Skip to main content

Indenture - HealthSouth Rehabilitation Corp. and NationsBank of Georgia NA

                     HEALTHSOUTH Rehabilitation Corporation

                                       TO

                 NationsBank of Georgia, National Association,

                                    Trustee





                                   Indenture

                            Dated as of March 24, 1994




                                  $287,500,000




                    9.5 % Senior Subordinated Notes due 2001









         Certain Sections of this Indenture relating to
                 Sections 310 through 318 of the
                          Trust Indenture Act of 1939:


Trust Indenture                                 Indenture
  Act Section                                    Section

Section 310(a)(1)     . . . . . . . . . . . . . . .    609
           (a)(2)     . . . . . . . . . . . . . . .    609
           (a)(3)     . . . . . . . . . . . . . . .    Not Applicable
           (a)(4)     . . . . . . . . . . . . . . .    Not Applicable
           (a)(5)     . . . . . . . . . . . . . . .    609
           (b)        . . . . . . . . . . . . . . .    608; 610
           (c)        . . . . . . . . . . . . . . .    Not Applicable
Section 311(a)        . . . . . . . . . . . . . . .    613
           (b)        . . . . . . . . . . . . . . .    613
           (c)        . . . . . . . . . . . . . . .    Not Applicable
Section 312(a)        . . . . . . . . . . . . . . .    701; 702(a)
           (b)        . . . . . . . . . . . . . . .    702(b)
           (c)        . . . . . . . . . . . . . . .    702(c)
Section 313(a)        . . . . . . . . . . . . . . .    703(a)
           (b)        . . . . . . . . . . . . . . .    703(a)
           (c)        . . . . . . . . . . . . . . .    703(a)
           (d)        . . . . . . . . . . . . . . .    703(b)
        314(a)        . . . . . . . . . . . . . . .    704
           (a)(4)     . . . . . . . . . . . . . . .    101; 1004
           (b)        . . . . . . . . . . . . . . .    Not Applicable
           (c)(1)     . . . . . . . . . . . . . . .    102
           (c)(2)     . . . . . . . . . . . . . . .    102
           (c)(3)     . . . . . . . . . . . . . . .    Not Applicable
           (d)        . . . . . . . . . . . . . . .    Not Applicable
           (e)        . . . . . . . . . . . . . . .    102
Section 315(a)        . . . . . . . . . . . . . . .    601
           (b)        . . . . . . . . . . . . . . .    602
           (c)        . . . . . . . . . . . . . . .    601
           (d)        . . . . . . . . . . . . . . .    601
           (e)        . . . . . . . . . . . . . . .    514
Section 316(a) (last sentence). . . . . . . . . . .    101
           (a)(1)(A). . . . . . . . . . . . . . . .    502; 512
           (a)(1)(B). . . . . . . . . . . . . . . .    513
           (a)(2)     . . . . . . . . . . . . . . .    Not Applicable
           (b)        . . . . . . . . . . . . . . .    508
           (c)        . . . . . . . . . . . . . . .    104(c)
Section 317(a)(l)     . . . . . . . . . . . . . . .    505
           (a)(2)     . . . . . . . . . . . . . . .    504
           (b)        . . . . . . . . . . . . . . .    1003
Section 318(a)        . . . . . . . . . . . . . . .    107


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




                               TABLE OF CONTENTS

                                                                            Page

Parties . . . . . . . . . . . . . . . . . . . . . . .          1
Recitals of the Company . . . . . . . . . . . . . . .          1


                                  ARTICLE ONE

                        Definitions and Other Provisions

                             of General Application

     SECTION 101.   Definitions . . . . . . . . . . . . . . .  1

          "Accounts Receivable" . . . . . . . . . . . . . . .  2
          "Acquired Indebtedness" . . . . . . . . . . . . . .  2
          "Act" . . . . . . . . . . . . . . . . . . . . . . .  2
          "Affiliate" . . . . . . . . . . . . . . . . . . . .  2
          "Asset Sale". . . . . . . . . . . . . . . . . . . .  2
          "Attributable Indebtedness" . . . . . . . . . . . .  3
          "Authenticating Agent". . . . . . . . . . . . . . .  3
          "Bank Debt" . . . . . . . . . . . . . . . . . . . .  3
          "Board of Directors". . . . . . . . . . . . . . . .  3
          "Board Resolution". . . . . . . . . . . . . . . . .  3
          "Business Day". . . . . . . . . . . . . . . . . . .  4
          "Capital Stock" . . . . . . . . . . . . . . . . . .  4
          "Capitalized Lease Obligations" . . . . . . . . . .  4
          "Change of Control" . . . . . . . . . . . . . . . .  4
          "Commission". . . . . . . . . . . . . . . . . . . .  4
          "Common Equity" . . . . . . . . . . . . . . . . . .  4
          "Company" . . . . . . . . . . . . . . . . . . . . .  4
          "Company Request" or "Company Order". . . . . . . .  4
          "Consolidated Amortization Expense" . . . . . . . .  4
          "Consolidated Depreciation Expense" . . . . . . . .  5
          "Consolidated EBITDA" . . . . . . . . . . . . . . .  5
          "Consolidated Income Tax Expense" . . . . . . . . .  5
          "Consolidated Interest Expense" . . . . . . . . . .  5
          "Consolidated Net Income" . . . . . . . . . . . . .  5
          "Consolidated Net Worth". . . . . . . . . . . . . .  6
          "Consolidated Tangible Assets". . . . . . . . . . .  7
          "Convertible Debentures". . . . . . . . . . . . . .  7
          "Corporate Trust Office". . . . . . . . . . . . . .  7
          "Corporation" . . . . . . . . . . . . . . . . . . .  7
          "Credit Agreements" . . . . . . . . . . . . . . . .  7
          "Default" . . . . . . . . . . . . . . . . . . . . .  7
          "Defaulted Interest". . . . . . . . . . . . . . . .  7
          "Designated Senior Indebtedness". . . . . . . . . .  7
          "Disqualified Stock". . . . . . . . . . . . . . . .  8
          "EBITDA Coverage Ratio" . . . . . . . . . . . . . .  8
          "Eligible Accounts Receivable". . . . . . . . . . .  8
          "Eligible Investments". . . . . . . . . . . . . . .  8
          "Exchange Act". . . . . . . . . . . . . . . . . . .  9
          "Existing Indebtedness" . . . . . . . . . . . . . .  9
          "Event of Default". . . . . . . . . . . . . . . . .  9
          "GAAP". . . . . . . . . . . . . . . . . . . . . . .  9
          "Hedging Obligations" . . . . . . . . . . . . . . .  9
          "Holder". . . . . . . . . . . . . . . . . . . . . .  9
          "Indebtedness". . . . . . . . . . . . . . . . . . .  9
          "Interest Expense". . . . . . . . . . . . . . . . . 10
          "Inventory" . . . . . . . . . . . . . . . . . . . . 10
          "Indenture" . . . . . . . . . . . . . . . . . . . . 10
          "Interest Payment Date" . . . . . . . . . . . . . . 10
          "Investments" . . . . . . . . . . . . . . . . . . . 11
          "Lien". . . . . . . . . . . . . . . . . . . . . . . 11
          "Maturity". . . . . . . . . . . . . . . . . . . . . 11
          "Net Proceeds". . . . . . . . . . . . . . . . . . . 11
          "Officers' Certificate" . . . . . . . . . . . . . . 12
          "Opinion of Counsel". . . . . . . . . . . . . . . . 12
          "Outstanding" . . . . . . . . . . . . . . . . . . . 12
          "Paying Agent". . . . . . . . . . . . . . . . . . . 13
          "Permitted Liens" . . . . . . . . . . . . . . . . . 13
          "Person". . . . . . . . . . . . . . . . . . . . . . 14
          "PP&E". . . . . . . . . . . . . . . . . . . . . . . 14
          "Predecessor Security". . . . . . . . . . . . . . . 14
          "Preferred Stock" . . . . . . . . . . . . . . . . . 14
          "Proceeding". . . . . . . . . . . . . . . . . . . . 14
          "Refinancing Indebtedness". . . . . . . . . . . . . 14
          "Redemption Date" . . . . . . . . . . . . . . . . . 15
          "Redemption Price". . . . . . . . . . . . . . . . . 15
          "Regular Record Date" . . . . . . . . . . . . . . . 15
          "Repurchase Date" . . . . . . . . . . . . . . . . . 15
          "Repurchase Event". . . . . . . . . . . . . . . . . 15
          "Repurchase Price". . . . . . . . . . . . . . . . . 15
          "Responsible Officer" . . . . . . . . . . . . . . . 15
          "Restricted Payment". . . . . . . . . . . . . . . . 15
          "Sale and Leaseback Transaction". . . . . . . . . . 16
          "Securities Payment". . . . . . . . . . . . . . . . 16
          "Security Register" and "Security Registrar". . . . 16
          "Senior Indebtedness" . . . . . . . . . . . . . . . 16
          "Senior Subordinated Debt". . . . . . . . . . . . . 17
          "Significant Subsidiary". . . . . . . . . . . . . . 17
          "Special Record Date" . . . . . . . . . . . . . . . 17
          "Stated Maturity" . . . . . . . . . . . . . . . . . 17
          "Subordinated Obligations". . . . . . . . . . . . . 17
          "Subsidiary". . . . . . . . . . . . . . . . . . . . 17
          "Trading Day" . . . . . . . . . . . . . . . . . . . 18
          "Trustee" . . . . . . . . . . . . . . . . . . . . . 18
          "Trust Indenture Act" . . . . . . . . . . . . . . . 18
          "Vice President". . . . . . . . . . . . . . . . . . 18
          "Weighted Average Life to Maturity" . . . . . . . . 18
          "Wholly Owned Subsidiary" . . . . . . . . . . . . . 18

     SECTION 102.   Compliance Certificates and Opinions. . . 19

     SECTION 103.   Form of Documents Delivered to Trustee. . 19

     SECTION 104.   Acts of Holders; Record Dates . . . . . . 20

     SECTION 105.   Notices, Etc., to Trustee and Company . . 21

     SECTION 106.   Notice to Holders; Waiver . . . . . . . . 21

     SECTION 107.   Conflict with Trust Indenture Act . . . . 22

     SECTION 108.   Effect of Headings and Table of
                    Contents. . . . . . . . . . . . . . . . . 22

     SECTION 109.   Successors and Assigns. . . . . . . . . . 22

     SECTION 110.   Separability Clause . . . . . . . . . . . 23

     SECTION 111.   Benefits of Indenture . . . . . . . . . . 23

     SECTION 112.   Governing Law . . . . . . . . . . . . . . 23

     SECTION 113.   Legal Holidays. . . . . . . . . . . . . . 23

                                  ARTICLE TWO

                                 Security Forms

     SECTION 201.   Forms Generally . . . . . . . . . . . . . 23

     SECTION 202.   Form of Face of Security. . . . . . . . . 24

     SECTION 203.   Form of Reverse of Security . . . . . . . 25

     SECTION 204.   Form of Trustee's Certificate of
                    Authentication. . . . . . . . . . . . . . 29

                                 ARTICLE THREE

                                 The Securities

     SECTION 301.   Title and Terms . . . . . . . . . . . . . 29

     SECTION 302.   Denominations . . . . . . . . . . . . . . 30

     SECTION 303.   Execution, Authentication, Delivery and
                    Dating. . . . . . . . . . . . . . . . . . 30

     SECTION 304.   Temporary Securities. . . . . . . . . . . 31

     SECTION 305.   Registration, Registration of Transfer
                    and Exchange. . . . . . . . . . . . . . . 31

     SECTION 306.   Mutilated, Destroyed, Lost and Stolen
                    Securities. . . . . . . . . . . . . . . . 32

     SECTION 307.   Payment of Interest; Interest Rights
                    Preserved . . . . . . . . . . . . . . . . 33

     SECTION 308.   Persons Deemed Owners . . . . . . . . . . 35

     SECTION 309.   Cancellation. . . . . . . . . . . . . . . 35

     SECTION 310.   Computation of Interest . . . . . . . . . 35

                                  ARTICLE FOUR

                           Satisfaction and Discharge

     SECTION 401.   Satisfaction and Discharge of
                    Indenture . . . . . . . . . . . . . . . . 35

     SECTION 402.   Application of Trust Money. . . . . . . . 37

                                  ARTICLE FIVE

                                    Remedies

     SECTION 501.   Events of Default . . . . . . . . . . . . 37

     SECTION 502.   Acceleration of Maturity; Rescission
                    and Annulment.. . . . . . . . . . . . . . 40

     SECTION 503.   Collection of Indebtedness and Suits
                    for Enforcement by Trustee. . . . . . . . 41

     SECTION 504.   Trustee May File Proofs of Claim. . . . . 41

     SECTION 505.   Trustee May Enforce Claims Without
                    Possession of Securities. . . . . . . . . 42

     SECTION 506.   Application of Money Collected. . . . . . 42

     SECTION 507.   Limitation on Suits . . . . . . . . . . . 43

     SECTION 508.   Unconditional Right of Holders to
                         Receive Principal, Premium and
                  Interest. . . . . . . . . . . . . . . . . 44

     SECTION 509.   Restoration of Rights and Remedies. . . . 44

     SECTION 510.   Rights and Remedies Cumulative. . . . . . 44

     SECTION 511.   Delay or Omission Not Waiver. . . . . . . 44

     SECTION 512.   Control by Holders. . . . . . . . . . . . 45

     SECTION 513.   Waiver of Past Defaults . . . . . . . . . 45

     SECTION 514.   Undertaking for Costs . . . . . . . . . . 45

     SECTION 515.   Waiver of Stay or Extension Laws. . . . . 46

                                  ARTICLE SIX

                                  The Trustee

     SECTION 601.   Certain Duties and Responsibilities . . . 46

     SECTION 602.   Notice of Defaults. . . . . . . . . . . . 46

     SECTION 603.   Certain Rights of Trustee . . . . . . . . 47

     SECTION 604.   Not Responsible for Recitals or
                    Issuance of Securities. . . . . . . . . . 48

     SECTION 605.   May Hold Securities . . . . . . . . . . . 48

     SECTION 606.   Money Held in Trust . . . . . . . . . . . 48

     SECTION 607.   Compensation and Reimbursement. . . . . . 48

     SECTION 608.   Disqualification; Conflicting
                    Interests . . . . . . . . . . . . . . . . 50

     SECTION 609.   Corporate Trustee Required;
                    Eligibility . . . . . . . . . . . . . . . 50

     SECTION 610.   Resignation and Removal; Appointment of
                    Successor . . . . . . . . . . . . . . . . 50

     SECTION 611.   Acceptance of Appointment by Successor. . 52

     SECTION 612.   Merger, Conversion, Consolidation or
                    Succession to Business. . . . . . . . . . 52

     SECTION 613.   Preferential Collection of Claims
                    Against Company . . . . . . . . . . . . . 52

     SECTION 614.   Appointment of Authenticating Agent.. . . 53

                                 ARTICLE SEVEN

        Holders' Lists and Reports by Trustee and Company

     SECTION 701.   Company to Furnish Trustee Names and
                    Addresses of Holders. . . . . . . . . . . 54

     SECTION 702.   Preservation of Information;
                    Communications to Holders . . . . . . . . 55

     SECTION 703.   Reports by Trustee. . . . . . . . . . . . 55

     SECTION 704.   Reports by Company. . . . . . . . . . . . 55

                                 ARTICLE EIGHT

     Consolidation, Merger, Conveyance, Transfer or Lease

     SECTION 801.   Limitations on Mergers, Consolidations
                    and Asset Transfers . . . . . . . . . . . 56

     SECTION 802.   Successor Substituted . . . . . . . . . . 57

                                  ARTICLE NINE

                            Supplemental Indentures

     SECTION 901.   Supplemental Indentures Without Consent
                    of Holders. . . . . . . . . . . . . . . . 57

     SECTION 902.   Supplemental Indentures With Consent of
                    Holders . . . . . . . . . . . . . . . . . 58

     SECTION 903.   Execution of Supplemental Indentures. . . 59

     SECTION 904.   Effect of Supplemental Indentures . . . . 59

     SECTION 905.   Conformity with Trust Indenture Act . . . 59

     SECTION 906.   Reference in Securities to Supplemental
                    Indentures. . . . . . . . . . . . . . . . 59

                                  ARTICLE TEN

                                   Covenants

     SECTION 1001.  Payment of Principal, Premium and
                    Interest. . . . . . . . . . . . . . . . . 60

     SECTION 1002.  Maintenance of Office or Agency . . . . . 60

     SECTION 1003.  Money for Security to Be Held in Trust. . 61

     SECTION 1004.  Statement by Officers as to Default . . . 62

     SECTION 1005.  Existence . . . . . . . . . . . . . . . . 62

     SECTION 1006.  Maintenance of Properties . . . . . . . . 63

     SECTION 1007.  Payment of Taxes and Other Claims . . . . 63

     SECTION 1008.  Limitations on Additional Indebtedness. . 63

     SECTION 1009.  Limitations on Subsidiary Preferred
                    Stock . . . . . . . . . . . . . . . . . . 64

     SECTION 1010.  Limitations on Restricted Payments. . . . 64

     SECTION 1011.  Limitations on Investments and Loans. . . 65

     SECTION 1012.  Limitations on Restrictions on
                    Distributions from Subsidiaries . . . . . 66

     SECTION 1013.  Limitations on Certain Other
                    Subordinated Indebtedness . . . . . . . . 67

     SECTION 1014.  Limitations on Transactions with
                    Affiliates. . . . . . . . . . . . . . . . 67

     SECTION 1015.  Limitations on Liens. . . . . . . . . . . 68

     SECTION 1016.  Limitations on Asset Sales. . . . . . . . 68

                                 ARTICLE ELEVEN

                            Redemption of Securities

     SECTION 1101.  Right of Redemption . . . . . . . . . . . 69

     SECTION 1102.  Applicability of Article. . . . . . . . . 69

     SECTION 1103.  Election to Redeem; Notice to Trustee.. . 69

     SECTION 1104.  Selection by Trustee of Securities to
                    Be Redeemed . . . . . . . . . . . . . . . 69

     SECTION 1105.  Notice of Redemption. . . . . . . . . . . 70

     SECTION 1106.  Deposit of Redemption Price . . . . . . . 70

     SECTION 1107.  Securities Payable on Redemption Date . . 71

     SECTION 1108.  Securities Redeemed in Part . . . . . . . 71

                                 ARTICLE TWELVE

                          Subordination of Securities

     SECTION 1201.  Securities Subordinate to Senior
                    Indebtedness. . . . . . . . . . . . . . . 71

     SECTION 1202.  Payment Over of Proceeds Upon
                    Dissolution, Etc. . . . . . . . . . . . . 72

     SECTION 1203.  Prior Payment to Senior Indebtedness
                    Upon Acceleration of Securities . . . . . 73

     SECTION 1204.  No Payment in Certain Circumstances . . . 74

     SECTION 1205.  Payment Permitted If No Default . . . . . 75

     SECTION 1206.  Subrogation to Rights of Holders of
                    Senior Indebtedness . . . . . . . . . . . 75

     SECTION 1207.  Provisions Solely to Define Relative
                    Rights. . . . . . . . . . . . . . . . . . 76

     SECTION 1208.  Trustee to Effectuate Subordination and
                    Payment Provisions. . . . . . . . . . . . 76

     SECTION 1209.  No Waiver of Subordination Provisions . . 76

     SECTION 1210.  Notice to Trustee . . . . . . . . . . . . 77

     SECTION 1211.  Reliance on Judicial Order or
                    Certificate of Liquidating Agent. . . . . 78

     SECTION 1212.  Trustee Not Fiduciary for Holders of
                    Senior Indebtedness . . . . . . . . . . . 78

     SECTION 1213.  Rights of Trustee as Holder of Senior
                    Indebtedness; Preservation of Trustee's
                    Rights. . . . . . . . . . . . . . . . . . 79

     SECTION 1214.  Article Applicable to Paying Agents . . . 79

                                ARTICLE THIRTEEN

          Repurchase of Securities at the Option of the

                         Holder Upon a Repurchase Event

     SECTION 1301.  Right to Require Repurchase . . . . . . . 79

     SECTION 1302.  Notices; Method of Exercising
                    Repurchase Right, Etc.. . . . . . . . . . 80

     SECTION 1303.  Definition of Repurchase Event. . . . . . 81






          INDENTURE,   dated  as  of  March   24,  1994,   between   HEALTHSOUTH
Rehabilitation  Corporation, a corporation duly organized and existing under the
laws of the  State  of  Delaware  (herein  called  the  "Company"),  having  its
principal  office at Two Perimeter Park South,  Birmingham,  Alabama 35243,  and
NationsBank of Georgia,  National  Association,  a national banking  association
duly organized and existing  under the laws of the United States of America,  as
Trustee  (herein  called  the  "Trustee"),  having its  principal  office at 600
Peachtree Street, Suite 900, Atlanta, Georgia 30308.


