning  with  January 31,  1999) a brief  certificate  (which need not
comply with Section 11.5) from the principal executive,  financial or accounting
officer of the  Company  stating  that in the course of the  performance  by the
signer  of his or her  duties  as an  officer  of the  Company  he or she  would
normally have knowledge of any default or  non-compliance  by the Company in the
performance of any covenants or conditions contained in this Indenture,  stating
whether or not he or she has  knowledge  of any such  default or  non-compliance
and, if so,  describing each such default or non- compliance of which the signer
has knowledge and the nature thereof.

SECTION 3.6 Corporate Existence.

     Subject to Article  9, 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 rights (charter and  statutory),  licenses and franchises of the Company
and its  Subsidiaries;  provided,  that the  Company  shall not be  required  to
preserve  any such  right,  license or  franchise,  if, in the  judgment  of the
Company,  the preservation  thereof is no longer desirable in the conduct of the
business  of the  Company  and its  Subsidiaries  taken as a whole  and the loss
thereof is not disadvantageous in any material respect to the Securityholders.

SECTION 3.7 Maintenance of Properties.

     The Company will cause all  properties  used in or useful in the conduct of
its business or the business of any Subsidiary to be maintained and kept in good
condition,  repair, and working order and supplied with all necessary  equipment
and  will  cause  to be made  all  necessary  repairs,  renewals,  replacements,
betterments and improvements  thereof, all as in the judgment of the Company may
be necessary,  so that the business  carried on in  connection  therewith may be
properly and advantageously  conducted at all time except to the extent that the
Company may be  prevented  from so doing by  circumstances  beyond its  control;
provided,   that  nothing  in  this  Section  shall  prevent  the  Company  from
discontinuing  the  operation  or  maintenance  of any of  such  properties,  or
disposing of any of them, if such discontinuance or disposal is, in the judgment
of the Company  desirable  in the conduct of the  business of the Company or any
Subsidiary   and  not   disadvantageous   in  any   material   respect   to  the
Securityholders.



                                       32




SECTION 3.8 Payment of Taxes and Other Claims.

     The Company will pay or discharge or cause to be paid or discharged, before
the same shall become  delinquent:  (a) all taxes,  assessments and governmental
charges levied or imposed upon the Company or any Subsidiary or upon the income,
profits or property of the Company or any Subsidiary;  and (b) all lawful claims
for labor, materials, and supplies, which, if unpaid, might by law become a lien
upon the property of the Company or any Subsidiary;  provided,  that the Company
shall not be required to pay or discharge or cause to be paid or discharged  any
such tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate  proceedings;  and provided further
that the Company  shall not be required  to cause to be paid or  discharged  any
such tax,  assessment,  charge or claim if the Company shall determine that such
payment is not  advantageous  to the conduct of the  business of the Company and
its Subsidiaries taken as a whole and that the failure so to pay or discharge is
not disadvantageous in any material respect to the Securityholders.

SECTION 3.9 Luxembourg Publications.

     In the event of the  publication  of any notice  pursuant to Section  5.15,
6.11(a),  6.12,  8.2,  10.4 or 13.2,  the party making such  publication  in the
Borough of Manhattan,  The City of New York and London shall also, to the extent
that notice is required  to be given to Holders of  Securities  of any series by
applicable  Luxembourg  law or stock  exchange  regulation,  as  evidenced by an
Officer's  Certificate  delivered to such party,  make a similar  publication in
Luxembourg.

SECTION 3.10 Usury Laws.

     The Company  covenants and agrees:  (a) not to insist upon, or plead, or in
any manner whatsoever claim the benefit or the advantage of the usury law of any
jurisdiction  against the Trustee or the Holders in  connection  with any claim,
action or proceeding which may be brought by the Trustee or the Holders in order
to enforce any right or remedy under this  Indenture;  and (b) to resist any and
all efforts to compel the Company to claim the benefit or the  advantage  of the
usury law of any  jurisdiction  against the Trustee or the Holders in connection
with any claim,  action or proceeding which may be brought by the Trustee or the
Holders in order to enforce any right or remedy under this Indenture.





                                       33




                                    ARTICLE 4

                     SECURITYHOLDER LISTS AND REPORTS BY THE
                             COMPANY AND THE TRUSTEE

SECTION 4.1 Company to Furnish Trustee  Information as to Names and Addresses of
            Securityholders.

     If and so long as the Trustee  shall not be the Security  Registrar for the
Securities of any series,  the Company and any other  obligor on the  Securities
will  furnish or cause to be furnished to the Trustee a list in such form as the
Trustee may reasonably  require of the names and addresses of the Holders of the
Registered  Securities  of such  series  pursuant  to  Section  312 of the Trust
Indenture Act:

          (a) semi-annually not more than 15 days after each Regular Record Date
     for the payment of interest on such Registered  Securities,  as hereinabove
     specified, as of such record date and on dates to be determined pursuant to
     Section 2.4 for non-interest  bearing  Registered  Securities in each year;
     and

          (b) at such  other  times as the  Trustee  may  reasonably  request in
     writing,  within  thirty  days  after  receipt  by the  Company of any such
     request  as of a date  not  more  than  15  days  prior  to the  time  such
     information is furnished.

SECTION 4.2 Preservation of Information; Communications to Holders.

          (a) The Trustee shall preserve,  in as current a form as is reasonably
     practicable,  the names and  addresses  of  Holders  contained  in the most
     recent  list  furnished  to the  Trustee as provided in Section 4.1 and the
     names and  addresses of Holders  received by the Trustee in its capacity as
     Security  Registrar.  The Trustee may destroy any list  furnished  to it as
     provided in Section 4.1 upon receipt of a new list so furnished.

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

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



                                       34




     and addresses of Holders made pursuant to the Trust Indenture Act.

SECTION 4.3 Reports by Trustee.

          (a) The Trustee shall transmit to Holders such reports  concerning the
     Trustee and its actions under this Indenture as may be required pursuant to
     the Trust  Indenture Act at the times and in the manner  provided  pursuant
     thereto.

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

SECTION 4.4 Reports by Company.

     The Company shall file with the Trustee and the Commission, and transmit to
Holders,  such  information,  documents and other  reports,  and such  summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to such Act; provided that any such information,
documents  or reports  required  to be filed  with the  Commission  pursuant  to
Section 13 or 15(d) of the Exchange Act,  shall be filed with the Trustee within
15 days after the same is so required to be filed with the Commission.

                                    ARTICLE 5

                   REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
                               ON EVENT OF DEFAULT

SECTION 5.1 Event of  Default  Defined,  Acceleration  of  Maturity;  Waiver  of
            Default.

     "Event of Default" with respect to Securities of any series,  wherever used
herein,  means each one of the following events which shall have occurred and be
continuing  (whatever  the reason for such Event of Default and whether it shall
be  voluntary or  involuntary  or be effected by operation of law or pursuant to
any judgment,  decree or order of any court or any order,  rule or regulation of
any administrative or governmental body):

          (a) default in the payment of any  installment of interest upon any of
     the  Securities  of such  series as and when the same shall  become due and
     payable, and continuance of such default for a period of 30 days; or



                                       35




          (b) default in the payment of all or any part of the principal, or any
     premium, on any of the Securities of such series as and when the same shall
     become  due and  payable  either  at  Maturity,  upon  any  redemption,  by
     declaration or otherwise; or

          (c) default in the payment of any sinking fund installment as and when
     the same shall  become due and  payable by the terms of the  Securities  of
     such series; or

          (d) failure on the part of the Company  duly to observe or perform any
     other of the  covenants  or  agreements  on the part of the  Company in the
     Securities  of such series or  contained  in this  Indenture  (other than a
     covenant or agreement  included in this Indenture solely for the benefit of
     a series of  Securities  other  than such  series)  for a period of 60 days
     after the date on which written  notice  specifying  such failure,  stating
     that such notice is a "Notice of Default"  hereunder and demanding that the
     Company  remedy the same,  shall have been given by registered or certified
     mail, return receipt  requested,  to the Company by the Trustee,  or to the
     Company  and the  Trustee  by the  holders  of at  least  25% in  aggregate
     principal amount of the Outstanding  Securities of the series to which such
     covenant or agreement relates; or

          (e)  default  under any bond,  debenture,  note or other  evidence  of
     indebtedness  for money  borrowed by the Company or any Subsidiary or under
     any mortgage, indenture or instrument under which there may be issued or by
     which there may be secured or evidenced any indebtedness for money borrowed
     by the Company or any Subsidiary,  whether such  indebtedness now exists or
     shall   hereafter  be  created,   if  (i)  such  default  results  in  such
     indebtedness  becoming or being  declared due and payable prior to the date
     on which it would  otherwise  become due and  payable,  (ii) the  principal
     amount of such  indebtedness,  together  with the  principal  amount of any
     other  such  indebtedness   which  has  been  so  accelerated,   aggregates
     $25,000,000 or more at any one time outstanding and (iii) such indebtedness
     is not  discharged,  or such  acceleration  is not  rescinded  or annulled,
     within a period of 10 days after there shall have been given to the Company
     by the  Trustee or to the  Company and the Trustee by the Holders of at 25%
     in  aggregate  principal  amount of the  Securities  of each such  affected
     series then Outstanding  hereunder a written notice specifying such default
     and  requiring the Company to cause such  indebtedness  to be discharged or
     cause such acceleration to be rescinded or annulled; or

          (f) a court having  jurisdiction  in the premises



                                       36




     shall  enter a decree or order for relief in respect of the  Company or any
     Significant   Subsidiary  in  an  involuntary  case  under  any  applicable
     bankruptcy,  insolvency or other similar law now or hereafter in effect, or
     appointing   a  receiver,   liquidator,   assignee,   custodian,   trustee,
     sequestrator  (or  similar  official)  of the  Company  or any  Significant
     Subsidiary  for any  substantial  part of its or their property or ordering
     the winding up or liquidation  of its or their affairs,  and such decree or
     order shall remain  unstayed  and in effect for a period of 60  consecutive
     days; or

          (g)  the  Company  or any  Significant  Subsidiary  shall  commence  a
     voluntary case under any applicable bankruptcy, insolvency or other similar
     law now or  hereafter  in  effect,  or consent to the entry of an order for
     relief  in an  involuntary  case  under  any such law,  or  consent  to the
     appointment  or taking  possession  by a  receiver,  liquidator,  assignee,
     custodian,  trustee,  sequestrator (or similar  official) of the Company or
     any  Significant  Subsidiary  or for any  substantial  part of it or  their
     property, or make any general assignment for the benefit of creditors; or

          (h) any other Event of Default provided in the supplemental indenture,
     Board  Resolution  or  Officer's  Certificate  under  which such  series of
     Securities is issued or in the form of Security for such series.

SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.

     If an Event of Default  described in clause (a),  (b), (c), (d), (e) or (h)
of Section 5.1 (if the Event of Default under clause (d) or (h), as the case may
be, is with  respect to less than all  series of  Securities  then  Outstanding)
occurs and is continuing,  then, and in each and every such case, except for any
series of Securities  the  principal of which shall have already  become due and
payable,  either the  Trustee or the  Holders of not less than 25% in  aggregate
principal amount of the Securities of each such affected series then Outstanding
hereunder  (each such series voting as a separate class) by notice in writing to
the Company  (and to the Trustee if given by  Securityholders),  may declare the
entire principal (or, if the Securities of any such affected series are Original
Issue  Discount  Securities,  such  portion  of the  principal  amount as may be
specified in the terms of such series) of all  Securities  of all such  affected
series,  and  the  interest  accrued  thereon,  if any,  to be due  and  payable
immediately,  and upon any such declaration,  the same shall become  immediately
due and payable.

     If an Event of Default  described  in clause (d) or (h) of Section 5.1 with
respect to all series of  Securities  then



                                       37




Outstanding,  or an Event of Default described in clause (f) or (g) above occurs
and is continuing,  then, and in each and every such case,  unless the principal
of all of the Securities  shall have already become due and payable,  either the
Trustee or the Holders of not less than 25% in aggregate principal amount of all
of the Securities then Outstanding hereunder (treated as one class) by notice in
writing to the  Company  (and to the Trustee if given by  Securityholders),  may
declare the entire  principal  (or, if the Securities of any series are Original
Issue  Discount  Securities,  such  portion  of the  principal  amount as may be
specified  in  the  terms  of  such  series)  of  all  of  the  Securities  then
Outstanding,  and the interest  accrued  thereon,  if any, to be due and payable
immediately,  and upon such declaration,  the same shall become  immediately due
and payable.

     The foregoing  provisions are subject to the condition that if, at any time
after  the  principal  (or,  if  the  Securities  are  Original  Issue  Discount
Securities,  such  portion of the  principal  as may be  specified  in the terms
thereof) of the Securities of any series (or of all the Securities,  as the case
may be) shall have been so declared due and payable,  and before any judgment or
decree for the payment of the moneys due shall have been  obtained or entered as
hereinafter provided,

          (A) the  Company  shall pay or shall  deposit  with the  Trustee a sum
     sufficient to pay

               (i) all matured  installments of interest upon all the Securities
          of each such series (or all the Securities, as the case may be); and

               (ii) the principal of any and all  Securities of each such series
          (or of all the Securities, as the case may be) which shall have become
          due otherwise than by acceleration; and

               (iii)  interest  upon such  principal  and,  to the  extent  that
          payment of such  interest  is  enforceable  under  applicable  law, on
          overdue  installments  of  interest,  at the same  rate as the rate of
          interest or Yield to Maturity (in the case of Original  Issue Discount
          Securities) specified in the Securities of each such series (or at the
          respective  rates  of  interest  or  Yields  to  Maturity  of all  the
          Securities,  as the  case  may  be) to the  date of  such  payment  or
          deposit; and

               (iv) all amounts payable to the Trustee  pursuant to Section 6.6;
          and

          (B) all  Events  of  Default  under  the  Indenture,  other  than  the
     non-payment  of the principal of Securities  which shall have become due by
     acceleration,  shall  have been  cured,  waived or  otherwise  remedied  as
     provided herein,



                                       38




then and in every such case the  Holders of a majority  in  aggregate  principal
amount of all the  Securities of each such series,  each such series voting as a
separate class (or of all the Securities, as the case may be, voting as a single
class),  then Outstanding,  by written notice to the Company and to the Trustee,
may waive all defaults  with respect to each such series (or with respect to all
the Securities,  as the case may be) and rescind and annul such  declaration and
its consequences,  but no such waive or rescission and annulment shall extend to
or shall  affect any  subsequent  default or shall  impair any right  consequent
thereon.

