Subordinated Indenture - HealthSouth Corp. and The Bank of Nova Scotia Trust Co. of New York


                             HEALTHSOUTH CORPORATION


                                       and


          THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK, as Trustee


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


                             SUBORDINATED INDENTURE

                           Dated as of March 20, 1998


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












                             CROSS REFERENCE SHEET*

                                     Between

     Provisions of Trust  Indenture Act (as defined  herein) and Indenture dated
as of March 20, 1998 between HEALTHSOUTH Corporation and The Bank of Nova Scotia
Trust Company of New York, 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"...............................................................3
  "Capital Stock"..............................................................3
  "Commission".................................................................3
  "Common Equity"..............................................................3
  "Company"....................................................................3
  "Company Order"..............................................................3
  "Consolidated Tangible Assets"...............................................3
  "Corporate Trust Office".....................................................4
  "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 Subordinated Securities," "Securityholder"..............4
  "IRS"    ....................................................................5
  "Judgment Currency"..........................................................5
  "Maturity"...................................................................5
  "Non-U.S. Person"............................................................5
  "Officer's Certificate"......................................................5
  "144A Global Subordinated Security"..........................................5
  "Opinion of Counsel".........................................................5
  "Original Issue Date"........................................................5
  "Original Issue Discount Subordinated Security"..............................5
  "Outstanding"................................................................6
  "Paying Agent"...............................................................6
  "Periodic Offering"..........................................................6
  "Person" ....................................................................7
  "PORTAL Market"..............................................................7
  "Predecessor Subordinated Security"..........................................7
  "principal"..................................................................7
  "QIB" or "Qualified Institutional Buyer".....................................7






  "Regular Record Date"........................................................7
  "Registered Global Subordinated Security"....................................7
  "Registered Subordinated Security"...........................................7
  "Regulation S"...............................................................7
  "Regulation S Global Subordinated Security"..................................8
  "Required Currency"..........................................................8
  "Responsible Officer"........................................................8
  "Restricted Subordinated Security"...........................................8
  "Rule 144"...................................................................8
  "Rule 144A"..................................................................8
  "Rule 144K"..................................................................8
  "Securities Act".............................................................8
  "Significant Subsidiary".....................................................8
  "Special Record Date"........................................................8
  "Stated Maturity"............................................................8
  "Subsidiary".................................................................9
  "Subordinated Indenture".....................................................9
  "Transfer Restriction Termination Date"......................................9
  "Trustee"....................................................................9
  "Unregistered Subordinated Security".........................................9
  "U.S. Government Obligations"................................................9
  "Voting Stock"...............................................................9
  "Yield to Maturity"........................................................ 10

ARTICLE 2           SUBORDINATED SECURITIES...................................10
  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 Subordinated Securities............................14
  SECTION 2.5       Execution of Subordinated Securities......................18
  SECTION 2.6       Certificate of Authentication.............................18
  SECTION 2.7       Denomination and Date of Subordinated Securities; 
                    Payments of Interest..................................... 19
  SECTION 2.8       Registration, Transfer and Exchange.......................21
  SECTION 2.9       Mutilated, Defaced, Destroyed, Lost and 
                      Stolen Subordinated Securities..........................28
  SECTION 2.10      Cancellation of Subordinated Securities; 
                      Destruction Thereof.....................................30
  SECTION 2.11      Temporary Subordinated Securities.........................30

ARTICLE 3  COVENANTS OF THE COMPANY ..........................................31
  SECTION 3.1       Payment of Principal and Interest.........................31
  SECTION 3.2       Offices for Payments, Etc.................................32
  SECTION 3.3       Appointment to Fill a Vacancy in
                      Office of Trustee.......................................33
  SECTION 3.4       Paying Agents.............................................33
  SECTION 3.5       Compliance Certificates...................................35
  SECTION 3.6       Corporate Existence.......................................35






  SECTION 3.7       Maintenance of Properties................................35
  SECTION 3.8       Payment of Taxes and Other Claims........................36
  SECTION 3.9       Luxembourg Publications..................................36
  SECTION 3.10      Usury Laws...............................................36

ARTICLE 4   SECURITYHOLDER LISTS AND REPORTS BY THE COMPANY AND THE
            TRUSTEE...........................................................37
  SECTION 4.1       Company to Furnish Trustee Information as 
                      to Names and Addresses of Securityholders...............37
  SECTION 4.2       Preservation of Information; 
                      Communications to Holders...............................37
  SECTION 4.3       Reports by Trustee........................................38
  SECTION 4.4       Reports by Company........................................38

ARTICLE 5   REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF
            DEFAULT...........................................................38
  SECTION 5.1       Event of Default Defined, Acceleration of Maturity;  
                      Waiver of Default.......................................38
  SECTION 5.2       Acceleration of Maturity; Rescission and Annulment........40
  SECTION 5.3       Collection of Indebtedness by Trustee; 
                      Trustee May Prove Debt..................................43
  SECTION 5.5       Trustee May Enforce Claims Without 
                      Possession of Subordinated Securities...................45
  SECTION 5.6       Application of Proceeds...................................45
  SECTION 5.7       Suits for Enforcement.....................................46
  SECTION 5.8       Limitations on Suits by Subordinated 
                      Security Holders........................................47
  SECTION 5.9       Unconditional Right of Securityholders
                      to Institute Certain Suits..............................48
  SECTION 5.10      Restoration of Rights on Abandonment 
                      of Proceedings..........................................48
  SECTION 5.11      Powers and Remedies Cumulative; Delay or 
                      Omission Not Waiver of Default..........................48
  SECTION 5.12      Delay or Omission Not Waiver..............................48
  SECTION 5.13      Control by Holders of Subordinated Securities.............49
  SECTION 5.14      Waiver of Past Defaults...................................49
  SECTION 5.15      Trustee to Give Notice of Default, But 
                      May Withhold in Certain Circumstances...................50
  SECTION 5.16      Right of Court to Require Filing of 
                      Undertaking to Pay Costs................................50
  SECTION 5.17      Waiver of Stay or Extension Laws..........................51

ARTICLE 6   CONCERNING THE TRUSTEE............................................51
  SECTION 6.1       Duties and Responsibilities of the Trustee;
                      During Default; Prior to Default........................51
  SECTION 6.2       Certain Rights of the Trustee.............................53
  SECTION 6.3       Trustee Not Responsible for Recitals, 
                      Disposition of Subordinated Securities or 
                      Application of Proceeds Thereof.........................54
  SECTION 6.4       Trustee and Agents May Hold Subordinated 
                      Securities or Coupons;Collections, Etc..................55
  SECTION 6.5       Moneys Held by Trustee....................................55
  SECTION 6.6       Compensation and Indemnification of
                      Trustee and Its Prior Claim.............................55






  SECTION 6.7       Right of Trustee to Rely on 
                      Officer's Certificate, Etc..............................56
  SECTION 6.8       Subordinated Indentures Not Creating
                      Potential Conflicting Interests for
                      the Trustee.............................................56
  SECTION 6.9       Qualification of Trustee:
                      Conflicting Interests...................................56
  SECTION 6.10      Persons Eligible for Appointment as Trustee...............56
  SECTION 6.11      Resignation and Removal; 
                      Appointment of Successor Trustee........................57
  SECTION 6.12      Acceptance of Appointment by Successor Trustee............59
  SECTION 6.13      Merger, Conversion, Consolidation or
                      Succession to Business of Trustee...................... 60
  SECTION 6.14      Preferential Collection of Claims
                      Against the Company.....................................61
  SECTION 6.15      Appointment of Authenticating Agent.......................61

ARTICLE 7   CONCERNING THE SECURITYHOLDERS....................................63
  SECTION 7.1       Evidence of Action Taken by Securityholders...............63
  SECTION 7.2       Proof of Execution of Instruments and 
                    of Holding of Subordinated Securities.....................63
  SECTION 7.3       Holders to be Treated as Owners...........................64
  SECTION 7.4       Subordinated Securities Owned by
                      Company Deemed NotOutstanding...........................64
  SECTION 7.5       Right of Revocation of Action Taken.......................65

ARTICLE 8           SUPPLEMENTAL SUBORDINATED INDENTURES......................66
  SECTION 8.1       Supplemental Subordinated Indentures 
                      Without Consent of Securityholders......................66
  SECTION 8.2       Supplemental Subordinated Indentures 
                      with Consent of Securityholders.........................68
  SECTION 8.4       Documents to be Given to Trustee..........................70
  SECTION 8.5       Notation on Subordinated Securities in 
                      Respect of Supplemental Subordinated 
                      Indentures..............................................70

ARTICLE 9   CONSOLIDATION, MERGER, SALE OR CONVEYANCE.........................71
  SECTION 9.1       Company May Consolidate, Etc..............................71
  SECTION 9.2       Successor Corporation Substituted.........................72

ARTICLE 10  SATISFACTION AND DISCHARGE........................................72
  SECTION 10.1      Satisfaction and Discharge of 
                      Subordinated Indenture................................. 72
  SECTION 10.2      Application by Trustee of Funds Deposited
                      for Payment of Subordinated Securities..................77
  SECTION 10.3      Repayment of Moneys Held by Paying Agent..................77
  SECTION 10.4      Return of Moneys Held by Trustee and 
                      Paying Agent Unclaimed for Two Years....................78
  SECTION 10.5      Indemnity for U.S. Government of Obligations..............78

ARTICLE 11  MISCELLANEOUS PROVISIONS..........................................78
  SECTION 11.1      Incorporators, Stockholders, Officers and 
                     Directors of Company Exempt from Individual
                     Liability............................................... 78