                            RECITALS OF THE COMPANY

          The Company has duly  authorized the creation of an issue  of  its 9.5
Senior   Subordinated  Notes  due  2001  (herein  called  the  "Securities")  of
substantially  the  tenor and  amount  hereinafter  set  forth,  and to  provide
therefor  the Company has duly  authorized  the  execution  and delivery of this
Indenture.

          All things  necessary  to make the  Securities,  when  executed by the
Company  and  authenticated  and  delivered  hereunder  and duly  issued  by the
Company,  the valid  obligations  of the Company,  and to make this  Indenture a
valid  agreement of the Company,  in accordance  with their and its terms,  have
been done.

          NOW, THEREFORE, THIS INDENTURE, WITNESSETH:

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



                                  ARTICLE ONE

                        Definitions and Other Provisions
                             of General Application

SECTION 101.   Definitions.

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

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

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

          (3) all  accounting  terms  not  otherwise  defined  herein  have  the
     meanings assigned to them in accordance with generally accepted  accounting
     principles,  and, except as otherwise herein expressly  provided,  the term
     "generally accepted accounting  principles" with respect to any computation
     required or permitted  hereunder shall mean such  accounting  principles as
     are generally accepted at the date of such computation; and

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

          "Accounts  Receivable"  means all of the  accounts  receivable  of the
Company and its  Subsidiaries on a consolidated  basis which, in accordance with
GAAP,  would be set  opposite  the  caption  "accounts  receivable"  or any like
caption on a balance sheet of the Company.

          "Acquired  Indebtedness"  means (a) with  respect to any  Person  that
becomes a Subsidiary  of the Company  after the date of initial  issuance of the
Securities,  Indebtedness  of such Person and its  Subsidiaries  existing at the
time such Person  becomes a  Subsidiary  of the Company that was not incurred in
connection  with, or in  contemplation  of, such Person becoming a Subsidiary of
the Company and (b) with respect to the Company or any of its Subsidiaries,  any
Indebtedness  assumed by the Company or any of its  Subsidiaries  in  connection
with the  acquisition  of an asset from another  Person that was not incurred by
such other person in connection with, or in contemplation of, such acquisition.

          "Act", when used with respect to any Holder, has the meaning specified
in Section 104.

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

          "Asset Sale" for any Person means the sale,  lease conveyance or other
disposition  (including,  without  limitation,  by merger or consolidation,  and
whether  by  operation  of law or  otherwise)  of any of  that  Person's  assets
(including,  without limitation,  the sale or other disposition of Capital Stock
of any Subsidiary of such Person, whether by such Person or by such Subsidiary),
whether owned on the date of initial  issuance of the Securities or subsequently
acquired, in one transaction or a series of related transactions,  in which such
Person and/or its Subsidiaries  sell, lease,  convey or otherwise dispose of (i)
all  or  substantially  all of  the  Capital  Stock  of  any  of  such  Person's
Subsidiaries,  (ii) assets which  constitute  substantially  all of an operating
unit or business of such Person or any of its Subsidiaries,  or (iii) any health
care facility;  provided, however, that the following shall not constitute Asset
Sales:  (i) a transaction  or series of related  transactions  that results in a
Change of  Control,  and (ii)  transactions  between  the Company and any of its
Wholly Owned Subsidiaries or among such Wholly Owned Subsidiaries.

          "Attributable  Indebtedness"  when used with  respect  to any Sale and
Leaseback  Transaction  or an  operating  lease  with  respect  to a  healthcare
facility means, as at the time of  determination,  the present value (discounted
at a rate equivalent to the interest rate implicit in the lease, compounded on a
semiannual  basis) of the total  obligations of the lessee for rental  payments,
after  excluding all amounts  required to be paid on account of maintenance  and
repairs,  insurance,  taxes, utilities and other similar expenses payable by the
lessee  pursuant  to the terms of the lease,  during the  remaining  term of the
lease  included in any such Sale and  Leaseback  Transaction  or such  operating
lease or until the earliest  date on which the lessee may  terminate  such lease
without  penalty or upon payment of a penalty (in which case the rental payments
shall include such penalty);  provided, that the Attributable  Indebtedness with
respect  to a Sale and  Leaseback  Transaction  shall  be no less  than the fair
market value of the property subject to such Sale and Leaseback Transaction.

          "Authenticating  Agent"  means any Person  authorized  by the  Trustee
pursuant  to  Section  614 to act on  behalf  of  the  Trustee  to  authenticate
Securities.

          "Bank Debt" means all obligations of the Company and its Subsidiaries,
now  or  hereafter  existing  under  (i)  the  Credit  Agreements,  whether  for
principal,  interest,  reimbursement  of amounts  drawn under  letters of credit
issued  pursuant  thereto,   guarantees  in  respect  thereof,  fees,  expenses,
premiums,  indemnities or otherwise,  and (ii) any Indebtedness  incurred by the
Company  to extend,  refund or  refinance,  in whole or in part,  the Bank Debt,
including any interest and premium on any such Indebtedness.

          "Board  of  Directors"  means  either  the board of  directors  of the
Company or any duly authorized committee of that board.

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

          "Business  Day" means each Monday,  Tuesday,  Wednesday,  Thursday and
Friday which is not a day on which banking  institutions in The City of New York
or the city in which the  Corporate  Trust Office is located are  authorized  or
obligated by law or executive order to close.

          "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).

          "Capitalized  Lease Obligations" of any Person means the obligation of
such  Person to pay rent or other  amounts  under a lease that is required to be
capitalized  for financial  reporting  purposes in accordance with GAAP, and the
amount of such obligation shall be the capitalized  amount thereof determined in
accordance with GAAP.

          "Change of Control" shall have the meaning specified
in Section 1303.

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

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

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

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

          "Consolidated Amortization Expense" of any Person for any period means
the amortization expense of such Person and its Subsidiaries for such period (to
the  extent  included  in the  computation  of  Consolidated  Net Income of such
Person), determined on a consolidated basis in accordance with GAAP.

          "Consolidated   Depreciation   Expense"   of  any  Person   means  the
depreciation expense of such Person and its Subsidiaries for such period (to the
extent included in the  computation of Consolidated  Net Income of such Person),
determined on a consolidated basis in accordance with GAAP.

          "Consolidated  EBITDA"  of  any  Person  means,  with  respect  to any
determination  date,  Consolidated  Net Income before  extraordinary  losses and
losses realized in connection with Asset Sales, plus (i) Consolidated Income Tax
Expense,  plus (ii) Consolidated  Depreciation  Expense, plus (iii) Consolidated
Amortization  Expense,  plus (iv) Consolidated  Interest  Expense,  plus (v) all
other  non-cash items  reducing  Consolidated  Net Income of such Person and its
Subsidiaries,  determined on a consolidated  basis in accordance with GAAP, plus
(vi)  without  duplication,  for  calculation  of an EBITDA  Coverage  Ratio for
periods  ending  on  or  before   December  31,  1994  the  sum  of  $31,500,000
(representing   expenses  related  to  the  Company's   acquisition  of  certain
rehabilitation  facilities and related assets from National Medical Enterprises,
Inc. effective December 31, 1993, net of Federal income tax effects), plus (vii)
without duplication, any amount, net of Federal income tax effects, representing
expenses  relating  to an  acquisition,  up to a maximum of 10% of the  purchase
price thereof,  determined on a consolidated  basis in accordance with GAAP, and
less all non-cash items  increasing  Consolidated  Net Income of such Person and
its Subsidiaries, determined on a consolidated basis in accordance with GAAP, in
each case, for such Person's prior four full fiscal quarters for which financial
results have been reported immediately preceding the determination date.

          "Consolidated  Income  Tax  Expense"  means,  for any  Person  for any
period,  the  provision for taxes based on income and profits of such Person and
its Subsidiaries to the extent such income or profits were included in computing
Consolidated Net Income of such Person for such Period.

          "Consolidated Interest Expense" of any Person for any period means the
Interest Expense of such Person and its Subsidiaries for such period, determined
on a  consolidated  basis in  accordance  with  GAAP,  plus (to the  extent  not
otherwise  included  within  the  definition  of  Interest  Expense  as  imputed
interest)  one-third of the rental expense on Attributable  Indebtedness of such
Person for such period determined on a consolidated basis.

          "Consolidated  Net Income" of any Person for any period  means the net
income (or loss) of such Person and its Subsidiaries for such period  determined
on a  consolidated  basis in  accordance  with GAAP,  without  giving  effect to
dividends on any series of  preferred  stock of any  Subsidiary  of such Person,
whether or not in cash, to the extent such  consolidated  net income was reduced
thereby;  provided  that there  shall be  excluded  from such net income (to the
extent otherwise included therein), without duplication;  (i) the net income (or
loss) of any Person  (other than a Subsidiary  of the referent  Person) in which
any Person other than the referent Person has an ownership  interest,  except to
the extent  that any such income has  actually  been  received  by the  referent
Person or any of its  Wholly  Owned  Subsidiaries  in the form of  dividends  or
similar  distributions  during such period; (ii) except to the extent includible
in the  consolidated net income of the referent Person pursuant to the foregoing
clause  (i),  the net income (or loss) of any Person that  accrued  prior to the
date that (a) such Person  becomes a  Subsidiary  of the  referent  Person or is
merged into or consolidated  with the referent Person or any of its Subsidiaries
or (b) the assets of such Person are acquired by the  referent  Person or any of
its Subsidiaries;  (iii) the net income of any Subsidiary of the referent Person
(other than a Wholly Owned  Subsidiary)  to the extent that the  declaration  or
payment of dividends or similar  distributions by such Subsidiary of that income
is not  permitted  by  operation  of the terms of its charter or any  agreement,
instrument,  judgment,  decree, order, statute, rule or governmental  regulation
applicable  to that  Subsidiary  during  such  period;  (iv) any gain (or loss),
together with any related provisions for taxes on any such gain, realized during
such  period  by the  referent  Person  or any of it  Subsidiaries  upon (a) the
acquisition of any securities, or the extinguishment of any Indebtedness, of the
referent Person or any of its Subsidiaries or (b) any Asset Sale by the referent
Person or any of its Subsidiaries; (v) any extraordinary gain (or extra-ordinary
loss),  together with any related  provision for taxes or tax benefit  resulting
from any such extraordinary gain or loss, realized by the referent Person or any
of its Subsidiaries  during such period;  and (vi) in the case of a successor to
such Person by consolidation,  merger or transfer of its assets, any earnings of
the successor prior to such merger, consolidation or transfer of assets.


          "Consolidated  Net  Worth"  of any  Person  as of any date  means  the
stockholders' equity (including any preferred stock that is classified as equity
under GAAP, other than  Disqualified  Stock) of such person and its Subsidiaries
(excluding any equity adjustment for foreign currency translation for any period
subsequent to the date of initial  issuance of the Securities) 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; provided, however,
that in calculating the Consolidated Net Worth of the Company  immediately prior
to a transaction  covered by Article Eight hereof which is an acquisition by the
Company  of  another  Person,  there  shall be  subtracted  from  the  Company's
Consolidated Net Worth  immediately  prior to such acquisition the lesser of (a)
such amount, net of Federal income tax effects,  as represents expenses relating
to such  acquisition,  or (b) 10% of the purchase  price or fair market value of
the consideration paid by the Company in connection with such acquisition.



          "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 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.


          "Convertible   Debentures"   means  the   Company's   5%   Convertible
Subordinated  Debentures  due 2001 to be issued under the Indenture  dated as of
March 24, 1994 between the Company and PNC Bank, Kentucky,  Inc., as Trustee, in
an aggregate  principal amount not to exceed  $100,000,000  ($115,000,000 if the
underwriters' over-allotment option is exercised in full).


          "Corporate  Trust Office" means the principal office of the Trustee in
the city at which at any particular  time its corporate  trust business shall be
administered.  As of the date hereof,  the Corporate Trust Office of the Trustee
is located at 600 Peachtree Street, Suite 900, Atlanta, Georgia 30308.

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

          "Credit  Agreements" means the two Credit Agreements,  one dated as of
November 20, 1992 and the other dated as of December  30,  1993,  by and between
the Company,  NationsBank of Georgia,  National  Association,  as Agent, and the
lenders  signatories  thereto,  together  with the  related  documents  thereto,
including,  without  limitation,  any  security  documents  and all exhibits and
schedules  thereto and any  agreement or agreements  relating to any  extension,
refunding,  refinancing,  successor or replacement facility, whether or not with
the same lender, and whether or not the principal amount or amount of letters of
credit  outstanding  thereunder or the interest rate payable in respect  thereof
shall be thereby  increased,  in each case as amended and in effect from time to
time.

          "Default"  means any event,  act or condition that is, or after notice
or the passage of time or both would be, an Event of Default.

          "Defaulted Interest" has the meaning specified in
Section 307.

          "Designated  Senior  Indebtedness"  means (i) the Bank  Debt,  without
regard to the amounts outstanding  thereunder,  and (ii) any Senior Indebtedness
which,  at  the  time  of  determination,  has  an  aggregate  principal  amount
outstanding  of at least  $20  million  and is  specifically  designated  in the
instrument   evidencing   such  Senior   Indebtedness   as  "Designated   Senior
Indebtedness" by the Company.

          "Disqualified Stock" means any Capital Stock that, by its terms (or by
the  terms of any  security  into  which it is  convertible  or for  which it is
exchangeable),  or upon the  happening of any event,  matures or is  mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the  holder  thereof,  in whole or in part,  on or prior to the
final maturity date of the Securities.

          "EBITDA  Coverage Ratio" with respect to any period means the ratio of
(i)  Consolidated  EBITDA  of the  Company  to  (ii)  the  aggregate  amount  of
Consolidated Interest Expense of the Company for such period; provided, however,
that if any calculation of the Company's  EBITDA Coverage Ratio requires the use
of any quarter  prior to the date of initial  issuance of the  Securities,  such
calculation shall be made on a pro forma basis, giving effect to the issuance of
the  Securities  and the use of the net  proceeds  therefrom  as if the same had
occurred  at  the  beginning  of the  four-quarter  period  used  to  make  such
calculation;  and provided further that if any such calculation requires the use
of any quarter  prior to the date that any Asset Sale was  consummated,  or that
any  Indebtedness  was incurred,  or that any acquisition of a hospital or other
healthcare  facility  or any assets  purchased  outside the  ordinary  course of
business  was  effected,  by  the  Company  or any  of  its  Subsidiaries,  such
calculation shall be made on a pro forma basis, giving effect to each such Asset
Sale, incurrence of Indebtedness or acquisition, as the case may be, and the use
of any proceeds  therefrom,  as if the same had occurred at the beginning of the
four-quarter period used to make such calculation.


          "Eligible  Accounts  Receivable"  means  Accounts  Receivable  of  the
Company and its  Subsidiaries on a consolidated  basis which arose within ninety
(90) days prior to any date of determination.


          "Eligible  Investments" of any Person means Investments of such Person
in (i) direct  obligations of, or obligations the payment of which is guaranteed
by,  the  United  States of  America  or an  interest  in any trust or fund that
invests solely in such obligations or repurchase  agreements,  properly secured,
with  respect to such  obligations;  (ii)  direct  obligations  of  agencies  or
instrumentalities of the United States of America having a rating of A or higher
by Standard & Poor's  Corporation or A2 or higher by Moody's Investors  Service,
Inc.;  (iii) a  certificate  of  deposit  issued  by, or other  interest-bearing
deposits  with,  a bank  having its  principal  place of  business in the United
States of America and having equity capital of not less than $250 million;  (iv)
a certificate of deposit by, or other interest-bearing  deposits with, any other
bank  organized  under the laws of the  United  States of  America  or any state
thereof, provided that such deposit is either (A) insured by the Federal Deposit
Insurance  Corporation or (B) properly  secured by such bank by pledging  direct
obligations  of the United  States of America  having a market value of not less
than the face  amount of such  deposits;  (v) prime  commercial  paper  maturing
within 270 days of the  acquisition  thereof  and,  at the time of  acquisition,
having a rating of A-1 or higher by  Standard  & Poor's  Corporation,  or P-1 or
higher by Moody's Investors Service,  Inc.; (vi) eligible banker's  acceptances,
repurchase  agreements and tax-exempt  municipal bonds having a maturity of less
than one  year,  in each  case  having a  rating,  or that is the full  recourse
obligation  of a person  whose  senior  debt is rated A or higher by  Standard & Poor's Corporation or A2 or higher by Moody's Investors Service, Inc.; (vii) any
other  investment  having a rating of A or higher or A-1 or higher by Standard & Poor's  Corporation  or A2 or  higher  or P-1 or  higher  by  Moody's  Investors
Service, Inc.

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

          "Existing Indebtedness" means all of the Indebtedness
of the Company and its Subsidiaries that is outstanding on the
date of initial issuance of the Securities.

          "Event of Default" has the meaning specified in
Section 501.

          "GAAP" means generally accepted accounting principles set forth in the
opinions and  pronouncements of the Accounting  Principles Board of the American
Institute of Certified Public  Accountants and statements and  pronouncements of
the Financial  Accounting  Standards  Board or in such other  statements by such
other  entity as may be  approved  by a  significant  segment of the  accounting
profession of the United States, as from time to time in effect.

          "Hedging  Obligations"  of any Person  means the  obligations  of such
Person pursuant to any interest rate swap agreement,  foreign currency  exchange
agreement,  interest rate collar agreement,  option or futures contract or other
similar agreement or arrangement  relating to interest rates or foreign exchange
rates.