     For all purposes under this Indenture, if a portion of the principal of any
Original Issue Discount  Securities shall have been accelerated and declared due
and  payable  pursuant  to the  provisions  hereof,  then,  from and after  such
declaration,  unless such  declaration  has been  rescinded  and  annulled,  the
principal amount of such Original Issue Discount Securities shall be deemed, for
all purposes hereunder,  to be such portion of the principal thereof as shall be
due and payable as a result of such acceleration, and payment of such portion of
the  principal  thereof  as  shall  be due  and  payable  as a  result  of  such
acceleration,  together  with  interest,  if any,  thereon and all other amounts
owing  thereunder,  shall  constitute  payment  in full of such  Original  Issue
Discount Securities.

SECTION 5.3 Collection of Indebtedness by Trustee; Trustee May Prove Debt .

     The Company covenants that (a) in case default shall be made in the payment
of any  installment of interest on any of the Securities of any series when such
interest  shall  have  become  due and  payable,  and such  default  shall  have
continued  for a period of 30 days,  or (b) in case default shall be made in the
payment  of all or any part of the  principal  of any of the  Securities  of any
series when the same shall have become due and payable, whether upon Maturity of
the  Securities  of such  series or upon any  redemption  or by  declaration  or
otherwise,  then upon demand of the Trustee, the Company will pay to the Trustee
for the benefit of the Holders of the Securities of such series the whole amount
that then shall have become due and payable on all  Securities  of such  series,
and such Coupons, for principal and interest,  as the case may be (with interest
to the date of such payment upon the overdue  principal  and, to the extent that
payment  of such  interest  is  enforceable  under  applicable  law,  on overdue
installments  of  interest  at the same rate as the rate of interest or Yield to
Maturity (in the case of Original  Issue Discount  Securities)  specified in the
Securities  of such series);  and in addition  thereto,  such further  amount as
shall be  sufficient  to cover the costs and  expenses of  collection,  and such
other amount due the Trustee  under Section 6.6 in respect of Securities of such
series.

     Until such demand is made by the Trustee, the Company



                                       39




may pay the  principal  of and interest on the  Securities  of any series to the
registered Holders, whether or not the Securities of such series be overdue.

SECTION 5.4 Trustee May File Proofs of Claims.

     In case the Company  shall fail  forthwith  to pay such  amounts  upon such
demand,  the Trustee,  in its own name as trustee of an express trust,  shall be
entitled  and  empowered  to institute  any action or  proceedings  at law or in
equity for the  collection of the sums so due and unpaid,  and may prosecute any
such action or proceedings to judgment or final decree, and may enforce any such
judgment  or  final  decree  against  the  Company  or  other  obligor  upon the
Securities and collect in the manner  provided by law out of the property of the
Company or other obligor upon the Securities,  wherever situated, all the moneys
adjudged or decreed to be payable.

     In case there shall be pending  proceedings  relative to the Company or any
other  obligor upon the  Securities  under Title 11 of the United States Code or
any other applicable  Federal or state  bankruptcy,  insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator,  sequestrator  or similar  official shall have been appointed for or
taken  possession  of the Company or its property or such other  obligor,  or in
case of any other  comparable  judicial  proceedings  relative to the Company or
other  obligor  upon the  Securities,  or to the  creditors  or  property of the
Company  or such  other  obligor,  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  pursuant  to the  provisions  of this  Section,  shall be
entitled and empowered, by intervention in such proceedings or otherwise:

          (a) to file and  prove a claim  or  claims  for the  whole  amount  of
     principal  and interest  (or, if the  Securities of any series are Original
     Issue Discount  Securities,  such portion of the principal amount as may be
     specified in the terms of such  series)  owing and unpaid in respect of the
     Securities of any series, 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 amounts  payable to the Trustee under Section 6.6)
     and of the Securityholders  allowed in any judicial proceedings relative to
     the Company or other  obligor upon the  Securities,  or to the creditors or
     property of the Company or such other obligor; and

          (b) unless  prohibited by applicable law and  regulations,  to vote on
     behalf of the holders of the  Securities of any series in any election of a
     receiver,   assignee,   trustee  or  a  standby   trustee  in  arrangement,
     reorganization,  liquidation or other bankruptcy or insolvency proceedings,
     custodian or



                                       40




     other  person   performing   similar  functions  in  respect  of  any  such
     proceedings; and

          (c) to collect  and receive  any moneys or other  property  payable or
     deliverable on any such claims, and to distribute all amounts received with
     respect to the claims of the  Securityholders  and of the  Trustee on their
     behalf;  and any  trustee,  receiver,  or  liquidator,  custodian  or other
     similar  official  performing  similar  functions  in  respect  of any such
     proceedings  is hereby  authorized by each of the  Securityholders  to make
     payments to the Trustee,  and, in the event that the Trustee  shall consent
     to the making of payments  directly to the  Securityholders,  to pay to the
     Trustee its costs and expenses of  collection  and all other amounts due to
     it pursuant to Section 6.6.

     Nothing  herein  contained  shall be deemed to  authorize  the  Trustee  to
authorize  or  consent  to or vote  for or  accept  or adopt  on  behalf  of any
Securityholder   any  plan  of   reorganization,   arrangement,   adjustment  or
composition  affecting the  Securities of any series or the rights of any Holder
thereof,  or to  authorize  the  Trustee  to vote in respect of the claim of any
Securityholder in any such proceeding, except as aforesaid in clause (b).

SECTION 5.5 Trustee May Enforce Claims Without Possession of Securities.

     All rights of action and of asserting claims under this Indenture, or under
any of the Securities of any series or Coupons  appertaining to such Securities,
may be enforced by the Trustee  without the  possession of any of the Securities
of such series or Coupons  appertaining  to such  Securities  or the  production
thereof in any trial or other proceedings  relative thereto, and any such action
or  proceedings  instituted  by the Trustee  shall be brought in its own name as
trustee of an express  trust,  and any recovery of judgment  shall be awarded to
the Trustee for ratable distribution to the Holders of the Securities or Coupons
appertaining to such Securities in respect of which such action was taken, after
payment  of all sums due to the  Trustee  under  Section  6.6 in respect of such
Securities.

     In any  proceedings  brought  by the  Trustee  (and  also  any  proceedings
involving the  interpretation  of any  provision of this  Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the Holders
of the Securities or Coupons appertaining to such Securities in respect to which
such action was taken, and it shall not be necessary to make any Holders of such
Securities  or  Coupons  appertaining  to such  Securities  parties  to any such
proceedings.



                                       41




SECTION 5.6 Application of Proceeds.

     Any moneys  collected by the Trustee pursuant to this Article in respect of
any series shall be applied in the following order at the date or dates fixed by
the  Trustee  and,  in case of the  distribution  of such  moneys on  account of
principal or interest,  upon presentation of the several  Securities and Coupons
appertaining  to such  Securities in respect of which monies have been collected
and stamping (or otherwise noting) thereon the payment, or issuing Securities of
such  series  in  reduced  principal  amounts  in  exchange  for  the  presented
Securities of like series if only partially  paid, or upon surrender  thereof if
fully paid:

          FIRST: To the payment of costs and expenses  applicable to such series
     of Securities in respect of which monies have been collected, including all
     amounts due to the Trustee and each predecessor Trustee pursuant to Section
     6.6 in respect to such series of Securities;

          SECOND:  In case the  principal  of the  Securities  of such series in
     respect of which  moneys have been  collected  shall not have become and be
     then due and payable,  to the payment of interest on the Securities of such
     series in default in the order of the Maturity of the  installments on such
     interest,  with  interest  (to the  extent  that  such  interest  has  been
     collected  by the  Trustee and is  permitted  by  applicable  law) upon the
     overdue  installments  of interest at the same rate as the rate of interest
     or Yield to Maturity (in the case of Original  Issue  Discount  Securities)
     specified  in such  Securities,  such  payments  to be made  ratably to the
     persons entitled thereto, without discrimination or preference;

          THIRD:  In case the  principal  of the  Securities  of such  series in
     respect of which moneys have been collected  shall have become and shall be
     then due and  payable,  to the  payment of the whole  amount then owing and
     unpaid upon all the  Securities  of such series for principal and interest,
     with  interest  upon the  overdue  principal,  and (to the extent that such
     interest has been  collected by the Trustee and is permitted by  applicable
     law) upon the overdue installments of interest at the same rate as the rate
     of interest or Yield to Maturity  (in the case of Original  Issue  Discount
     Securities)  specified in the  Securities of such series;  and in case such
     moneys  shall be  insufficient  to pay in full the whole  amount so due and
     unpaid  upon the  Securities  of such  series,  then to the payment of such
     principal and interest or Yield to Maturity, without preference or priority
     of principal over interest or Yield to Maturity, or of interest or Yield to
     Maturity over  principal,  or of any 



                                       42




     installment  of interest over any other  installment  of interest or of any
     Security of such series over any other Security of such series,  ratably to
     the aggregate of such principal and accrued and unpaid interest or Yield to
     Maturity; and

          FOURTH: To the payment of the remainder, if any, to the Company or any
     other person lawfully entitled thereto.

SECTION 5.7 Suits for Enforcement.

     In case an Event of  Default  has  occurred,  has not  been  waived  and is
continuing, the Trustee may in its discretion proceed to protect and enforce the
rights vested in it by this Indenture by such appropriate  judicial  proceedings
as the  Trustee  shall deem most  effectual  to protect  and enforce any of such
rights,  either at law or in equity or in bankruptcy  or otherwise,  whether for
the  specific  enforcement  of any  covenant  or  agreement  contained  in  this
Indenture or in aid of the exercise o any power granted in this  Indenture or to
enforce  any  other  legal or  equitable  right  vested in the  Trustee  by this
Indenture or by law.

SECTION 5.8 Limitations on Suits by Security Holders.

     No Holder of any  Security  of any  series  or of any  Coupon  appertaining
thereto  shall have any right by virtue or by availing of any  provision of this
Indenture  to  institute  any  action  or  proceeding  at law or in equity or in
bankruptcy or otherwise  upon or under or with respect to this Indenture or such
Security, or for the appointment of a trustee, receiver,  liquidator,  custodian
or other  similar  official or for any other  remedy  hereunder  or  thereunder,
unless (a) such Holder previously shall have given to the Trustee written notice
of an Event of Default  with  respect to  Securities  of such  series and of the
continuance thereof, as hereinbefore  provided,  and (b) the Holders of not less
than 25% in aggregate principal amount of the Securities of such affected series
then  Outstanding  (treated as a single  class) shall have made written  request
upon the  Trustee to  institute  such action or  proceedings  in its own name as
Trustee  hereunder  and  shall  have  offered  to the  Trustee  such  reasonable
indemnity as it may require  against the costs,  expenses and  liabilities to be
incurred  therein or thereby,  and (c) the Trustee for 60 days after its receipt
of such notice,  request and offer of  indemnity  shall have failed to institute
any such  action or  proceeding,  and (d) no  direction  inconsistent  with such
written  request shall have been given to the Trustee  pursuant to Section 5.13;
it being  understood and intended,  and being expressly  covenanted by the taker
and Holder of every Security or Coupon with every other taker and Holder and the
Trustee,  that no one or more  Holders  of  Securities  of any series or Coupons
appertaining to such  Securities  shall have any right in any manner whatever by
virtue or by availing of any 



                                       43




provision of this Indenture or any Security to affect,  disturb or prejudice the
rights of any other such taker or Holder of Securities  or Coupons  appertaining
to such  Securities,  or to obtain or seek to obtain priority over or preference
to any other such taker or Holder or to enforce any right  under this  Indenture
or any Security, except in the manner herein provided and for the equal, ratable
and common  benefit of all Holders of  Securities of the  applicable  series and
Coupons  appertaining to such Securities.  For the protection and enforcement of
the provisions of this Section,  each and every  Securityholder  and the Trustee
shall be entitled to such relief as can be given either at law or in equity.

SECTION 5.9 Unconditional Right of Securityholders to Institute Certain Suits.

     Notwithstanding  any other provision in this Indenture and any provision of
any  Security,  the right of any  Holder of any  Security  or Coupon to  receive
payment of the  principal of and interest on such Security or Coupon on or after
the respective due dates  expressed in such Security or Coupon or the applicable
redemption  dates provided for in such Security,  to convert such  Securities of
any series in accordance with terms that may be established  pursuant to Section
2.3, or to  institute  sui for the  enforcement  of any such payment on or after
such respective dates,  shall not be impaired or affected without the consent of
such Holder.

SECTION 5.10 Restoration of Rights on Abandonment of Proceedings.

     In case the Trustee  shall have  proceeded  to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned for any
reason,  or shall have been  determined  adversely to the  Trustee,  then and in
every such case the Company and the Trustee  shall be restored  respectively  to
their former positions and rights hereunder, and all rights, remedies and powers
of the Company, the Trustee and the Securityholders  shall continue as though no
such proceedings had been taken.

SECTION 5.11 Powers and  Remedies  Cumulative;  Delay or Omission  Not Waiver of
             Default.

     Except as provided in Section 5.8, no right or remedy herein conferred upon
or  reserved  to the  Trustee  or to the  Holders  of  Securities  or Coupons 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



                                       44




not prevent the  concurrent  assertion or  employment  of any other  appropriate
right or remedy.

SECTION 5.12 Delay or Omission Not Waiver.