  SECTION 11.2      Provisions of Subordinated Indenture for
                      the Sole Benefit of Parties and  Holders 
of                    Subordinated Securities and Coupons.....................79
  SECTION 11.3      Successors and Assigns of Company Bound by 
                      Subordinated Indenture..................................79
  SECTION 11.4      Notices and Demands on Company, Trustee and 
                      Holders of Subordinated Securities and Coupons..........79
  SECTION 11.5      Officer's Certificates and Opinions of Counsel; 
                      Statements to be Contained Therein......................80
  SECTION 11.6      Payments Due on Saturdays, Sundays and Holidays...........81
  SECTION 11.7      Conflict of Any Provision of Subordinated 
                      Indenture with Trust Indenture Act......................82
  SECTION 11.8      New York Law to Govern....................................82
  SECTION 11.9      Counterparts..............................................82
  SECTION 11.10     Effect of Headings....................................... 82
  SECTION 11.11     Subordinated Securities in a Foreign 
                      Currency or in ECU......................................82
  SECTION 11.12     Judgment Currency.........................................83

ARTICLE 12   REDEMPTION OF SUBORDINATED SECURITIES AND SINKING FUNDS..........84
  SECTION 12.1      Applicability of Article..................................84
  SECTION 12.2      Notice of Redemption; Partial Redemptions.................84
  SECTION 12.3      Payment of Subordinated Securities Called 
                      for Redemption........................... 86
  SECTION 12.4      Exclusion of Certain Subordinated Securities
                     from Eligibility forSelection for Redemption.............87
  SECTION 12.5      Mandatory and Optional Sinking Funds......................87








     THIS  SUBORDINATED  INDENTURE,  dated as of March 20, 1998,  by and between
HEALTHSOUTH Corporation, a Delaware corporation (the "Company"), and The Bank of
Nova Scotia Trust Company of New York, a New York trust company, 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  subordinated
indebtedness (hereinafter referred to as the "Subordinated 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  Subordinated  Securities are to
be issued,  authenticated  and  delivered,  the Company has duly  authorized the
execution of this Subordinated Indenture; and

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

     WHEREAS, all things necessary to make this Subordinated 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  Subordinated
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  Subordinated  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  Subordinated
Indenture and of any  indenture  supplemental  hereto shall have the  respective
meanings  specified in this Section.  All other terms used in this  Subordinated
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 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  Subordinated  Securities  as provided for in Section 2.3. The
words "herein," "hereof" and "hereunder" and other words of similar import refer
to this  Subordinated  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 of 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  Subordinated  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 such Subordinated  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 interest 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  Subordinated  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 Subordinated  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 Subordinated
Indenture,  located at One Liberty Plaza,  23rd Floor, New York, New York 10006,
Attention: Corporate Trust Administration.

     "Coupon"  means  any  interest  coupon   appertaining  to  an  Unregistered
Subordinated 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  Subordinated  Securities  of any
series  issuable  or  issued  in  the  form  of one or  more  Registered  Global
Subordinated  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  Subordinated  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  Subordinated  Securities  of any such
series  shall  mean  the  Depositary  with  respect  to  the  Registered  Global
Subordinated 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 Subordinated  Securities,"  "Securityholder"  or other
similar terms mean (a) in the case of any Registered  Subordinated Security, the
person in whose name such  Subordinated  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  Subordinated  Security,  the
bearer of such Subordinated Security, or any Coupon appertaining thereto, as the
case may be.

     "Interest  Payment  Date," means the Stated  Maturity of an  installment of
interest on such Subordinated 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 Subordinated Security, means the
date on which  the  principal  of such  Subordinated  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 of 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  Subordinated  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  Subordinated  Security (or portion  thereof)
means the earlier of (a) the date of such Subordinated  Security or (b) the date
of any Subordinated  Security (or portion  thereof) for which such  Subordinated
Security  was issued  (directly  or  indirectly)  on  registration  of transfer,
exchange or substitution.

     "Original  Issue Discount  Subordinated  Security"  means any  Subordinated
Security that provides for an amount less than the principal  amount  thereof to
be due and payable upon a declaration of  acceleration  of the Maturity  thereof
pursuant to Section 5.2.

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

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

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

     In  determining  whether the Holders of the requisite  principal  amount of
Outstanding Subordinated 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  Subordinated 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  Subordinated  Securities  of a
series from time to time, the specific terms of which  Subordinated  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 by the Company or its agents upon the
issuance of such Subordinated 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 Subordinated Security" of any particular Subordinated Security
means every previous  Subordinated  Security  evidencing all or a portion of the
same debt as that evidenced by such particular  Subordinated Security;  and, for
the purposes of this definition,  any Subordinated  Security  authenticated  and
delivered  under  Section  2.4  in  exchange  for  or in  lieu  of a  mutilated,
destroyed,  lost or stolen Subordinated Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Subordinated Security.

     "principal" whenever used with reference to the Subordinated  Securities or
any  Subordinated  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  Subordinated  Security" means a Subordinated  Security
evidencing  all or a part of a series  of  Registered  Subordinated  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   Subordinated   Security"  means  any  Subordinated   Security
registered on the Subordinated Security Register of the Company.

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






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

     "Required Currency" shall have the 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,
any  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  Subordinated  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  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.

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

     "Subordinated  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 Subordinated Securities established as contemplated hereunder.

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

     "Transfer Restriction Termination Date" means the earlier of the first date
on  which  (i)  the  Subordinated  Securities  of  a  series  (other  than  such
Subordinated  Securities  acquired by the Company or any Affiliate thereof since
the issue date of such  Subordinated  Securities)  may be sold  pursuant to Rule
144K (or any successor provision) and (ii) all such Subordinated 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  Subordinated  Securities  of any series
shall mean the  trustee  with  respect to the  Subordinated  Securities  of such
series.

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






                                    ARTICLE 2


                             SUBORDINATED SECURITIES

SECTION 2.1 Forms Generally.

     The Subordinated  Securities of each series and the Coupons,  if any, to be
attached thereto shall be substantially in such form (not inconsistent with this
Subordinated  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
Subordinated  Indenture and may have imprinted or otherwise  reproduced  thereon
such legend or legends or endorsements,  not inconsistent with the provisions of
this Subordinated  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  Subordinated  Securities  and  Coupons,  if  any,  as
evidenced by their execution of such Subordinated Securities and Coupons.

     The  definitive  Subordinated  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
Subordinated  Securities and Coupons, if any, as evidenced by their execution of
such Subordinated Securities and Coupons, if any.

SECTION 2.2 Form of Trustee's Certificate of Authentication.

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

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

                                            [__________________________________]

                                            as Trustee

                                             By_________________________________

                                                  Authorized Signatory"






     If at any  time  there  shall be an  Authenticating  Agent  appointed  with
respect to any series of Subordinated Securities, then the Trustee's Certificate
of Authentication to be borne by the Subordinated Securities of each such series
shall be substantially as follows:

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

                                            [__________________________________]
                                               as Authenticating Agent


                                            By__________________________________
                                                 Authorized Signatory"


SECTION 2.3 Amount Unlimited; Issuable in Series.

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

     The  Subordinated  Securities  may be issued in one or more series and each
such series 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 Subordinated Securities of any series,

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

     (2) any limit  upon the  aggregate  principal  amount  of the  Subordinated
Securities  of the series that may be  authenticated  and  delivered  under this
Subordinated  Indenture  (except for Subordinated  Securities  authenticated and
delivered upon  registration  of transfer of, or in exchange for, or in lieu of,
other Subordinated  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  Subordinated
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 Subordinated Securities
of the series is payable;

     (5) the rate or rates at which the  Subordinated  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 Registered
Subordinated 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
Subordinated  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 Subordinated 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  Subordinated
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
Subordinated  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  Subordinated  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 Subordinated  Securities,  or $1,000 and $5,000 in the
case  of  Unregistered  Subordinated  Securities,  the  denominations  in  which
Subordinated Securities of the series shall be issuable;

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

     (12) if the principal of or interest on the Subordinated  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  Subordinated  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
Subordinated  Securities  of the series may be determined  with  reference to an
index  based on a coin or  currency  other  than that in which the  Subordinated
Securities of the series are denominated, the manner in which such amounts shall
be determined;

     (14) whether the Subordinated  Securities of the series will be issuable as
Registered  Subordinated  Securities  (and  if  so,  whether  such  Subordinated
Securities  will be issuable as Registered  Global  Subordinated  Securities) or
Unregistered   Subordinated   Securities  (with  or  without  Coupons),  or  any
combination of the foregoing,  any restrictions applicable to the offer, sale or
delivery of Unregistered Subordinated Securities or the payment of interest






thereon  and,  if other than as provided  in Section  2.8,  the terms upon which
Unregistered  Subordinated  Securities  of  any  series  may  be  exchanged  for
Registered Subordinated Securities of such series and vice versa;

     (15) whether and under what  circumstances  the Company will pay additional
amounts on the Subordinated 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
Subordinated Securities of the series rather than pay such additional amounts;

     (16) if the  Subordinated  Securities  of the series are to be  issuable in
definitive  form (whether  upon  original  issue or upon exchange of a temporary
Subordinated  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  Subordinated
Securities of such series;

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

     (19)  the  terms  of   subordination   applicable  to  any  series  of  the
Subordinated Securities;

     (20) if the  Subordinated  Securities  of the series are to be  convertible
into or exchangeable for any other security; and

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

     All  Subordinated  Securities  of any  one  series  and  Coupons,  if  any,
appertaining  thereto shall be  substantially  identical,  except in the case of
Registered  Subordinated  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 Subordinated  Securities of any one series need not be issued at the
same time and may be issued from time to time, consistent with the terms of this
Subordinated  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 Subordinated Securities.