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

          "Indebtedness" of any Person at any date means,  without  duplication:
(i) all  indebtedness  of such  Person for  borrowed  money  (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion  thereof);  (ii) all  obligations  of such  Person  evidenced  by bonds,
debentures,  notes or other similar  instruments;  (iii) all obligations of such
Person  in  respect  of  letters  of  credit or other  similar  instruments  (or
reimbursement  obligations with respect  thereto);  (iv) all obligations of such
Person  with  respect  to  Hedging  Obligations  (other  than those that fix the
interest rate on variable rate indebtedness otherwise permitted by the Indenture
or that protect the Company and/or its  Subsidiaries  against changes in foreign
exchange  rates);  (v) all  obligations  of such Person to pay the  deferred and
unpaid purchase price of property or services, except trade payables and accrued
expenses incurred in the ordinary course of business; (vi) all Capitalized Lease
Obligations of such Person;  (vii) all  indebtedness of others secured by a Lien
on any asset of such Person, whether or not such indebtedness is assumed by such
Person;  (viii) all  indebtedness  of others  guaranteed  by such  Person to the
extent of such guarantee; and (ix) all Attributable Indebtedness.  The amount of
Indebtedness of any Person at any date shall be the outstanding  balance at such
date of all unconditional  obligations as described above, the maximum liability
of such Person for any such contingent obligations at such date and, in the case
of clause (vii), the amount of the Indebtedness secured.

          "Interest  Expense" of any Person for any period  means the  aggregate
amount of interest  which,  in accordance  with GAAP,  would be set opposite the
caption  "interest  expense" or any like caption on an income statement for such
Person (including, without limitation or duplication,  imputed interest included
in Capitalized Lease Obligations, all commissions,  discounts and other fees and
charges  owed  with  respect  to  letters  of  credit  and  bankers'  acceptance
financing,  the net costs associated with Hedging  Obligations,  amortization of
financing  fees and  expenses,  the  interest  portion of any  deferred  payment
obligation,  amortization  of discount and all other non-cash  interest  expense
other than interest  amortized to cost of sales) plus the aggregate  amount,  if
any, by which such interest  expense was reduced as a result of the amortization
of deferred debt restructuring credits for such period.

          "Inventory"  means all of the inventory of the Company and each of its
Subsidiaries  which, in accordance with GAAP,  would be set opposite the caption
"inventory" or any like caption on a balance sheet of the Company.

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

          "Interest Payment Date" means the Stated Maturity of
an installment of interest on the Securities.

          "Investments"  of any Person means (i) all  investments by such Person
in any other  Person in the form of loans,  advances  or  capital  contributions
(excluding  commission,  travel and similar  advances to officers and  employees
made in the ordinary course of business), (ii) all guarantees of Indebtedness or
other  obligations  of any other Person by such Person,  (iii) all purchases (or
other  acquisitions for  consideration) by such Person of Indebtedness,  Capital
Stock or other  securities  of any other  Person  and (iv) all other  items that
would be classified as investments (including, without limitation,  purchases of
assets  outside the  ordinary  course of  business)  on a balance  sheet of such
Person prepared in accordance with GAAP.

          "Lien" means, with respect to any asset, any mortgage,  lien,  pledge,
charge, security interest or other similar encumbrance of any kind in respect of
such  asset,  whether  or not  filed,  recorded  or  otherwise  perfected  under
applicable law (including,  without  limitation,  any conditional  sale or other
title retention  agreement,  and any financing lease in the nature thereof,  any
agreement  to sell,  and any  filing of, or  agreement  to give,  any  financing
statement  (other than notice filings not perfecting a security  interest) under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).

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

          "Net  Proceeds" with respect to any Asset Sale means (i) cash (in U.S.
dollars or freely  convertible into U.S. dollars) received by the Company or any
of its Subsidiaries from such Asset Sale (including,  without  limitation,  cash
received as  consideration  for the  assumption  or  incurrence  of  liabilities
incurred in connection with or in  anticipation  of such Asset Sale),  after (a)
provision for all income or other taxes measured by or resulting from such Asset
Sale or the transfer of the proceeds of such Asset Sale to the Company or any of
its Subsidiaries,  (b) payment of all brokerage commissions and the underwriting
and other fees and expenses  related to such Asset Sale and (c)  deduction of an
appropriate amount to be provided by the Company or any of its Subsidiaries as a
reserve,  in accordance with GAAP,  against any liabilities  associated with the
assets  sold or  otherwise  disposed  of in such Asset Sale and  retained by the
Company or any of its  Subsidiaries  after such Asset Sale  (including,  without
limitation,   pension  and  other   post-employment   benefit   liabilities  and
liabilities  related to  environmental  matters) or against any  indemnification
obligations  associated with the sale or other disposition of the assets sold or
otherwise  disposed  of in such Asset Sale and (ii) all  non-cash  consideration
received  by the Company or any of its  Subsidiaries  from such Asset Sales upon
the liquidation or conversion of such consideration into cash.

          "Officers'  Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the President or a Vice President,  and
by  the  Treasurer,  an  Assistant  Treasurer,  the  Secretary  or an  Assistant
Secretary,  of the Company,  and  delivered to the Trustee.  One of the officers
signing an  Officers'  Certificate  given  pursuant to Section 1004 shall be the
principal executive, financial or accounting officer of the Company.

          "Opinion of Counsel"  means a written  opinion of counsel,  who may be
counsel for the Company, and who shall be acceptable to the Trustee.

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

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

               (ii)  Securities  for whose  payment or  redemption  money in the
     necessary  amount has been  theretofore  deposited  with the Trustee or any
     Paying Agent (other than the Company) in trust or set aside and  segregated
     in trust by the Company (if the Company  shall act as its own Paying Agent)
     for the Holders of such  Securities;  provided that, if such Securities are
     to be redeemed,  notice of such  redemption has been duly given pursuant to
     this Indenture or provision  therefor  satisfactory to the Trustee has been
     made; and

              (iii)  Securities  which have been paid pursuant to Section 306 or
     in  exchange  for  or  in  lieu  of  which  other   Securities   have  been
     authenticated and delivered pursuant to this Indenture, other than any such
     Securities  in respect of which  there  shall  have been  presented  to the
     Trustee proof  satisfactory  to it that such  Securities are held by a bona
     fide purchaser in whose hands such Securities are valid  obligations of the
     Company;

provided,  however,  that in  determining  whether the Holders of the  requisite
principal amount of the Outstanding  Securities have given any request,  demand,
authorization,  direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the  Securities or any Affiliate of the
Company  or of such  other  obligor  shall be  disregarded  and deemed not to be
Outstanding,  except that, in determining whether the Trustee shall be protected
in relying upon any such  request,  demand,  authorization,  direction,  notice,
consent or waiver,  only Securities which the Trustee knows to be so owned shall
be so disregarded. Securities so owned which have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's  right so to act with respect to such  Securities and that
the pledgee is not the Company or any other  obligor upon the  Securities or any
Affiliate of the Company or of such other obligor.

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

          "Permitted   Liens"  means  (i)  Liens  for  taxes,   assessments   or
governmental charges or claims that either (a) are not yet delinquent or (b) are
being contested in good faith by appropriate  proceedings;  (ii) statutory Liens
of   landlords   and   carriers',   warehousemen's,    mechanics',   suppliers',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business and with respect to amounts that either (a) are not yet  delinquent  or
(b) are being  contested in good faith by appropriate  proceedings;  (iii) Liens
(other than any Lien imposed by the Employee  Retirement  Income Security Act of
1974, as amended) incurred or deposits due in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security;  (iv) Liens incurred or deposits made to secure the performance
of  tenders,  bids,  leases,  statutory  obligations,  surety and appeal  bonds,
progress  payments,  government  contracts and other  obligations of like nature
(exclusive  of  obligations  for the payment of borrowed  money),  in each case,
incurred in the ordinary  course of business;  (v)  attachment or judgment Liens
not  giving  rise  to  a  Default  or  an  Event  of  Default;  (vi)  easements,
rights-of-way,  restrictions  and other  similar  charges  or  encumbrances  not
interfering  with the ordinary  conduct of the business of the Company or any of
its  Subsidiaries;  (vii) leases or subleases  granted to others not interfering
with  the  ordinary  conduct  of  the  business  of  the  Company  or any of its
Subsidiaries;  (viii) Liens with respect to any Acquired Indebtedness;  provided
that such Liens only extend to assets  that were  subject to such Liens prior to
the  acquisition of such assets by the Company or its  Subsidiaries;  (ix) Liens
securing Senior Indebtedness or Refinancing Indebtedness;  provided, in the case
of Refinancing Indebtedness,  that such Liens only extend to the assets securing
the  Indebtedness   being  refinanced  and  such  refinanced   Indebtedness  was
previously  secured  by such  assets;  (x)  Liens on  Accounts  Receivable  (and
guarantees by third parties of such Accounts Receivable or collateral pledged by
account  obligors  or other  unrelated  third  parties  securing  such  Accounts
Receivable) or Inventory;  (xi) purchase money mortgages (including  Capitalized
Lease Obligations);  (xii) Liens existing on the date of initial issuance of the
Securities;  (xiii) Liens on assets of any  Subsidiary  of the Company  securing
Indebtedness of such Subsidiary; provided that such Indebtedness is permitted to
be incurred by the terms of the Indenture;  (xiv) bankers' liens with respect to
the right of set-off arising in the ordinary course of business  against amounts
maintained  in bank  accounts  or  certificates  of  deposit  in the name of the
Company or any Subsidiary; (xv) the interest of any issuer of a letter of credit
in any cash or  Eligible  Investment  deposited  with or for the benefit of such
issuer as collateral for such letter of credit;  provided that the  Indebtedness
so  collateralized  is permitted  to be incurred by the terms of the  Indenture;
(xvi) any Lien  consisting of a right of first refusal or option to purchase the
Company's ownership interest in any Subsidiary,  which right of first refusal or
option is entered into in the ordinary  course of business;  and (xvii) the Lien
granted to the  Trustee  pursuant  to Section  607 hereof and any  substantially
equivalent  Lien granted to the  respective  trustees  under the  indentures for
other debt securities of the Company.

          "Person"  means  any  individual,   corporation,   partnership,  joint
venture, incorporated or unincorporated association, joint-stock company, trust,
unincorporated   organization   or  government  or  other  agency  or  political
subdivision thereof or other entity of any kind.

          "PP&E" means the amount shown for "Property, plant and equipment, net"
on a consolidated balance sheet for the Company and its Subsidiaries.

          "Predecessor Security" of any particular Security means every previous
Security  evidencing all or a portion of the same debt as that evidenced by such
particular  Security;  and,  for the purposes of this  definition,  any Security
authenticated  and  delivered  under Section 306 in exchange for or in lieu of a
mutilated,  destroyed,  lost or stolen  Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.

          "Preferred  Stock" means with respect to any Person all Capital  Stock
of such Person  which has a  preference  in  liquidation  or a  preference  with
respect to the payment of dividends  or  distributions  of  operating  profit or
cash.

          "Proceeding" has the meaning specified in Section
1202.

          "Refinancing Indebtedness" means Indebtedness that refunds, refinances
or  extends  any  Existing  Indebtedness,  provided  that:  (i) the  Refinancing
Indebtedness  is the  obligation of the same Person and is  subordinated  to the
Securities,  if at all, to the same extent as the  Indebtedness  being refunded,
refinanced or extended; (ii) the Refinancing Indebtedness is scheduled to mature
no earlier than the Indebtedness being refunded,  refinanced or extended;  (iii)
the Refinancing Indebtedness has a Weighted Average Life to Maturity at the time
such  Refinancing  Indebtedness is incurred that is equal to or greater than the
Weighted  Average  Life to  Maturity of the  portion of the  Indebtedness  being
refunded,  refinanced or extended; (iv) the Refinancing  Indebtedness is secured
only to the  extent,  if at all,  by the  assets  that  the  Indebtedness  being
refunded,   refinanced  or  extended  is  secured;   and  (v)  such  Refinancing
Indebtedness is in an aggregate  principal  amount that is equal to or less than
the aggregate  principal  amount then outstanding  under the Indebtedness  being
refunded,  refinanced  or extended  (except for issuance  costs and increases in
Attributable   Indebtedness  due  solely  to  increases  in  the  present  value
calculations  resulting  from  renewals  or  extensions  of  the  terms  of  the
underlying leases in effect on the date of initial issuance of the Securities).

          "Redemption  Date",  when  used with  respect  to any  Security  to be
redeemed,  means  the date  fixed for such  redemption  by or  pursuant  to this
Indenture and includes any Repurchase Date as defined in Section 1301.

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

          "Regular Record Date" for the interest payable on any Interest Payment
Date means the March 15 or September 15 (whether or not a Business  Day), as the
case may be, next preceding such Interest Payment Date.

          "Repurchase Date" has the meaning specified in Section
1301.

          "Repurchase Event" shall have the meaning specified in
Section 1303.

          "Repurchase Price" has the meaning specified in
Section 1301.

          "Responsible  Officer",  when used with respect to the Trustee,  means
any officer within the Corporate Trust Office including  without  limitation any
vice president,  any assistant vice president,  any trust officer, any assistant
secretary or any other officer of the Trustee customarily  performing  functions
similar to those  performed  by any of the above  designated  officers  and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred  because of his knowledge of and  familiarity  with
the particular subject.

          "Restricted  Payment"  means  with  respect  to any  Person:  (i)  the
declaration  of any dividend or the making of any other payment or  distribution
of cash,  securities  or other  property  or assets in respect of such  Person's
Capital  Stock  (except that a dividend  payable  solely in Capital Stock (other
than  Disqualified  Stock) of such  Person  shall not  constitute  a  Restricted
Payment); (ii) any payment on account of the purchase, redemption, retirement or
other  acquisition for value of such Person's Capital Stock or any other payment
or distribution  made in respect  thereof,  either directly or indi- rectly;  or
(iii) any payment on account of the purchase, redemption, retirement, defeasance
or  other   acquisition  for  value  of  Indebtedness  of  the  Company  or  its
Subsidiaries which is pari passu with or subordinated in right of payment to the
Securities and has a scheduled  maturity date  subsequent to the maturity of the
Securities;  provided,  however,  that  with  respect  to the  Company  and  its
Subsidiaries, Restricted Payments shall not include any payment described (a) in
clause  (i),  (ii) or (iii)  above made (1) to the  Company or any of its Wholly
Owned Subsidiaries by any of the Company's Subsidiaries or (2) by the Company to
any of its Wholly Owned Subsidiaries or (3) by any Subsidiary  provided that the
Company or another Subsidiary receives its proportionate share thereof or (b) in
clause (ii) above if the  payment is made to  purchase  or redeem a  partnership
interest in a Subsidiary  and the Company's  EBITDA  Coverage  Ratio on the date
thereof  would be at least 2.0 to 1,  determined on a pro forma basis as if such
payment had been made, and the  acquisition  of the  partnership  interest,  had
occurred at the  beginning  of the  four-quarter  period used to  calculate  the
Company's  EBITDA  Coverage Ratio or (c) in clause (iii) above made with the Net
Proceeds from any Asset Sale remaining after  completion of the Asset Sale Offer
made in connection with such Asset Sale, all as contemplated  under "Limitations
on Asset Sales."

          "Sale and Leaseback Transaction" means, with respect to any Person, an
arrangement with any bank,  insurance  company or other lender or investor or to
which such  lender or  investor  is a party,  providing  for the leasing by such
Person or any of its Subsidiaries of any property or asset of such Person or any
of its  Subsidiaries  which  has been or is being  sold or  transferred  by such
Person or such  Subsidiary  to such  lender or investor or to any Person to whom
funds have been or are to be advanced by such lender or investor on the security
of such property or asset.

          "Securities Payment" has the meaning specified in
Section 1202.

          "Security  Register"  and  "Security  Registrar"  have the  respective
meanings specified in Section 305.

          "Senior  Indebtedness" means the principal of and premium, if any, and
interest on (such interest on Senior  Indebtedness,  wherever referred to in the
Indenture, is deemed to include interest accruing after the filing of a petition
initiating any proceeding  pursuant to any bankruptcy law in accordance with and
at the rate (including any rate applicable upon any default or event of default,
to  the  extent  unlawful)  specified  in any  document  evidencing  the  Senior
Indebtedness,  whether or not the claim for such  interest is allowed as a claim
after such filing in any proceeding under such bankruptcy law) and other amounts
due on or in connection  with any  Indebtedness  of the Company  existing on the
date of initial  issuance of the Securities or any  Indebtedness  of the Company
thereafter  created,  incurred  or assumed and  permitted  under  Section  1008,
unless, in the case of any particular  Indebtedness,  the instrument creating or
evidencing  the same or  pursuant  to which  the same is  outstanding  expressly
provides that such  Indebtedness  shall not be senior in right of payment to the
Securities.

          "Senior   Subordinated  Debt"  means  the  Securities  and  any  other
indebtedness,  guarantee or obligation of the Company that specifically provides
that such indebtedness, guarantee or obligation is to rank pari passu with other
Senior  Subordinated Debt of the Company and is not subordinated by its terms to
any  indebtedness,  guarantee or  obligation  of the Company which is not Senior
Indebtedness.

          "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 307.

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

          "Subordinated  Obligations"  means any principal of, premium,  if any,
and interest on the Securities  payable  pursuant to the terms of the Securities
or upon acceleration, including any amounts received upon the exercise of rights
of  rescission  or other  rights of action  (including  claims for  damages)  or
otherwise,  to the extent  relating to the purchase  price of the  Securities or
amounts  corresponding  to such principal,  premium,  if any, or interest on the
Securities.

          "Subsidiary"  of any Person means (i) 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 (ii) 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.

          "Trading  Day" means each  Monday,  Tuesday,  Wednesday,  Thursday and
Friday,  other than any day on which securities are not traded on the applicable
securities exchange or in the applicable securities market.

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

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

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

          "Weighted  Average  Life  to  Maturity"  means,  when  applied  to any
Indebtedness  or portion  thereof at any date,  the number of years  obtained by
dividing  (i) the then  outstanding  principal  amount of such  Indebtedness  or
portion  thereof (if applicable)  into (ii) the sum of the products  obtained by
multiplying  (a) the amount of each then  remaining  installment,  sinking fund,
serial  maturity or other required  payment of principal,  including  payment at
final maturity,  in respect thereof,  by (b) the number of years  (calculated to
the nearest  one-twelfth)  that will elapse  between such date and the making of
such payment.

          "Wholly  Owned  Subsidiary"  of any person means (i) a  Subsidiary  of
which 100% of the Common  Equity  (except for  director's  qualifying  shares or
certain  minority  interests  owned by other  Persons  solely  due to local  law
requirements that there be more than one stockholder,  but which interest is not
in excess of what is required for such purpose) is owned directly by such Person
or through one or more other Wholly Owned  Subsidiaries  of such Person and (ii)
any  entity  other  than  a  corporation  in  which  such  Person,  directly  or
indirectly, owns all of the Common Equity of such entity.


SECTION 102.   Compliance Certificates and Opinions.

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

          Every  certificate  or  opinion  with  respect  to  compliance  with a
condition or covenant  provided for in this  Indenture  (other than an Officers'
Certificate provided pursuant to Section 1004 hereof) shall include

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

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

          (3) a statement that, in the opinion of each such  individual,  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

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


SECTION 103.   Form of Documents Delivered to Trustee.

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

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

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


SECTION 104.   Acts of Holders; Record Dates.