     No delay or  omission  of the  Trustee  or of any Holder of  Securities  or
Coupons  to  exercise  any right or power  accruing  upon any  Event of  Default
occurring and  continuing  as aforesaid  shall impair any such right or power or
shall  be  construed  to  be a  waiver  of  any  such  Event  of  Default  or an
acquiescence  therein.  Every  power and  remedy  given by this  Indenture,  any
Security or law to the Trustee or to the Holders of Securities or Coupons may be
exercised from time to time, and as often as shall be deemed  expedient,  by the
Trustee or, subject to Section 5.8, by the Holders of Securities or Coupons.

SECTION 5.13 Control by Holders of Securities.

     The Holders of a majority in aggregate  principal  amount of the Securities
of each series  affected  (with each such series voting as a separate  class) at
the time Outstanding 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 by this Indenture; provided, that such direction shall
not be  otherwise  than  in  accordance  with  law and  the  provisions  of this
Indenture and provided, further, that (subject to the provisions of Section 6.1)
the Trustee shall have the right to decline to follow any such  direction if (a)
the  Trustee,  being  advised by  counsel,  shall  determine  that the action or
proceeding  so directed may not lawfully be taken;  or (b) if the Trustee by its
board of directors,  the executive committee,  or a trust committee of directors
or  Responsible  Officers of the Trustee shall  determine in good faith that the
action or  proceedings  so  directed  would  involve  the  Trustee  in  personal
liability;  or (c) if the  Trustee in good  faith  shall so  determine  that the
actions or  forbearances  specified  in or pursuant to such  direction  would be
unduly prejudicial to the interests of Holders of the Securities of all affected
series not joining in the giving of said  direction,  it being  understood  that
(subject to Section 6.1) the Trustee shall have no duty to ascertain  whether or
not such actions or forbearances are unduly prejudicial to such Holders.

     Nothing in this  Indenture  shall  impair  the right of the  Trustee in its
discretion  to take any action  deemed  proper by the  Trustee  and which is not
inconsistent with such direction or directions by Securityholders.

SECTION 5.14 Waiver of Past Defaults.

     Prior to the  declaration of acceleration of the



                                       45




Maturity of any Securities as provided in Section 5.2, the Holders of a majority
in  aggregate  principal  amount of the  Securities  of such series (each series
voting as a separate  class) at the time  Outstanding  with  respect to which an
Event of  Default  shall have  occurred  and be  continuing  (voting as a single
class)  may on  behalf  of the  Holders  of all such  Securities  waive any past
default  or Event of Default  described  in  Section  5.1 and its  consequences,
except a default in respect of a covenant or  provision  hereof  which cannot be
modified or amended without the consent of the Holder of each Security affected.
In the case of any such waiver, the Company,  the Trustee and the Holders of all
such  Securities  shall  be  restored  to  their  former  positions  and  rights
hereunder,  respectively, and such default shall cease to exist and be deemed to
have been cured and not to have occurred for purposes of this Indenture;  but no
such waiver shall extend to any  subsequent or other default or impair any right
consequent thereon.

SECTION 5.15 Trustee to Give  Notice of  Default,  But May  Withhold  in Certain
             Circumstances.

     The Trustee  shall,  within 90 days after the  occurrence of a default with
respect to the  Securities  of any  series,  give  notice of all  defaults  with
respect to that series known to the Trustee (i) if any  Unregistered  Securities
of that series are then Outstanding,  to the Holders thereof,  by publication at
least once in an Authorized  Newspaper in the Borough of Manhattan,  The City of
New York  and at least  once in an  Authorized  Newspaper  in  London  (and,  if
required by Section 3.9, at least once in an Authorized Newspaper in Luxembourg)
and (ii) to all  Holders of  Securities  of such series in the manner and to the
extent  provided in Section 313(c) of the Trust  Indenture  Act,  unless in each
case such defaults  shall have been cured before the mailing or  publication  of
such notice (the term  "default"  for the purpose of this  Section  being hereby
defined to mean any event or condition which is, or with notice or lapse of time
or both would become, an Event of Default);  provided,  that, except in the case
of  default  in  the  payment  of the  principal  of or  interest  on any of the
Securities of such series,  or in the payment of any sinking fund installment on
such series, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee, or a trust committee of
directors or trustees and/or  Responsible  Officers of the Trustee in good faith
determines  that the  withholding  of such  notice  is in the  interests  of the
Securityholders of such series.

SECTION 5.16 Right of Court to Require Filing of Undertaking to Pay Costs.

     All parties to this  Indenture  agree,  and each Holder of any  Security or
Coupon by his acceptance thereof shall be deemed to have agreed,  that any court
may in its discretion



                                       46




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  shall  not  apply  to any suit  instituted  by the
Trustee,   to  any  suit   instituted   by  any   Securityholder   or  group  of
Securityholders  of  any  series  holding  in the  aggregate  more  than  10% in
aggregate  principal amount of the Securities of such series, or, in the case of
any suit  relating to or arising  under clause (d) or (h) of Section 5.1 (if the
suit relates to  Securities  of more than one but less than all series),  10% in
aggregate  principal amount of Securities then Outstanding and affected thereby,
or in the case of any suit  relating to or arising  under  clause (d) or (h) (if
the  suit  under  clause  (d)  or  (h)  relates  to  all  the  Securities   then
Outstanding),  (f) or (g) of Section 5.1, 10% in aggregate  principal  amount of
all Securities then Outstanding, or to any suit instituted by any Securityholder
for the  enforcement  of the  payment of the  principal  of or  interest  on any
Security on or after the due date  expressed in such  Security or any date fixed
for redemption.

SECTION 5.17 Waiver of Stay or Extension Laws.

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

                                   ARTICLE 6

                             CONCERNING THE TRUSTEE

SECTION 6.1  Duties and Responsibilities of the Trustee;  During Default;  Prior
             to Default.

     Prior  to the  occurrence  of an  Event  of  Default  with  respect  to the
Securities of a particular  series and after the curing or waiving of all Events
of Default  which may have  occurred  with respect to such  series,  the Trustee
undertakes to perform such duties and only such duties as are  specifically  set



                                       47




forth in this Indenture  with respect to such series of  Securities.  In case an
Event of Default with respect to the Securities of a series has occurred and has
not been cured or waived, the Trustee shall exercise with respect to such series
of Securities  such of the rights and powers vested in it by this Indenture with
respect to such series of Securities,  and use the same degree of care and skill
in  their  exercise,   as  a  prudent  man  would  exercise  or  use  under  the
circumstances in the conduct of his own affairs.

     No  provision of this  Indenture  shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that

          (a) prior to the occurrence of an Event of Default with respect to the
     Securities of any series and after the curing or waiving of all such Events
     of Default with respect to such series which may have occurred:

               (i) the duties and obligations of the Trustee with respect to the
          Securities  of any series  shall be  determined  solely by the express
          provisions  of this  Indenture,  and the  Trustee  shall not be liable
          except  for the  performance  of such  duties and  obligations  as are
          specifically set forth in this Indenture,  and no implied covenants or
          obligations shall be read into this Indenture against the Trustee; and

               (ii) in the absence of bad faith on the part of the Trustee,  the
          Trustee may  conclusively  rely, as to the truth of the statements and
          the  correctness  of  the  opinions   expressed   therein,   upon  any
          statements,  certificates  or  opinions  furnished  to the Trustee and
          conforming to the  requirements of this Indenture;  but in the case of
          any such  statements,  certificates or opinions which by any provision
          hereof are specifically  required to be furnished to the Trustee,  the
          Trustee shall be under a duty to examine the same to determine whether
          or not they conform to the requirements of this Indenture;

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

          (c) the Trustee  shall not be liable with  respect to any action taken
     or omitted to be taken by it in good faith in accordance with the direction
     of the Holders  pursuant to Section 5.13  relating to the time,  method and
     place of conducting any proceeding for any



                                       48




     remedy available to the Trustee, or exercising any trust or power conferred
     upon the Trustee, under this Indenture.

     None of the  provisions  contained  in this  Indenture  shall  require  the
Trustee to expend or risk its own funds or otherwise  incur  personal  financial
liability in the  performance  of any of its duties or in the exercise of any of
its rights or powers, if there shall be reasonable ground for believing that the
repayment  of such funds or adequate  indemnity  against  such  liability is not
reasonably assured to it.

     The  provisions  of this Section 6.1 are in  furtherance  of and subject to
Section 315 of the Trust Indenture Act.

SECTION 6.2 Certain Rights of the Trustee.

     In  furtherance  of and subject to the Trust  Indenture Act, and subject to
Section 6.1:

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

          (b) any request,  direction,  order or demand of the Company mentioned
     herein shall be sufficiently  evidenced by an Officer's Certificate (unless
     other evidence in respect thereof is specifically  prescribed  herein or in
     the terms established in respect of any series);  and any resolution of the
     Board of  Directors  may be  evidenced  to the  Trustee  by a copy  thereof
     certified by the secretary or an assistant secretary of the Company;

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

          (d) the Trustee  shall be under no  obligation  to exercise any of the
     trusts or powers  vested in it by this  Indenture at the request,  order or
     direction of any of the Securityholders  pursuant to the provisions of this
     Indenture,  unless such  Securityholders  shall have offered to the Trustee
     reasonable   security  or  indemnity   against  the  costs,   expenses  and
     liabilities which might be incurred therein or thereby;



                                       49




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

          (f) prior to the occurrence of an Event of Default hereunder and after
     the curing or waiving of all Events of Default,  the  Trustee  shall not be
     bound to make any  investigation  into the facts or  matters  stated in any
     resolution,  certificate,  statement,  instrument, opinion, report, notice,
     request,  consent,  order,  approval,  appraisal,  bond,  debenture,  note,
     coupon, security, or other paper or document unless requested in writing so
     to do by the  Holders of not less than a majority  in  aggregate  principal
     amount of the Securities of all series affected then Outstanding; provided,
     that, if the payment within a reasonable  time to the Trustee of the costs,
     expenses or  liabilities  likely to be incurred by it in the making of such
     investigation is, in the opinion of the Trustee,  not reasonably assured to
     the Trustee by the security  afforded to it by the terms of this Indenture,
     the Trustee may  require  reasonable  indemnity  against  such  expenses or
     liabilities as a condition to proceeding;  the reasonable expenses of every
     such investigation  shall be paid by the Company or, if paid by the Trustee
     or any predecessor trustee, shall be repaid by the Company upon demand; and

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

SECTION 6.3  Trustee Not Responsible for Recitals,  Disposition of Securities or
             Application  of Proceeds  Thereof.

     The recitals  contained herein and in the Securities,  except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee assumes no  responsibility  for the correctness of the same. The
Trustee  makes no  representation  as to the  validity  or  sufficiency  of this
Indenture or of the Securities or Coupons.  The Trustee shall not be accountable
for the use or  application  by the Company of any of the  Securities  or of the
proceeds thereof.



                                       50




SECTION 6.4  Trustee and Agents May Hold  Securities  or  Coupons;  Collections,
             Etc.

     The  Trustee  or  any  agent  of the  Company  or of  the  Trustee,  in its
individual or any other capacity,  may become the owner or pledgee of Securities
or Coupons with the same rights it would have if it were not the Trustee or such
agent and may  otherwise  deal with the Company and receive,  collect,  hold and
retain  collections  from the  Company  with the same rights it would have if it
were not the Trustee or such agent.

SECTION 6.5 Moneys Held by Trustee.

     Subject to the  provisions of Section 10.4 hereof,  all moneys  received by
the Trustee shall,  until used or applied as herein  provided,  be held in trust
for the purposes for which they were received,  but need not be segregated  from
other  funds  except to the extent  required  by  mandatory  provisions  of law.
Neither the  Trustee nor any agent of the Company or the Trustee  shall be under
any liability for interest on any moneys received by it hereunder.

SECTION 6.6  Compensation and Indemnification of Trustee and Its Prior Claim.

     The Company  covenants  and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to reasonable compensation (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express  trust) and the Company  covenants  and agrees to pay or  reimburse  the
Trustee  and each  predecessor  trustee  upon  its  request  for all  reasonable
expense,  disbursements  and advances  incurred or made by or on behalf of it in
accordance  with  any  of  the  provisions  of  this  Indenture  (including  the
reasonable compensation and the expenses and disbursements of its counsel and of
all  agents and other  persons  not  regularly  in its  employ)  except any such
expense,  disbursement or advance as may arise from its negligence or bad faith.
The Company also covenants to indemnify the Trustee and each predecessor trustee
for, and to hold it harmless  against,  any loss,  liability or expense incurred
without  negligence  or bad faith on its part,  arising out of or in  connection
with the acceptance or  administration of this Indenture or the trusts hereunder
and its duties  hereunder,  including the costs and expenses of defending itself
against or investigating any claim of liability in the premises. The obligations
of the Company  under this Section to  compensate  and indemnify the Trustee and
each  predecessor  trustee  and  to  pay  or  reimburse  the  Trustee  and  each
predecessor  trustee for expenses,  disbursements  and advances shall constitute
additional  indebtedness  hereunder  and  shall  survive  the  satisfaction  and
discharge of this  Indenture.  Such  additional  indebtedness  shall be a senior
claim to that of the Securities upon all property



                                       51




and funds held or collected  by the Trustee as such,  except funds held in trust
for the  benefit of the Holders of  particular  Securities  or Coupons,  and the
Securities are hereby subordinated to such senior claim.

SECTION 6.7 Right of Trustee to Rely on Officer's Certificate, Etc.

     Subject to  Sections  6.1 and 6.2,  whenever in the  administration  of the
trusts of this Indenture the Trustee shall deem it necessary or desirable that a
matter be proved or  established  prior to taking or  suffering  or omitting any
action  hereunder,  such matter  (unless  other  evidence in respect  thereof be
herein  specifically  prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee,  be deemed to be conclusively proved and established
by an Officer's Certificate  delivered to the Trustee, and such certificate,  in
the absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted by it under the
provisions of this Indenture upon the faith thereof.