     The  Company  may  deliver  Subordinated  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 Subordinated  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  Subordinated
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  Subordinated  Securities  and
accepting the additional  responsibilities  under this Subordinated Indenture in
relation  to such  Subordinated  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
Subordinated  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 Subordinated  Securities and Coupons,  if any, are
not to be delivered to the Company,  provided that, with respect to Subordinated
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 Subordinated Securities for authentication and delivery, (b) the
Trustee shall  authenticate and deliver  Subordinated  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
Subordinated 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 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  Subordinated  Securities and Coupons,  if any,
were established;

     (3) an Officer's  Certificate  setting forth the form or forms and terms of
the Subordinated  Securities and Coupons, if any, stating that the form or forms
and  terms  of the  Subordinated  Securities  and  Coupons,  if any,  have  been
established  pursuant to Sections 2.1 and 2.3 and comply with this  Subordinated
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 Subordinated  Securities and Coupons,  if
     any, have been duly  authorized  and  established  in  conformity  with the
     provisions of this Subordinated Indenture;

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

          (c) such Subordinated Securities and Coupons, if any, when executed by
     the  Company  and  authenticated  by the  Trustee  in  accordance  with the
     provisions  of this  Subordinated  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 Subordinated
     Indenture, will be entitled to the benefits of this Subordinated Indenture,
     and will be valid and binding  obligations  of the Company,  enforceable in
     accordance with their respective terms except as 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
Subordinated  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's own rights,  duties or immunities
under the Subordinated Securities, this Subordinated Indenture or otherwise.







     If  the  Company  shall   establish   pursuant  to  Section  2.3  that  the
Subordinated  Securities of a series are to be issued in the form of one or more
Registered Global  Subordinated  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
Subordinated  Securities that (i) shall represent and shall be denominated in an
amount  equal  to the  aggregate  principal  amount  of all of the  Subordinated
Securities of such series issued and not yet canceled,  (ii) shall be registered
in the name of the Depositary for such Registered Global  Subordinated  Security
or  Subordinated  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
Subordinated   Securities  in  definitive  registered  form,  this  Subordinated
Security  may not be  transferred  except  as 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 Subordinated Securities.

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






SECTION 2.6 Certificate of Authentication.

     Only such  Subordinated  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  Subordinated  Indenture  or be  valid  or
obligatory for any purpose.  No Coupon shall be entitled to the benefits of this
Subordinated  Indenture or shall be valid and  obligatory  for any purpose until
the certificate of  authentication  on the  Subordinated  Security to which such
Coupon appertains shall have been duly executed by the Trustee. The execution of
such certificate by the Trustee upon any Subordinated  Security  executed by the
Company  shall  be  conclusive  evidence  that  the  Subordinated   Security  so
authenticated has been duly  authenticated and delivered  hereunder and that the
Holder is entitled to the benefits of this Subordinated Indenture.

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

     The Subordinated  Securities of each series shall be issuable as Registered
Subordinated Securities or Unregistered Subordinated Securities in denominations
established  as  contemplated  by Section 2.3 or, with respect to the Registered
Subordinated  Securities of any series, if not so established,  in denominations
of $1,000 and any integral  multiple  thereof.  If denominations of Unregistered
Subordinated Securities of any series are not so established,  such Subordinated
Securities  shall be  issuable  in  denominations  of  $1,000  and  $5,000.  The
Subordinated 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  Subordinated  Security  shall  be  dated  the date of its
authentication.  Each  Unregistered  Subordinated  Security  shall  be  dated as
provided in the Board  Resolution  referred to in Section 2.3. The  Subordinated
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 Subordinated  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   Subordinated   Security  (or  one  or  more  Predecessor
Subordinated  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
Subordinated  Security  may be paid by  mailing  a check to the  address  of the
Holder thereof as such address appears in the Subordinated Securities Register.

Any  interest  on  any  Subordinated  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  Subordinated  Securities  (or  their  respective
Predecessor






Subordinated  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 Subordinated  Security
and the date of the  proposed  payment,  and at the same time the Company  shall
deposit  with the  Trustee  an amount  of money  equal to the  aggregate  amount
proposed  to be paid in  respect  of  such  Defaulted  Interest  or  shall  make
arrangements  satisfactory  to the Trustee for such deposit prior to the date of
the  proposed  payment,  such money when  deposited  to be held in trust for the
benefit of the  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  Subordinated  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 Subordinated Securities
(or their respective Predecessor  Subordinated Securities) are registered at the
close of  business  on such  Special  Record Date and shall no longer be payable
pursuant to the following clause (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 Subordinated  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 Subordinated Security
delivered under this Subordinated  Indenture upon registration of transfer of or
in exchange for or in lieu of any other  Subordinated  Security  shall carry the
rights to interest accrued and unpaid, and to accrue, which were carried by such
other Subordinated Security.

In the case of any  Subordinated  Security which is converted  during the period
after any Regular  Record Date and on or prior to the next  succeeding  Interest
Payment Date (other than any  Subordinated  Security  whose Maturity is prior to
such Interest Payment Date),  interest whose Stated Maturity is on such Interest
Payment Date shall be payable on such Interest Payment Date notwithstanding such
conversion,  and such interest  (whether or not punctually paid or duly provided
for) shall be paid to the Person in whose name that  Subordinated  Security  (or
one or more Predecessor  Subordinated  Securities) is registered at the close of
business on such  Regular  Record Date;  provided,  however,  that  Subordinated
Securities  so  registered  for   conversion   shall  (except  in  the  case  of
Subordinated   Securities  or  portions  thereof  which  have  been  called  for
redemption on a Redemption Date within such period) be accompanied by payment in
New York  Clearing  House Funds or other funds  acceptable  to the Company of an
amount  equal to the  interest  payable  on such  Interest  Payment  Date on the
principal amount being surrendered for conversion. Except as otherwise expressly
provided in the immediately preceding sentence, in






the case of any Subordinated Security which is converted,  interest whose Stated
Maturity is after the date of conversion of such Subordinated Security shall not
be payable.

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 Subordinated  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 may prescribe, it will provide for
the  registration of Registered  Subordinated  Securities of such series and the
registration of transfer of Registered  Subordinated  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
Subordinated  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  Subordinated  Security or Registered  Subordinated
Securities of the same series,  maturity date,  interest rate and original issue
date in authorized denominations for a like aggregate principal amount.

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

     At the option of the Holder thereof,  Registered Subordinated Securities of
any series (other than a Registered Global Subordinated Security,  except as set
forth  below)  may  be  exchanged  for a  Registered  Subordinated  Security  or
Registered   Subordinated   Securities   of  such   series   having   authorized
denominations and an equal aggregate  principal  amount,  upon surrender of such
Registered  Subordinated 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  Subordinated  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   Subordinated
Securities of any series may be exchanged for Registered Subordinated Securities
of such series having authorized  denominations and an equal aggregate principal
amount,  upon  surrender  of such  Unregistered  Subordinated  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  Subordinated
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  Subordinated  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 Subordinated Securities may be exchanged for Unregistered






Subordinated  Securities of such series having  authorized  denominations and an
equal  aggregate   principal   amount,   upon  surrender  of  such  Unregistered
Subordinated  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  Subordinated
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  Subordinated
Securities  of any series may not be  exchanged  for  Unregistered  Subordinated
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  Subordinated
Securities to be exchanged for Unregistered Subordinated Securities would result
in no  Federal  income  tax effect  adverse  to the  Company  or to any  Holder.
Whenever any  Subordinated  Securities  are so  surrendered  for  exchange,  the
Company shall  execute,  and the Trustee  shall  authenticate  and deliver,  the
Subordinated  Securities  which the Holder  making the  exchange  is entitled to
receive.  All Subordinated  Securities and Coupons, if any, surrendered upon any
exchange  or  transfer  provided  for in this  Subordinated  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  Subordinated  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 Subordinated 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 Subordinated  Securities of any series for a period of 15 days preceding the
first mailing of notice of redemption of Subordinated  Securities of such series
to be  redeemed or (b) any  Subordinated  Securities  selected,  called or being
called  for  redemption,  in  whole  or in  part,  except,  in the  case  of any
Subordinated  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  Subordinated  Securities  in definitive
registered form, a Registered Global Subordinated Security representing all or a
portion of the Subordinated 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.

     If at any time the Depositary for any Registered Subordinated Securities of
a series  represented by one or more Registered Global  Subordinated  Securities
notifies the Company that






it is  unwilling  or  unable  to  continue  as  Depositary  for such  Registered
Subordinated  Securities or if at any time the  Depositary  for such  Registered
Subordinated  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  Subordinated  Securities.  If a successor Depositary
eligible under Section 2.4 for such  Registered  Subordinated  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  Subordinated  Securities be represented by one
or more Registered Global  Subordinated  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  Subordinated
Securities  of  such  series,   will  authenticate  and  deliver,   Subordinated
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 Subordinated  Security or Subordinated
Securities  representing such Registered Subordinated Securities in exchange for
such Registered Global Subordinated Security or Subordinated Securities.