          (a) Any request, demand,  authorization,  direction,  notice, consent,
waiver  or  other  action  provided  by this  Indenture  to be given or taken by
Holders  may  be  embodied  in and  evidenced  by one  or  more  instruments  of
substantially  similar  tenor  signed by such Holders in person or by agent duly
appointed in writing;  and, except as herein otherwise expressly provided,  such
action shall become  effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required,  to the Company. Such
instrument  or  instruments  (and the  action  embodied  therein  and  evidenced
thereby) are herein  sometimes  referred to as the "Act" of the Holders  signing
such instrument or instruments.  Proof of execution of any such instrument or of
a writing  appointing any such agent shall be sufficient for any purpose of this
Indenture  and (subject to Section 601)  conclusive  in favor of the Trustee and
the Company, if made in the manner provided in this Section.

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

          (c) The  Company  may,  in the  circumstances  permitted  by the Trust
Indenture  Act,  by  Board  Resolution  fix any day as the  record  date for the
purpose of determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote on
any action,  authorized or permitted to be given or taken by Holders. If not set
by the Company prior to the first solicitation of a Holder made by any Person in
respect  of any such  action,  or, in the case of any such  vote,  prior to such
vote,  the record date for any such action or vote shall be the 30th day (or, if
later,  the date of the most  recent  list of Holders  required  to be  provided
pursuant to Section 701) prior to such first  solicitation  or vote, as the case
may be. With regard to any record date,  only the Holders on such date (or their
duly  designated  proxies)  shall be entitled  to give or take,  or vote on, the
relevant action.

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

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


SECTION 105.   Notices, Etc., to Trustee and Company.

          Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other  document  provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,

          (1)  the Trustee by any Holder or by the Company
     shall be sufficient for every purpose hereunder if
     made, given, furnished or filed in writing to or with
     the Trustee at its Corporate Trust Office, Attention:
     Corporate Trust Administration, or

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


SECTION 106.   Notice to Holders; Waiver.

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

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


SECTION 107.   Conflict with Trust Indenture Act.

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


SECTION 108.   Effect of Headings and Table of Contents.

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


SECTION 109.   Successors and Assigns.

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


SECTION 110.   Separability Clause.

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


SECTION 111.   Benefits of Indenture.

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


SECTION 112.   Governing Law.

          This Indenture and the  Securities  shall be governed by and construed
in accordance  with the laws of the State of New York,  without giving effect to
such State's conflicts of laws principles.


SECTION 113.   Legal Holidays.

          In any case where any Interest Payment Date,  Redemption Date,  Stated
Maturity or  Repurchase  Date of any Security  shall not be a Business Day, then
(notwithstanding  any other  provision of this  Indenture or of the  Securities)
payment of interest or principal (and premium,  if any) 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 Interest  Payment Date, the Redemption Date, or the
Repurchase  Date, or at the Stated  Maturity,  provided  that no interest  shall
accrue for the period  from and after such  Interest  Payment  Date,  Redemption
Date, Repurchase Date or Stated Maturity, as the case may be.



                                  ARTICLE TWO

                                 Security Forms


SECTION 201.   Forms Generally.

          The Securities and the Trustee's  certificates of authentication shall
be in substantially  the forms set forth in this Article,  with such appropriate
insertions,  omissions,  substitutions  and other  variations as are required or
permitted by this Indenture,  and may have such letters,  numbers or other marks
of  identification  and such legends or  endorsements  placed  thereon as may be
required  to  comply  with  the  rules  of any  securities  exchange  or as may,
consistently  herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities.

          The definitive  Securities shall be printed,  lithographed or engraved
or produced by any combination of these methods on steel engraved borders or may
be  produced  in any  other  manner  permitted  by the  rules of any  securities
exchange  on which  the  Securities  may be  listed,  all as  determined  by the
officers  executing  such  Securities,  as evidenced by their  execution of such
Securities.


SECTION 202.   Form of Face of Security.

                     HEALTHSOUTH Rehabilitation Corporation

                    9.5% Senior Subordinated Notes due 2001


No.                                                    $

          HEALTHSOUTH  Rehabilitation  Corporation, a corporation duly organized
and existing under the laws of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture  hereinafter referred to), for
value received, hereby promises to pay to , or registered assigns, the principal
sum of Dollars on April 1, 2001, and to pay interest  thereon from and including
the date of initial  issuance of  Securities  under the  Indenture,  or from and
including the most recent Interest  Payment Date to which interest has been paid
or duly  provided  for,  semiannually  on April 1 and  October  1 in each  year,
commencing  October 1, 1994, at the rate of 9,5% per annum,  until the principal
hereof is paid or made  available  for  payment.  The  interest so payable,  and
punctually  paid or duly  provided  for, on any Interest  Payment Date will,  as
provided in such  Indenture,  be paid to the Person in whose name this  Security
(or one or more  Predecessor  Securities) is registered at the close of business
on the  Regular  Record Date for such  interest,  which shall be the March 15 or
September 15 (whether or not a Business Day), as the case may be, next preceding
such  Interest  Payment Date.  Any such interest not so punctually  paid or duly
provided  for will  forthwith  cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security (or
one or more Predecessor  Securities) is registered at the close of business on a
Special  Record Date for the payment of such  Defaulted  Interest to be fixed by
the Trustee,  notice  whereof shall be given to Holders of  Securities  not less
than 10 days prior to such Special  Record  Date,  or be paid at any time in any
other lawful manner not  inconsistent  with the  requirements  of any securities
exchange on which the Securities  may be listed,  and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture. Payment
of the principal of (and premium,  if any) and interest on this Security will be
made at the office or agency of the Company  maintained  for that purpose in the
Borough of Manhattan,  The City of New York and in such other cities, if any, as
the Company may designate in writing to the Trustee, in such coin or currency of
the United  States of  America  as at the time of  payment  is legal  tender for
payment of public and private debts;  provided,  however,  that at the option of
the Company  payment of interest  may be made by check  mailed to the address of
the  Person  entitled  thereto  as such  address  shall  appear in the  Security
Register.

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

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

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

Dated:


                              HEALTHSOUTH Rehabilitation Corporation



                              By


Attest:



          Secretary


SECTION 203.   Form of Reverse of Security.

          This Security is one of a duly  authorized  issue of Securities of the
Company designated as its 9.5% Senior Subordinated Notes due 2001 (herein called
the  "Securities"),  limited  in  aggregate  principal  amount  to  $287,500,000
(including the  underwriters'  over-allotment  option),  issued and to be issued
under an Indenture,  dated as of March , 1994 (herein  called the  "Indenture"),
between the Company and NationsBank of Georgia, National Association, as Trustee
(herein  called the "Trustee",  which term includes any successor  trustee under
the  Indenture),  to which  Indenture and all  indentures  supplemental  thereto
reference is hereby made for a statement of the respective  rights,  limitations
of rights,  duties and immunities  thereunder of the Company,  the Trustee,  the
holders of Senior  Indebtedness  and the Holders of the  Securities,  and of the
terms upon which the Securities are, and are to be, authenticated and delivered.


          The  Securities  are subject to  redemption  upon not less than 30 nor
more than 60 days' notice by first class mail,  at any time on or after April 1,
1998,  as a whole or in part,  at the election of the Company,  at the following
Redemption Prices (expressed as percentages of the principal amount):

If redeemed during the 12-month period beginning April 1 of the
years indicated,

                                   Redemption
               Year             Price

               1998 . . .        104.750%
               1999 . . .        102.375%
               2000 . . .        100.000%

together  in the  case of any  such  redemption  with  accrued  interest  to the
Redemption Date, but interest  installments whose Stated Maturity is on or prior
to such  Redemption Date will be payable to the Holders of such  Securities,  or
one or more  Predecessor  Securities,  of record at the close of business on the
Regular  Record  Dates  referred to on the face  hereof,  all as provided in the
Indenture.

          The Indenture provides that if a Repurchase Event (as defined therein)
occurs,  each Holder of Securities  shall have the right, in accordance with the
provisions of the  Indenture,  to require the Company to repurchase  all of such
Holder's  Securities,  or any portion  thereof  that is an integral  multiple of
$1,000,  for  cash at a price  equal  to 101% of the  principal  amount  of such
Securities to be repurchased,  together with accrued  interest to the Repurchase
Date, but any interest  installment  the Stated Maturity of which is on or prior
to such  Repurchase Date will be payable to the Holders of such  Securities,  or
one or more  Predecessor  Securities,  of record at the close of business on the
Regular  Record  Dates  referred to on the face  hereof,  all as provided in the
Indenture.

          In the event of  redemption  or  repurchase  of this  Security in part
only,  a new  Security  or  Securities  for the portion  hereof not  redeemed or
repurchased  will  be  issued  in  the  name  of  the  Holder  hereof  upon  the
cancellation hereof.

          The indebtedness evidenced by this Security is, to the extent provided
in the  Indenture,  subordinate  and  subject  in right of  payment to the prior
payment in full of all Senior Indebtedness,  and this Security is issued subject
to the  provisions of the Indenture  with respect  thereto.  Each Holder of this
Security,  by  accepting  the  same,  (a)  agrees  to and shall be bound by such
provisions,  (b)  authorizes  and directs the Trustee on his behalf to take such
action as may be necessary or  appropriate to effectuate  the  subordination  so
provided and (c) appoints the Trustee his  attorney-in-fact for any and all such
purposes.

          If an Event of Default shall occur and be continuing, the principal of
all the  Securities  may be declared  due and payable in the manner and with the
effect provided in the Indenture.

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

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

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

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

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

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

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

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


SECTION 204.   Form of Trustee's Certificate of Authentication.

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

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


                              NATIONSBANK OF GEORGIA, NATIONAL
                                                                     ASSOCIATION
                                                                      as Trustee


                              By

                                                            Authorized Signatory



                                 ARTICLE THREE

                                 The Securities

SECTION 301.   Title and Terms.

          The   aggregate   principal   amount  of   Securities   which  may  be
authenticated  and  delivered  under this  Indenture is limited to  $287,500,000
(including $37,500,000 aggregate principal amount of Securities that may be sold
by the Company  pursuant to the  Underwriting  Agreement,  dated March 17, 1994,
between the Company  and Smith  Barney  Shearson  Inc.),  except for  Securities
authenticated  and delivered  upon  registration  of transfer of, or in exchange
for, or in lieu of, other  Securities  pursuant to Section 304,  305,  306, 906,
1108 or 1302.


          The  Securities  shall be known and  designated  as the " 9.5%  Senior
Subordinated  Notes due 2001" of the  Company.  Their Stated  Maturity  shall be
April 1, 2001, and they shall bear interest at the rate of 9.5% per annum,  from
and  including  the  date of  initial  issuance  of the  Securities  under  this
Indenture,  or from and including the most recent Interest Payment Date to which
interest  has been  paid or duly  provided  for,  as the  case  may be,  payable
semiannually  on April 1 and October 1,  commencing  October 1, 1994,  until the
principal  thereof  is paid or made  available  for  payment.  Each  payment  of
interest shall include  interest  accrued to but excluding the Interest  Payment
Date on which payment is to be made.

          The principal of (and premium,  if any) and interest on the Securities
shall be  payable  at the  office or agency of the  Company  in the  Borough  of
Manhattan,  The City of New York  maintained  for such  purpose and at any other
office or agency maintained by the Company for such purpose; provided,  however,
that at the  option of the  Company  payment  of  interest  may be made by check
mailed to the  address of the Person  entitled  thereto  as such  address  shall
appear in the Security Register.

          The Securities shall be redeemable as provided in Article Eleven.

          The  Securities  shall be  subordinated  in right of payment to Senior
Indebtedness as provided in Article Twelve.

          The  Securities  shall be subject to  repurchase  at the option of the
Holder as provided in Article Thirteen.


SECTION 302.   Denominations.

          The  Securities  shall be issuable  only in  registered  form  without
coupons and only in denominations of $1,000 and any integral multiple thereof.


SECTION 303.   Execution, Authentication, Delivery and Dating.

          The  Securities  shall be  executed  on behalf of the  Company  by its
Chairman of the Board,  its Vice Chairman of the Board,  its President or one of
its Vice Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its  Assistant  Secretaries.  The  signature of any of these
officers on the Securities may be manual or facsimile.

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

          At any time and from time to time after the  execution and delivery of
this Indenture,  the Company may deliver  Securities  executed by the Company to
the  Trustee  for  authentication,   together  with  a  Company  Order  for  the
authentication  and delivery of such  Securities;  and the Trustee in accordance
with such Company  Order shall  authenticate  and deliver such  Securities as in
this Indenture provided and not otherwise.

          Each  Security  shall be dated  March __, 1994 and shall also bear the
date of its authentication.

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


SECTION 304.   Temporary Securities.

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

          If temporary Securities are issued, the Company shall cause definitive
Securities to be prepared without  unreasonable  delay. After the preparation of
definitive  Securities,  the  temporary  Securities  shall be  exchangeable  for
definitive  Securities upon surrender of the temporary  Securities at any office
or agency of the Company designated  pursuant to Section 1002, without charge to
the  Holder.  Upon  surrender  for  cancellation  of any one or  more  temporary
Securities  the Company  shall execute and the Trustee  shall  authenticate  and
deliver in exchange therefor a like principal amount of definitive Securities of
authorized  denominations.  Until so exchanged the temporary Securities shall in
all respects be entitled to the same benefits under this Indenture as definitive
Securities.


SECTION 305.   Registration, Registration of Transfer and
               Exchange.

          (a) The Company shall cause to be kept at the  Corporate  Trust Office
of the Trustee a register  (the  register  maintained  in such office and in any
other  office or  agency  designated  pursuant  to  Section  1002  being  herein
sometimes collectively referred to as the "Security Register") in which, subject
to such  reasonable  regulations as it may prescribe,  the Company shall provide
for the  registration of Securities and of transfers of Securities.  The Trustee
is  hereby  appointed  "Security  Registrar"  for  the  purpose  of  registering
Securities  and transfers of Securities as herein  provided.  At all  reasonable
times the Security Register shall be open for inspection by the Company.

          Upon  surrender  for  registration  of transfer of any  Security at an
office or agency of the Company  designated  pursuant  to Section  1002 for such
purpose,  the Company  shall  execute,  and the Trustee shall  authenticate  and
deliver,  in the name of the designated  transferee or transferees,  one or more
new Securities of any authorized denominations and of a like aggregate principal
amount.

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

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

          Every Security  presented or surrendered for  registration of transfer
or  for  exchange  shall  be  duly  endorsed,  or be  accompanied  by a  written
instrument  of transfer  in form  satisfactory  to the Company and the  Security
Registrar duly executed,  by the Holder thereof or his attorney duly  authorized
in writing.

          No service  charge shall be made for any  registration  of transfer or
exchange of Securities,  but the Company may require payment of a sum sufficient
to cover any tax or other governmental  charge that may be imposed in connection
with any  registration  of  transfer  or  exchange  of  Securities,  other  than
exchanges pursuant to Section 304, 906, 1108 or 1302 not involving any transfer.

          The Company shall not be required (i) to issue,  register the transfer
of or exchange any Security during a period  beginning 15 days before the day of
the mailing of a notice of  redemption  of  Securities  selected for  redemption
under  Section 1104 and ending on the day of such  mailing,  or (ii) to register
the transfer of or exchange any Security so selected for  redemption in whole or
in part, except the unredeemed portion of any Security being redeemed in part.


SECTION 306.   Mutilated, Destroyed, Lost and Stolen Securities.

          If any mutilated  Security is surrendered to the Trustee,  the Company
shall  execute  and the  Trustee  shall  authenticate  and  deliver in  exchange
therefor a new Security of like tenor and principal  amount and bearing a number
not contemporaneously outstanding.

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

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

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

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

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


SECTION 307.   Payment of Interest; Interest Rights Preserved.

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

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

          (1) The Company may elect to make payment of any Defaulted Interest to
     the Persons in whose names the Securities (or their respective  Predecessor
     Securities)  are  registered  at the close of business on a Special  Record
     Date for the payment of such  Defaulted  Interest,  which shall be fixed in
     the  following  manner.  The Company shall notify the Trustee in writing of
     the amount of Defaulted  Interest  proposed to be paid on each Security and
     the date of 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 Security  Register,  not
     less than 10 days prior to such Special Record Date. Notice of the proposed
     payment of such  Defaulted  Interest and the Special  Record Date  therefor
     having been so mailed, such Defaulted Interest shall be paid to the Persons
     in whose names the Securities (or their respective Predecessor  Securities)
     are  registered  at the close of business on such  Special  Record Date and
     shall no longer be payable pursuant to the following 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 Securities  may be listed,  and upon such
     notice as may be required by such  exchange,  if, after notice given by the
     Company to the Trustee of the  proposed  payment  pursuant to this  clause,
     such manner of payment shall be deemed practicable by the Trustee.

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


SECTION 308.   Persons Deemed Owners.

          The  Company,  the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such  Security is  registered as the absolute
owner of such Security for the purpose of receiving payment of principal of (and
premium,  if any) and (subject to Section 307) interest on such Security and for
all other  purposes  whatsoever,  whether or not such  Security be overdue,  and
neither  the  Company,  the  Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.


SECTION 309.   Cancellation.

          All Securities  surrendered for payment,  redemption,  registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered  to the Trustee and shall be promptly  cancelled by it. The Company
may at  any  time  deliver  to  the  Trustee  for  cancellation  any  Securities
previously  authenticated  and  delivered  hereunder  which the Company may have
acquired in any manner  whatsoever,  and all  Securities  so delivered  shall be
promptly cancelled by the Trustee.  No Securities shall be authenticated in lieu
of or in exchange  for any  Securities  cancelled  as provided in this  Section,
except as expressly permitted by this Indenture.  All cancelled  Securities held
by the Trustee shall be disposed of as directed by a Company Order.


SECTION 310.   Computation of Interest.

          Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.




                                  ARTICLE FOUR

                           Satisfaction and Discharge


SECTION 401.   Satisfaction and Discharge of Indenture.

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

          (1)  either

               (A) all Securities theretofore authenticated and delivered (other
          than (i)  Securities  which  have been  destroyed,  lost or stolen and
          which have been  replaced  or paid as provided in Section 306 and (ii)
          Securities for whose payment money has  theretofore  been deposited in
          trust or  segregated  and held in trust by the Company and  thereafter
          repaid to the Company or  discharged  from such trust,  as provided in
          Section 1003) have been delivered to the Trustee for cancellation; or

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

                        (i) have become due and payable,
               or

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

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

     and the Company,  in the case of (i), (ii) or (iii) above, has deposited or
     caused to be  deposited  with the  Trustee as trust  funds in trust for the
     purpose  an amount  in cash  sufficient  to pay and  discharge  the  entire
     indebtedness on such  Securities not  theretofore  delivered to the Trustee
     for cancellation,  for principal (and premium,  if any) and interest to the
     date of such deposit (in the case of  Securities  which have become due and
     payable) or to the Stated Maturity or Redemption  Date, as the case may be;
     provided,  however,  that the  Company  shall be  deemed  to have  made the
     deposit  required  herein  as to any  Securities  in  respect  of which the
     Company  has mailed a check to the  address  of the Holder  thereof as such
     address appears in the Security Register;


          (2) the Company  has paid or caused to be paid all other sums  payable
     hereunder  by the Company  (including  all fees and expenses of the Trustee
     required to be paid by the Company hereunder); and

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

Notwithstanding   the  satisfaction   and  discharge  of  this  Indenture,   the
obligations  of the Company to the Trustee under Section 607 and, if money shall
have been deposited with the Trustee  pursuant to subclause (B) of clause (1) of
this  Section,  the  obligations  of the Trustee  under Section 402 and the last
paragraph of Section 1003 shall survive.