SECTION 6.8  Indentures  Not Creating  Potential  Conflicting  Interests for the
             Trustee.

     The following indentures are hereby specifically described for the purposes
of Section  310(b)(1) of the Trust Indenture Act: this Indenture with respect to
the Securities of any other series.

SECTION 6.9 Qualification of Trustee: Conflicting Interests.

     The Trustee shall comply with Section 310(b) of the Trust Indenture Act.

SECTION 6.10 Persons Eligible for Appointment as Trustee.

     The Trustee for each series of Securities hereunder shall at all times be a
corporation or banking  association  organized and doing business under the laws
of the United States of America,  any State thereof or the District of Columbia,
that has (or, in the case of a corporation or banking association  included in a
bank holding company system,  whose related bank holding company has) a combined
capital and surplus of at least $50,000,000,  and which is authorized under such
laws to  exercise  corporate  trust  powers  and is subject  to  supervision  or
examination  by  Federal,  state or  District  of  Columbia  authority.  If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid  supervising or examining  authority,  then
for the



                                       52




purposes of this Section,  the combined  capital and surplus of such corporation
shall be deemed to be its combined  capital and surplus as set forth in its most
recent  report of condition so  published.  In case at an time the Trustee shall
cease to be eligible in accordance  with the  provisions  of this  Section,  the
Trustee shall resign  immediately in the manner and with the effect specified in
Section 6.11.

     The  provisions of this Section 6.10 are in  furtherance  of and subject to
Section 310(a) of the Trust Indenture Act.

SECTION 6.11 Resignation and Removal; Appointment of Successor Trustee.

     (a) The Trustee, or any trustee or trustees hereafter appointed, may at any
time resign with  respect to one or more or all series of  Securities  by giving
written  notice  of  resignation  to the  Company  and  (i) if any  Unregistered
Securities of a series affected are then  Outstanding,  by giving notice of such
resignation  to  the  Holders  thereof,  by  publication  at  least  once  in an
Authorized  Newspaper in the Borough of Manhattan,  The City of New York, and at
least once in an  Authorized  Newspaper in London  (and,  if required by Section
3.9,  at least  once in an  Authorized  Newspaper  in  Luxembourg),  (ii) if any
Unregistered  Securities of a series affected are then  Outstanding,  by mailing
notice of such resignation to the Holders thereof who have filed their names and
addresses with the Trustee pursuant to Section  313(c)(2) of the Trust Indenture
Act at such  addresses  as were so furnished to the Trustee and (iii) by mailing
notice  of  such  resignation  to the  Holders  of then  Outstanding  Registered
Securities  of each series  affected at their  addresses as they shall appear on
the registry books. Upon receiving such notice of resignation, the Company shall
promptly appoint a successor  trustee or trustees with respect to the applicable
series by written instrument in duplicate, executed by authority of the Board of
Directors,  one copy of which  instrument  shall be delivered  to the  resigning
Trustee  and one copy to the  successor  trustee or  trustees.  If no  successor
trustee  shall  have been so  appointed  with  respect  to any  series  and have
accepted  appointment  within  30 days  after  the  mailing  of such  notice  of
resignation,   the  resigning  trustee  may  petition  any  court  of  competent
jurisdiction for the appointment of a successor  trustee,  or any Securityholder
who has been a bona fide Holder of a Security or  Securities  of the  applicable
series for at least six months may,  subject to the  provisions of Section 5.12,
on behalf of himself and all others similarly situated,  petition any such court
for the appointment of a successor trustee. Such court may thereupon, after such
notice,  if any,  as it may deem  proper  and  prescribe,  appoint  a  successor
trustee.

          (b) In case at any time any of the following shall occur:

               (i) the  Trustee  shall  fail to comply  with the  provisions  of
          Section 310(b) of the Trust



                                       53




          Indenture Act with respect to any series of  Securities  after written
          request therefor by the Company or by any  Securityholder who has been
          a bona fide Holder of a Security or  Securities  of such series for at
          least six months; or

               (ii) the Trustee  shall cease to be eligible in  accordance  with
          the  provisions  of  Section  6.10 and  Section  310(a)  of the  Trust
          Indenture Act and shall fail to resign after written request  therefor
          by the Company or by any Securityholder; or

               (iii) the Trustee  shall become  incapable of acting with respect
          to any  series of  Securities,  or shall be  adjudged  a  bankrupt  or
          insolvent,  or a  receiver  or  liquidator  of the  Trustee  or of its
          property  shall be appointed,  or any public officer shall take charge
          or  control  of the  Trustee or of its  property  or  affairs  for the
          purpose of rehabilitation, conservation or liquidation;

then,  in any such case,  the Company may remove the Trustee with respect to the
applicable  series of Securities and appoint a successor trustee for such series
by written instrument, in duplicate, executed by order of the Board of Directors
of the Company,  one copy of which  instrument shall be delivered to the Trustee
so removed and one copy to the successor trustee,  or, subject to the provisions
of Section 315(e) of the Trust Indenture Act, any  Securityholder who has been a
bona fide  Holder of a Security  or  Securities  of such series for at least six
months may on behalf of himself and all others similarly situated,  petition any
court  of  competent  jurisdiction  for  the  removal  of the  Trustee  and  the
appointment of a successor  trustee with respect to such series.  Such court may
thereupon,  after such  notice,  if any,  as it may deem  proper and  prescribe,
remove the Trustee and appoint a successor trustee.

          (c) The Holders of a majority  in  aggregate  principal  amount of the
     Securities  of each series at the time  outstanding  may at any time remove
     the  Trustee  with  respect to  Securities  of such  series  and  appoint a
     successor  trustee  with  respect  to the  Securities  of  such  series  by
     delivering to the Trustee so removed, to the successor trustee so appointed
     and to the Company the  evidence  provided for in Section 7.1 of the action
     in that regard taken by the Securityholders.

          (d) Any  resignation  or removal of the  Trustee  with  respect to any
     series and any  appointment  of a successor  trustee  with  respect to such
     series  pursuant to any of the provisions of this Section 6.11 shall become
     effective  upon  acceptance  of  appointment  by the  successor  trustee as
     provided in Section 6.12.



                                       54




SECTION 6.12 Acceptance of Appointment by Successor Trustee.

     Any successor  trustee  appointed as provided in Section 6.11 shall execute
and  deliver  to the  Company  and  to its  predecessor  trustee  an  instrument
accepting such appointment  hereunder,  and thereupon the resignation or removal
of the  predecessor  trustee with respect to all or any applicable  series shall
become  effective and such successor  trustee,  without any further act, deed or
conveyance,  shall become vested with all rights, powers, duties and obligations
with respect to such series of its predecessor hereunder, with like effect as if
originally named as trustee for such series hereunder; but, nevertheless, on the
written request of the Company or of the successor trustee,  upon payment of its
charges then unpaid, the trustee ceasing to act shall,  subject to Section 10.4,
pay over to the  successor  trustee all moneys at the time held by it  hereunder
and shall  execute  and deliver an  instrument  transferring  to such  successor
trustee all such rights,  powers,  duties and  obligations.  Upon request of any
such  successor  trustee,  the Company shall execute any and all  instruments in
writing for more fully and certainly vesting in and confirming to such successor
trustee  all  such  rights  and  powers.  Any  trustee  ceasing  to  act  shall,
nevertheless,  retain a prior claim upon all property or funds held or collected
by such trustee to secure any amounts then due it pursuant to the  provisions of
Section 6.6.

     If a successor  trustee is appointed  with respect to the Securities of one
or more (but not all) series,  the  Company,  the  predecessor  trustee and each
successor  trustee with respect to the Securities of any applicable series shall
execute and deliver an indenture  supplemental  hereto which shall  contain such
provisions  as shall be deemed  necessary  or  desirable to confirm that all the
rights, powers, trusts and duties of the predecessor trustee with respect to the
Securities  of any series as to which the  predecessor  trustee is not  retiring
shall  continue  to be vested in the  predecessor  trustee,  and shall add to or
change any of the  provisions of this Indenture as shall be necessary to provide
for or facilitate the  administration  of the trusts  hereunder by more than one
trustee,  it  being  understood  that  nothing  herein  or in such  supplemental
indenture shall constitute such trustees  co-trustees of the same trust and that
each  such  trustee  shall  be  trustee  of a trust  or  trusts  under  separate
indentures.

     No successor  trustee with respect to any series of Securities shall accept
appointment  as  provided  in  this  Section  6.12  unless  at the  time of such
acceptance such successor trustee shall be qualified under Section 310(b) of the
Trust Indenture Act and eligible under the provisions of Section 6.10.

     Upon acceptance of appointment by any successor trustee as provided in this
Section  6.12,  the Company  shall give



                                       55




notice thereof (a) if any Unregistered  Securities of a series affected are then
Outstanding, to the Holders thereof, by publication of such notice at least once
in an Authorized Newspaper in the Borough of Manhattan, The City of New York and
at least once in an Authorized  Newspaper in London (and, if required by Section
3.9,  at  least  once in an  Authorized  Newspaper  in  Luxembourg),  (b) if any
Unregistered  Securities  of a  series  affected  are then  Outstanding,  to the
Holders  thereof  who have filed  their  names and  addresses  with the  Trustee
pursuant to Section 313(c)(2) of the Trust Indenture Act, by mailing such notice
to such  Holders at such  addresses as were so furnished to the Trustee (and the
Trustee shall make such  information  available to the Company for such purpose)
and (c) to the Holders of  Registered  Securities  of each series  affected,  by
mailing such notice to such  Holders at their  addresses as they shall appear on
the  registry  books.   If  the  acceptance  of  appointment  is   substantially
contemporaneous  with  the  resignation,  then  the  notice  called  for  by the
preceding  sentence may be combined  with the notice called for by Section 6.11.
If the Company  fails to give such notice  within ten days after  acceptance  of
appointment  by the successor  trustee,  the successor  trustee shall cause such
notice to be given at the expense of the Company.

SECTION 6.13 Merger,  Conversion,  Consolidation  or  Succession  to Business of
             Trustee.

     Any  corporation  into which the Trustee may be merged or converted or with
which it may be  consolidated,  or any  corporation  resulting  from any merger,
conversion  or  consolidation  to which  the  Trustee  shall be a party,  or any
corporation  succeeding to the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided, that such corporation shall be
qualified under Section 310(b) of the Trust Indenture Act and eligible under the
provisions  of Section 6.10 without the  execution or filing of any paper or any
further act on the part of any of the  parties  hereto,  anything  herein to the
contrary notwithstanding.

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



                                       56




in the name of any  predecessor  trustee  shall  apply only to its  successor  o
successors by merger, conversion or consolidation.

SECTION 6.14 Preferential Collection of Claims Against the Company.

     If this Indenture is qualified  under the Trust  Indenture Act, the Trustee
shall comply with  Section  311(a) of the Trust  Indenture  Act,  excluding  any
creditor  relationship  listed in Section  311(b) of the Trust  Indenture Act. A
Trustee who has resigned or been removed  shall be subject to Section  311(a) of
the Trust Indenture Act to the extent indicated.

SECTION 6.15 Appointment of Authenticating Agent.

     As long as any Securities of a series remain Outstanding,  the Trustee may,
by an  instrument  in  writing,  appoint  with the  approval  of the  Company an
authenticating agent (the  "Authenticating  Agent") which shall be authorized to
act on behalf of the Trustee to authenticate  Securities,  including  Securities
issued upon exchange,  registration of transfer,  partial redemption or pursuant
to  Section  2.9.   Securities  of  each  such  series   authenticated  by  such
Authenticating  Agent shall be entitled to the  benefits of this  Indenture  and
shall be valid  and  obligatory  for all  purposes  as if  authenticated  by the
Trustee.  Whenever reference is made in this Indenture to the authentication and
delivery  of  Securities  of any  series  by  the  Trustee  or to the  Trustee's
Certificate  of  Authentication,  such  reference  shall be  deemed  to  include
authentication and delivery on behalf of the Trustee by an Authenticating  Agent
for such series and a Certificate  of  Authentication  executed on behalf of the
Trustee by suc  Authenticating  Agent.  Such  Authenticating  Agent shall at all
times be a corporation organized and doing business under the laws of the United
States of  America  or of any  State,  authorized  under  such laws to  exercise
corporate  trust  powers,  having a  combined  capital  and  surplus of at least
$45,000,000 (determined as provided in Section 6.10 with respect to the Trustee)
and subject to supervision or examination by Federal or State authority.

     Any  corporation  into  which  any  Authenticating  Agent  may be merged or
converted,  or with which it may be consolidated,  or any corporation  resulting
from any merger,  conversion or consolidation to which any Authenticating  Agent
shall be a party, or any corporation succeeding to the corporate agency business
of any Authenticating  Agent, shall continue to be the authenticating Agent with
respect to all series of Securities for which it served as Authenticating  Agent
without the  execution  or filing of any paper or any further act on the part of
the Trustee or such  Authenticating  Agent. Any Authenticating  Agent may at any
time,  and if it shall  cease to be  eligible  shall,  resign by giving  written
notice of resignation to the Trustee and to the Company.



                                       57




     Upon receiving such a notice of resignation or upon such a termination,  or
in case at any time any  Authenticating  Agent  shall  cease to be  eligible  in
accordance  with the provisions of this Section 6.15 with respect to one or more
series of Securities,  the Trustee shall upon receipt of a Company Order appoint
a successor  Authenticating  Agent and the Company shall provide  notice of such
appointment to all Holders of Securities of such series in the manner and to the
extent  provided  in  Section  11.4.  Any  successor  Authenticating  Agent upon
acceptance  of its  appointment  hereunder  shall become vested with all rights,
powers,  duties and  responsibilities  of its predecessor  hereunder,  with like
effect as if originally named as Authenticating Agent. The Company agrees to pay
to the  Authenticating  Agent  for  such  series  from  time to time  reasonable
compensation.  The  Authenticating  Agent for the Securities of any series shall
have no  responsibility  or liability  for any action taken by it as such at the
direction of the Trustee.