     The Company may at any time and in its sole  discretion  determine that the
Registered  Subordinated  Securities  of any series issued in the form of one or
more Registered Global Subordinated Securities shall no longer be represented by
a Registered Global Subordinated  Security or Subordinated  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  Subordinated
Securities  of  such  series,   will  authenticate  and  deliver,   Subordinated
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 Subordinated  Security or Subordinated
Securities representing such Registered Subordinated Securities, in exchange for
such Registered Global Subordinated Security or Subordinated Securities.

     If  specified  by the  Company  pursuant  to  Section  2.3 with  respect to
Subordinated   Securities   represented  by  a  Registered  Global  Subordinated
Security,  the Depositary for such Registered Global  Subordinated  Security may
surrender such Registered Global  Subordinated  Security in exchange in whole or
in part for Subordinated  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
Subordinated  Security or  Subordinated  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 Subordinated Security; and

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






     Upon  the  exchange  of  a  Registered  Global  Subordinated  Security  for
Subordinated  Securities  in  definitive  registered  form without  coupons,  in
authorized denominations,  such Registered Global Subordinated Security shall be
canceled by the Trustee or an agent of the Company or the Trustee.  Subordinated
Securities in definitive  registered form without coupons issued in exchange for
a Registered Global Subordinated  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 Subordinated 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  Subordinated  Securities  to or as  directed by the Persons in whose names
such Subordinated Securities are so registered.

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

     Notwithstanding   anything  herein  or  in  the  terms  of  any  series  of
Subordinated 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  Subordinated  Security for a Registered  Subordinated
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  Subordinated  Securities)  under  then
applicable United States Federal income tax laws.

     (b)(i)  Subordinated  Securities  that  are  distributed  to  QIBs  will be
represented  by a global  Subordinated  Security (the "144A Global  Subordinated
Security").  Subordinated  Securities that are  distributed to Non-U.S.  Persons
will be represented by a global Subordinated  Security (the "Regulation S Global
Subordinated  Security").  Each of the 144A Global Subordinated Security and the
Regulation  S Global  Subordinated  Security  shall be  referred  to herein as a
"Global  Subordinated  Security." If Global Subordinated  Securities are issued,
transfers of interests in the  Subordinated  Securities  between the 144A Global
Subordinated  Security and the Regulation S Global Subordinated 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 Subordinated Securities to reflect any such transfers.

     Except as provided below,  beneficial owners of a Subordinated  Security in
global  form shall not be  entitled  to have  certificates  registered  in their
names,  will  not  receive  or be  entitled  to  receive  physical  delivery  of
certificates  in  definitive  form and will not be  considered  Holders  of such
Subordinated Securities in global form.

     (ii) So long as the  Subordinated  Securities  are eligible for  book-entry
settlement,  and to the extent that Subordinated  Securities are held by QIBs or
Non-U.S.  Persons,  as the case may be, in a Global  Subordinated  Security,  or
unless otherwise required by law, upon any






transfer of a definitive  Subordinated 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  Subordinated
Security  or  Subordinated  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 Subordinated  Security or any Regulation S Global Subordinated  Security,
as the case may be, to reflect an increase in the aggregate  principal amount of
the Subordinated  Securities  represented by such Global Subordinated  Security,
and  the  Trustee  shall  cancel  such  definitive   Subordinated   Security  or
Subordinated  Securities  in  accordance  with  the  standing  instructions  and
procedures of the  Depositary,  the aggregate  principal  amount of Subordinated
Securities  represented  by such Global  Subordinated  Security to be  increased
accordingly;  provided  that no  definitive  Subordinated  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 Subordinated Security until
such definitive Subordinated Security is freely tradable in accordance with Rule
144K;  provided  further that the Trustee shall,  at the written  request of the
Company, issue Subordinated Securities in definitive form upon any transfer of a
beneficial  interest in the Global  Subordinated  Security to the Company or any
Affiliate of the Company.

     Any Global Subordinated  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  Subordinated  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 Subordinated Securities to be tradable
on the PORTAL Market or as may be required for the Subordinated 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 Subordinated 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 Subordinated Securities are subject.

     (iii) Each  Subordinated  Security  that bears or is  required  to bear the
legend set forth in this Section 2.8(b) (a "Restricted  Subordinated  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
Subordinated  Security, by such Holder's acceptance thereof,  agrees to be bound
by such  restrictions  on  transfer.  As used in this Section  2.8(b),  the term
"transfer"  encompasses any sale,  pledge,  transfer or other disposition of any
Restricted Subordinated Security.

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

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

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

     In case any  temporary or  definitive  Subordinated  Security or any Coupon
appertaining  to  any  Subordinated   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  Subordinated  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 Subordinated  Security,  or in lieu of
and in substitution for the Subordinated  Security so destroyed,  lost or stolen
with  Coupons  corresponding  to the Coupons  appertaining  to the  Subordinated
Securities so mutilated,  defaced,  destroyed, lost or stolen, or in exchange or
substitution  for the  Subordinated  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  Subordinated  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 Subordinated Security or Coupon and of the ownership thereof, and in the
case of mutilation or defacement shall surrender the  Subordinated  Security and
related Coupons to the Trustee or such agent.

     Upon the issuance of any substitute  Subordinated  Security or Coupon,  the
Company may require  the payment of a sum  sufficient  to cover any tax or other
governmental  charge  that may be  imposed  in  relation  thereto  and any other
expenses (including the fees and expenses of the Trustee) or its agent connected
therewith.  In case any Subordinated  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  Subordinated  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  Subordinated  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 the 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 Subordinated Security or Coupons and of the ownership thereof.

     Every  substitute  Subordinated  Security  or Coupon of any  series  issued
pursuant to the  provisions  of this Section by virtue of the fact that any such
Subordinated 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
Subordinated  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  Subordinated  Indenture  equally  and
proportionately  with any and all other  Subordinated  Securities  or Coupons of
such  series  duly  authenticated  and  delivered  hereunder.  All  Subordinated
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  Subordinated  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  Subordinated  Securities;  Destruction  Thereof.

     All   Subordinated   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  Subordinated
Securities  or  Coupons  shall be issued  in lieu  thereof  except as  expressly
permitted by any of the provisions of this Subordinated  Indenture.  The Trustee
or its agent shall dispose of canceled Subordinated  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  Subordinated  Securities  or Coupons,  such
acquisition   shall  not  operate  as  a  redemption  or   satisfaction  of  the
indebtedness  represented by such Subordinated  Securities or Coupons unless and
until the same are delivered to the Trustee or its agent for cancellation.

SECTION 2.11 Temporary Subordinated Securities.

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

                                    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
Subordinated Securities that it will duly and punctually pay or cause to be paid
the principal of, and interest on, if any, each of the  Subordinated  Securities
of such series  (together with any additional  amounts  payable  pursuant to the
terms of such Subordinated Securities) at the place or places, at the respective
time or times and in the manner provided in such Subordinated  Securities and in
the Coupons, if any,  appertaining  thereto and in this Subordinated  Indenture.
The interest on Subordinated Securities with Coupons attached (together with any
additional   amounts  payable  pursuant  to  the  terms  of  such   Subordinated
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  Subordinated Security provides
that  interest  thereon  may be paid  while  such  Subordinated  Security  is in
temporary  form,  the interest on any such temporary  Unregistered  Subordinated
Security  (together with any additional amounts payable pursuant to the terms of
such  Subordinated  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  Subordinated  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
Subordinated  Securities  (together with any additional amounts payable pursuant
to the terms of such  Subordinated  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  Subordinated  Securities  are  authorized  for
issuance pursuant to this Subordinated  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 Subordinated Securities of each series may
be presented for payment,  where the Subordinated  Securities of each series may
be presented for exchange as is provided in this Subordinated  Indenture,  where
the  Subordinated  Securities of each series may be  surrendered  for conversion
and,  if   applicable,   pursuant  to  Section  2.4  and  where  the  Registered
Subordinated  Securities  of each series may be presented  for  registration  of
transfer as in this Subordinated 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  maintained  under the rules of any stock  exchange on
which  the  Subordinated  Securities  of  such  series  are  listed)  where  the
Unregistered  Subordinated  Securities,  if any, of each series and Coupons,  if
any,  appertaining  thereto  may be  presented  for  payment.  No payment on any
Unregistered  Subordinated  Security or Coupon will be made upon presentation of
such  Unregistered  Subordinated  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  Subordinated  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  Subordinated  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 Subordinated  Securities of any series, the Coupons  appertaining
thereto or this Subordinated 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  Subordinated  Securities  of a series  and any  Coupons
appertaining  thereto  may be  presented  for  payment,  where the  Subordinated
Securities  of that  series may be  presented  for  exchange as provided in this
Subordinated  Indenture  and  pursuant to Section  2.4 and where the  Registered
Subordinated  Securities  of that series may be presented  for  registration  of
transfer






as in this  Subordinated  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 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
Subordinated Securities hereunder.

SECTION 3.4 Paying Agents.

     Whenever  the Company  shall  appoint a Paying Agent other than the Trustee
with respect to the  Subordinated  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  Subordinated  Securities of such series
(whether  such sums have been paid to it by the Company or by any other  obligor
on the  Subordinated  Securities of such series) in trust for the benefit of the
Holders of the Subordinated  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 Subordinated  Securities of such series) to make any
payment of the principal of or interest on the  Subordinated  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 Subordinated  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
Subordinated  Securities  of any series,  it will, on or before each due date of
the principal of or interest on the Subordinated  Securities of such series, set
aside,  segregate  and hold in  trust  for the  benefit  of the  Holders  of the
Subordinated 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
Subordinated  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 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  Subordinated
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.