SECTION 402.   Application of Trust Money.

          Subject to the  provisions of the last  paragraph of Section 1003, all
money deposited with the Trustee  pursuant to Section 401 shall be held in trust
and applied by it, in accordance  with the provisions of the Securities and this
Indenture,  to  the  payment,  either  directly  or  through  any  Paying  Agent
(including  the  Company  acting as its own  Paying  Agent) as the  Trustee  may
determine,  to the Persons entitled thereto,  of the principal (and premium,  if
any) and  interest  for whose  payment  such money has been  deposited  with the
Trustee.



                                  ARTICLE FIVE

                                    Remedies


SECTION 501.   Events of Default.

          "Event  of  Default",  wherever  used  herein,  means  any  one of the
following  events  (whatever the reason for such Event of Default and whether it
shall be  occasioned  by the  provisions  of Article  Twelve 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):

          (1) default in the payment of any interest  upon any Security  when it
     becomes due and payable, and continuance of such default for a period of 30
     days; or

          ^
 default in the payment of the principal of
     (or premium, if any, on) any Security at its Maturity;
     or

          (3) default in the performance, or breach, of the
     provisions of Article Eight hereof; or

          (4) default in the performance, or breach, of any covenant or warranty
     of the Company  contained in Sections 1008 through 1016 of this  Indenture,
     and  continuance  of such  default  or breach for a period of 30 days after
     there has been given,  by registered  or certified  mail, to the Company by
     the  Trustee or to the  Company  and the Trustee by the Holders of at least
     25% in principal  amount of the  Outstanding  Securities  a written  notice
     specifying  such  default or breach and  requiring  it to be  remedied  and
     stating that such notice is a "Notice of Default" hereunder; or

          (5) default in the performance, or breach, of any covenant or warranty
     of the  Company in this  Indenture  (other  than a covenant  or  warranty a
     default in whose  performance  or whose breach is elsewhere in this Section
     specifically  dealt with),  and continuance of such default or breach for a
     period of 45 days after there has been given,  by  registered  or certified
     mail,  to the  Company by the  Trustee or to the Company and the Trustee by
     the  Holders  of at  least  25% in  principal  amount  of  the  Outstanding
     Securities a written notice specifying such default or breach and requiring
     it to be  remedied  and  stating  that such notice is a "Notice of Default"
     hereunder; or

          (6) any acceleration of the maturity of Indebtedness of the Company or
     any Significant  Subsidiary or any two or more  Subsidiaries of the Company
     which,  if merged,  would be a  Significant  Subsidiary  having a principal
     amount  outstanding  in excess  of  $5,000,000,  or a  failure  to pay such
     Indebtedness  at its stated  maturity,  provided that such  acceleration or
     failure  to pay is not cured  within 10 days  after  such  acceleration  or
     failure to pay;

          (7) the  entry by a court or  courts of  competent  jurisdiction  of a
     final  judgment or final  judgments  for the  payment of money  against the
     Company or any  Significant  Subsidiary or any two or more  Subsidiaries of
     the Company  which,  if merged,  would be a Significant  Subsidiary,  which
     remain  undischarged  for a period  (during  which  execution  shall not be
     effectively  stayed,  the posting of any required  bond not being deemed an
     execution  for purposes  hereof) of 30 days after all rights to appeal have
     been  exhausted,  provided that the aggregate  amount of all such judgments
     exceeds $5,000,000; or

          (8) the entry by a court having  jurisdiction in the premises of (A) a
     decree or order for  relief in respect  of the  Company or any  Significant
     Subsidiary or any two or more Subsidiaries of the Company which, if merged,
     would be a Significant  Subsidiary,  in an  involuntary  case or proceeding
     under   any   applicable   Federal   or   State   bankruptcy,   insolvency,
     reorganization  or other similar law or (B) a decree or order adjudging the
     Company or any  Significant  Subsidiary or any two or more  Subsidiaries of
     the Company which, if merged, would be a Significant Subsidiary, a bankrupt
     or  insolvent,   or  approving  as  properly   filed  a  petition   seeking
     reorganization,  arrangement, adjustment or composition of or in respect of
     the Company or any Significant  Subsidiary or any two or more  Subsidiaries
     of the Company which, if merged, would be a Significant  Subsidiary,  under
     any applicable  Federal or State law, or appointing a custodian,  receiver,
     liquidator,  assignee,  trustee,  sequestrator or other similar official of
     the Company or any Significant  Subsidiary or any two or more  Subsidiaries
     of the Company which, if merged, would be a Significant  Subsidiary,  or of
     any substantial part of their respective property,  or ordering the winding
     up or  liquidation  of affairs,  and the  continuance of any such decree or
     order for relief or any such other  decree or order  unstayed and in effect
     for a period of 90 consecutive days; or

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

          (10) a default in the  payment of the  Repurchase  Price in respect of
     any  Security  on the  Repurchase  Date  therefor  in  accordance  with the
     provisions of Article Thirteen.


SECTION 502.   Acceleration of Maturity; Rescission and
               Annulment.

          If an Event of Default occurs and is continuing,  then and in any such
case the Trustee or the Holders of not less than 25% in principal  amount of the
Outstanding Securities may declare the principal of all the Securities to be due
and  payable  immediately,  by a notice in  writing to the  Company  (and to the
Trustee if given by Holders), and upon any such declaration such principal shall
become immediately due and payable.

          At any time after such a declaration of acceleration has been made and
before a judgment  or decree for  payment of the money due has been  obtained by
the Trustee as hereinafter in this Article  provided,  the Holders of a majority
in principal  amount of the  Outstanding  Securities,  by written  notice to the
Company  and the  Trustee,  may  rescind  and  annul  such  declaration  and its
consequences if

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

               (A)  all overdue interest on all Securities,

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

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

               (D) all sums paid or advanced by the  Trustee  hereunder  and the
          reasonable compensation,  expenses,  disbursements and advances of the
          Trustee, its agents and counsel;

     and

          (2) all Events of Default, other than the non-payment of the principal
     of  Securities  which  have  become  due  solely  by  such  declaration  of
     acceleration, have been cured or waived as provided in Section 513.

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


SECTION 503.   Collection of Indebtedness and Suits for
               Enforcement by Trustee.

          The Company covenants that if

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

          (2)  default is made in the payment of the
     principal of (or premium, if any, on) any Security at
     the Maturity thereof,

the Company will, upon demand of the Trustee,  pay to it, for the benefit of the
Holders  of such  Securities,  the whole  amount  then due and  payable  on such
Securities for principal (and premium, if any) and interest,  and, to the extent
that  payment of such  interest  shall be legally  enforceable,  interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
borne by the Securities,  and, in addition thereto, such further amount as shall
be  sufficient  to cover the costs and  expenses of  collection,  including  the
reasonable  compensation,  expenses,  disbursements and advances of the Trustee,
its agents and counsel.

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


SECTION 504.   Trustee May File Proofs of Claim.

          In case of any  judicial  proceeding  relative  to the Company (or any
other obligor upon the Securities),  its property or its creditors,  the Trustee
shall be entitled and empowered,  by  intervention  in such proceeding by filing
proofs of claim or otherwise,  to take any and all actions  authorized under the
Trust  Indenture  Act in order to have  claims of the  Holders  and the  Trustee
allowed in any such proceeding.  In particular,  the Trustee shall be authorized
to collect and receive any moneys or other  property  payable or  deliverable on
any such  claims  and to  distribute  the  same;  and any  custodian,  receiver,
assignee,  trustee,  liquidator,  sequestrator or other similar  official in any
such  judicial  proceeding  is  hereby  authorized  by each  Holder to make such
payments to the Trustee and, in the event that the Trustee  shall consent to the
making of such  payments  directly  to the  Holders,  to pay to the  Trustee any
amount  due it for the  reasonable  compensation,  expenses,  disbursements  and
advances of the Trustee,  its agents and counsel,  and any other amounts due the
Trustee under Section 607.

          No  provision  of this  Indenture  shall be  deemed to  authorize  the
Trustee  to  authorize  or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities  or the rights of any Holder  thereof or to authorize  the Trustee to
vote in respect of the claim of any Holder in any such proceeding.


SECTION 505.   Trustee May Enforce Claims Without Possession of
               Securities.

          All rights of action and claims under this Indenture or the Securities
may be prosecuted  and enforced by the Trustee  without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such  proceeding  instituted by the Trustee shall be brought in its own name
as trustee of an express  trust,  and any  recovery  of  judgment  shall,  after
provision   for  the   payment  of  the   reasonable   compensation,   expenses,
disbursements  and advances of the Trustee,  its agents and counsel,  be for the
ratable  benefit  of the  Holders  of the  Securities  in  respect of which such
judgment has been recovered.


SECTION 506.   Application of Money Collected.

          Subject to Article Twelve, any money collected by the Trustee pursuant
to this Article  shall be applied in the following  order,  at the date or dates
fixed by the Trustee and, in case of the  distribution  of such money on account
of  principal  (or  premium,  if  any) or  interest,  upon  presentation  of the
Securities  and the notation  thereon of the payment if only  partially paid and
upon surrender thereof if fully paid:

          FIRST:    To the payment of all amounts due the
     Trustee under Section 607;

          SECOND:  To the  payment  of the  amounts  then  due  and  unpaid  for
     principal  of (and  premium,  if any) and  interest  on the  Securities  in
     respect of which or for the benefit of which such money has been collected,
     ratably,  without  preference  or  priority of any kind,  according  to the
     amounts due and payable on such  Securities for principal (and premium,  if
     any) and interest, respectively; and

          THIRD:  The balance, if any, to the Company or any
     other Person or Persons determined to be entitled thereto.


SECTION 507.   Limitation on Suits.

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

          (1)  such Holder has previously given written
     notice to the Trustee of a continuing Event of
     Default;

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

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

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

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

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


SECTION 508.   Unconditional Right of Holders to Receive
               Principal, Premium and Interest.

          Notwithstanding  any other provision in this Indenture,  the Holder of
any  Security  shall have the right,  which is absolute  and  unconditional,  to
receive  payment of the  principal  of (and  premium,  if any) and  (subject  to
Section  307)  interest on such  Security on the  respective  Stated  Maturities
expressed in such Security  (or, in the case of  redemption,  on the  Redemption
Date or,  in the case of a  repurchase  pursuant  to  Article  Thirteen,  on the
Repurchase  Date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder.


SECTION 509.   Restoration of Rights and Remedies.

          If the Trustee or any Holder has  instituted any proceeding to enforce
any  right  or  remedy  under  this  Indenture  and  such  proceeding  has  been
discontinued or abandoned for any reason,  or has been  determined  adversely to
the  Trustee or to such  Holder,  then and in every  such  case,  subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored  severally and respectively to their former positions  hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.


SECTION 510.   Rights and Remedies Cumulative.

          Except as  otherwise  provided  with  respect  to the  replacement  or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section  306,  no right or remedy  herein  conferred  upon or reserved to the
Trustee or to the  Holders is  intended  to be  exclusive  of any other right or
remedy,  and every right and remedy  shall,  to the extent  permitted by law, be
cumulative  and in addition to every other right and remedy  given  hereunder or
now or hereafter  existing at law or in equity or  otherwise.  The  assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.


SECTION 511.   Delay or Omission Not Waiver.

          No delay or omission  of the Trustee or of any Holder of any  Security
to exercise any right or remedy  accruing upon any Event of Default shall impair
any such right or remedy or  constitute a waiver of any such Event of Default or
an acquiescence therein.  Every right and remedy given by this Article or by law
to the  Trustee or to the  Holders may be  exercised  from time to time,  and as
often as may be deemed expedient,  by the Trustee or by the Holders, as the case
may be.


SECTION 512.   Control by Holders.

          The  Holders  of a majority  in  principal  amount of the  Outstanding
Securities  shall  have the  right to  direct  the  time,  method  and  place of
conducting any proceeding for any remedy  available to the Trustee or exercising
any trust or power conferred on the Trustee, provided that

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

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


SECTION 513.   Waiver of Past Defaults.

          The  Holders of not less than a majority  in  principal  amount of the
Outstanding  Securities may on behalf of the Holders of all the Securities waive
any past default hereunder and its consequences, except a default

          (1)  in the payment of the principal of (or
     premium, if any) or interest on any Security, or

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

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


SECTION 514.   Undertaking for Costs.

          In any suit for the  enforcement  of any  right or remedy  under  this
Indenture,  or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an  undertaking to pay the costs of such suit, and may assess costs against
any such party  litigant,  in the manner and to the extent provided in the Trust
Indenture Act;  provided,  that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company.


SECTION 515.   Waiver of Stay or Extension Laws.

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



                                  ARTICLE SIX

                                  The Trustee


SECTION 601.   Certain Duties and Responsibilities.

          The duties and responsibilities of the Trustee shall be as provided by
the Trust  Indenture Act.  Notwithstanding  the foregoing,  no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers,  if it shall have  reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not  reasonably  assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting  the  liability of or affording  protection to the Trustee shall be
subject to the provisions of this Section.


SECTION 602.   Notice of Defaults.

          The  Trustee  shall give the Holders  notice of any default  hereunder
known to the Trustee as and to the extent  provided by the Trust  Indenture Act;
provided, however, that in the case of any default of the character specified in
Section 501(5),  no such notice to Holders shall be given until at least 45 days
after  the  occurrence  thereof.  For the  purpose  of this  Section,  the  term
"default"  means  any event  which is, or after  notice or lapse of time or both
would become, an Event of Default.


SECTION 603.   Certain Rights of Trustee.

          Subject to the provisions of Section 601:

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

          (2) any request or direction of the Company  mentioned herein shall be
     sufficiently  evidenced  by a  Company  Request  or  Company  Order and any
     resolution  of the Board of Directors  may be  sufficiently  evidenced by a
     Board Resolution;

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

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

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

          (6) the Trustee shall not be bound to make any investigation  into the
     facts  or  matters  stated  in  any  resolution,   certificate,  statement,
     instrument,  opinion, report, notice, request,  direction,  consent, order,
     bond,  debenture,  note,  other evidence of  indebtedness or other paper or
     document, but the Trustee, in its discretion, may make such further inquiry
     or investigation  into such facts or matters as it may see fit, and, if the
     Trustee shall determine to make such further inquiry or  investigation,  it
     shall be  entitled  to  examine  the books,  records  and  premises  of the
     Company, personally or by agent or attorney; and

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


SECTION 604.   Not Responsible for Recitals or Issuance of
               Securities.

          The  recitals  contained  herein  and in the  Securities,  except  the
Trustee's  certificates of  authentication,  shall be taken as the statements of
the Company,  and the Trustee assumes no responsibility  for their  correctness.
The Trustee makes no  representations  as to the validity or sufficiency of this
Indenture,  the  Securities or any  registration  statement or other  disclosure
document  prepared  in  connection  with the  same.  The  Trustee  shall  not be
accountable  for the use or  application  by the  Company of  Securities  or the
proceeds thereof.


SECTION 605.   May Hold Securities.

          The  Trustee,   any  Paying  Agent,   any  Security   Registrar,   any
Authenticating Agent or any other agent of the Company, in its individual or any
other capacity,  may become the owner or pledgee of Securities  and,  subject to
Sections 608 and 613, may  otherwise  deal with the Company with the same rights
it  would  have  if it were  not  Trustee,  Paying  Agent,  Security  Registrar,
Authenticating Agent or such other agent.


SECTION 606.   Money Held in Trust.

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


SECTION 607.   Compensation and Reimbursement.

          The Company agrees

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

          (2) except as otherwise  expressly  provided herein,  to reimburse the
     Trustee and each predecessor  Trustee, as the case may be, upon its request
     for all reasonable expenses, disbursements and advances incurred or made by
     the  Trustee  or any such  predecessor  Trustee,  as the  case  may be,  in
     accordance  with any provision of this Indenture  (including the reasonable
     compensation  and the expenses and  disbursements of its agents and counsel
     and other  persons not regularly in its employ and the  reasonable  fees of
     in-house  counsel in the regular  employ of the Trustee which are allocable
     to this trust and the expenses and  disbursements of such counsel),  except
     any such expense,  disbursement  or advance as may be  attributable  to its
     negligence or bad faith; and


          (3) to  indemnify  the  Trustee and each  predecessor  Trustee and the
     officers,  directors,  employees  and  agents  of the  Trustee  or any such
     predecessor  Trustee  (the  Trustee,  each  predecessor  Trustee  and  such
     officers, directors,  employees and agents being hereinafter referred to in
     this Section collectively as the "Indemnified  Parties" and individually as
     an "Indemnified  Party") for, and to hold each  Indemnified  Party harmless
     against, any loss, liability, tax, assessment, or other governmental charge
     (other than taxes  applicable to the Trustee's  compensation  hereunder) or
     expenses  incurred  without  negligence  or bad  faith  on the part of such
     Indemnified  Party,  arising out of or in connection with the acceptance or
     administration  of the Indenture or the trusts  hereunder and the duties of
     the Trustee hereunder, including enforcement of this Section.


     To secure the  Company's  payment  obligations  in this  Section  607,  the
Trustee shall have a lien prior to the  Securities on all money or property held
or  collected by the  Trustee,  except that held in trust to pay the  principal,
premium, if any, interest, Redemption Price or Repurchase Price, as the case may
be, on Securities.


          The Company's payment  obligations  pursuant to this Section 607 shall
survive the discharge of this  Indenture.  When the Trustee incurs  expenses and
provides  services  after the  occurrence  of an Event of Default  specified  in
Section  501(8) or (9), the expenses and  compensation  for the services will be
intended to constitute  expenses of administration  under Title 11 of the United
States  Bankruptcy  Code or any other  applicable  federal  or state law for the
relief of debtors.


SECTION 608.   Disqualification; Conflicting Interests.

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


SECTION 609.   Corporate Trustee Required; Eligibility.

          There  shall at all  times be a  Trustee  hereunder  which  shall be a
Person that is eligible  pursuant to the Trust  Indenture Act to act as such and
either (a) has a combined capital and surplus of at least  $50,000,000 or (b) is
a wholly owned  subsidiary of a parent that is a bank, a trust company or a bank
holding  company having a combined  capital and surplus of at least  $50,000,000
and such wholly owned subsidiary's  obligations as a Trustee hereunder are fully
and unconditionally  guaranteed by such parent. If such Person publishes reports
of  condition  at least  annually,  pursuant  to law or to the  requirements  of
applicable  supervising  or examining  authority,  then for the purposes of this
Section,  the combined  capital and surplus of such Person shall be deemed to be
its  combined  capital  and  surplus as set forth in its most  recent  report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section,  it shall resign  immediately in
the manner and with the effect hereinafter specified in this Article.


SECTION 610.   Resignation and Removal; Appointment of
               Successor.

          (a) No  resignation  or removal of the Trustee and no appointment of a
successor  Trustee  pursuant to this Article  shall become  effective  until the
acceptance of appointment by the successor Trustee under Section 611.