     If an  appointment  is made with respect to one or more series  pursuant to
this  Section,  the  Securities  of such series may have  endorsed  thereon,  in
addition  to  the  Trustee's  certificate  of  authentication,   an  alternative
certificate of authentication in the following form:

     This is one of the Securities described in the within-mentioned Indenture.

                                                 PNC BANK, NATIONAL ASSOCIATION,
                                                                      As Trustee

                                                 By
                                                   ----------------------------,
                                                         As Authenticating Agent

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

     Sections   6.2,   6.3,  6.4,  6.6  and  7.3  shall  be  applicable  to  any
Authenticating Agent.

                                    ARTICLE 7

                         CONCERNING THE SECURITYHOLDERS

SECTION 7.1 Evidence of Action Taken by Securityholders.

     Any request, demand,  authorization,  direction, notice,



                                       58




consent,  waiver or other action provided by this Indenture to be given or taken
by a specified  percentage in principal amount of the  Securityholders of any or
all  series may be  embodied  in and  evidenced  by one or more  instruments  of
substantially   similar   tenor   signed  by  such   specified   percentage   of
Securityholders in person or by agent duly appointed in writing;  and, except as
herein  otherwise  expressly  provided,  such action shall become effective when
such instrument or instruments are delivered to the Trustee.  Proof of execution
of any instrument or of a writing  appointing any such agent shall be sufficient
for any  purpose  of this  Indenture  and  (subject  to  Sections  6.1 and  6.2)
conclusive  in favor  of the  Trustee  and the  Company,  if made in the  manner
provided in this Article.

SECTION 7.2 Proof of Execution of Instruments and of Holding of Securities.

     Subject to Sections  6.1 and 6.2,  the  execution  of any  instrument  by a
Securityholder  or his  agent or proxy may be  proved  in  accordance  with such
reasonable  rules and regulations as may be prescribed by the Trustee or in such
manner as shall be satisfactory to the Trustee.  The holding of Securities shall
be proved by the Security Register or by a certificate of the registrar thereof.

SECTION 7.3 Holders to be Treated as Owners.

     The  Company,  the  Trustee and any agent of the Company or the Trustee may
deem and treat the person in whose name any Security  shall be  registered  upon
the Security  Register for such series as the  absolute  owner of such  Security
(whether or not such Security shall be overdue and  notwithstanding any notation
of ownership or other writing  thereon) for the purpose of receiving  payment of
or on  account  of the  principal  of and,  subject  to the  provisions  of this
Indenture, interest on such Security and for all other purposes; and neither the
Company nor the  Trustee  nor any agent of the  Company or the Trustee  shall be
affected by any notice to the contrary.  The Company,  the Trustee and any agent
of the Company or the Trustee may treat the Holder of any Unregistered  Security
and the Holder of any Coupon as the absolute owner of such Unregistered Security
or Coupon (whether or not such Unregistered Security or Coupon shall be overdue)
for the purpose of receiving  payment  thereof or on account thereof and for all
other  purposes  and  neither the  Company,  the  Trustee,  nor any agent of the
Company or the Trustee shall be affected by any notice to the contrary. All such
payments so made to any such person, or upon his order,  shall be valid, and, to
the extent of the sum or sums so paid,  effectual to satisfy and  discharge  the
liability for moneys payable upon any such Unregistered Security or Coupon.

     If the  Securities  of any  series  are  issued  in the form of one or more
Global Securities, the Depository therefor may grant proxies to Persons having a
beneficial  ownership  in such Global 



                                       59




Security or  Securities  for purposes of voting or otherwise  responding  to any
request for consent, waiver or other action which the Holder of such Security is
entitled to grant or take under this Indenture and the Trustee shall accept such
proxies for the  purposes  granted;  provided  that  neither the Trustee nor the
Company shall have any obligation  with respect to the grant of or  solicitation
by the Depository of such proxies.

SECTION 7.4 Securities Owned by Company Deemed Not Outstanding.

     In  determining  whether the Holders of the requisite  aggregate  principal
amount of  Outstanding  Securities  of any or all series have  concurred  in any
request,  demand,  authorization,  direction,  notice,  consent, waiver or other
action by  Securityholders  under this Indenture,  Securities which are owned by
the Company or any other  obligor on the  Securities  with respect to which such
determination is being made or by any person directly or indirectly  controlling
or controlled by or under direct or indirect  common control with the Company or
any other obligor on the Securities with respect to which such  determination is
being made shall be disregarded and deemed not to be Outstanding for the purpose
of any such  determination,  except that for the purpose of determining  whether
the Trustee  shall be  protected  in relying on any such action only  Securities
which the Trustee  knows are so owned  shall be so  disregarded.  Securities  so
owned which have been  pledged in good faith may be regarded as  Outstanding  if
the pledgee  establishes to the  satisfaction of the Trustee the pledgee's right
so to act with  respect  to such  Securities  and that  the  pledgee  is not the
Company or any other  obligor  upon the  Securities  or any person  directly  or
indirectly  controlling  or  controlled  by or under  direct or indirect  common
control with the Company or any other  obligor on the  Securities.  In case of a
dispute as to such  right,  the advice of counsel  shall be full  protection  in
respect of any decision made by the Trustee in accordance with such advice. Upon
request of the Trustee,  the Company  shall  furnish to the Trustee  promptly an
Officer's  Certificate listing and identifying all Securities,  if any, known by
the  Company  to be  owned  or  held  by or  for  the  account  of  any  of  the
above-described persons; and, subject to Sections 6.1 and 6.2, the Trustee shall
be entitled to accept such Officer's  Certificate as conclusive  evidence of the
facts therein set forth and of the fact that all  Securities  not listed therein
are Outstanding for the purpose of any such determination.

SECTION 7.5 Right of Revocation of Action Taken.

     At any time prior to (but not  after) the  evidencing  to the  Trustee,  as
provided  in Section  7.1,  of the  taking of any  action by the  Holders of the
percentage in aggregate principal amount of the Securities of any or all series,
as the case may be,  specified in this Indenture in connection with such action,


                                       60




any Holder of a Security the serial  number of which is shown by the evidence to
be included among the serial numbers of the Securities the Holders of which have
consented to such action may, by filing  written  notice at the Corporate  Trust
Office and upon proof of holding as provided in this Article, revoke such action
so far as concerns such  Security.  Except as aforesaid any such action taken by
the Holder of any Security  shall be conclusive and binding upon such Holder and
upon all future Holders and owners of such Security and of any Securities issued
in exchange or substitution  therefor or on  registration  of transfer  thereof,
irrespective  of whether or not any notation in regard  thereto is made upon any
such  Security.  Any action taken by the Holders of the  percentage in aggregate
principal  amount of the  Securities  of any or all series,  as the case may be,
specified in this Indenture in connection with such action shall be conclusively
binding  upon the  Company,  the Trustee  and the Holders of all the  Securities
affected by such action.

SECTION 8.1 Supplemental Indentures Without Consent of Securityholders.

     The Company,  when  authorized  by a  resolution  of its Board of Directors
(which  resolution  may provide  general terms or parameters for such action and
may  provide  that  the  specific  terms of such  action  may be  determined  in
accordance with or pursuant to an Company Order),  and the Trustee may from time
to time and at any time  enter  into an  indenture  or  indentures  supplemental
hereto for one or more of the following purposes:

          (a) to convey, transfer,  assign, mortgage or pledge to the Trustee as
     security for the Securities of one or more series any property or assets;

          (b) to evidence the  succession of another  Person to the Company,  or
     successive  successions,  and the  assumption by any such  successor of the
     covenants, agreements and obligations of the Company pursuant to Article 9;

          (c) to add to the  covenants of the Company  such  further  covenants,
     restrictions, conditions or provisions as the Company and the Trustee shall
     consider to be for the  protection of the Holders of Securities or Coupons,
     and to make the occurrence, or the occurrence and continuance, of a default
     in any such additional covenants, restrictions, conditions or provisions an
     Event of Default  permitting  the  enforcement of all or any of the several
     remedies provided in this Indenture as herein set forth; provided,  that in
     respect  of  any  such  additional 



                                       61




     covenant,  restriction,  condition or provision such supplemental indenture
     may provide for a particular  period of grace after  default  (which period
     may be shorter or longer than that  allowed in the case of other  defaults)
     or may provide for an immediate  enforcement  upon such an Event of Default
     or may limit the  remedies  available  to the Trustee upon such an Event of
     Default or may limit the right of the  Holders of a majority  in  aggregate
     principal amount of the Securities of such series to waive such an Event of
     Default;

          (d) to cure any  ambiguity or to correct or  supplement  any provision
     contained herein or in any supplemental indenture which may be defective or
     inconsistent   with  any  other  provision   contained  herein  or  in  any
     supplemental  indenture, or to make any other provisions as the Company may
     deem necessary or desirable,  provided, that no such action shall adversely
     affect the interests of the Holders of the Securities or Coupons;

          (e) to establish  the forms or terms of Securities of any series or of
     the Coupons  appertaining  to such  Securities as permitted by Sections 2.1
     and 2.3;

          (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, pursuant to the requirements
     of Section 6.12; or

          (g) to provide for the  qualification of the Indenture under the Trust
     Indenture Act.

     The Trustee is hereby  authorized to join with the Company in the execution
of any such supplemental  indenture,  to make any further appropriate agreements
and  stipulations  which may be therein  contained and to accept the conveyance,
transfer,  assignment,  mortgage or pledge of any property  thereunder,  but the
Trustee  shall not be  obligated to enter into any such  supplemental  indenture
which  affects  the  Trustee's  own  rights,  duties or  immunities  under  this
Indenture or otherwise.

     Any supplemental indenture authorized by the provisions of this Section may
be executed  without the consent of the Holders of any of the  Securities at the
time outstanding, notwithstanding any of the provisions of Section 8.2.



                                       62




SECTION 8.2 Supplemental Indentures With Consent of Securityholders.

     With the consent (evidenced as provided in Article 7) of the Holders of not
less than a majority in aggregate principal amount of the Securities at the time
Outstanding of all series affected by such supplemental indenture (voting as one
class),  the Company,  when authorized by a resolution of its Board of Directors
(which  resolution  may provide  general terms or parameters for such action and
may  provide  that  the  specific  terms of such  action  may be  determined  in
accordance with or pursuant to an Company Order), and the Trustee may, from time
to time and at any time,  enter into an  indenture  or  indentures  supplemental
hereto (which shall conform to the  provisions of the Trust  Indenture Act as in
force and effect at the date of execution thereof) 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  Holders  of the  Securities  of each  such  series or of the
Coupons  appertaining to such Securities;  provided,  that no such  supplemental
indenture  shall (a) extend the final  maturity of any  Security,  or reduce the
principal  amount  thereof,  or reduce the rate or extend the time of payment of
interest  thereon or premium  thereon,  if any, or reduce any amount  payable on
redemption  thereof,  or make the  principal  thereof  (including  any amount in
respect of original issue discount),  or interest thereon payable in any coin or
currency other than that provided in the Securities and Coupons or in accordance
with the terms  thereof,  or reduce the amount of the  principal  of an Original
Issue Discount  Security that would be due and payable upon an  acceleration  of
the maturity  thereof  pursuant to Section 5.1 or the amount thereof provable in
bankruptcy  pursuant to Section 5.2, or alter the provisions of Section 11.11 or
11.12 or impair or affect the right of any  Securityholder to institute suit for
the payment thereof when due or, if the Securities  provide therefor,  any right
of  repayment  at the option of the  Securityholder,  in each case  without  the
consent of the Holder of each Security so affected,  or (b) reduce the aforesaid
percentage of  Securities of any series,  the consent of the Holders of which is
required for any such supplemental indenture, without the consent of the Holders
of each Security so affected.

     A supplemental  indenture which changes or eliminates any covenant or other
provision of this  Indenture  which has expressly  been included  solely for the
benefit of one or more  particular  series of Securities,  or which modifies the
rights of Holders of Securities of such series,  or of Coupons  appertaining  to
such Securities, with respect to such covenant or provision, shall be deemed not
to affect the rights under this  Indenture of the Holders of  Securities  of any
other series or of the Coupons appertaining to such Securities.

     Upon the request of the Company,  accompanied  by a copy of a resolution of
the Board of Directors (which resolution may



                                       63




provide  general  terms or  parameters  for such action and may provide that the
specific  terms of such action may be determined in accordance  with or pursuant
to a Company Order) certified by the secretary or an assistant  secretary of the
Company authorizing the execution of any such supplemental  indenture,  and upon
the filing  with the  Trustee of  evidence  of the consent of the Holders of the
Securities as aforesaid and other  documents,  if any,  required by Section 7.1,
the Trustee  shall join with the Company in the  execution of such  supplemental
indenture unless such  supplemental  indenture affects the Trustee's own rights,
duties or  immunities  under  this  Indenture  or  otherwise,  in which case the
Trustee may in its  discretion,  but shall not be obligated  to, enter into such
supplemental indenture.

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

     Promptly  after  the  execution  by the  Company  and  the  Trustee  of any
supplemental  indenture pursuant to the provisions of this Section,  the Trustee
shall give  notice  thereof (i) to the  Holders of then  Outstanding  Registered
Securities  of each  series  affected  thereby,  by mailing a notice  thereof by
first-class  mail to such Holders at their addresses as they shall appear on the
Security  Register,  (ii) if any  Unregistered  Securities of a series  affected
thereby are then Outstanding,  to the Holders thereof who have filed their names
and  addresses  with the  Trustee  pursuant  to Section  313(c)(2)  of the Trust
Indenture Act, by mailing a notice  thereof by first-class  mail to such Holders
at  such  addresses  as  were so  furnished  to the  Trustee  and  (iii)  if any
Unregistered  Securities of a series affected thereby are then  Outstanding,  to
all Holders  thereof,  by  publication  of a notice  thereof at least once in an
Authorized  Newspaper in the Borough of  Manhattan,  The City of New York and at
least once in an  Authorized  Newspaper in London  (and,  if required by Section
3.9, at least once in an Authorized  Newspaper in Luxembourg),  and in each case
such notice shall set forth in general terms the substance of such  supplemental
indenture.  Any  failure  of the  Company  to give such  notice,  or any  defect
therein,  shall not,  however,  in any way impair or affect the  validity of any
such supplemental indenture.