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 Subordinated 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  Subordinated  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.

                                    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
Subordinated  Securities of any series, the Company and any other obligor on the
Subordinated 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 Subordinated 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  Subordinated  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  Subordinated
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  Subordinated
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  Subordinated  Indenture  or under  the  Subordinated
Securities,  and the corresponding rights and duties of the Trustee, shall be as
provided by the Trust Indenture Act.

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

SECTION 4.3 Reports by Trustee.

     (a) The Trustee  shall  transmit to Holders  such  reports  concerning  the
Trustee and its actions  under this  Subordinated  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
Subordinated  Securities  are listed,  with the Commission and with the Company.
The Company will notify the Trustee when the Subordinated  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  Subordinated  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 occasioned by the subordination  provisions of any series of
Subordinated  Securities  or 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
Subordinated 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

     (b)  default  in the  payment of all or any part of the  principal,  or any
premium,  on any of the  Subordinated  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 Subordinated 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  Subordinated
Securities  of such series or contained in this  Subordinated  Indenture  (other
than a covenant or agreement included in this Subordinated  Indenture solely for
the benefit of a series of Subordinated 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  Subordinated  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,  which default shall
constitute  a  failure  to pay  the  principal  of  indebtedness  in  excess  of
$25,000,000  when due and payable after the expiration of any  applicable  grace
period with respect  thereto or shall have resulted in indebtedness in excess of
$25,000,000  becoming or being  declared  due and  payable  prior to the date on
which it would otherwise have become due and payable,  without such indebtedness
having been discharged,  or such acceleration having been rescinded or annulled,
within a period of 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 Subordinated  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  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 its 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
Subordinated  Securities is issued or in the form of  Subordinated  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  Subordinated  Securities  then
Outstanding)  occurs and is  continuing,  then, and in each and every such case,
except for any series of  Subordinated  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  Subordinated  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
Subordinated  Securities of any such affected series are Original Issue Discount
Subordinated  Securities,  such  portion  of  the  principal  amount  as  may be
specified in the terms of such  series) of all  Subordinated  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 Subordinated Securities then Outstanding, occurs and is
continuing,  then, and in each and every such case,  unless the principal of all
of the Subordinated 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 Subordinated  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  Subordinated
Securities of any series are Original  Issue Discount  Subordinated  Securities,
such  portion of the  principal  amount as may be specified in the terms of such
series) of all of the Subordinated 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.  If an Event of
Default described in clause (f) or (g) of Section 5.1 shall occur, the principal
amount of all outstanding Subordinated Securities shall ipso facto become and be
immediately  due and payable without any declaration or other act on the part of
the Trustee or any Holder.

     The foregoing  provisions are subject to the condition that if, at any time
after the  principal  (or, if the  Subordinated  Securities  are Original  Issue
Discount  Subordinated  Securities,  such  portion  of the  principal  as may be
specified in the terms thereof) of the Subordinated Securities of any series (or
of all the  Subordinated  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  Subordinated
     Securities of each such series (or all the Subordinated Securities,  as the
     case may be); and

          (ii) the principal of any and all Subordinated Securities of each such
     series (or of all the  Subordinated  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 Subordinated  Securities) specified
     in the  Subordinated  Securities of each such series (or at the  respective
     rates of interest or Yields to Maturity of all the Subordinated 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 Subordinated Indenture,  other than the
non-payment of the principal of Subordinated  Securities which shall have become
due by  acceleration,  shall have been cured,  waived or  otherwise  remedied as
provided herein,

then and in every such case the  Holders of a majority  in  aggregate  principal
amount of all the Subordinated  Securities of each such series, each such series
voting as a separate class (or of all the Subordinated  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 Subordinated Securities,  as the case may be)
and rescind and annul such declaration and its consequences,  but no such waiver
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  Subordinated  Indenture,  if a portion of the
principal of any Original Issue Discount Subordinated 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
Subordinated  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 Subordinated 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  Subordinated  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
Subordinated  Securities  of any series  when the same shall have become due and
payable,  whether upon Maturity of the Subordinated 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 Subordinated Securities of such series the whole amount that then shall have
become due and payable on all Subordinated  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  Subordinated  Securities)  specified  in the
Subordinated  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  Subordinated
Securities of such series.

     Until such demand is made by the Trustee, the Company may pay the principal
of and interest on the  Subordinated  Securities of any series to the registered
Holders, whether or not the Subordinated 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
Subordinated  Securities  and  collect in the manner  provided by law out of the
property  of the  Company or other  obligor  upon the  Subordinated  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  Subordinated  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 Subordinated  Securities,  or to the creditors
or property of the Company or such other obligor,  the Trustee,  irrespective of
whether  the  principal  of the  Subordinated  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  Subordinated  Securities  of any series are Original
Issue Discount Subordinated Securities,  such portion of the principal amount as
may be specified in the terms of such series) owing and unpaid in respect of the
Subordinated  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  Subordinated  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 Subordinated 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 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 Subordinated 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  Subordinated
             Securities.

     All  rights of action  and of  asserting  claims  under  this  Subordinated
Indenture,  or under any of the Subordinated Securities of any series or Coupons
appertaining  to such  Subordinated  Securities,  may be enforced by the Trustee
without the possession of any of the  Subordinated  Securities of such series or
Coupons  appertaining to such Subordinated  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 awarded to the
Trustee for ratable  distribution to the Holders of the Subordinated  Securities
or Coupons appertaining to such Subordinated 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 Subordinated Securities.

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

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 Subordinated Securities
and Coupons  appertaining  to such  Subordinated  Securities in respect of which
monies have been  collected  and  stamping  (or  otherwise  noting)  thereon the
payment, or issuing Subordinated  Securities of such series in reduced principal
amounts in exchange for the presented Subordinated  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
Subordinated  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 Subordinated Securities;






     SECOND: In case the principal of the Subordinated 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  Subordinated  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  Subordinated  Securities)  specified  in such
Subordinated  Securities,  such  payments  to be  made  ratably  to the  persons
entitled thereto, without discrimination or preference;

     THIRD: In case the principal of the Subordinated  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 Subordinated  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  installations  of  interest at the same rate as the rate of interest or
Yield  to  Maturity  (in  the  case  of  Original  Issue  Discount  Subordinated
Securities) specified in the Subordinated 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 Subordinated  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  installment  of  interest  over any other
installment of interest or of any Subordinated  Security of such series over any
other  Subordinated  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 Subordinated  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  Subordinated  Indenture or in aid of the exercise of any power  granted in
this  Subordinated  Indenture or to enforce any other legal or  equitable  right
vested in the Trustee by this Subordinated Indenture or by law.

SECTION 5.8 Limitations on Suits by Subordinated Security Holders.

     No Holder  of any  Subordinated  Security  of any  series or of any  Coupon
appertaining  thereto  shall  have any  right by virtue  or by  availing  of any
provision of this  Subordinated  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 Subordinated Indenture or such Subordinated 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  Subordinated  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  Subordinated  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 Subordinated Security or Coupon with
every other  taker and Holder and the  Trustee,  that no one or more  Holders of
Subordinated   Securities  of  any  series  or  Coupons   appertaining  to  such
Subordinated Securities shall have any right in any manner whatever by virtue or
by availing of any provision of this Subordinated  Indenture or any Subordinated
Security to affect,  disturb or prejudice  the rights of any other such taker or
Holder of Subordinated  Securities or Coupons  appertaining to such Subordinated
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  Subordinated
Indenture or any Subordinated Security, except in the manner herein provided and
for the equal,  ratable  and  common  benefit  of all  Holders  of  Subordinated
Securities  of  the  applicable   series  and  Coupons   appertaining   to  such
Subordinated 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 Subordinated  Indenture and any
provision  of  any  Subordinated  Security,  the  right  of  any  Holder  of any
Subordinated  Security  or Coupon to  receive  payment of the  principal  of and
interest on such Subordinated  Security or Coupon on or after the respective due
dates  expressed  in such  Subordinated  Security  or Coupon  or the  applicable
redemption  dates provided for in such  Subordinated  Security,  to convert such
Subordinated  Securities  of any  series in  accordance  with  terms that may be
established pursuant to Section 2.3, or to institute suit for the enforcement of
any such  payment on or after such  respective  dates,  shall not be impaired or
affected without the consent of such Holder.

SECTION   5.10   Restoration   of  Rights   on   Abandonment   of   Proceedings.

     In case the Trustee  shall have  proceeded  to enforce any right under this
Subordinated  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  Subordinated  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 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  Subordinated
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  Subordinated
Indenture,  any Subordinated Security or law to the Trustee or to the Holders of
Subordinated  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 Subordinated Securities or Coupons.

SECTION    5.13    Control    by    Holders    of    Subordinated    Securities.