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

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

          (d)  If at any time:

          (1) the Trustee  shall fail to comply with  Section 608 after  written
     request  therefor  by the Company or by any Holder who has been a bona fide
     Holder of a Security for at least six months, or

          (2) the Trustee shall cease to be eligible under Section 609 and shall
     fail to resign after written request therefor by the Company or by any such
     Holder, or

          (3) the Trustee shall become  incapable of acting or shall be adjudged
     a bankrupt or  insolvent  or a receiver  of the Trustee or of its  property
     shall be  appointed or any public  officer  shall take charge or control of
     the   Trustee  or  of  its   property   or  affairs   for  the  purpose  of
     rehabilitation, conservation or liquidation,

then,  in any such case,  (i) the Company by a Board  Resolution  may remove the
Trustee,  or (ii)  subject to Section  514,  any Holder who has been a bona fide
Holder of a Security  for at least six months  may, on behalf of himself and all
others similarly situated,  petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.

          (e) If the Trustee  shall  resign,  be removed or become  incapable of
acting,  or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution,  shall promptly appoint a successor Trustee. If,
within  90  days  after  such  resignation,  removal  or  incapability,  or  the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders  of a  majority  in  principal  amount  of  the  Outstanding  Securities
delivered  to the Company and the retiring  Trustee,  the  successor  Trustee so
appointed shall,  forthwith upon its acceptance of such appointment,  become the
successor  Trustee and supersede the successor Trustee appointed by the Company.
If no  successor  Trustee  shall have been so  appointed  by the  Company or the
Holders and accepted appointment in the manner hereinafter provided,  any Holder
who has been a bona fide  Holder of a Security  for at least six months  may, on
behalf of  himself  and all others  similarly  situated,  petition  any court of
competent jurisdiction for the appointment of a successor Trustee.

          (f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to all Holders in the
manner  provided  in Section  106.  Each  notice  shall  include the name of the
successor Trustee and the address of its Corporate Trust Office.


SECTION 611.   Acceptance of Appointment by Successor.

          Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring  Trustee an instrument  accepting
such  appointment,  and  thereupon  the  resignation  or removal of the retiring
Trustee shall become effective and such successor  Trustee,  without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the  retiring  Trustee;  but,  on  request  of the  Company or the
successor  Trustee,  such retiring  Trustee shall,  upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights,  powers  and  trusts of the  retiring  Trustee  and shall  duly  assign,
transfer  and deliver to such  successor  Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company  shall  execute  any and all  instruments  for more fully and  certainly
vesting in and confirming to such successor Trustee all such rights,  powers and
trusts.

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


SECTION 612.   Merger, Conversion, Consolidation or Succession
               to Business.

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


SECTION 613.   Preferential Collection of Claims Against
               Company.

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


SECTION 614.   Appointment of Authenticating Agent.

          The Trustee may appoint an Authenticating  Agent or Agents which shall
be authorized to act on behalf of the Trustee to authenticate  Securities issued
upon  original  issue  and upon  exchange,  registration  of  transfer,  partial
redemption,  partial  repurchase  or pursuant to Section 306, and  Securities so
authenticated  shall be entitled to the benefits of this  Indenture and shall be
valid  and  obligatory  for all  purposes  as if  authenticated  by the  Trustee
hereunder.  Whenever  reference is made in this Indenture to the  authentication
and  delivery of  Securities  by the  Trustee or the  Trustee's  certificate  of
authentication,  such references shall be deemed to include  authentication  and
delivery on behalf of the Trustee by an  Authenticating  Agent and a certificate
of authentication  executed on behalf of the Trustee by an Authenticating Agent.
Each  Authenticating  Agent shall be  acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the United
States of America,  any State  thereof or the District of  Columbia,  authorized
under such laws to act as  Authenticating  Agent,  having a combined capital and
surplus of not less than  $50,000,000  and subject to supervision or examination
by Federal or State authority. If such Authenticating Agent publishes reports of
condition  at least  annually,  pursuant to law or to the  requirements  of said
supervising or examining  authority,  then for the purposes of this Section, the
combined capital and surplus of such Authenticating  Agent shall be deemed to be
its  combined  capital  and  surplus as set forth in its most  recent  report of
condition so published. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section,  such Authenticating
Agent shall resign  immediately  in the manner and with the effect  specified in
this Section.

          Any  Person  into  which an  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 such Authenticating Agent
shall be a party,  or any  corporation  succeeding  to the  corporate  agency or
corporate  trust business of an  Authenticating  Agent,  shall continue to be an
Authenticating  Agent,  provided such Person shall be otherwise  eligible  under
this Section, without the execution or filing of any paper or any further act on
the part of the Trustee or the Authenticating Agent.

          An  Authenticating  Agent may  resign  at any time by  giving  written
notice  thereof to the Trustee and to the  Company.  The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation  or  upon  such  a  termination,   or  in  case  at  any  time  such
Authenticating  Agent  shall  cease  to  be  eligible  in  accordance  with  the
provisions of this Section,  the Trustee may appoint a successor  Authenticating
Agent  which  shall be  acceptable  to the Company and shall give notice of such
appointment to all Holders in the manner  provided in Section 106. Any successor
Authenticating  Agent upon acceptance of its appointment  hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if  originally  named as an  Authenticating  Agent.  No successor
Authenticating  Agent shall be appointed unless eligible under the provisions of
this Section.

          The Company  agrees to pay to each  Authenticating  Agent from time to
time reasonable compensation for its services under this Section.

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

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



                                   ----------------------------,
                                                                      As Trustee



                                                   By__________________________,
                                                         As Authenticating Agent



                                                   By___________________________
                                                            Authorized Signatory



                                 ARTICLE SEVEN

        Holders' Lists and Reports by Trustee and Company


SECTION 701.   Company to Furnish Trustee Names and Addresses of
               Holders.

     The Company will furnish or cause to be furnished to the
Trustee

          (a)  semiannually,  not more than 15 days  after each  Regular  Record
     Date, a list, in such form as the Trustee may  reasonably  require,  of the
     names and addresses of the Holders as of such Regular Record Date, and

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

excluding from any such list names and addresses  received by the Trustee in its
capacity as Security Registrar.


SECTION 702.   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  701 and the names and
addresses  of Holders  received  by the  Trustee  in its  capacity  as  Security
Registrar.  The  Trustee may  destroy  any list  furnished  to it as provided in
Section 701 upon receipt of a new list so furnished.

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

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


SECTION 703.   Reports by Trustee.

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

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


SECTION 704.   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 EIGHT

     Consolidation, Merger, Conveyance, Transfer or Lease


SECTION 801.   Limitations on Mergers, Consolidations and Asset
               Transfers.

     The Company shall not  consolidate  or merge with or into, or sell,  lease,
convey or otherwise dispose of all or substantially all of its assets, or assign
any of its  obligations  under the Securities or this  Indenture,  to any Person
unless:


          (1) the Person formed by or surviving such consolidation or merger (if
     other than the Company), or to which such sale, lease,  conveyance or other
     disposition  or assignment  shall be made,  is a corporation  organized and
     existing  under the laws of the United  States or any State  thereof or the
     District of Columbia,  and such Person assumes by supplemental indenture in
     a form  satisfactory  to the Trustee all of the  obligations of the Company
     under the Securities and this Indenture;

          (2) immediately after giving effect to such transaction, no Default or
     Event of Default shall have occurred and be continuing;

          (3) immediately after giving effect to such transaction and the use of
     any net proceeds therefrom on a pro forma basis, the Consolidated Net Worth
     of the Company would be at least equal to the Consolidated Net Worth of the
     Company immediately prior to such transaction;


          (4) the EBITDA Coverage Ratio of the Company  immediately after giving
     effect to such  transaction,  would, on a pro forma basis, be such that the
     Company would be entitled to incur at least $1 of  additional  Indebtedness
     under the restriction set forth in the first sentence of Section 1008; and

          (5) the  Company  shall have  delivered  to the  Trustee an  Officers'
     Certificate   and  an  Opinion  of   Counsel,   each   stating   that  such
     consolidation,  merger or transfer and such supplemental indenture (if any)
     comply with this Article and that all conditions  precedent herein provided
     for relating to such transaction have been satisfied.


SECTION 802.   Successor Substituted.

          Upon any  consolidation  of the Company with, or merger of the Company
into, any other Person or any sale,  lease,  conveyance or other  disposition or
assignment  of  all  or  substantially  all of the  assets  of  the  Company  in
accordance with Section 801, the successor  Person formed by such  consolidation
or into which the Company is merged or to which such sale, lease,  conveyance or
other  disposition  or assignment  is made shall succeed to, and be  substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such  successor  Person had been named as the Company
herein,  and thereafter,  except in the case of a lease, the predecessor  Person
shall be relieved of all  obligations and covenants under this Indenture and the
Securities.



                                  ARTICLE NINE

                            Supplemental Indentures


SECTION 901.   Supplemental Indentures Without Consent of
               Holders.

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

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

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

          (3)  to secure the Securities; or

          (4)  to  evidence  and  provide  for  the  acceptance  of  appointment
     hereunder by a successor  Trustee with respect to the Securities and to add
     to or change any of the  provisions of this Indenture as shall be necessary
     to provide for or facilitate the  administration of the trusts hereunder by
     more than one Trustee; or

          (5)  to add any additional Events of Default; or

          (6) to cure any  ambiguity,  to correct or  supplement  any  provision
     herein which may be  inconsistent  with any other provision  herein,  or to
     make any other  provisions  with  respect to matters or  questions  arising
     under this Indenture which shall not be inconsistent with the provisions of
     this Indenture, provided that such action pursuant to this clause (6) shall
     not adversely affect the interests of the Holders in any material  respect;
     or

          (7)  to  cause  the  Indenture  and  the  Securities  to  comply  with
     applicable law, including the Trust Indenture Act.


SECTION 902.   Supplemental Indentures With Consent of Holders.

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

          (1) change the Stated Maturity of the principal of, or any installment
     of interest on, any Security, or reduce the principal amount thereof or the
     rate of  interest  thereon  or any  premium  payable  upon  the  redemption
     thereof,  or change the place of payment where,  or the coin or currency in
     which,  any  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 adversely  affect the right to cause the
     Company to repurchase any Security pursuant to Article Thirteen,  or modify
     the provisions of this Indenture with respect to the  subordination  of the
     Securities in a manner adverse to the Holders, or

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

          (3)  modify any of the  provisions  of this  Section  or Section  513,
     except to increase any such  percentage  or to provide  that certain  other
     provisions  of this  Indenture  cannot be  modified  or waived  without the
     consent of the Holder of each Outstanding Security affected thereby.

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


SECTION 903.   Execution of Supplemental Indentures.

          In  executing,  or accepting  the  additional  trusts  created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture,  the Trustee shall be entitled to receive,
and  (subject  to Section  601) shall be fully  protected  in relying  upon,  an
Opinion of Counsel stating that the execution of such supplemental  indenture is
authorized  or  permitted by this  Indenture.  The Trustee may, but shall not be
obligated  to,  enter into any such  supplemental  indenture  which  affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.


SECTION 904.   Effect of Supplemental Indentures.

          Upon the execution of any  supplemental  indenture under this Article,
this Indenture shall be modified in accordance therewith,  and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities  theretofore or thereafter  authenticated and delivered  hereunder
shall be bound thereby.


SECTION 905.   Conformity with Trust Indenture Act.

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


SECTION 906.   Reference in Securities to Supplemental
               Indentures.

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



                                  ARTICLE TEN

                                   Covenants


SECTION 1001.  Payment of Principal, Premium and Interest.

          The  Company  will  duly  and  punctually  pay the  principal  of (and
premium,  if any) and interest on the Securities in accordance with the terms of
the Securities and this Indenture.


SECTION 1002.  Maintenance of Office or Agency.

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

          The  Company  may also from time to time  designate  one or more other
offices or agencies  (in or outside the  Borough of  Manhattan,  The City of New
York) where the Securities  may be presented or surrendered  for any or all such
purposes and may from time to time rescind such designations; provided, however,
that no such  designation or rescission  shall in any manner relieve the Company
of its  obligation  to maintain an office or agency in the Borough of Manhattan,
The City of New York for such  purposes.  The Company  will give prompt  written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.


SECTION 1003.  Money for Security to Be Held in Trust.

          If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of (and premium, if any) or interest
on any of the  Securities,  segregate  and hold in trust for the  benefit of the
Persons entitled thereto a sum sufficient to pay the principal (and premium,  if
any) or interest so becoming  due until such sums shall be paid to such  Persons
or otherwise disposed of as herein provided and will promptly notify the Trustee
of its action or failure so to act.

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

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

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

          Any money deposited with the Trustee or any Paying Agent, or then held
by the Company,  in trust for the payment of the principal of (and  premium,  if
any) or interest on any Security  and  remaining  unclaimed  for two years after
such  principal  (and  premium,  if any) or interest  has become due and payable
shall  be paid to the  Company  on  Company  Request,  or (if  then  held by the
Company)  shall be discharged  from such trust;  and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment  thereof,  and all  liability  of the Trustee or such Paying  Agent with
respect  to such  trust  money,  and all  liability  of the  Company  as trustee
thereof, shall thereupon cease.


SECTION 1004.  Statement by Officers as to Default.

          (a) The Company shall deliver to the Trustee, within 90 days after the
end of each  fiscal  year of the  Company  ending  after  the  date  hereof,  an
Officers'  Certificate,  stating  whether  or not to the best  knowledge  of the
signers  thereof the Company is in default in the  performance and observance of
any of the terms, provisions and conditions of this Indenture (without regard to
any period of grace or requirement  of notice  provided  hereunder)  and, if the
Company  shall be in default,  specifying  all such  defaults and the nature and
status thereof of which they may have knowledge. The first Officers' Certificate
to be delivered  pursuant to this Section  1004(a)  shall be for the fiscal year
ending December 31, 1994.


          (b) The Company shall deliver to the Trustee, within 90 days after the
end of each  fiscal  year  of the  Company  ending  after  the  date  hereof,  a
certificate  signed by the Company's  independent  certified public  accountants
stating (i) that their audit examination has included a review of this Indenture
and the  Securities  as they relate to accounting  matters,  (ii) that they have
read the most recent Officers' Certificates delivered to the Trustee pursuant to
paragraph (a) of this Section 1004 and (iii) whether,  in connection  with their
audit examination,  anything came to their attention that caused them to believe
that  the  Company  was not in  compliance  with  any of the  terms,  covenants,
provisions or conditions of Sections 1008, 1010, 1011 and 1016 of this Indenture
as they  pertain to  accounting  matters and, if any Default or Event of Default
has come to their  attention,  specifying  the nature  and  period of  existence
thereof;  provided that such independent  certified public accountants shall not
be liable in  respect  of such  statement  by  reason of any  failure  to obtain
knowledge of any such Default or Event of Default that would not be disclosed in
the course of an audit  examination  conducted in accordance with GAAP in effect
at the date of such examination.


SECTION 1005.  Existence.

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


SECTION 1006.  Maintenance of Properties.

          The Company shall cause all  properties  used 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  shall  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 times;  provided,
however,   that  nothing  in  this  Section   shall  prevent  the  Company  from
discontinuing  the operation or  maintenance  of any of such  properties if such
discontinuance  is, in the judgment of the Company,  desirable in the conduct of
its business or the business of any  Subsidiary and not  disadvantageous  in any
material respect to the Holders.


SECTION 1007.  Payment of Taxes and Other Claims.

          The Company shall pay or discharge or cause to be paid or  discharged,
before  the  same  shall  become  delinquent,  (1) 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 (2)
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,
however,  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 as to which  appropriate  reserves or other provisions have been
made in accordance with GAAP.


SECTION 1008.  Limitations on Additional Indebtedness.

          (A)  The  Company   shall  not,  and  shall  not  permit  any  of  its
Subsidiaries  to,  directly  or  indirectly,   create,   incur,  issue,  assume,
guarantee,  extend the maturity of, or otherwise  become  liable with respect to
(collectively,   "incur"),  any  Indebtedness  (including,  without  limitation,
Acquired  Indebtedness),  and  (B)  the  Company  shall  not  permit  any of its
Subsidiaries  to  issue  (except  to the  Company  or any  of its  Wholly  Owned
Subsidiaries)  any Preferred  Stock,  unless,  after giving effect thereto,  the
Company's  EBITDA Coverage Ratio on the date thereof would be at least 2.0 to 1,
determined  on a pro  forma  basis  as if  the  incurrence  of  such  additional
Indebtedness  or the issuance of such Preferred  Stock,  as the case may be, and
the application of the net proceeds therefrom,  had occurred at the beginning of
the four-quarter period used to calculate the Company's EBITDA Coverage Ratio.

          Notwithstanding  the foregoing:  (A) the Company and its  Subsidiaries
may (i) incur Indebtedness under the Credit Agreements in an aggregate principal
amount  at any time not to exceed  $300,000,000  plus 50% of  Eligible  Accounts
Receivable; (ii) incur Refinancing Indebtedness; (iii) incur any Indebtedness of
the Company to any Wholly Owned  Subsidiary or of any  Subsidiary to the Company
or to any Wholly  Owned  Subsidiary;  (iv) incur any  Indebtedness  evidenced by
letters  of credit  which are used in the  ordinary  course of  business  of the
Company and its Subsidiaries to secure workers' compensation and other insurance
coverages;   and  (v)  incur  Capitalized  Lease  Obligations  and  Attributable
Indebtedness  of the  Company and its  Subsidiaries  in an  aggregate  principal
amount at any one time  outstanding  not to exceed 5% of  Consolidated  Tangible
Assets;  (B) the  Company  may issue  the  Convertible  Debentures;  and (C) any
Subsidiary may issue or create  Preferred  Stock if permitted under Section 1009
hereof.


     The Company  will not be in default  under the  covenant  set forth in this
Section 1008 by reason of the fact that the outstanding  Indebtedness  under the
Credit Agreements at any time exceeds $300,000,000 plus 50% of Eligible Accounts
Receivable  unless  during  such  time  the  Company  increases  the  amount  of
outstanding  Indebtedness  under the Credit  Agreements  and at the time of such
increase does not meet the EBITDA Coverage Ratio test of 2.0 to 1 on a pro forma
basis with respect to such additional Indebtedness as provided above.



SECTION 1009.  Limitations on Subsidiary Preferred Stock.

          The  Company  shall not  permit  any of its  Subsidiaries  to issue or
create  any  Preferred  Stock  (other  than to the  Company  or a  Wholly  Owned
Subsidiary)  or permit  any Person  (other  than the  Company or a Wholly  Owned
Subsidiary)  to own or hold  any  interest  in any  Preferred  Stock of any such
Subsidiary,  unless the  Subsidiary  would be  permitted  to incur  Indebtedness
pursuant to the  provisions  of Section 1008 in the aggregate  principal  amount
equal to the aggregate liquidation value of such Preferred Stock.

          Notwithstanding  the foregoing,  the Company may permit any Subsidiary
which is a partnership  formed to operate a single health care facility to issue
or  create  Preferred  Stock,  provided  that the  aggregate  amount of all such
Preferred  Stock  outstanding  after giving  effect to such issuance or creation
shall  not  exceed  1% of  Consolidated  Tangible  Assets as of the date of such
issuance or creation.


SECTION 1010.  Limitations on Restricted Payments.