SECTION 8.3 Effect of Supplemental Indenture.

     Upon the execution of any supplemental indenture pursuant to the provisions
hereof,  this  Indenture  shall be and be deemed to be  modified  and amended in
accordance   therewith  and  the  respective  rights,   limitations  of  rights,
obligations,  duties and  immunities  under this  Indenture of the Trustee,  the
Company and the Holders of  Securities  of each series  affected  thereby  shall
thereafter  be  determined,  exercised  and  enforced  hereunder  subject in all
respects to such modifications and amendments,  and all the terms and conditions
of any such  supplemental  indenture  shall be and be  deemed  to be part of the




                                       64




terms and conditions of this Indenture for any and all purposes.

SECTION 8.4 Documents to be Given to Trustee.

     The Trustee, subject to the provisions of Sections 6.1 and 6.2, may receive
an Officer's  Certificate and an Opinion of Counsel as conclusive  evidence that
any supplemental indenture executed pursuant to this Article 8 complies with the
applicable provisions of this Indenture.

SECTION 8.5 Notation on Securities in Respect of Supplemental Indentures.

     Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article may bear a
notation  in form  approved  by the  Trustee  for such  series as to any  matter
provided  for by  such  supplemental  indenture  or as to any  action  taken  by
Securityholders.  If  the  Company  or  the  Trustee  shall  so  determine,  new
Securities  of any  series so  modified  as to  conform,  in the  opinion of the
Trustee  and the  Board of  Directors,  to any  modification  of this  Indenture
contained  in any such  supplemental  indenture  may be prepared by the Company,
authenticated  by the Trustee and  delivered in exchange for the  Securities  of
such series then Outstanding.


                                    ARTICLE 9

                    CONSOLIDATION, MERGER, SALE OR CONVEYANCE

SECTION 9.1 Company May Consolidate, Etc, Only on Certain Terms.

     The Company shall not consolidate  with or merge into any other Person,  or
convey, transfer or lease its properties and assets substantially as an entirety
to any other  Person,  and the  Company  shall not  permit  any other  Person to
consolidate  with or merge into the  Company or  convey,  transfer  or lease its
properties and assets substantially as an entirety to the Company, unless:

          (a) either the Company  shall be the  continuing  corporation,  or the
     successor  entity (if other than the Company) formed by such  consolidation
     or into which the Company is merged or to which the  properties  and assets
     of the Company  substantially  as an entity are transferred or leased shall
     be  a  corporation,   partnership,  limited  liability  company,  or  trust
     organized and existing under the laws of the United States of America,  any
     State thereof or the District of Columbia and shall expressly assume, by an
     indenture  supplemental  hereto,  executed and delivered to the Trustee, in
     form satisfactory to the Trustee,



                                       65




     all the obligations of the Company under the Securities and this Indenture;
     and

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

SECTION 9.2 Successor Entity Substituted.

     The successor entity formed by such consolidation or into which the Company
is merged or to which such  conveyance,  transfer or lease is made shall succeed
to and be  substituted  for,  and may  exercise  every  right and power of,  the
Company under this Indenture  with the same effect as if such  successor  entity
had been named as the Company  herein,  and thereafter  (except in the case of a
lease to  another  Person)  the  predecessor  entity  shall be  relieved  of all
obligations  and  covenants  under th Indenture and the  Securities  and, in the
event of such  conveyance  or  transfer,  any  such  predecessor  entity  may be
dissolved and liquidated.

SECTION 9.3 Opinion of Counsel To Be Given Trustee.

     The Trustee  subject to the  provisions of Sections 6.1 and 6.2 may receive
an  Opinion  of  Counsel as  conclusive  evidence  that any such  consolidation,
merger, sale or conveyance, and any such assumption complies with the provisions
of this Article 9.


                                   ARTICLE 10

                           SATISFACTION AND DISCHARGE


SECTION 10.1 Satisfaction and Discharge of Indenture.

     (A) If at any time (i) the Company shall have paid or caused to be paid the
principal  of and  interest  on all the  Securities  of any  series  Outstanding
hereunder and all unmatured Coupons  appertaining thereto (other than Securities
of such series and Coupons appertaining thereto which have been destroyed,  lost
or stolen and which have been  replaced or paid as  provided in Section  2.9) as
and when the same shall have become due and payable,  or (ii) the Company  shall
have  delivered to the Trustee for  cancellation  all  Securities  of any series
theretofore  authenticated and all unmatured Coupons appertaining thereto (other
than any Securities of such series and Coupons  appertaining thereto which shall
have been  destroyed,  lost or



                                       66




stolen and which shall have been replaced or paid as provided in Section 2.9) or
(iii) in the case of any series of Securities where the exact amount  (including
the  currency of  payment)  of  principal  of and  interest  due on which can be
determined  at the time of making the  deposit  referred to in clause (b) below,
(a) all the  Securities  of such series and all unmatured  Coupons  appertaining
thereto not  theretofore  delivered to the Trustee for  cancellation  shall have
become due and payable,  or are by their terms to become due and payable  within
one year or are to be called for redemption  within one year under  arrangements
satisfactory to the Trustee for the giving of notice of redemption,  and (b) the
Company  shall have  irrevocably  deposited or caused to be  deposited  with the
Trustee as trust funds in trust the entire amount in (i) cash (other than moneys
repaid by the  Trustee or any Paying  Agent to the  Company in  accordance  with
Section  10.4),  (ii) in the case of any series of  Securities  the  payments on
which may only be made in Dollars,  direct  obligations  of the United States of
America,  backed by its full faith and credit ("U.S.  Government  Obligations"),
maturing as to principal  and interest at such times and in such amounts as will
insure the  availability of cash sufficient to pay at such Maturity or upon such
redemption,  as the case may be, or (iii) a combination thereof,  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
(a) the  principal  and  interest on all  Securities  of such series and Coupons
appertaining  thereto on each date that such  principal  or  interest is due and
payable and (b) any  mandatory  sinking fund payments on the dates on which such
payments are due and payable in  accordance  with the terms of the Indenture and
the Securities of such series;  and if, in any such case, the Company shall also
pay or cause to be paid all other sums payable  hereunder  by the Company,  then
this  Indenture  shall cease to be of further effect (except as to (i) rights of
registration  of  transfer  and  exchange  of  Securities  of such Series and of
Coupons appertaining thereto and the Company's right of optional redemption,  if
any,  (ii)  substitution  of  mutilated  defaced,   destroyed,  lost  or  stolen
Securities  or  Coupons,  (iii)  rights of holders  of  Securities  and  Coupons
appertaining  thereto to receive  payments of  principal  thereof  and  interest
thereon,   upon  the  original   stated  due  dates   therefor   (but  not  upon
acceleration),  and remaining rights of the Holders to receive mandatory sinking
fund  payments,  if any, (iv) any optional  redemption  rights of such series of
Securities to the extent to be exercised to make such call for redemption within
one year,  (v) the rights,  obligations,  duties and  immunities  of the Trustee
hereunder,  including those under Section 6.6, (vi) the rights of the Holders of
securities  of such series and  Coupons  appertaining  thereto as  beneficiaries
hereof with respect to the property so deposited with the Trustee payable to all
or any of them, and (vii) the  obligations of the Company under Section 3.2) and
the Trustee,  on demand of the Company  accompanied by an Officer's  Certificate
and an Opinion  of Counsel  and at the cost and  expense of the  Company,  shall
execute proper  instruments  acknowledging  such satisfaction of and discharging
this  Indenture;  provided,  that the rights of



                                       67




Holders of the Securities and Coupons to receive amounts in respect of principal
of and interest on the  Securities and Coupons held by them shall not be delayed
longer  than  required  by then  applicable  mandatory  rules or policies of any
securities  exchange upon which the Securities are listed. The Company agrees to
reimburse  the  Trustee  for any costs or  expenses  thereafter  reasonably  and
properly  incurred and to  compensate  the Trustee for any  services  thereafter
reasonably  and  properly  rendered  by the  Trustee  in  connection  with  this
Indenture or the Securities of such series.

     (B) The following  provisions  shall apply to the Securities of each series
unless  specifically  otherwise  provided  in  a  Board  Resolution,   Officer's
Certificate or indenture  supplemental  hereto provided pursuant to Section 2.3.
In  addition  to  discharge  of the  Indenture  pursuant  to the next  preceding
paragraph,  in the case of any series of Securities the exact amounts (including
the  currency of  payment)  of  principal  of and  interest  due on which can be
determined  at the time of making the  deposit  referred to in clause (a) below,
the Company shall be deemed to have paid and discharged the entire  indebtedness
on all the Securities of such a series and the Coupons  appertaining  thereto on
the  date  of the  deposit  referred  to in  subparagraph  (a)  below,  and  the
provisions of this  Indenture  with respect to the Securities of such series and
Coupons  appertaining  thereto  shall no longer be in effect  (except  as to (i)
rights of registration of transfer and exchange of Securities of such series and
of Coupons  appertaining thereto and the Company's right of optional redemption,
if any, (ii)  substitution  of  mutilated,  defaced,  destroyed,  lost or stolen
Securities  or  Coupons,  (iii)  rights of Holders  of  Securities  and  Coupons
appertaining  thereto to receive  payments of  principal  thereof  and  interest
thereon,   upon  the  original   stated  due  dates   therefor   (but  not  upon
acceleration),  and remaining rights of the Holders to receive mandatory sinking
fund  payments,  if any, (iv) any optional  redemption  rights of such series of
Securities to the extent to be exercised to make such call for redemption within
one year,  (v) the rights,  obligations,  duties and  immunities  of the Trustee
hereunder,  (vi) the rights of the  Holders  of  Securities  of such  series and
Coupons  appertaining  thereto  as  beneficiaries  hereof  with  respect  to the
property so deposited  with the Trustee  payable to all or any of them and (vii)
the  obligations  of the Company  under  Section  3.2) and the  Trustee,  at the
expense  of  the  Company,  shall  at  the  Company's  request,  execute  proper
instruments acknowledging the same, if

          (a) with  reference  to this  provision  the Company  has  irrevocably
     deposited or caused to be  irrevocably  deposited with the Trustee as trust
     funds in trust,  specifically pledged as security for, and dedicated solely
     to, the benefit of the Holders of the Securities of such series and Coupons
     appertaining  thereto  (i)  cash in an  amount,  or (ii) in the case of any
     series of  Securities  the  payments  on which may only be made in Dollars,
     U.S. Government Obligations,



                                       68




     maturing as to principal  and interest at such times and in such amounts as
     will  insure  the  availability  of cash or  (iii) a  combination  thereof,
     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 (a) the principal and interest on all Securities of
     such  series  and  Coupons  appertaining  thereto  on each  date  that such
     principal or interest is due and payable and (b) any mandatory sinking fund
     payments  on the  dates on  which  such  payments  are due and  payable  in
     accordance  with the  terms of the  Indenture  and the  Securities  of such
     series;

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

          (c) the  Company  has  delivered  to the Trustee an Opinion of Counsel
     based on the fact that (x) the Company has received from, or there has been
     published by, the IRS a ruling or (y) since the date hereof, there has been
     a change in the  applicable  Federal  income tax law, in either case to the
     effect  that,  and such  opinion  shall  confirm  that,  the Holders of the
     Securities  of such  series  and  Coupons  appertaining  thereto  will  not
     recognize  income,  gain or loss  for  United  States  Federal  income  tax
     purposes as a result of such deposit,  defeasance and discharge and will be
     subject to United States  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; and

          (d) the Company has delivered to the Trustee an Officer's  Certificate
     and an Opinion of  Counsel,  each  stating  that all  conditions  precedent
     provided for relating to the defeasance contemplated by this provision have
     been complied with.

     (C) The Company shall be released from its  obligations  under Sections 3.6
and 9.1 and unless  otherwise  provided for in the Board  Resolution,  Officer's
Certificate  or  Indenture  supplemental  hereto  establishing  such  series  of
Securities,  from all  covenants  and other  obligations  referred to in Section
2.3(18) or 2.3(19)  with respect to such series of  Securities,  and any Coupons
appertaining thereto, outstanding on and after the date the conditions set forth
below are satisfied (hereinafter, "covenant defeasance"). For this purpose, such
covenant  defeasance  means that, with respect to the Outstanding  Securities of
any series,  the Company may omit to comply with and shall have no  liability in
respect of any term, condition or limitation set forth in such Section,  whether
directly  or  indirectly  by reason of any  reference  elsewhere  herein to such
Section or by reason of any  reference  in such  Section to any



                                       69




other  provision  herein or in any other  document  and such  omission to comply
shall not constitute an Event of Default under Section 5.1, but the remainder of
this Indenture and such Securities and Coupons shall be unaffected thereby.  The
following  shall be the conditions to  application of this  subsection C of this
Section 10.1:

          (a) The Company has  irrevocably  deposited  or caused to be deposited
     with the  Trustee  as trust  funds in trust for the  purpose  of making the
     following  payments,  specifically  pledged as security  for, and dedicated
     solely to, the benefit of the holders of the  Securities of such series and
     coupons appertaining thereto, (i) cash in an amount, or (ii) in the case of
     any series of Securities the payments on which may only be made in Dollars,
     U.S. Government  Obligations  maturing as to principal and interest at such
     times and in such amounts as will insure the  availability of cash or (iii)
     a  combination  thereof,   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 (A) the principal
     and  interest on all  Securities  of such  series and Coupons  appertaining
     thereof and (B) any  mandatory  sinking  fund  payments on the day on which
     such  payments  are due and  payable  in  accordance  with the terms of the
     Indenture and the Securities of such series;

          (b) No Event of Default or event which with notice or lapse of time or
     both would become an Event of Default with respect to the Securities  shall
     have occurred and be continuing on the date of such deposit;

          (c) Such  covenant  defeasance  shall not cause the  Trustee to have a
     conflicting  interest  as defined in Section  6.9 and for  purposes  of the
     Trust Indenture Act with respect to any securities of the Company;

          (d) Such covenant defeasance shall 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;

          (e) Such  covenant  defeasance  shall not cause  any  Securities  then
     listed on any registered  national  securities  exchange under the Exchange
     Act to be delisted;

          (f) The  Company  shall have  delivered  to the  Trustee an  Officer's
     Certificate  and  Opinion of Counsel to the effect  that the Holders of the
     Securities  of such  series  and  Coupons  appertaining  thereto  will  not
     recognize  income,  gain or loss  for 



                                       70




     United  States  Federal  income tax  purposes as a result of such  covenant
     defeasance  and will be subject to United States  Federal income tax on the
     same  amounts,  in the same manner and at the same times as would have been
     the case if such covenant defeasance had not occurred; and

          (g) The  Company  shall have  delivered  to the  Trustee an  Officer's
     Certificate  and an Opinion of Counsel,  each stating  that all  conditions
     precedent provided for relating to the covenant defeasance  contemplated by
     this provision have been complied with.