     The Holders of a majority in aggregate principal amount of the Subordinated
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
Subordinated Securities of such series by this Subordinated Indenture; provided,
that such direction  shall not be otherwise than in accordance  with law and the
provisions of this Subordinated  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
Subordinated 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  Subordinated  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  Maturity  of  any
Subordinated Securities as provided in Section 5.2, the Holders of a majority in
aggregate  principal amount of the Subordinated  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  Subordinated  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
Subordinated Security affected. In the case of any such waiver, the Company, the
Trustee and the Holders of all such Subordinated 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 Subordinated 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  Subordinated  Securities  of any  series,  give  notice  of all
defaults  with  respect  to  that  series  known  to  the  Trustee  (i)  if  any
Unregistered Subordinated 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  Subordinated
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  Subordinated  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  Subordinated  Indenture  agree, and each Holder of any
Subordinated  Security or Coupon by his  acceptance  thereof  shall be deemed to
have agreed,  that any court may in its discretion  require, in any suit for the
enforcement of any right or remedy under this  Subordinated  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 Subordinated 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  Subordinated  Securities  of more than one but less
than all series),  10% in aggregate principal amount of Subordinated  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 Subordinated  Securities then  Outstanding),  (f) or (g) of Section 5.1,
10%  in  aggregate   principal  amount  of  all  Subordinated   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  Subordinated  Security on
or after the due date expressed in such Subordinated  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 Subordinated 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
Subordinated  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 forth in this  Subordinated  Indenture  with  respect  to such
series of Subordinated  Securities.  In case an Event of Default with respect to
the  Subordinated  Securities of a series has occurred and has not been cured or
waived,  the Trustee shall exercise with respect to such series of  Subordinated
Securities  such of the  rights  and  powers  vested in it by this  Subordinated
Indenture with respect to such series of  Subordinated  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  Subordinated  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
Subordinated  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
     Subordinated  Securities  of any series shall be  determined  solely by the
     express  provisions of this Subordinated  Indenture,  and the Trustee shall
     not be liable except for the  performance of such duties and obligations as
     are specifically set forth in this Subordinated  Indenture,  and no implied
     covenants or  obligations  shall be read into this  Subordinated  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  Subordinated  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 Subordinated 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 remedy available to the Trustee, or exercising
any  trust  or  power  conferred  upon  the  Trustee,  under  this  Subordinated
Indenture.

     None of the  provisions  contained  in this  Subordinated  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 Subordinated  Indenture at the request,  order or
direction  of any of the  Securityholders  pursuant  to the  provisions  of this
Subordinated  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;

     (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 Subordinated 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  Subordinated
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 Subordinated 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 Subordinated
            Securities or Application of Proceeds Thereof.

     The recitals  contained herein and in the Subordinated  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 Subordinated Indenture or of the Subordinated Securities or Coupons. The
Trustee shall not be  accountable  for the use or  application by the Company of
any of the Subordinated Securities or of the proceeds thereof.

SECTION  6.4  Trustee and Agents May Hold  Subordinated  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
Subordinated 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 Subordinated  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  Subordinated  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 Subordinated






Indenture.  Such additional  indebtedness shall be a senior claim to that of the
Subordinated  Securities  upon all  property  and funds held or collected by the
Trustee as such,  except  funds held in trust for the  benefit of the Holders of
particular  Subordinated  Securities or Coupons, and the Subordinated 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  Subordinated  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 Subordinated Indenture upon the faith
thereof.

SECTION 6.8 Subordinated 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  Subordinated  Indenture
with respect to the Subordinated 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 Subordinated  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  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 any 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 Subordinated Securities
by  giving  written  notice  of  resignation  to  the  Company  and  (i)  if any
Unregistered  Subordinated 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  Subordinated  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  Subordinated  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
Subordinated Security or Subordinated 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   Indenture  Act  with  respect  to  any  series  of
     Subordinated Securities after written request therefor by the Company or by
     any  Securityholder  who has  been a bona  fide  Holder  of a  Subordinated
     Security or Subordinated 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  Subordinated  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 Subordinated 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  Subordinated  Security  or  Subordinated
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
Subordinated  Securities of each series at the time  outstanding may at any time
remove the Trustee with respect to  Subordinated  Securities  of such series and
appoint a successor trustee with respect to the Subordinated  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.

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  Subordinated
Securities  of one or more (but not all) series,  the Company,  the  predecessor
trustee and each successor  trustee with respect to the Subordinated  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 Subordinated 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  Subordinated  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 Subordinated  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 notice  thereof (a) if any  Unregistered
Subordinated  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
Subordinated  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  Subordinated  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 Subordinated Indenture any of the Subordinated 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 Subordinated Securities so






authenticated;  and, in case at that time any of the Subordinated  Securities of
any series shall not have been  authenticated,  any successor to the Trustee may
authenticate such Subordinated  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  Subordinated
Securities of such series or in this  Subordinated  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
Subordinated  Securities  of any series in the name of any  predecessor  trustee
shall  apply  only to its  successor  or  successors  by merger,  conversion  or
consolidation.

SECTION 6.14 Preferential Collection of Claims Against the Company.

     If this Subordinated  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 Subordinated 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  Subordinated
Securities, including Subordinated Securities issued upon exchange, registration
of  transfer,  partial  redemption  or  pursuant  to Section  2.9.  Subordinated
Securities of each such series  authenticated by such Authenticating Agent shall
be entitled to the benefits of this  Subordinated  Indenture  and shall be valid
and obligatory  for all purposes as if  authenticated  by the Trustee.  Whenever
reference  is made in this  Subordinated  Indenture  to the  authentication  and
delivery  of  Subordinated  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  such   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  Subordinated  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.







     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 Subordinated  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  Subordinated  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  Subordinated
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 Subordinated  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  Subordinated  Securities  described in the  within-mentioned
Subordinated Indenture.


                                             ----------------------------,
                                                                     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, consent, waiver or
other action provided by this  Subordinated  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 Subordinated  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  Subordinated
            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 or  Subordinated
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  Subordinated  Security  shall be
registered  upon the Security  Register for such series as the absolute owner of
such Subordinated  Security (whether or not such Subordinated  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  Subordinated  Indenture,  interest  on such
Subordinated  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  Subordinated  Security and
the Holder of any Coupon as the absolute owner of such Unregistered Subordinated
Security or Coupon (whether or not such  Unregistered  Subordinated  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 Subordinated Security or Coupon.

If the  Subordinated  Securities  of any series are issued in the form of one or
more Global Subordinated  Securities,  the Depository therefor may grant proxies
to Persons having a beneficial ownership in such Global Subordinated Security or
Subordinated  Securities  for purposes of voting or otherwise  responding to any
request  for  consent,   waiver  or  other  action  which  the  Holder  of  such
Subordinated Security is entitled to grant or take under this






Subordinated  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 Subordinated Securities Owned by Company Deemed Not Outstanding.

     In  determining  whether the Holders of the requisite  aggregate  principal
amount  of  Outstanding  Subordinated  Securities  of  any or  all  series  have
concurred in any request,  demand,  authorization,  direction,  notice, consent,
waiver or other action by  Securityholders  under this  Subordinated  Indenture,
Subordinated  Securities  which are owned by the Company or any other obligor on
the  Subordinated  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  Subordinated  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  Subordinated
Securities  which  the  Trustee  knows  are so owned  shall  be so  disregarded.
Subordinated  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  Subordinated
Securities and that the pledgee is not the Company or any other obligor upon the
Subordinated  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  Subordinated  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  Subordinated  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  Subordinated  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 Subordinated  Securities of any
or all series, as the case may be, specified in this  Subordinated  Indenture in
connection  with such action,  any Holder of a Subordinated  Security the serial
number of which is shown by the evidence to be included among the serial numbers
of the  Subordinated  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 Subordinated  Security.  Except as aforesaid any such action taken
by the Holder of any Subordinated  Security shall be conclusive and binding upon
such Holder and upon all future Holders and owners of such Subordinated Security
and of any Subordinated  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  Subordinated  Security.  Any action  taken by the
Holders of the  percentage  in aggregate  principal  amount of the  Subordinated
Securities  of any  or all  series,  as the  case  may  be,  specified  in  this
Subordinated  Indenture in  connection  with such action  shall be  conclusively
binding  upon the Company,  the Trustee and the Holders of all the  Subordinated
Securities affected by such action.

                                    ARTICLE 8

                      SUPPLEMENTAL SUBORDINATED INDENTURES

SECTION   8.1   Supplemental   Subordinated   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 a 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 cause the  Subordinated  Indenture to be  qualified  under the Trust
Indenture Act; or

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

     (c) to add to the  covenants  of the Company for the benefit of the Holders
of all or any series of Subordinated Securities (and if such covenants are to be
for the benefit of less than all series of Subordinated Securities, stating that
such  covenants  are  expressly  being  included  solely for the benefit of such
series) or to surrender any right or power herein conferred upon the Company; or

     (d) to add any additional  Events of Default for the benefit of the Holders
of all or any series of Subordinated  Securities (and if such additional  Events
of Default  are to be for the  benefit  of less than all series of  Subordinated
Securities,  stating that such additional  Events of Default are expressly being
included solely for the benefit of such series); or

     (e)  to add  to or  change  any of  the  provisions  of  this  Subordinated
Indenture  to such  extent as shall be  necessary  to permit or  facilitate  the
issuance  of  Subordinated   Securities  in  bearer  form,  registrable  or  not
registrable as to principal,  and with or without interest coupons, or to permit
or facilitate the issuance of Subordinated Securities in uncertificated form; or

     (f)  to  add  to,  change  or  eliminate  any of  the  provisions  of  this
Subordinated  Indenture  in  respect  of  one or  more  series  of  Subordinated
Securities,  provided that any such addition,  change or  elimination  (A) shall
neither (i) apply to any Subordinated Security of any






series  created  prior  to the  execution  of such  supplemental  indenture  and
entitled  to the  benefit of such  provision  nor (ii)  modify the rights of the
Holder of any such  Subordinated  Security with respect to such provision or (B)
shall  become  effective  only  when  there  is no  such  Subordinated  Security
Outstanding; or

     (g) to secure the Subordinated Securities; or

     (h) to establish the form or terms of Subordinated Securities of any series
as permitted by Sections 2.1 and 2.3; or

     (i) to evidence and provide for the acceptance of appointment  hereunder by
a successor  Trustee with respect to the Subordinated  Securities of one or more
series  and to add to or  change  any of the  provisions  of  this  Subordinated
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 6.11; or

     (j) to cure any ambiguity,  to correct or supplement  any provision  herein
which may be defective or inconsistent  with any other provision  herein,  or to
make any other  provisions  with respect to matters or questions  arising  under
this Subordinated  Indenture,  provided that such action pursuant to this Clause
(j) shall not  adversely  affect the  interests  of the Holders of  Subordinated
Securities of any series in any material respect; or

     (k) to make provision  with respect to the conversion  rights of Holders in
the event of a consolidation, merger or sale of assets involving the Company, as
required in this Subordinated Indenture; or

     (l) to supplement  any of the provisions of the  Subordinated  Indenture to
such extent as shall be necessary to permit or  facilitate  the  defeasance  and
discharge  of any series of  Subordinated  Securities  pursuant  to Article  10,
provided  that any such action shall not  adversely  affect the interests of the
Holders  of  Subordinated  Securities  of such  series  or any  other  series of
Subordinated Securities in any material respect.