          (a)  The  Company   shall  not,  and  shall  not  permit  any  of  its
Subsidiaries,  directly or indirectly,  to make any Restricted Payment if at the
time of such Restricted Payment:

          (i)  a Default or Event of Default shall have occurred
     and be continuing or shall occur as a consequence thereof;

          (ii) after  giving  effect to the  proposed  Restricted  Payment,  the
     amount of such Restricted  Payment,  when added to the aggregate  amount of
     all  Restricted  Payments  made  after  the  date  of  the  Indenture  plus
     Investments  made after  such date  pursuant  to clause  (vi)(b) of Section
     1011, exceeds the sum of: (1) 50% of the Company's  Consolidated Net Income
     accrued  during the period (taken as a single period)  commencing  with the
     date of initial  issuance of the  Securities  to and  including  the fiscal
     quarter ended immediately prior to the date of such Restricted Payment (or,
     if such aggregate Consolidated Net Income shall be a deficit, minus 100% of
     such  aggregate  deficit);  and (2) the net cash proceeds from the issuance
     and sale of the  Company's  Capital  Stock that is not  Disqualified  Stock
     (other than to a Subsidiary of the Company) during such period; or

          (iii) the Company  would not be able to incur an  additional  $1.00 of
     Indebtedness pursuant to the first sentence of Section 1008.

          (b) The provisions of subsection (a) of this Section
1010 shall not prohibit:

          (i) the  payment  of any  dividend  within  60 days  after the date of
     declaration  thereof if the payment  thereof  would have  complied with the
     limitations of this covenant on the date of declaration; or

          (ii) the  retirement of shares of the  Company's  Capital Stock or the
     Company's or a Subsidiary of the Company's Indebtedness out of the proceeds
     of a  substantially  concurrent  sale  (other than to a  Subsidiary  of the
     Company) of shares of the Company's  Capital Stock (other than Disqualified
     Stock).


SECTION 1011.  Limitations on Investments and Loans.

          The Company  shall not,  and shall not permit any of its  Subsidiaries
to, make any Investments in any other Person, except (i) capital  contributions,
advances or loans to the Company by any Subsidiary or by the Company to a Wholly
Owned Subsidiary;  (ii) the Company and each of its Subsidiaries may acquire and
hold  receivables  owing to it, if created or acquired in the ordinary course of
business and payable or  dischargeable in accordance with customary trade terms;
(iii) the Company and its  Subsidiaries  may acquire and hold cash and  Eligible
Investments;  (iv) the  Company and its  Subsidiaries  may make  Investments  in
Persons at least a majority of whose  revenues  result from health  care-related
businesses or  facilities;  (v) the Company,  directly or through a Wholly Owned
Subsidiary,  may make an Investment in a Wholly Owned  Subsidiary  formed solely
for the purpose of insuring  the health care  business and  facilities  owned or
operated by the Company or a Subsidiary and any physician  employed by or on the
staff of any such business or facility (the  "Insurance  Subsidiary"),  provided
that the  amount  invested  in such  Insurance  Subsidiary  does not  exceed  $5
million; and (vi) Investments not otherwise permitted by clauses (i) through (v)
above  in an  aggregate  amount  not  exceeding  at any  time the sum of (a) $10
million and (b) that amount equal to the amount of Restricted Payments permitted
to be made by the Company and its Subsidiaries under Section 1010.


SECTION 1012.  Limitations on Restrictions on Distributions from
               Subsidiaries.

          The Company  shall not,  and shall not permit any of its  Subsidiaries
to,  create  or  otherwise  cause or suffer  to exist or  become  effective  any
consensual  encumbrance or restriction  (other than encumbrances or restrictions
imposed by law or by judicial or regulatory action or by provisions in leases or
other agreements that restrict the assignability  thereof) on the ability of any
Subsidiary of the Company to (i) pay  dividends or make any other  distributions
on its Capital Stock or any other interest or participation  in, or measured by,
its  profits,  owned by the  Company  or any of its other  Subsidiaries,  or pay
interest on or principal of any Indebtedness  owned to the Company or any of its
other  Subsidiaries,  (ii) make loans or  advances  to the Company or any of its
other  Subsidiaries  or (iii)  transfer any of its  properties  or assets to the
Company  or  any  of  its  other   Subsidiaries,   except  for  encumbrances  or
restrictions  existing under or by reason of (a) applicable  law, (b) the Credit
Agreements, (c) Existing Indebtedness,  (d) any restrictions under any agreement
evidencing any Acquired  Indebtedness that was permitted to be incurred pursuant
to the Indenture, provided that such restrictions and encumbrances only apply to
assets that were  subject to such  restrictions  and  encumbrances  prior to the
acquisition of such assets by the Company or its Subsidiaries,  (e) restrictions
or encumbrances replacing those permitted by clause (b), (c) or (d) which, taken
as a whole, are not more  restrictive,  (f) the Indenture,  (g) any restrictions
and encumbrances arising in connection with Refinancing Indebtedness;  provided,
however,  that any  restrictions  or  encumbrances of the type described in this
paragraph  that arise under such  Refinancing  Indebtedness  are not, taken as a
whole,  more restrictive  than those under the agreement  creating or evidencing
the Indebtedness being refunded or refinanced, (h) any restrictions with respect
to a Subsidiary of the Company  imposed  pursuant to an agreement  that has been
entered into for the sale or other  disposition of all or  substantially  all of
the Capital Stock or assets of such  Subsidiary,  (i) any agreement  restricting
the  sale  or  other  disposition  of  property  securing  Indebtedness  if such
agreement does not expressly restrict the ability of a Subsidiary of the Company
to pay dividends or make loans or advances,  and (j) customary  restrictions  in
purchase money debt or leases relating to the property covered thereby.


SECTION 1013.  Limitations on Certain Other Subordinated
               Indebtedness.

          The  Company  shall not create,  incur,  assume or suffer to exist any
Indebtedness that is subordinate in right of payment to any Senior  Indebtedness
unless such Indebtedness by its terms or the terms of the instrument creating or
evidencing  such  Indebtedness  is  subordinate in right of payment to, or ranks
pari passu with, the Securities.


SECTION 1014.  Limitations on Transactions with Affiliates.

          Neither the Company nor any of its  Subsidiaries  shall make any loan,
advance,  guarantee or capital  contribution to, or for the benefit of, or sell,
lease,  transfer or otherwise  dispose of any of its properties or assets to, or
for the benefit of, or purchase or lease any property or assets  from,  or enter
into or amend any contract,  agreement or understanding with, or for the benefit
of, any  Affiliate of the Company or any of its  Subsidiaries  or any Person (or
any  Affiliate of such Person)  holding 10% or more of the Common  Equity of the
Company or any of its Subsidiaries (each an "Affiliate Transaction"), unless (i)
such  Affiliate   Transactions   are  between  or  among  the  Company  and  its
Subsidiaries;  (ii) such Affiliate  Transactions  are in the ordinary  course of
business and consistent with past practice; or (iii) the terms of such Affiliate
Transactions are fair and reasonable to the Company or such  Subsidiary,  as the
case may be, and are at least as  favorable as the terms which could be obtained
by the  Company  or  such  Subsidiary,  as the  case  may  be,  in a  comparable
transaction made on an arm's-length basis between  unaffiliated  parties. In the
event of any transaction or series of transactions  occurring  subsequent to the
date of the  Indenture  with an Affiliate of the Company  which is not permitted
under clauses (i) or (ii) above and involves in excess of  $5,000,000  the terms
of such  transaction  shall be in writing  and a majority  of the  disinterested
members  of the  Board of  Directors  shall by  resolution  determine  that such
business or transaction meets the criterion set forth in clause (iii) above.


SECTION 1015.  Limitations on Liens.

          The  Company  shall not create or suffer to exist any Lien  (including
any Lien created to secure the Company's obligation to repay Senior Subordinated
Debt other than the Securities or to repay Subordinated Obligations), other than
Permitted  Liens,  on any of its  assets  unless  all  payments  due  under  the
Indenture and the  Securities are secured on an equal and ratable basis with the
obligation so secured until such time as such obligation is no longer secured by
a Lien.


SECTION 1016.  Limitations on Asset Sales.

          The Company  shall not,  and shall not permit any of its  Subsidiaries
to,  consummate  any Asset Sale  unless,  with respect to Asset Sales other than
Asset Sales of health care facilities  pursuant to a binding commitment existing
on the date of issuance of the  Securities  (i) the Company or its  Subsidiaries
receive  consideration at the time of such Asset Sale at least equal to the fair
market  value of the assets or  Capital  Stock  included  in such Asset Sale (as
determined in good faith by the Board of Directors, whose determination shall be
conclusive  and  evidenced by a board  resolution)  and (ii) either (A) not less
than 75% of such  consideration  is in the form of cash  received at the time of
such Asset Sale,  or (B) after giving  effect to such Asset Sale,  the aggregate
amount or fair market value of other consideration  received by the Company from
all Asset Sales since the date of  issuance  of the  Securities,  reduced by the
original  amount of all deferred  obligations to pay cash received from all such
Asset Sales which have then been satisfied and paid in full, would not exceed 5%
of the amount of  Company's  PP&E shown on its most recent  balance  sheet filed
with the Commission under Section 13(a) or Section 15(d) of the Exchange Act; or
(C) such Asset Sale  occurs  prior to  eighteen  (18)  months  after the date of
issuance  of the  Securities  and is of a health  care  facility  acquired  from
National Medical  Enterprises,  Inc. or located in a geographic  market so as to
compete with such a facility.  The Net Proceeds of Assets Sales shall within 360
days,  (i) be  reinvested  in the lines of business of the Company or any of its
Subsidiaries,  immediately  prior to such  investment;  (ii) be  applied  to the
payment of the  principal  of, and interest on,  Senior  Indebtedness;  (iii) be
utilized  to make  any  Investment  in any  other  Person  permitted  under  the
Indenture;  or (iv) be applied to an offer (an "Asset Sale Offer") to repurchase
outstanding Securities. In any such Asset Sale Offer, the Company shall offer to
repurchase  Securities  on a pro rata basis or as  selected by lot at a purchase
price equal to 100% of the aggregate  principal  amount of the Securities,  plus
accrued and unpaid  interest to the date of repurchase,  in the manner set forth
in the  Indenture.  Any Asset Sale Offer will be  conducted in  compliance  with
applicable  tender offer rules,  including Section 14(e) of the Exchange Act and
Rule  14e-1  thereunder.  Any  Net  Proceeds  remaining  immediately  after  the
completion  of  any  Asset  Sale  Offer  may  be  used  by  the  Company  or its
Subsidiaries for any purpose not  inconsistent  with the other provisions of the
Indenture.


                                 ARTICLE ELEVEN

                            Redemption of Securities


SECTION 1101.  Right of Redemption.

          The  Securities  may be redeemed at the election of the Company,  as a
whole or from time to time in part,  at any time on or after  April 1, 1998,  at
the Redemption Prices specified in the form of Security  hereinbefore set forth,
together with accrued interest to but excluding the Redemption Date.


SECTION 1102.  Applicability of Article.

          Redemption of Securities at the election of the Company,  as permitted
by any  provision  of this  Indenture,  shall be made in  accordance  with  such
provision and this Article.


SECTION 1103.  Election to Redeem; Notice to Trustee.

          The  election  of the  Company to redeem any  Securities  pursuant  to
Section 1101 shall be evidenced by a Board Resolution. In case of any redemption
at the  election  of the  Company of less than all the  Securities,  the Company
shall,  at  least 60 days  prior to the  Redemption  Date  fixed by the  Company
(unless a shorter  notice  shall be  satisfactory  to the  Trustee),  notify the
Trustee of such Redemption Date and of the principal  amount of Securities to be
redeemed,  which  principal  amount  shall  not be less than  $1,000,000  in the
aggregate.


SECTION 1104.  Selection by Trustee of Securities to Be
               Redeemed.

          If less than all the  Securities  are to be redeemed,  the  particular
Securities  to be redeemed  shall be selected not more than 60 days prior to the
Redemption Date by the Trustee,  from the Outstanding  Securities not previously
called  for  redemption,  by such  method  as the  Trustee  shall  deem fair and
appropriate  and which may provide for the selection for  redemption of portions
(equal to $1,000 or any integral  multiple  thereof) of the principal  amount of
Securities of a denomination larger than $1,000.

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

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


SECTION 1105.  Notice of Redemption.

          Notice  of  redemption  shall be given by  first-class  mail,  postage
prepaid,  mailed not less than 15 nor more than 60 days prior to the  Redemption
Date, to each Holder of Securities to be redeemed,  at his address  appearing in
the Security Register.

          All notices of redemption shall state:

          (1)  the Redemption Date,

          (2)  the Redemption Price,

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

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

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

          Notice of  redemption  of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's  request,  by the
Trustee in the name and at the expense of the Company.


SECTION 1106.  Deposit of Redemption Price.

          Prior to any  Redemption  Date,  the Company  shall  deposit  with the
Trustee or with a Paying  Agent (or,  if the Company is acting as its own Paying
Agent,  segregate  and hold in trust as provided  in Section  1003) an amount of
money  sufficient to pay the Redemption  Price of, and (except if the Redemption
Date shall be an Interest  Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.


SECTION 1107.  Securities Payable on Redemption Date.

          Notice of redemption having been given as aforesaid, the Securities so
to be redeemed  shall,  on the  Redemption  Date,  become due and payable at the
Redemption  Price  therein  specified,  and from and after such date (unless the
Company  shall  default  in the  payment  of the  Redemption  Price and  accrued
interest) such  Securities  shall cease to bear interest.  Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption  Price,  together with accrued interest
to the Redemption Date; provided,  however,  that installments of interest whose
Stated  Maturity is on or prior to the  Redemption  Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered as
such at the close of business on the relevant  Record  Dates  according to their
terms and the provisions of Section 307.

          If any  Security  called  for  redemption  shall  not be so paid  upon
surrender  thereof for  redemption,  the principal (and premium,  if any) shall,
until paid,  bear  interest  from the  Redemption  Date at the rate borne by the
Security.


SECTION 1108.  Securities Redeemed in Part.

          Any Security which is to be redeemed only in part shall be surrendered
at an office or agency of the Company  designated  for that purpose  pursuant to
Section 1002 (with,  if the Company or the Trustee so requires,  due endorsement
by, or a written  instrument of transfer in form  satisfactory to the Company or
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing),  and the Company shall execute,  and the Trustee shall authenticate
and  deliver  to the  Holder of such  Security  without  service  charge,  a new
Security or  Securities,  of any  authorized  denomination  as requested by such
Holder,  in  aggregate  principal  amount  equal  to and  in  exchange  for  the
unredeemed portion of the principal of the Security so surrendered.



                                 ARTICLE TWELVE

                          Subordination of Securities


SECTION 1201.  Securities Subordinate to Senior Indebtedness.

          The Company  covenants and agrees,  and each Holder of a Security,  by
his acceptance thereof,  likewise covenants and agrees,  that, to the extent and
in the manner  hereinafter set forth in this Article  (subject to the provisions
of Article Four), the indebtedness represented by the Securities and the payment
of the  principal of (and  premium,  if any) and interest on each and all of the
Securities  (including any  repurchases or payments  pursuant to Section 1016 or
Article  Thirteen) are hereby expressly made subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness.


SECTION 1202.  Payment Over of Proceeds Upon Dissolution, Etc.

          In the event of (1) any  insolvency or bankruptcy  case or proceeding,
or any  receivership,  liquidation,  reorganization  or  other  similar  case or
proceeding in connection therewith, relative to the Company or to its creditors,
as  such,  or to a  substantial  part of its  assets,  or (2)  any  liquidation,
dissolution or other winding up of the Company, whether voluntary or involuntary
and whether or not involving insolvency or bankruptcy, or (3) any assignment for
the benefit of creditors or any other  marshalling of assets and  liabilities of
the Company, then and in any such event specified in (1), (2) or (3) above (each
such event, if any, herein sometimes  referred to as a "Proceeding") the holders
of Senior  Indebtedness  shall be  entitled  to  receive  payment in full of all
amounts  due or to become due on or in respect  of all Senior  Indebtedness,  or
provision  shall  be made  for  such  payment  in cash  or cash  equivalents  or
otherwise in a manner satisfactory to the holders of Senior Indebtedness, before
the  Holders  of  the   Securities  are  entitled  to  receive  any  payment  or
distribution of any kind or character,  whether in cash, property or securities,
on account of principal of (or premium, if any) or interest on the Securities or
on account of any purchase (including any repurchase pursuant to Section 1016 or
Article  Thirteen)  or other  acquisition  of  Securities  by the Company or any
Subsidiary  of the Company  (all such  payments,  distributions,  purchases  and
acquisitions herein referred to, individually and collectively, as a "Securities
Payment"),  and to that end the  holders  of all  Senior  Indebtedness  shall be
entitled to receive,  for  application  to the payment  thereof,  any Securities
Payment which may be payable or  deliverable in respect of the Securities in any
such Proceeding.


          In the event that,  notwithstanding  the foregoing  provisions of this
Section,  the  Trustee or the Holder of any  Security  shall have  received  any
Securities  Payment  before all Senior  Indebtedness  is paid in full or payment
thereof  provided  for in cash or cash  equivalents  or  otherwise  in a  manner
satisfactory to the holders of Senior  Indebtedness,  and if such fact shall, at
or prior to the time of such  Securities  Payment,  have been made  known to the
Trustee  pursuant to Section 1210 or, as the case may be, such Holder,  then and
in such event such Securities Payment shall be paid over or delivered  forthwith
to  the  trustee  in  bankruptcy,   receiver,  liquidating  trustee,  custodian,
assignee,  agent or other Person making payment or distribution of assets of the
Company  for  application  to the payment of all Senior  Indebtedness  remaining
unpaid,  to the extent  necessary to pay all Senior  Indebtedness in full, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness.

          For  purposes  of  this  Article  only,  the  words  "any  payment  or
distribution of any kind or character,  whether in cash, property or securities"
shall not be deemed to include a payment or  distribution of stock or securities
of the  Company  provided  for  by a  plan  of  reorganization  or  readjustment
authorized  by an order or  decree  of a court of  competent  jurisdiction  in a
reorganization  proceeding  under any applicable  bankruptcy law or of any other
corporation  provided for by such plan of reorganization or readjustment,  which
stock or securities are subordinated in right of payment to all then outstanding
Senior  Indebtedness to substantially the same extent as, or to a greater extent
than,  the  Securities  are so  subordinated  as provided in this  Article.  The
consolidation  of the Company with,  or the merger of the Company into,  another
Person or the liquidation or dissolution or the Company following the conveyance
or  transfer  of all or  substantially  all of its  properties  and assets as an
entirety to another  Person upon the terms and  conditions  set forth in Article
Eight shall not be deemed a  Proceeding  for the purposes of this Section if the
Person formed by such  consolidation  or into which the Company is merged or the
Person which  acquires by  conveyance  or transfer  such  properties  and assets
substantially  as an  entirety,  as the  case may be,  shall,  as a part of such
consolidation,  merger,  conveyance or transfer,  comply with the conditions set
forth in Article Eight.


SECTION 1203.  Prior Payment to Senior Indebtedness Upon
               Acceleration of Securities.

          In the event that any  Securities  are declared due and payable before
their  Stated  Maturity,  then  and in such  event  the  holders  of the  Senior
Indebtedness  outstanding at the time such  Securities so become due and payable
shall be entitled to receive payment in full of all amounts due or to become due
on or in respect of all Senior Indebtedness, or provision shall be made for such
payment in cash or cash equivalents or otherwise in a manner satisfactory to the
holders of such Senior  Indebtedness,  before the Holders of the  Securities are
entitled to receive any Securities  Payment  (including any payment which may be
payable by reason of the payment of any other  indebtedness of the Company being
subordinated to the payment of the Securities).