SECTION 10.2  Application  by  Trustee  of  Funds  Deposited  for  Payment  of
               Securities.

     Subject to Section 10.4,  all moneys  deposited  with the Trustee (or other
trustee)  pursuant  to Section  10.1 shall be held in trust and applied by it to
the payment,  either directly or through any Paying Agent (including the Company
acting as its own Paying Agent), to the Holders of the particular  Securities of
such series and of Coupons appertaining thereto for the payment or redemption of
which such moneys have been deposited  with the Trustee,  of all sums due and to
become  due  thereon  fo  principal  and  interest;  but such  money need not be
segregated from other funds except to the extent required by law.

SECTION 10.3 Repayment of Moneys Held by Paying Agent.

     In connection  with the  satisfaction  and discharge of this Indenture with
respect to  Securities  of any series,  all moneys then held by any Paying Agent
under the provisions of this Indenture with respect to such series of Securities
shall,  upon demand of the  Company,  be repaid to it or paid to the Trustee and
thereupon  such Paying Agent shall be released from all further  liability  with
respect to such moneys.

SECTION 10.4 Return of Unclaimed Moneys Held by Trustee and Paying Agent.

     Any moneys  deposited  with or paid to the Trustee or any Paying  Agent for
the payment of the principal of and any premium and interest on any Security and
any  series  of  Coupons  attached  thereto  and not so  applied  but  remaining
unclaimed  under  applicable  law shall be  transferred  by the  Trustee  to the
appropriate  Persons in accordance with applicable  laws, and the Holder of such
Security of such series and of any Coupons appertaining thereto shall thereafter
look only to such  Persons  for an payment  which such Holder may be entitled to
collect and all  liability  of the Trustee and such Paying Agent with respect to
such moneys shall thereupon cease.



                                       71




SECTION 10.5 Indemnity for U.S. Government Obligations.

     The Company  shall pay and  indemnify  the Trustee  against any tax, fee or
other  charge  imposed on or assessed  against the U.S.  Government  Obligations
deposited  pursuant to Section  10.1 or the  principal  or interest  received in
respect of such obligations.


                                   ARTICLE 11

                            MISCELLANEOUS PROVISIONS


SECTION 11.1 Incorporators,  Stockholders,  Officers  and  Directors  of Company
             Exempt from Individual Liability.

     No recourse under or upon any obligation,  covenant or agreement  contained
in this Indenture,  or in any Security, or because of any indebtedness evidenced
thereby,  shall be had against any  incorporator,  as such, or against any past,
present or future stockholder,  officer or director,  as such, of the Company or
of any successor, either directly or through the Company or any successor, under
any rule of law,  statute or  constitutional  provision or by the enforcement of
any  assessment or by any legal or equitable  proceeding or otherwise,  all such
liability  being  expressly  waived  and  released  by  the  acceptance  of  the
Securities and the Coupons, if any,  appertaining thereto by the Holders thereof
and as part of the consideration for the issue of the Securities and the Coupons
appertaining thereto.

SECTION 11.2 Provisions of Indenture for the Sole Benefit of Parties and Holders
             of Securities and Coupons.

     Nothing in this Indenture, in the Securities or in the Coupons appertaining
thereto,  expressed or implied, shall give or be construed to give to any Person
other than the  parties  thereto  and their  successors  and the  Holders of the
Securities  or Coupons,  if any, any legal or equitable  right,  remedy or claim
under this Indenture or under any covenant or provision  herein  contained,  all
such covenants and  provisions  being for the sole benefit of the parties hereto
and their successors and of the Holders of the Securities or Coupons, if any.

SECTION 11.3 Successors and Assigns of Company Bound by Indenture.

     All the covenants, stipulations,  promises and



                                       72




agreements in this Indenture contained by or in behalf of the Company shall bind
its successors and assigns, whether so expressed or not.

SECTION 11.4 Notices and Demands on Company,  Trustee and Holders of  Securities
             and  Coupons.

     Any notice or demand which by any  provision of this  Indenture is required
or  permitted  to be  given  or  served  by the  Trustee  or by the  Holders  of
Securities  or  Coupons,  if any, to or on the Company may be given or served by
being  deposited   postage  prepaid,   first-class  mail  (except  as  otherwise
specifically provided herein) addressed (until another address of the Company is
filed  by  the  Company  with  the  Trustee)  to  HEALTHSOUTH  Corporation,  One
HealthSouth Parkway, Birmingham, Alabama 35243 Attention: Secretary. Any notice,
direction,  request  or demand by the  Company or any  Holder of  Securities  or
Coupons,  if  any,  to or  upon  the  Trustee  shall  be  deemed  to  have  been
sufficiently  given or served by being deposited  postage  prepaid,  first-class
mail (except as otherwise specifically provided herein) addressed (until another
address of the  Trustee is filed by the  Trustee  with the  Company) to 500 West
Jefferson  Street,  Louisville,   Kentucky  40202,  Attention:  Corporate  Trust
Department.

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

     In case, by reason of the suspension of or  irregularities  in regular mail
service,  it shall be  impracticable  to mail  notice to the  Company  when such
notice is required to the given  pursuant to any  provision  of this  Indenture,
then any manner of giving such notice as shall be reasonably satisfactory to the
Trustee shall be deemed to be a sufficient giving of such notice.



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SECTION 11.5 Officer's  Certificates  and Opinions of Counsel;  Statements to be
             Contained  Therein.

     Upon any  application  or demand by the  Company to the Trustee to take any
action under any of the provisions of this Indenture,  the Company shall furnish
to the Trustee an Officer's  Certificate  stating that all conditions  precedent
provided  for in this  Indenture  relating  to the  proposed  action  have  been
complied  with and an  Opinion of Counsel  stating  that in the  opinion of such
counsel all such  conditions  precedent have been complied with,  except that in
the case of any such  application  o demand as to which the  furnishing  of such
documents is specifically  required by any provision of this Indenture  relating
to such particular  application or demand, no additional  certificate or opinion
need be furnished.

     Each certificate or opinion provided for in this Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided for
in this  Indenture  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.

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

     Any  certificate,  statement  or opinion of an officer of the Company or of
counsel  may be based,  insofar  as it  relates to  accounting  matters,  upon a
certificate  or  opinion  of or  representations  by an  accountant  or  firm of
accountants in the



                                       74




employ of the Company, unless such officer or counsel, as the case may be, knows
that the  certificate  or  opinion  of or  representations  with  respect to the
accounting matters upon which his certificate, statement or opinion may be based
as aforesaid are  erroneous,  or in the exercise of reasonable  care should know
that the same are erroneous.

     Any  certificate or opinion of any independent  firm of public  accountants
filed with and directed to the Trustee shall contain a statement  that such firm
is independent.

SECTION 11.6 Payments Due on Saturdays, Sundays and Holidays.

     If the date of Maturity of interest on or  principal of the  Securities  of
any series or any Coupons  appertaining thereto or the date fixed for redemption
or repayment of any such  Security or Coupon shall not be a Business  Day,  then
payment of interest or principal  need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made on
the date of Maturity  or the date fixed for  redemption,  and no interest  shall
accrue for the period after such date.

SECTION 11.7 Conflict of Any Provision of Indenture with Trust Indenture Act.

     If and to the extent that any provision of this Indenture limits, qualifies
or conflicts with duties imposed by, or with another provision (an "incorporated
provision")  included in this  Indenture  by  operation  of Sections 310 to 318,
inclusive,  of the Trust  Indenture  Act,  such imposed  duties or  incorporated
provision shall control.

SECTION 11.8 New York Law to Govern.

     THIS  INDENTURE  AND EACH  SECURITY  AND  COUPON  SHALL BE  DEEMED  TO BE A
CONTRACT  UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE
CONSTRUED  IN  ACCORDANCE  WITH THE LAWS OF SUCH  STATE,  WITHOUT  REGARD TO THE
CONFLICTS OF LAW PRINCIPLES THEREOF.

SECTION 11.9 Counterparts.

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

SECTION 11.10 Effect of Headings.

     The Article and Section  headings  herein and the Table of Contents are for
convenience only and shall not affect the



                                       75




construction hereof.

SECTION 11.11 Securities in a Foreign Currency or in ECU.

     Unless otherwise specified in an Officer's  Certificate  delivered pursuant
to  Section  2.3 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
ECUs),  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.  For purposes of this Section 11.11,  Market  Exchange Rate shall mean the
noon  Dollar  buying  rate in The New York  City  for  cable  transfers  of that
currency as published by the Federal Reserve Bank of New York; provided,  in the
case of ECUs, Market Exchange Rate shall mean the rate of exchange determined by
the  Commission  of the  European  Communities  (or any  successor  thereto)  as
published in the Official Journal of the European  Communities (such publication
or any successor  publication,  the "Journal").  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 or,  in the  case of ECUs,  the rate of
exchange as published in the Journal,  as of the most recent  available date, or
quotations  or, in the case of ECUs,  rates of  exchange  from one or more major
banks in The  City of New York or in the  country  of issue of the  currency  in
question,  which for  purposes of the ECU shall be  Brussels,  Belgium,  or such
other  quotations or, in the case of ECU, rates of exchange as the Trustee 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 a 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 11.12 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



                                       76




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  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, to the
extent  permitted by applicable law, 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, or 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 or day
on which banking institutions in The City of New York are authorized or required
by law or executive order to close.


                                   ARTICLE 12

                   REDEMPTION OF SECURITIES AND SINKING FUNDS

SECTION 12.1 Applicability of Article.

     The provisions of this Article shall be applicable to the Securities of any
series which are redeemable before their Maturity or to any sinking fund for the
retirement  of  Securities  of  a  series  except  as  otherwise   specified  as
contemplated by Section 2.3 for Securities of such series.

SECTION 12.2 Notice of Redemption; Partial Redemptions.

     Notice of redemption to the Holders of Registered  Securities of any series
to be redeemed as a whole or in part at the option of the Company shall be given
by mailing notice of such redemption by first class mail,  postage  prepaid,  at
least 30 days and not more than 60 days prior to the date  fixed for  redemption
to such  Holders of  Securities  of such series at their last  addresses as they
shall appear upon the registry  books.



                                       77




Notice of redemption to the Holders of Unregistered Securities to be redeemed as
a whole or in part,  who have filed their names and  addresses  with the Trustee
pursuant  to  Section  313(c)(2)  of the Trust  Indenture  Act shall be given by
mailing notice of such  redemption,  by first class mail,  postage  prepaid,  at
least 30 days and not more than 60 prior to the date  fixed for  redemption,  to
such Holders at such  addresses as were so furnished to the Trustee (and, in the
case of any such  notice  given by the  Company,  the  Trustee  shall  make such
information available to the Company for such purpose).  Notice of redemption to
all other Holders of Unregistered Securities shall be published in an Authorized
Newspaper in the Borough of Manhattan, The City of New York and in an Authorized
Newspaper in London (and, if required by Section 3.9, in an Authorized Newspaper
in Luxembourg),  in each case, once in each of three successive  calendar weeks,
the first  publication to be not less than 30 nor more than 60 days prior to the
date  fixed for  redemption.  Any notice  which is mailed in the  manner  herein
provided shall be conclusively  presumed to have been duly given, whether or not
the Holder receives the notice. Failure to give notice by mail, or any defect in
the notice to the Holder of any Security of a series  designated  for redemption
as a whole or in part shall not affect the validity of the  proceedings  for the
redemption of such Security of such series.

     The notice of  redemption  to each such Holder shall  specify the principal
amount of each  Security of such series held by such Holder to be redeemed,  the
date fixed for redemption, the redemption price, the place or places of payment,
that payment will be made upon  presentation  and  surrender of such  Securities
and, in the case of Securities  with Coupons  attached  thereto,  of all Coupons
appertaining  thereto  maturing after the date fixed for  redemption,  that such
redemption  is pursuant to th mandatory or optional  sinking  fund,  or both, if
such be the case, that interest accrued to the date fixed for redemption will be
paid as  specified  in such  notice  and that on and after  said  date  interest
thereon or on the portions thereof to be redeemed will cease to accrue.  In case
any Security of a series is to be redeemed in part only the notice of redemption
shall state the portion of the principal amount thereof to be redeemed and shall
state that on and after the date fixed for  redemption,  upon  surrender of such
Security,  a new Security or Securities of such series in principal amount equal
to the unredeemed portion thereof will be issued.

     The notice of  redemption of Securities of any series to be redeemed at the
option  of the  Company  shall be  given by the  Company  or,  at the  Company's
request, by the Trustee in the name and at the expense of the Company.