SECTION   8.2   Supplemental    Subordinated    Indentures   with   Consent   of
                Securityholders.

     With the consent of the Holders of a majority  in  principal  amount of the
Outstanding Subordinated Securities of each series affected by such supplemental
indenture,  by act of said Holders delivered to the Company and the Trustee, the
Company,  when authorized by a Board Resolution,  and the Trustee may enter into
an indenture  or  indentures  supplemental  hereto for the purpose of adding any
provisions  to or changing in any manner  eliminating  any of the  provisions of
this  Subordinated  Indenture  or of  modifying  in any manner the rights of the
Holders of  Subordinated  Securities  of such  series  under  this  Subordinated
Indenture; provided, however, that no such supplemental indenture shall, without
the consent of the Holder of each  Outstanding  Subordinated  Security  affected
thereby,






     (a) change the Stated  Maturity of the principal of, or any  installment of
principal of or interest on, any Subordinated  Security, or reduce the principal
amount thereof or the rate of interest  thereon or any premium  payable upon the
redemption  thereof,  or reduce the amount of the principal of an Original Issue
Discount Subordinated Security or any other Subordinated Security which would be
due and payable upon a  declaration  of  acceleration  of the  Maturity  thereof
pursuant to Section  5.2, or change any place of payment  where,  or the coin or
currency in which, any Subordinated  Security or any premium or interest thereon
is payable,  or impair the right to institute  suit for the  enforcement  of any
such  payment  on or after  the  Stated  Maturity  thereof  (or,  in the case of
redemption,  on or after the Redemption  Date), or modify the provisions of this
Subordinated  Indenture with respect to the  subordination  of the  Subordinated
Securities in a manner adverse to the Holders, or

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

     (c) modify  any of the  provisions  of this  Section  8.2 or Section  5.14,
except  to  increase  any such  percentage  or to  provide  that  certain  other
provisions of this  Subordinated  Indenture cannot be modified or waived without
the consent of the Holder of each  Outstanding  Subordinated  Security  affected
thereby; provided,  however, that this clause shall not be deemed to require the
consent of any Holder with respect to changes in the references to "the Trustee"
and concomitant changes in this Section 8.2, or the deletion of this proviso, in
accordance with the requirements of Sections 6.11 and 8.1(i).

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

     Upon the request of the Company,  accompanied  by a copy of a resolution of
the 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 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  Subordinated  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  Subordinated  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
Subordinated  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   Subordinated
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  Subordinated  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 Subordinated Indenture.

     Upon the execution of any supplemental indenture pursuant to the provisions
hereof,  this  Subordinated  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 Subordinated Indenture of
the  Trustee,  the Company and the Holders of  Subordinated  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 terms and conditions of this Subordinated 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 Subordinated Indenture.

SECTION  8.5  Notation on  Subordinated  Securities  in Respect of  Supplemental
              Subordinated Indentures.

     Subordinated 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 Subordinated 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 Subordinated  Indenture contained in any such supplemental indenture may be
prepared by the Company,  authenticated by the Trustee and delivered in exchange
for the Subordinated 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) in case the Company shall consolidate with or merge into another Person
or convey,  transfer  or lease its  properties  and assets  substantially  as an
entirety to any Person,  the Person formed by such  consolidation  or into which
the Company is merged or the Person which acquires by conveyance or transfer, or
which  leases,  the  properties  and assets of the Company  substantially  as an
entirety  shall be a corporation,  partnership or trust,  shall be organized and
validly  existing  under the laws of the  United  States of  America,  any State
thereof or the District of Columbia and shall expressly  assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form satisfactory
to the Trustee, the due and punctual payment of the principal of and any premium
and  interest  on  all  the  Subordinated  Securities  and  the  performance  or
observance of every covenant of this  Subordinated  Indenture on the part of the
Company to be performed or observed and any conversion  rights shall be provided
for in  accordance  with the terms that may be  established  pursuant to Section
2.3, if  applicable,  or as  otherwise  specified  pursuant  to Section  2.3, by
supplemental  indenture  satisfactory  in  form  to the  Trustee,  executed  and
delivered  to the Trustee,  by the Person (if other than the Company)  formed by
such  consolidation  or into which the Company  shall have been merged or by the
Person which shall have acquired the Company's assets;

     (b)  immediately  after  giving  effect  to  such  consolidation,   merger,
conveyance,  transfer or lease, 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;

     (c) such  consolidation,  merger,  conveyance,  transfer  or lease does not
adversely affect the validity or enforceability of the Subordinated  Securities;
and

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






supplemental indenture (if any), comply with this Subordinated Indenture and the
Subordinated  Securities and that all conditions  precedent  herein provided for
relating to such transaction have been satisfied.

SECTION 9.2 Successor Corporation Substituted.

     The successor  corporation  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  Subordinated  Indenture  with the same effect as if such
successor  corporation  had been named as the  Company  herein,  and  thereafter
(except in the case of a lease to another  Person) the  predecessor  corporation
shall be  relieved  of all  obligations  and  covenants  under the  Subordinated
Indenture and the  Subordinated  Securities and, in the event of such conveyance
or transfer, any such predecessor corporation may be dissolved and liquidated.

                                   ARTICLE 10

                           SATISFACTION AND DISCHARGE

SECTION 10.1 Satisfaction and Discharge of Subordinated 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  Subordinated  Securities  of any series
Outstanding hereunder and all unmatured Coupons appertaining thereto (other than
Subordinated  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
Subordinated  Securities  of  any  series  theretofore   authenticated  and  all
unmatured Coupons appertaining  thereto (other than any Subordinated  Securities
of such series and Coupons appertaining thereto which shall have been destroyed,
lost or stolen and which shall have been replaced or paid as provided in Section
2.9) or (iii) in the case of any  series of  Subordinated  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  Subordinated  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 Subordinated
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  Subordinated  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  Subordinated
Indenture and the Subordinated  Securities of such series; (x) the principal and
interest on all Subordinated  Securities of such series and Coupons appertaining
thereto on each date that such  principal or interest is due and payable and (y)
any mandatory  sinking fund payments on the dates on which such payments are due
and payable in accordance with the terms of the  Subordinated  Indenture and the
Subordinated  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  Subordinated  Indenture shall cease to be of further effect
(except  as  to  (i)  rights  of   registration  of  transfer  and  exchange  of
Subordinated  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  Subordinated  Securities  or
Coupons,  (iii)  rights  of  holders  of  Subordinated  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
Subordinated  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  Subordinated  Indenture;  provided,  that the  rights of
Holders of the Subordinated Securities and Coupons to receive amounts in respect
of principal of and interest on the Subordinated  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  Subordinated
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  Subordinated  Indenture  or the  Subordinated
Securities of such series.

     (B) The following provisions shall apply to the Subordinated  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 Subordinated  Indenture pursuant to
the  next  preceding  paragraph,  in the  case  of any  series  of  Subordinated
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 Subordinated  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 Subordinated  Indenture
with  respect  to  the  Subordinated  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  Subordinated  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
Subordinated  Securities  or Coupons,  (iii)  rights of Holders of  Subordinated
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  Subordinated  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
Subordinated  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  Subordinated   Securities  of  such  series  and  Coupons
appertaining thereto (i) cash in an amount, or (ii) in the case of any series of
Subordinated  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
Subordinated  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  Subordinated  Indenture and the  Subordinated
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  Subordinated  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 Subordinated  Indenture  supplemental  hereto  establishing  such
series of  Subordinated  Securities,  from all covenants  and other  obligations
referred  to in  Section  2.3(18)  or 2.3(20)  with  respect  to such  series of
Subordinated  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  Subordinated  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 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 Subordinated  Indenture and
such  Subordinated  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 Subordinated Securities of such series and coupons
appertaining  thereto,  (i) cash in an amount, or (ii) in the case of any series
of  Subordinated  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
Subordinated  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  Subordinated  Indenture and the
Subordinated 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  Subordinated  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  Subordinated  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  Subordinated  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
Subordinated 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  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
                Subordinated Securities. 

     Subject to Section 10.4,  all moneys  deposited with the Trustee (for 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  Subordinated
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 for 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  Subordinated
Indenture with respect to Subordinated Securities of any series, all moneys then
held by any Paying Agent under the  provisions  of this  Subordinated  Indenture
with respect to such series of Subordinated 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 Moneys Held by Trustee and Paying Agent Unclaimed for Two
             Years.