          In the event that,  notwithstanding  the foregoing,  the Company shall
make any  Securities  Payment to the  Trustee or any  Holder  prohibited  by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such Securities Payment, have been made known to the Trustee pursuant to
Section  1210 or, as the case may be, such  Holder,  then and in such event such
Securities Payment shall be paid over and delivered forthwith to the Company.

          The  provisions  of this  Section  shall not  apply to any  Securities
Payment with respect to which Section 1202 would be applicable.


SECTION 1204.  No Payment in Certain Circumstances.

          (a) In the event and during  the  continuation  of any  default in the
payment of any Senior Indebtedness in excess of $5,000,000 beyond any applicable
grace period with respect  thereto,  no Securities  Payment shall be made unless
and until  such  default  is cured or  waived or ceases to exist or such  Senior
Indebtedness is discharged.

          (b) During the  continuation of any non-payment  event of default with
respect to any  Designated  Senior  Indebtedness  pursuant to which the maturity
thereof  may  be  accelerated,   no  Securities  Payment  or  other  payment  or
distribution  of any assets of the Company of any kind or character  (other than
payments  of  amounts  already  deposited  in  accordance  with  the  defeasance
provisions  of the  Indenture)  shall  be  made by the  Company  on  account  of
Subordinated  Obligations  or on account of the  purchase,  redemption  or other
acquisition  of the  Securities  for the period  specified  below (the  "Payment
Blockage  Period").  The Payment Blockage Period shall commence upon the receipt
of notice by the Company or the Trustee from any  representative  of a holder of
Designated  Senior  Indebtedness  and shall end on the  earlier  of (i) 179 days
thereafter,  (ii) the date on which  such  event is cured or waived or ceases to
exist or on which such Designated Senior  Indebtedness is discharged,  (iii) the
date on which the maturity of any Indebtedness (other than Senior  Indebtedness)
shall have been  accelerated by virtue of such event,  or (iv) the date on which
such Payment Blockage Period shall have been terminated by notice to the Company
or the  Trustee  from the  representative  of holders of the  Designated  Senior
Indebtedness  initiating such Payment Blockage  Period,  after which the Company
shall resume making any and all required  payments in respect of the Securities,
including any missed payments. Only one Payment Blockage Period may be commenced
during any period of 365  consecutive  days. No event of default with respect to
Designated Senior Indebtedness that existed or was continuing on the date of the
commencement  of any  Payment  Blockage  Period with  respect to the  Designated
Senior Indebtedness  initiating such Payment Blockage Period will be, or can be,
made the basis for the  commencement of a second Payment Blockage Period whether
or not within a period of 365 consecutive days, unless such event of default has
been cured or waived for a period of not less than 90  consecutive  days.  In no
event may a Payment Blockage Period extend beyond 179 days.

          In the event that,  notwithstanding  the foregoing,  the Company shall
make any  Securities  Payment to the  Trustee or any  Holder  prohibited  by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such Securities Payment, have been made known to the Trustee pursuant to
Section  1210 or, as the case may be, such  Holder,  then and in such event such
Securities Payment shall be paid over and delivered forthwith to the Company.

          The  provisions  of this  Section  shall not  apply to any  Securities
Payment with respect to which Section 1202 would be applicable.


SECTION 1205.  Payment Permitted If No Default.

          Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities  shall prevent (1) the Company,  at any time except during
the  pendency  of any  Proceeding  referred  to in  Section  1202 or  under  the
conditions  described in Section 1203 or 1204, from making Securities  Payments,
or (2) the  application by the Trustee of any money  deposited with it hereunder
to  Securities  Payments  or the  retention  of such  Securities  Payment by the
Holders,  if, at the time of such  application  by the Trustee,  it did not have
knowledge  that  such  Securities  Payment  would  have been  prohibited  by the
provisions of this Article.


SECTION 1206.  Subrogation to Rights of Holders of Senior
               Indebtedness.

          Subject to the  payment in full of all amounts due or to become due on
or in respect of Senior Indebtedness,  or the provision for such payment in cash
or cash  equivalents  or  otherwise in a manner  satisfactory  to the holders of
Senior  Indebtedness,  the Holders of the Securities  shall be subrogated to the
extent of the  payments  or  distributions  made to the  holders of such  Senior
Indebtedness  pursuant to the  provisions  of this Article  (equally and ratably
with the holders of all  indebtedness  of the Company which by its express terms
is subordinated to indebtedness of the Company to substantially  the same extent
as  the  Securities  are   subordinated  and  is  entitled  to  like  rights  of
subrogation) to the rights of the holders of such Senior Indebtedness to receive
payments and  distributions of cash,  property and securities  applicable to the
Senior Indebtedness until the principal of (and premium, if any) and interest on
the  Securities  shall be paid in full.  For  purposes of such  subrogation,  no
payments or distributions to the holders of the Senior Indebtedness of any cash,
property or  securities  to which the Holders of the  Securities  or the Trustee
would be entitled  except for the  provisions of this  Article,  and no payments
over  pursuant  to the  provisions  of this  Article  to the  holders  of Senior
Indebtedness  by Holders of the Securities or the Trustee,  shall,  as among the
Company, its creditors other than holders of Senior Indebtedness and the Holders
of the  Securities,  be deemed to be a payment or distribution by the Company to
or on account of the Senior Indebtedness.


SECTION 1207.  Provisions Solely to Define Relative Rights.

          The  provisions  of this Article are and are  intended  solely for the
purpose of defining the  relative  rights of the Holders on the one hand and the
holders of Senior  Indebtedness  on the other hand.  Nothing  contained  in this
Article or elsewhere in this  Indenture or in the  Securities  is intended to or
shall (1) impair,  as among the  Company,  its  creditors  other than holders of
Senior  Indebtedness  and the Holders of the  Securities,  the obligation of the
Company,  which is  absolute  and  unconditional,  to pay to the  Holders of the
Securities  the  principal  of  (and  premium,  if  any)  and  interest  on  the
Securities,  and to make any  repurchases of the Securities  required by Article
Thirteen  hereof,  the  Securities  as and when the same  shall  become  due and
payable in accordance  with the terms hereof;  or (2) affect the relative rights
against  the  Company of the  Holders of the  Securities  and  creditors  of the
Company  other  than the  holders of Senior  Indebtedness;  or (3)  prevent  the
Trustee or the Holder of any Security  from  exercising  all remedies  otherwise
permitted by applicable  law upon default under this  Indenture,  subject to the
rights,  if any,  under this  Article of the holders of Senior  Indebtedness  to
receive cash,  property and securities  otherwise  payable or deliverable to the
Trustee or such Holder.


SECTION 1208.  Trustee to Effectuate Subordination and Payment
               Provisions.

          Each Holder of a Security by his  acceptance  thereof  authorizes  and
directs  the Trustee on his behalf to take such  action as may be  necessary  or
appropriate to effectuate the subordination and payment  provisions  provided in
this Article and appoints the Trustee his  attorney-in-fact for any and all such
purposes.


SECTION 1209.  No Waiver of Subordination Provisions.

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

          Without in any way limiting the generality of the foregoing paragraph,
the  holders  of  Senior  Indebtedness  may,  at any time and from time to time,
without  the  consent  of or  notice  to  the  Trustee  or  the  Holders  of the
Securities,  without  incurring  responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the  obligations  hereunder of the Holders of the  Securities  to the holders of
Senior Indebtedness, do any one or more of the following: (i) change the manner,
place or terms of payment  or extend the time of payment  of, or renew or alter,
Senior  Indebtedness,  or otherwise  amend or  supplement  in any manner  Senior
Indebtedness or any instrument  evidencing the same or any agreement under which
Senior Indebtedness is outstanding;  (ii) sell,  exchange,  release or otherwise
deal  with  any  property  pledged,   mortgaged  or  otherwise  securing  Senior
Indebtedness;  (iii) release any Person liable in any manner for the  collection
of Senior Indebtedness;  and (iv) exercise or refrain from exercising any rights
against the Company and any other Person.


SECTION 1210.  Notice to Trustee.

          The  Company  shall give prompt  written  notice to the Trustee of any
fact known to the Company  which would  prohibit the making of any payment to or
by the Trustee in respect of the Securities.  Notwithstanding  the provisions of
this Article or any other provision of this Indenture,  the Trustee shall not be
charged with  knowledge of the  existence of any facts which would  prohibit the
making of any payment to or by the Trustee in respect of the Securities,  unless
and until a  Responsible  Officer of the  Trustee  shall have  received  written
notice thereof from the Company or a holder of Senior  Indebtedness  or from any
trustee  therefor;  and,  prior to the receipt of any such written  notice,  the
Trustee,  subject to the  provisions  of Section  601,  shall be entitled in all
respects  to assume that no such facts  exist;  provided,  however,  that if the
Trustee shall not have received the notice provided for in this Section at least
three  Business  Days prior to the date upon which by the terms hereof any money
may become payable for any purpose (including,  without limitation,  the payment
of the  principal of (and  premium,  if any) or interest on, or amounts  payable
upon redemption or repurchase of, any Security), then, anything herein contained
to the contrary notwithstanding, the Trustee shall have full power and authority
to receive  such money and to apply the same to the purpose for which such money
was received  and shall not be affected by any notice to the contrary  which may
be received by it within three Business Days prior to such date.


          Subject  to the  provisions  of  Section  601,  the  Trustee  shall be
entitled to rely on the delivery to a Responsible Officer of a written notice by
a Person  representing  himself  to be a holder  of  Senior  Indebtedness  (or a
trustee  therefor) to  establish  that such notice has been given by a holder of
Senior  Indebtedness  (or a trustee  therefor).  In the event  that the  Trustee
determines  in good faith that further  evidence is required with respect to the
right of any Person as a holder of Senior  Indebtedness  to  participate  in any
payment or distribution  pursuant to this Article,  the Trustee may request such
Person to furnish  evidence to the reasonable  satisfaction of the Trustee as to
the amount of Senior  Indebtedness held by such Person, the extent to which such
person is entitled to participate in such payment or distribution  and any other
facts  pertinent  to the rights of such Person under this  Article,  and if such
evidence  is not  furnished,  the  Trustee  may defer any payment to such Person
pending  judicial  determination  as to the right of such Person to receive such
payment.


SECTION 1211.  Reliance on Judicial Order or Certificate of
               Liquidating Agent.

          Upon any payment or distribution of assets of the Company  referred to
in this Article, the Trustee,  subject to the provisions of Section 601, and the
Holders of the  Securities  shall be  entitled  to rely upon any order or decree
entered  by any court of  competent  jurisdiction  in which such  Proceeding  is
pending,  or a certificate of the trustee in bankruptcy,  receiver,  liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution,  delivered to the Trustee or to the Holders
of  Securities,  for  the  purpose  of  ascertaining  the  Persons  entitled  to
participate  in  such  payment  or  distribution,  the  holders  of  the  Senior
Indebtedness  and other  indebtedness  of the  Company,  the  amount  thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article.


SECTION 1212.  Trustee Not Fiduciary for Holders of Senior
               Indebtedness.

          The  Trustee  shall  not be deemed  to owe any  fiduciary  duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall in good faith  mistakenly  pay over or distribute to Holders of Securities
or to the Company or to any other Person cash,  property or  securities to which
any holders of Senior  Indebtedness  shall be entitled by virtue of this Article
or otherwise.  With respect to the holders of Senior  Indebtedness,  the Trustee
undertakes to perform or to observe only such of its  covenants and  obligations
as are  specifically  set forth in this  Article,  and no implied  covenants  or
obligations  with  respect to the holders of Senior  Indebtedness  shall be read
into this Article Twelve against the Trustee.


SECTION 1213.  Rights of Trustee as Holder of Senior
               Indebtedness; Preservation of Trustee's Rights.

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

          Nothing in this Article  shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 607.


SECTION 1214.  Article Applicable to Paying Agents.

          In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting  hereunder,  the term "Trustee"
as used in this  Article  shall  in such  case  (unless  the  context  otherwise
requires) be construed  as extending to and  including  such Paying Agent within
its meaning as fully for all intents and  purposes as if such Paying  Agent were
named in this  Article  in  addition  to or in place of the  Trustee;  provided,
however,  that Section  1213 shall not apply to the Company or any  Affiliate of
the Company if it or such Affiliate acts as Paying Agent.



                                ARTICLE THIRTEEN

          Repurchase of Securities at the Option of the
                         Holder Upon a Repurchase Event


SECTION 1301.  Right to Require Repurchase.

          In the event that a Repurchase  Event (as  hereinafter  defined) shall
occur, then each Holder shall have the right, at the Holder's option, to require
the Company to repurchase, and upon the exercise of such right the Company shall
repurchase,  all of such  Holder's  Securities,  or any portion of the principal
amount  thereof  that is an  integral  multiple  of  $1,000,  on the  date  (the
"Repurchase Date") that is 60 calendar days after the date of the Company Notice
(as  defined in Section  1302),  for cash at a purchase  price (the  "Repurchase
Price")equal to 101% of the principal  amount of the Securities to be purchased,
together with accrued and unpaid interest to the Repurchase  Date.  Prior to the
Repurchase Date, the Company shall pay in full all amounts outstanding under the
Credit Agreements or obtain the consents of the lenders  signatories  thereto to
the  repurchase  of  Securities.  Any  failure by the Company to pay in full all
amounts outstanding under the Credit Agreements or to obtain the consents of the
lenders  signatories thereto to the repurchase of Securities as described above,
shall not excuse a default by the  Company  under this  Article  Thirteen.  Such
right to require the  repurchase of the  Securities  shall not continue  after a
discharge of the Company from its obligations  with respect to the Securities in
accordance  with Article  Four,  unless a Repurchase  Event shall have  occurred
prior to such discharge.


SECTION 1302.  Notices; Method of Exercising Repurchase Right,
               Etc.

          (a) Unless the Company shall have  theretofore  called for  redemption
all of the Outstanding Securities,  on or before the 30th calendar day after the
occurrence of a Repurchase  Event,  the Company or, at the request (and expense)
of the Company,  the Trustee,  shall mail to all Holders a notice (the  "Company
Notice") of the occurrence of the Repurchase  Event and of the repurchase  right
set forth herein arising as a result thereof.

          Each notice of a repurchase right shall state:

          (1)  the Repurchase Date,

          (2)  the date by which the repurchase right must
     be exercised,

          (3)  the Repurchase Price, and

          (4) a  description  of the  procedure  which a Holder  must  follow to
     exercise a repurchase right.

          No failure  of the  Company  to give the  foregoing  notices or defect
therein shall limit any Holder's right to exercise a repurchase  right or affect
the validity of the proceedings for the repurchase of Securities.

          If any of the foregoing  provisions are  inconsistent  with applicable
law, such law shall govern.

          (b) To exercise a  repurchase  right,  a Holder  shall  deliver to the
Trustee on or before the close of business on the second  Business  Day prior to
the Repurchase  Date (i) written notice of the Holder's  exercise of such right,
which notice shall set forth the name of the Holder, the principal amount of the
Securities  to be  repurchased,  a statement  that an  election to exercise  the
repurchase right is being made thereby,  and (ii) the Securities with respect to
which the repurchase right is being exercised, duly endorsed for transfer to the
Company.
Such written notice shall be irrevocable.

          (c) In the event a repurchase  right shall be exercised in  accordance
with the terms hereof,  the Company shall pay or cause to be paid the Repurchase
Price in cash to the Holder on the  Repurchase  Date,  together with accrued and
unpaid interest to the Repurchase Date payable with respect to the Securities as
to  which  the  purchase  right  has been  exercised;  provided,  however,  that
installments of interest that mature on or prior to the Repurchase Date shall be
payable in cash to the Holders of such  Securities,  or one or more  predecessor
Securities,  registered as such at the close of business on the relevant Regular
Record Date according to the terms and provisions of Article Three.

          (d) If any Security surrendered for repurchase shall not be so paid on
the  Repurchase  Date,  the principal  shall,  until paid,  bear interest to the
extent permitted by applicable law from the Repurchase Date at the rate borne by
the Security  until the principal of such Security  shall have been paid or duly
provided for.

          (e) Any  Security  which is to be  repurchased  only in part  shall be
surrendered to the Trustee (with, if the Company or the Trustee so requires, due
endorsement by, or a written  instrument of transfer in form satisfactory to the
Company and the Trustee  duly  executed  by, the Holder  thereof or his attorney
duly  authorized  in writing),  and the Company shall  execute,  and the Trustee
shall  authenticate  and deliver to the Holder of such Security  without service
charge, a new Security or Securities, containing identical terms and conditions,
of any  authorized  denomination  as  requested  by  such  Holder  in  aggregate
principal amount equal to and in exchange for the  unrepurchased  portion of the
principal of the Security so surrendered.

          (f) Prior to the  Repurchase  Date, the Company shall deposit with the
Trustee or with a Paying  Agent (or,  if the Company is acting as its own Paying
Agent,  segregate  and hold in trust as provided  in Section  1003) an amount of
money  sufficient to pay the Repurchase  Price of the Securities  that are to be
repaid on the Repurchase Date.


SECTION 1303.  Definition of Repurchase Event.

          For purposes of this Article Thirteen, a "Repurchase Event" shall be a
"Change of  Control,"  which means any of the  following:  (1) the sale,  lease,
conveyance or other  disposition  of all or  substantially  all of the Company's
assets as an entirety or  substantially  as an entirety to any Person or "group"
(within the meaning of Section  13(d)(3) of the Exchange Act) in one or a series
of  transactions;  (2)  stockholders  of the Company  shall  approve any plan or
proposal for the liquidation or dissolution of the Company;  (3) any transaction
or series of transactions (as a result of a tender offer, merger,  consolidation
or  otherwise)  that  results in any  Person,  including  a "group"  (within the
meaning of Section  13(d)(3) of the  Exchange  Act) that  includes  such Person,
acquiring  "beneficial  ownership"  (as defined in Rule 13d-3 under the Exchange
Act),  directly or indirectly,  of 50% or more of the aggregate  voting power of
all  classes of Common  Equity of the  Company;  or (4)  individuals  who at the
beginning of any period of two consecutive  calendar years constituted the Board
of Directors  (together  with any new directors  whose  election to the Board of
Directors or whose  nomination  for election by the Company's  stockholders  was
approved  by a vote of at  least  two-thirds  of the  members  of the  Board  of
Directors at the beginning of such period or whose  election or  nomination  for
election  was  previously  so  approved)  cease for any reason to  constitute  a
majority of the members of the Board of Directors then in office.





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





          IN WITNESS  WHEREOF,  the parties hereto have caused this Indenture to
be duly executed,  and their  respective  corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.


                              HEALTHSOUTH Rehabilitation
                                                                     Corporation



                              By /s/ ANTHONY J. TANNER
                                -------------------------------------


Attest:

/s/ AARON BEAM, JR.
- ---------------------------

                              NATIONSBANK OF GEORGIA, NATIONAL
                                       ASSOCIATION



                              By  /s/ ELIZABETH T. TALLEY

                                -------------------------------------
Attest:
/s/ SABRINA FULLER
- ---------------------------


Copied to clipboard