     On or before the  redemption  date  specified  in the notice of  redemption
given as provided in this Section,  the Company will deposit with the Trustee or
with one or more  Paying  Agents (or, if the Company is acting as its own Paying
Agent,  set aside,  segregate and holder in trust as provided in Section 3.4) an
amount of money  sufficient to redeem on the redemption 



                                       78




date  all  the  Securities  of such  series  so  called  for  redemption  at the
appropriate  redemption price,  together with accrued interest to the date fixed
for  redemption.  The Company will deliver to the Trustee at least 70 days prior
to the date fixed for redemption,  or such shorter period as shall be acceptable
to the Trustee, an Officer's  Certificate stating the aggregate principal amount
of  Securities  to be redeemed.  In case of a redemption  at the election of the
Company  prior to the  expiration of any  restriction  on such  redemption,  the
Company  shall  deliver  to the  Trustee,  prior to the  giving of any notice of
redemption to Holders pursuant to this Section, an Officer's Certificate stating
that such restriction has been complied with.

     If less than all the Securities of a series are to be redeemed, the Trustee
shall  select,  in such manner as it shall deemed  appropriate  and fair, in its
sole  discretion,  Securities of such series to be redeemed in whole or in part.
Securities may be redeemed in part in multiples equal to the minimum  authorized
denomination for Securities of such series or any multiple thereof.  The Trustee
shall  promptly  notify the Company in writing of the  Securities of such series
selected  for  redemption  and,  in the case of any  Securities  of such  series
selected for partial  redemption,  the principal  amount thereof to be redeemed.
For all purposes of this Indenture,  unless the context otherwise requires,  all
provisions  relating to the redemption of Securities of any series shall relate,
in the case of any  Security  redeemed  or to be redeemed  only in part,  to the
portion  of the  principal  amount of such  Security  which has been or is to be
redeemed.

SECTION 12.3 Payment of Securities Called for Redemption.

     If notice of redemption has been given as above provided, the Securities or
portions of Securities  specified in such notice shall become due and payable on
the date and at the place  stated in such  notice at the  applicable  redemption
price,  together with interest accrued to the date fixed for redemption,  and on
and after said date  (unless  the Company  shall  default in the payment of such
Securities at the redemption price, together with interest accrued to said date)
interest on the  Securities or portions of  Securities so called for  redemption
shall cease to accrue, and the unmatured Coupons, if any,  appertaining  thereto
shall be void, and, except as provided in Sections 6.5 and 10.4, such Securities
shall cease from and after the date fixed for  redemption  to be entitled to any
benefit or security under this Indenture,  and the Holders thereof shall have no
right in respect of such  Securities  except the right to receive the redemption
price  thereof  and  unpaid  interest  to  the  date  fixe  for  redemption.  On
presentation and surrender of such Securities at a place of payment specified in
said notice,  together with all Coupons, if any,  appertaining  thereto maturing
after the date fixed for redemption,  said Securities or the specified  portions
thereof shall be paid and redeemed by the Company at the  applicable  redemption
price,  together with



                                       79




interest  accrued  thereon  to the date  fixed for  redemption;  provided,  that
payment of interest  becoming  due on or prior to the date fixed for  redemption
shall be payable in the case of Securities with Coupons attached thereto, to the
Holders of the Coupons for such interest upon surrender thereof, and in the case
of Registered Securities, to the Holder of such Registered Securities registered
as such on the relevant  record  date,  subject to the terms and  provisions  of
Section 2.3 and 2.7 hereof.

     If any Security  called for redemption  shall not be so paid upon surrender
thereof for redemption,  the principal  shall,  until paid or duly provided for,
bear  interest  from the date fixed for  redemption  at the rate of  interest or
Yield to Maturity (in the case of an Original Issue Discount  Security) borne by
such Security.

     If any Security with Coupons attached thereto is surrendered for redemption
and is not accompanied by all appurtenant  Coupons maturing after the date fixed
for redemption, the surrender of such missing Coupon or Coupons may be waived by
the Company and the Trustee, if there be furnished to each of them such security
or indemnity as they may require to save each of them harmless.

     Upon  presentation of any Security redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to or on the order of the
Holder thereof,  at the expense of the Company,  a new Security or Securities of
such series,  of  authorized  denominations,  in  principal  amount equal to the
unredeemed portion of the Security so presented.

SECTION 12.4 Exclusion of Certain  Securities from Eligibility for Selection for
             Redemption.

     Securities  shall be excluded from eligibility for selection for redemption
if they are identified by registration  and  certificate  number in an Officer's
Certificate  delivered to the Trustee at least 40 days prior to the last date on
which  notice  of  redemption  may  be  given  as  being  owned  of  record  and
beneficially  by, and not pledged or hypothecated  by, either (a) the Company or
(b) an entity  specifically  identified in such written statement as directly or
indirectly  controlling  or  controlled  by or under  direct or indirect  common
control with the Company.

SECTION 12.5 Mandatory and Optional Sinking Funds.

     The minimum amount of any sinking fund payment provided for by the terms of
the Securities of any series is herein referred to as a "mandatory  sinking fund
payment," and any payment in excess of such minimum  amount  provided for by the



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terms of the  Securities  of any series is herein  referred  to as an  "optional
sinking fund payment." The date on which a sinking fund payment is to be made is
herein referred to as the "sinking fund payment date."

     In lieu of making all or any part of any  mandatory  sinking  fund  payment
with respect to any series of Securities in cash,  the Company may at its option
(a) deliver to the Trustee  Securities of such series  theretofore  purchased or
otherwise  acquired  (except upon redemption  pursuant to the mandatory  sinking
fund) by the  Company  or receive  credit for  Securities  of such  series  (not
previously so credited)  theretofore  purchased or otherwise acquired (except as
aforesaid) by the Company and delivered to the Trustee for cancellation pursuant
to Section  2.10,  (b) receive  credit for optional  sinking fund  payments (not
previously so credited) made pursuant to this Section, or (c) receive credit for
Securities of such series (not  previously so credited)  redeemed by the Company
through any optional redemption provision contained in the terms of such series.
Securities so delivered or credited shall be received or credited by the Trustee
at the sinking fund redemption price specified in such Securities.

     On or before the 60th day next preceding each sinking fund payment date for
any series,  the Company will  deliver to the Trustee an  Officer's  Certificate
(which need not contain the statements  required by Section 11.5) (a) specifying
the portion of the mandatory  sinking fund payment to be satisfied by payment of
cash and the portion to be satisfied by credit of  Securities of such series and
the basis for such  credit,  (b)  stating  that none of the  Securities  of such
series has  theretofore  been so  credited,  (c) stating that no defaults in the
payment of  interest  or Events of Default  with  respect  to such  series  have
occurred  (which  have not been  waived or  cured)  and are  continuing  and (d)
stating  whether or not the  Company  intends to  exercise  its right to make an
optional sinking fund payment with respect to such series and, if so, specifying
the amount of such optional  sinking fund payment  which the Company  intends to
pay on or before the next  succeeding  sinking fund payment date. Any Securities
of such series to be credited  and  required to be  delivered  to the Trustee in
order for the Company to be entitled to credit  therefor as aforesaid which have
not   theretofore   been  delivered  to  the  Trustee  shall  be  delivered  for
cancellation  pursuant  to  Section  2.10 to the  Trustee  with  such  Officer's
Certificate  (or reasonably  promptly  thereafter if acceptable to the Trustee).
Such  Officer's  Certificate  shall be  irrevocable  and upon its receipt by the
Trustee the Company shall become unconditionally  obligated to make all the cash
payments  or  payments  therein  referred  to,  if any,  on or  before  the next
succeeding sinking fund payment date.  Failure of the Company,  on or before any
such 60th day, to deliver such Officer's Certificate and Securities specified in
this paragraph, if any, shall not constitute a default but shall constitute,  on
and as of such  date,  the  irrevocable  election  of the  Company  (i) that the
mandatory  sinking  fund  payment  for such  series  due on the next  succeeding
sinking fund  payment date shall be paid  entirely



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in cash  without  the option to deliver or credit  Securities  of such series in
respect  thereof and (ii) that the Company  will make no optional  sinking  fund
payment with respect to such series as provided in this Section.

     If the sinking fund payment or payments  (mandatory or optional or both) to
be made in cash on the next succeeding sinking fund payment date plus any unused
balance of any preceding sinking fund payments made in cash shall exceed $50,000
(or the  equivalent  thereof in any Foreign  Currency or ECU) or a lesser sum in
Dollars  (or the  equivalent  thereof  in any  Foreign  Currency  or ECU) if the
Company  shall so request  with  respect  to the  Securities  of any  particular
series,  such cash shall be applied on the next succeeding  sinking fund payment
date  to the  redemption  of  Securities  of such  series  at the  sinking  fund
redemption   price  together  with  accrued  interest  to  the  date  fixed  for
redemption.  If such amount shall be $50,000 (or the  equivalent  thereof in any
Foreign  Currency or ECU) or less and the Company  makes no such request then it
shall be  carried  over  until a sum in excess  of  $50,000  (or the  equivalent
thereof in any Foreign Currency or ECU) is available.  The Trustee shall select,
in the manner  provided in Section  12.2,  for  redemption  on such sinking fund
payment  date a  sufficient  principal  amount of  Securities  of such series to
absorb said cash, as nearly as may be, and shall (if requested in writing by the
Company)  inform the  Company of the serial  numbers of the  Securities  of such
series (or portions  thereof) so  selected.  Securities  shall be excluded  from
eligibility  for  redemption  under  this  Section  if they  are  identified  by
registration and certificate number in an Officer's Certificate delivered to the
Trustee at least 60 days prior to the sinking  fund  payment date as being owned
of record and  beneficially  by, and not pledged or hypothecated  by, either (a)
the  Company  or  (b)  an  entity  specifically  identified  in  such  Officer's
Certificate  as directly or  indirectly  controlling  or  controlled by or under
direct or indirect common control with the Company. The Trustee, in the name and
at the  expense of the  Company  (or the  Company,  if it shall so  request  the
Trustee in writing)  shall cause notice of redemption of the  Securities of such
series to be given in  substantially  the manner  provided in Section  12.2 (and
with the effect  provided in Section  12.3) for the  redemption of Securities of
such series in part at the option of the Company. The amount of any sinking fund
payments not so applied or allocated to the  redemption  of  Securities  of such
series shall be added to the next cash sinking fund payment for such series and,
together with such payment,  shall be applied in accordance  with the provisions
of this  Section.  Any and all sinking  fund moneys held on the Stated  Maturity
date of the Securities of any particular series (or earlier, if such maturity is
accelerated),  which are not held for the payment or  redemption  of  particular
Securities  of such series  shall be applied,  together  with other  moneys,  if
necessary,  sufficient for the purpose,  to the payment of the principal of, and
interest on, the Securities of such series at Maturity.

     On or before each sinking fund payment  date,  the



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Company  shall pay to the  Trustee in cash or shall  otherwise  provide  for the
payment of all interest  accrued to the date fixed for  redemption on Securities
to be redeemed on the next following sinking fund payment date.

     The Trustee  shall not redeem or cause to be redeemed any  Securities  of a
series with sinking fund moneys or give any notice of  redemption  of Securities
for such series by  operation of the sinking  fund during the  continuance  of a
default in payment of  interest  on such  Securities  or of any Event of Default
except that,  where the giving of notice of redemption of any  Securities  shall
theretofore  have been made,  the Trustee  shall  redeem or cause to be redeemed
such  Securities,  provided  that it shall have  received from the Company a sum
sufficient for such redemption.  Except as aforesaid,  any moneys in the sinking
fund for such series at the time when any such default or Event of Default shall
occur, and any moneys thereafter paid into the sinking fund,  shall,  during the
continuance of such default or Event of Default be deemed to have been collected
under  Article 5 and held for the payment of all such  Securities.  In case such
Event of  Default  shall have been  waived as  provided  in Section  5.14 or the
default  cured on or before the sixtieth day  preceding the sinking fund payment
date in any year, such moneys shall thereafter be applied on the next succeeding
sinking fund payment date in accordance  with this Section to the  redemption of
such Securities.


                            [Signature page follows]




                                       83




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

                                              HEALTHSOUTH CORPORATION

                                              By: /s/ MICHAEL D. MARTIN
                                                 -------------------------------
                                                  Michael D. Martin
                                                  Executive Vice President,
                                                  Chief Financial Officer and
                                                  Treasurer

Attest:

By: /s/ WILLIAM W. HORTON
   --------------------------
   Assistant Secretary                        PNC BANK, NATIONAL ASSOCIATION, as
                                              Trustee

                                              By: /s/ DAVID G. METCALF
                                                  ------------------------------
                                                  Name: David G. Metcalf
                                                  Title: Vice President

Attest:

By: /s  W. MICHAEL HANKS
    --------------------------
    W. Michael Hanks
    Vice President




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STATE OF ALABAMA                    )
                                    : ss.:
COUNTY OF JEFFERSON                 )

      On the 22nd day of June,  1998,  before  me  personally  came  Michael  D.
Martin,  to me known, who, being by me duly sworn, did depose and say that he is
EVP,  CFO and  Treasurer of  HEALTHSOUTH  Corporation,  one of the  corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation;  that the seal affixed to said instrument is such corporate
seal;  that it was so affixed by  authority  of the Board of  Directors  of said
corporation; and that he signed his name thereto by like authority.

[NOTARIAL SEAL]                                        /s/ KATHY P. JONES
                                                       -------------------------
                                                           Notary Public






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STATE OF KENTUCKY                   )
                                    : ss.:
COUNTY OF JEFFERSON                 )

      On the 22nd day of June, 1998, before me personally came David G. Metcalf,
to me known,  who,  being by me duly  sworn,  did depose and say that he is Vice
President of PNC Bank, National Association,  one of the corporations  described
in and which executed the foregoing  instrument;  that he knows the seal of said
corporation;  that the seal affixed to said  instrument is such corporate  seal;
that  it was so  affixed  by  authority  of  the  Board  of  Directors  of  said
corporation; and that he signed his name thereto by like authority.

[NOTARIAL SEAL]                                        /s/ W. MICHAEL HANES
                                                       -------------------------
                                                           Notary Public







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