     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 Subordinated
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  Subordinated  Security  of such  series  and of any  Coupons  appertaining
thereto  shall  thereafter  look only to such Persons for any 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.






SECTION 10.5 Indemnity for U.S. Government of 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 Subordinated  Indenture,  or in any Subordinated 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 Subordinated  Securities and the Coupons, if any, appertaining
thereto by the Holders thereof and as part of the consideration for the issue of
the Subordinated Securities and the Coupons appertaining thereto.

SECTION  11.2  Provisions  of  Subordinated  Indenture  for the Sole  Benefit of
               Parties and Holders of Subordinated Securities and Coupons.
 
     Nothing in this Subordinated  Indenture,  in the Subordinated Securities or
in the Coupons  appertaining  thereto,  expressed  or implied,  shall give or be
construed  to give to any person,  firm or  corporation,  other than the parties
thereto and their successors and the Holders of the  Subordinated  Securities or
Coupons,  if any,  any legal or  equitable  right,  remedy or claim  under  this
Subordinated 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  Subordinated  Securities  or
Coupons, if any.

SECTION 11.3 Successors and Assigns of Company Bound by Subordinated Indenture.

     All  the   covenants,   stipulations,   promises  and  agreements  in  this
Subordinated  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 Subordinated
             Securities and Coupons.

     Any notice or demand which by any provision of this Subordinated  Indenture
is required or  permitted to be given or served by the Trustee or by the Holders
of Subordinated 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
Subordinated  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 One Liberty Plaza, 23rd Floor, New York, New York 10006,  Attention:
Mr. George E. Timmes.

     Where  this  Subordinated  Indenture  provides  for  notice to  Holders  of
Registered  Subordinated  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
Subordinated  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  Subordinated
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.

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 Subordinated  Indenture,  the Company
shall  furnish  to  the  Trustee  an  Officer's  Certificate  stating  that  all
conditions precedent provided for in this Subordinated 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 or demand as to which the
furnishing of such documents is  specifically  required by any provision of this
Subordinated  Indenture  relating to such particular  application or demand,  no
additional certificate or opinion need be furnished.







     Each certificate or opinion provided for in this Subordinated Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this  Subordinated  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 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  Subordinated
Securities of any series or any Coupons  appertaining  thereto or the date fixed
for  redemption or repayment of any such  Subordinated  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  Subordinated  Indenture  with Trust
              Indenture Act. 

     If and to the extent  that any  provision  of this  Subordinated  Indenture
limits, qualifies or conflicts with duties imposed by, or with another provision
(an  "incorporated  provision")  included  in  this  Subordinated  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 SUBORDINATED INDENTURE AND EACH SUBORDINATED 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 Subordinated  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 construction hereof.

SECTION 11.11 Subordinated Securities in a Foreign Currency or in ECU.

     Unless otherwise specified in an Officer's  Certificate  delivered pursuant
to Section  2.3 of this  Subordinated  Indenture  with  respect to a  particular
series of Subordinated  Securities,  whenever for purposes of this  Subordinated
Indenture  any action may be taken by the Holders of a specified  percentage  in
aggregate  principal  amount of  Subordinated  Securities  of all  series or all
series  affected by a  particular  action at the time  Outstanding  and, at such
time,  there are  Outstanding  Subordinated  Securities  of any series which are
denominated in a coin or currency other than Dollars  (including ECUs), then the
principal amount of Subordinated 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  Subordinated  Securities of a series  denominated  in a currency  other than
Dollars  in  connection  with  any  action  taken  by  Holders  of  Subordinated
Securities pursuant to the terms of this Subordinated 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 on the Subordinated  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 Subordinated
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 Subordinated  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 a 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 SUBORDINATED SECURITIES AND SINKING FUNDS

SECTION 12.1 Applicability of Article.

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

SECTION 12.2 Notice of Redemption; Partial Redemptions.

     Notice of redemption to the Holders of Registered  Subordinated  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  Subordinated  Securities of such series at their
last  addresses  as they  shall  appear  upon  the  registry  books.  Notice  of
redemption to the Holders of Unregistered Subordinated 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  Subordinated 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 Subordinated  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 Subordinated  Security of
such series.

     The notice of  redemption  to each such Holder shall  specify the principal
amount of each  Subordinated  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  Subordinated  Securities and, in the case of Subordinated  Securities with
Coupons attached thereto, of all Coupons appertaining thereto maturing after the
date fixed for redemption,  that such redemption is pursuant to the 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 Subordinated  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 Subordinated Security, a new Subordinated
Security or Subordinated  Securities of such series in principal amount equal to
the unredeemed portion thereof will be issued.

     The notice of  redemption  of  Subordinated  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 date all the Subordinated
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 Subordinated
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  Subordinated  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,  Subordinated  Securities of such
series  to be  redeemed  in  whole or in part.  Subordinated  Securities  may be
redeemed in part in multiples equal to the minimum  authorized  denomination for
Subordinated  Securities  of such series or any  multiple  thereof.  The Trustee
shall promptly notify the Company in writing of the  Subordinated  Securities of
such  series  selected  for  redemption  and,  in the  case of any  Subordinated
Securities of such series selected for partial redemption,  the principal amount
thereof to be redeemed. For all purposes of this Subordinated Indenture,  unless
the context  otherwise  requires,  all provisions  relating to the redemption of
Subordinated  Securities  of  any  series  shall  relate,  in  the  case  of any
Subordinated Security redeemed or to be redeemed only in part, to the portion of
the principal  amount of such  Subordinated  Security which has been or is to be
redeemed.

SECTION 12.3 Payment of Subordinated Securities Called for Redemption.

     If notice of redemption has been given as above provided,  the Subordinated
Securities or portions of Subordinated 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 Subordinated  Securities at the redemption  price,  together
with interest accrued to said date) interest on the  Subordinated  Securities or
portions of  Subordinated  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 Subordinated Securities shall cease from and after the date fixed for
redemption  to be entitled to any  benefit or security  under this  Subordinated
Indenture,  and the  Holders  thereof  shall  have no right in  respect  of such
Subordinated Securities except the right to receive the redemption price thereof
and  unpaid  interest  to the date fixed for  redemption.  On  presentation  and
surrender of such  Subordinated  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  Subordinated  Securities  or the
specified  portions  thereof  shall be paid and  redeemed  by the Company at the
applicable  redemption price, together with 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
Subordinated  Securities with Coupons  attached  thereto,  to the Holders of the
Coupons for such interest upon surrender thereof,  and in the case of Registered
Subordinated   Securities,   to  the  Holder  of  such  Registered  Subordinated
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  Subordinated  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
Subordinated Security) borne by such Subordinated Security.

     If any  Subordinated  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 Subordinated  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
Subordinated  Security or Subordinated  Securities of such series, of authorized
denominations,  in  principal  amount  equal to the  unredeemed  portion  of the
Subordinated Security so presented.

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

     Subordinated  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 Subordinated  Securities of any series is herein referred to as a "mandatory
sinking fund






payment," and any payment in excess of such minimum  amount  provided for by the
terms of the  Subordinated  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  Subordinated  Securities in cash, the Company may
at its option (a) deliver to the Trustee Subordinated  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  Subordinated
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 Subordinated  Securities of such series
(not  previously  so  credited)  redeemed  by the Company  through any  optional
redemption  provision  contained  in the  terms  of  such  series.  Subordinated
Securities so delivered or credited shall be received or credited by the Trustee
at the sinking fund redemption price specified in such Subordinated 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  Subordinated  Securities  of
such  series  and the  basis  for such  credit,  (b)  stating  that  none of the
Subordinated  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 Subordinated  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 Subordinated
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 in cash without
the  option to  deliver  or credit  Subordinated  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 Subordinated Securities of any particular series,
such cash shall be applied on the next  succeeding  sinking fund payment date to
the  redemption  of  Subordinated  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 Subordinated  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
Subordinated  Securities  of such  series (or  portions  thereof)  so  selected.
Subordinated  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  Subordinated  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  Subordinated  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  Subordinated  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
Subordinated  Securities of any particular series (or earlier,  if such maturity
is accelerated),  which are not held for the payment or redemption of particular
Subordinated  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  Subordinated  Securities  of such series at
Maturity.

     On or before each sinking fund payment  date,  the 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  Subordinated  Securities  to be
redeemed on the next following sinking fund payment date.

     The  Trustee  shall not  redeem or cause to be  redeemed  any  Subordinated
Securities of a series with sinking fund moneys or give any notice of redemption
of  Subordinated  Securities  for such series by  operation  of the sinking fund
during the continuance of a default in payment of interest on such  Subordinated
Securities or of any Event of Default except that, where the giving of notice of
redemption of any Subordinated  Securities shall theretofore have been made, the
Trustee  shall  redeem or cause to be  redeemed  such  Subordinated  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  Subordinated  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 Subordinated Securities.

                            [Signature page follows]






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

                                             HEALTHSOUTH CORPORATION

                                             By:        /s/MICHAEL D. MARTIN
                                               _______________________________
                                             Name:  Michael D. Martin
                                             Title: Chief Financial Officer

Attest:

By:    /s/WILLIAM W. HORTON
  __________________________

                                             THE BANK OF NOVA SCOTIA TRUST
                                             COMPANY OF NEW YORK, as Trustee


                                             By:    /s/George Timmes
                                               _______________________________
                                             Name:  George Timmes
                                             Title: Vice President

Attest:

By:     /s/WARREN GOSHINE
  _________________________